chapter 16

International Business, 6th Edition

International Marketing

Griffin & Pustay

16-1
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
 Chapter Objectives

• Characterize the nature of marketing

management in international business
• Discuss the basic kinds of product
policies and decisions made in
international business
• Identify pricing issues and evaluate
pricing decisions in international business

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 Chapter Objectives (continued)

• Identify promotion issues and evaluate

promotion decisions in international
business
• Discuss the basic kinds of distribution
issues and decisions in international
business

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 Marketing

Marketing is “the process of planning

and executing the conception, pricing,
promotion, and distribution of ideas,
goods, and services to create
exchanges that satisfy individual and
organizational objectives.”
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 International Marketing

International Marketing is the

extension of these marketing activities
across national boundaries.

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 Figure 16.1 International Marketing as an
Integrated Functional Area

Operations Accounting
Management

Marketing

Human
Resource
Finance Management

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 Market Strategy Must Support
Business Strategy

Differentiation

Cost Leadership

Focus

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 Marketing Mix Issues

• How to develop the firm’s product(s)

• How to price those products
• How to sell those products
• How to distribute those products to
the firm’s customers

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 Figure 16.2 Elements of the Marketing Mix
for International Firms

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 Key Decision-Making Factors

• Standardization versus customization

• Legal forces
• Economic factors
• Changing exchange rates
• Target customers
• Cultural influences
• Competition

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 Standardization versus Customization

Ethnocentric Approach

Polycentric Approach

Geocentric Approach

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 Table 16.1 Standardized
International Marketing
Advantages Disadvantages
• Reduces marketing costs • Ignores different conditions
of product use
• Facilitates centralized
control of marketing • Ignores local legal
differences
• Promotes efficiency in
R&D • Ignores differences in
• Results in economies of buyer behavior patterns
scale in production • Inhibits local marketing
• Reflects the trend toward initiatives
a single global • Ignores other differences
marketplace in individual markets

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 Table 16.1 Customized
International Marketing

Advantages Disadvantages

• Reflects different • Increases costs/

inefficiencies
conditions of use
• Acknowledges local • Inhibits centralized
legal differences/ control of marketing
differences in buyer • Reduces economies
behavior of scale in
• Accounts for other production
differences in • Ignores the trend
individual markets toward a single
global marketplace
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 Product

Product comprises both the set of

tangible factors that the consumer can
see or touch (the physical product and its
packaging) and numerous intangible
factors such as image, installation,
warranties, and credit terms.

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 Factors Affecting the
Standardization of Products

Cultural
Legal forces influences

Economic Brand names

factors

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 Factors Affecting
Pricing Policies

Business strategy

Competitive environment

Costs of doing business

Exchange rate fluctuations

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 Pricing Policies

Standard Price
Policy

Two-Tiered Market
Pricing Pricing

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 Figure 16.3a Determining the
Profit-Maximizing Price

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 Figure 16.3b Determining the
Profit-Maximizing Price

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 Conditions for Market Pricing

• Firm must face different demand and/or

cost conditions in the countries in which it
sells its products
• Firm must be able to prevent arbitrage

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 Risks to Market Pricing Policy

Charges of dumping

Damage to brand name

Development of a gray market

Consumer resentment

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 Promotion Mix

Advertising Personal Selling

Sales Promotion Public Relations

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 Factors Affecting Advertising Strategy

• The message it wants to convey

• The media available for conveying
the message
• The extent to which the firm wants
to globalize its advertising effort

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 Advertising

Message: the facts or impressions the

advertiser wants to convey to potential
customers

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 Advertising (continued)

Medium: the communication channel

used by the advertiser to convey a
message

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 Global Advertising

A customer entering
this domino parlor in
Egypt encounters no
language barriers in
knowing that the
establishment
serves Coke.

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 Personal Selling

Personal Selling: making sales on the

basis of personal contacts

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 Advantages of Personal Selling for
International Firms

• Local sales representatives understand

local culture, norms, and customs
• Personal selling promotes close,
personal contact with customers
• Personal selling makes it easier for firm
to adopt valuable market information

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 Sales Promotion

Sales promotion: comprises specialized

marketing efforts designed to offer an
incentive for behavior such as coupons, in-
store promotions, sampling, direct mail
campaigns, cooperative advertising, and
trade fair attendance.

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 Public Relations

Public Relations consists of efforts

aimed at enhancing a firm’s reputation and
image with the general public, as opposed
to touting the specific advantages of an

individual product or service.

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 Distribution Issues

Physical Merchandising
transportation mode
mode

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 Table 16.2 Advantages/Disadvantages of
Transportation Modes
Mode Advantages Disadvantages Sample
Products
Train Safe, reliable, Limited to rail Automobiles,
inexpensive routes, slow grains

Airplane Safe, reliable, fast Expensive, Jewelry,

limited access medicine

Truck Versatile, Small size Consumer goods

inexpensive

Ship Inexpensive, Slow, indirect Automobiles,

good for larger furniture
products
Electronic Fast Unusable for Information
Media many products

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 Basic Parts of a
Distribution Channel

Manufacturer

Wholesaler

Retailer

Customer

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 Figure 16.4 Distribution
Channel Options

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publishing as Prentice Hall