ELEC 3: INTERNATIONAL MARKETING

LECTURE 1
EVENTS & TRENDS AFFECTING
GLOBAL BUSINESS

•The rapid growth of the World Trade

Organization and regional free trade areas –
69 to 159 members

•The trend toward the acceptance of the

free market system among developing
countries in Latin America, Asia, and
Eastern Europe –ASEAN, LAFTA, EU
EVENTS & TRENDS AFFECTING
GLOBAL BUSINESS

•The burgeoning impact of the Internet,

mobile phones, and other global media on
the dissolution of national borders

•The mandate to properly manage the

resources and global environment for
the generations to come
The Internationalization of
Philippine Businesses

Increasing globalization of markets

◦Jollibee has 5,800 stores located in 34
countries outside the Philippines
◦Liwayway Group, maker of Oishi has
factories in China and Vietnam
◦San Miguel Corporation has breweries
in 7 countries outside the Philippines
The Internationalization of
Philippine Businesses

Increasing number of foreign companies

building and buying manufacturing plants in
the Philippines
•Car companies, banks, food processing
companies
•At least 15 foreign banks in the country –
HSBC, Tokyo-Mitsubishi, Mizuho Bank,
Citibank, Standard Chartered, etc.
International Marketing

Performance of business activities

designed to
Plan
Price
Promote, and
Direct the flow of a company’s
goods and services to consumers or
users in more than one nation for a
profit
International Marketing

•Literally, international marketing means

marketing between nations
•The word international means that a firm is
not a corporate citizen of the world but
operating from a home base
Domestic Marketing

•Concerned with marketing practices

within a marketers home country.
International Marketing vs.
Domestic Marketing
Reasons why Companies Venture into
International Marketing

•To utilize the firm’s excess capacity

•To take advantage of higher purchasing
power in overseas markets
•To take advantage of the government’s
export promotion drive
•To find other markets as the firm’s product
experiences a decline in sales in the home
market
•To find other markets as stiff competition in
the domestic or home market has reduced the
firm’s sales
Reasons why Companies Venture into
International Marketing

•To diversify the firm’s power base in different

geographic locations
•To take advantage of tax incentives and
promotional packages offered by certain
countries to foreign investors
•To take advantage of low labor and raw
material costs in foreign countries
•Access to new technologies in foreign
countries
Stages of International
Marketing Involvement

•No direct foreign marketing

•Infrequent foreign marketing
•Regular foreign marketing
•International marketing
•Global marketing
No direct foreign marketing

Products reach foreign markets indirectly

•Trading companies
•Foreign customers who contact firm
•Wholesalers
•Distributors
•Web sites
Foreign orders pique a company’s interest to
seek additional international sales
Infrequent Foreign Marketing

✔Caused by temporary surpluses

• Variations in production levels
• Increases in demand
✔Firm has little or no intention of
maintaining continuous market
representation
✔Little or no change in company
organization or product lines
✔No formal effort to maintain foreign
sales
Regular Foreign Marketing

•Firm has production capacity devoted to

foreign markets
•The primary focus of operations and
production is to service domestic market
needs.
Regular Foreign Marketing

•Products allocated or adapted to

foreign markets as demand grows

•Firm depends on profits from foreign

markets
International Marketing

•Fully committed to international

marketing activities
•The firm views the world as a series of
separate markets
Global Marketing

•Refers to marketing activities

coordinated and integrated across
multiple country markets
•At this stage, companies treat the
world, including their home market, as
one market.
Global Marketing

•This orientation means operating as if

all the country markets in a company’s
scope of operations (including the
domestic market) were approachable as
a single global market and standardizing
the marketing mix where culturally
feasible and cost effective.
The International Marketing
Tasks
The International Marketing
Tasks
•The inner circle depicts the controllable
elements that constitute a marketer’s
decision area.
•The second circle encompasses those
environmental elements at home that have
some effect on foreign-operation decisions
• The outer circles represent the elements of
the foreign environment for each foreign
market within which the marketer operates.
Environmental Adaptation

•Ability to effectively interpret the

influence and impact of the culture in
which you hope to do business
•Cultural conditioning is like an iceberg
—we are not aware of nine-tenths of it
•Cultural adjustment is the most
challenging one confronting a marketer
Environmental Adaptation

•Establish a frame of reference

•Avoid measuring and assessing markets
against the fixed values and assumptions
of your own culture
•Cross-cultural misunderstandings can
also occur when a simple hand gesture
has a number of different meanings in
different parts of the world
The Self-Reference Criterion
and Ethnocentrism

The key to successful international

marketing is adaptation to the
environmental differences from
one market to another
The Self-Reference Criterion
and Ethnocentrism
The primary obstacles to success in
international marketing are a person’s
self-reference criterion (SRC) and an
associated ethnocentrism
Self-Reference Criterion (SRC)

•The SRC is an unconscious reference to

one’s own cultural values, experiences,
and knowledge as a basis for decisions

Dangers of the SRC

•Failing to recognize the need to
take action
•Discounting the cultural differences
that exist among countries
SRC and Ethnocentrism

Dangers of SRC
•Reacting to a situation in a manner offensive
to your hosts

Ethnocentrism
•Notion that one’s culture or company knows
best
SRC and Ethnocentrism

•Ethnocentrism and the SRC can influence

an evaluation of the appropriateness of a
domestically designed marketing mix for a
foreign market
•The most effective way to control the
influence of ethnocentrism and the SRC is
to recognize their effects on our behavior
Developing a Global Awareness

Tolerance of cultural differences:

•Understanding cultural differences and
accepting and working with others
whose behavior may be different from
yours
•Knowledge of cultures, history, world
market potential, and global economic,
social, and political trends
Approaches to Global
Awareness

•Select individual managers specifically

for their demonstrated global
awareness
•Develop personal relationships in other
countries
•Have a culturally diverse senior
executive staff or board of directors
Limits to Globalized Marketing

Industry factors
•Not all industries have the right
characteristics for global strategy
E.g. culture bound products and services
Internal sources
•Not all companies have the capability to
go global
Limits to Globalized Marketing

Different mixes
•Not all marketing mixes lend themselves
to global treatment
•While product designs can be uniformed
across countries, language and cultural
barriers make it difficult to standardize
products.