The Scope and Challenge of

International Marketing
Chapter 1

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 The benefits of international markets
LO2 The changing face of U.S. business
LO3 The scope of the international marketing task
LO4 The importance of the self-reference criterion
(SRC) in international marketing
LO5 The increasing importance of global awareness
LO6 The progression of becoming a global marketer

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 Global Commerce Causes Peace
 Global commerce thrives during peacetime
 Boeing company, America’s largest exporter is the most
prominent exporter with its two constituent business units
including military sales and aircrafts
 Individuals and small companies also make a difference i.e.
Daniel Lubetzky’s company PeaceWorks that combines the
Arabs and Israelis as Joint Ventures
 Economic boom in North America in the late 1990s largely
due to the end of the cold war
 International Marketing is hard work and it can enrich you,
your family, your company and your country
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 Major Events That Affected IM
 When IM done well by small or large companies, the needs and wants
of customers in in other lands are well understood
 In the recent 25 years many events have changed the focus of IM
• Technological Boom of the late 1990’s
• High Tech bust of 2001
• Enron and WorldCom scandals
• 9/11 in USA and wars in Afghanistan and Iraq
• The major international conflicts regarding disruptions associated among
China, Taiwan and the USA
• 2003 SARS outbreak in Asia
• The great Indian Ocean Tsunami in 2004
• Space programs and International Space Stations whose future is now
clouded by the Columbia shuttle tragedy

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 Global Commerce Causes Peace
 For doing business internationally you have to plan and forecast,
but markets, particularly international ones, are ultimately
unpredictable
 There are four factors that affect global business in today's world
(1) Rapid growth of WTO and regional free trade areas
(2) Trend towards accepting the free market systems in Latin America,
Asia and eastern Europe
(3) Impact of internet, mobile phones and other global medias
(4) The mandate to manage the resources and global environment for the
generations to come (Sustainable Marketing)
 Today technology, research, capital investment and production as
well as marketing, distribution and communication networks all
have international dimensions
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 International Marketing Defined
 “ IM is the performance of business activities designed to plan,
price, promote and the direct flow of company’s goods and services
to consumers or users in more than one nation for a profit”.
 This apparently minor difference, “in more than one country”,
accounts for the complexity and diversity found in international
marketing operations
 Marketing concepts, processes and principles are universally
applicable and the marketer’s task is the same whether doing
business domestically or globally
 What makes marketing interesting is the challenge of modeling the
controllable elements of marketing decisions within the framework
of the uncontrollable elements of marketplace in such a way that the
marketing objectives are achieved
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 Environmental Adoption Needed
 The uncontrollable elements constitute the culture and the difficulty
facing the marketer in adjusting to the culture lies in recognizing
their impact
 Reaction to uncontrollable elements in a domestic culture is part of
our socialization and we react in a manner acceptable to our society
 Reaction to uncontrollable elements in foreign markets is much
challenging for marketers and while dealing with foreign cultures
marketers must be aware of the Frame of Reference they are using
in making their marketing decisions (Ubber in Pakistan)
 Cultural conditioning is an iceberg-----we are not aware of ninths
and tens of it
 Marketers must take steps to make themselves aware of the home
cultural reference in their analysis and decision making
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The Internationalization of U.S. Businesses

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 The International Marketing Task
 The international marketer’s task is more complicated than
that of the domestic marketer because the international
marketer must deal with at least two levels of uncontrollable
uncertainty instead of one
 Uncertainty is created by the uncontrollable elements of all
business environments, but each foreign country in which a
company operates adds its own unique uncontrollable factors
 Thus the more foreign markets in which a company operates,
the greater is the possible variety of foreign environmental
factors
 Frequently, a solution to a problem in country market A is not
applicable to a problem in country market B
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The International Marketing Task

Four One

Three Two

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Exhibit 1.2 Selected U.S. Companies and Their
International Sales

Source: Compiled from annual reports of listed firms, 2012

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Self-Reference Criterion & Ethnocentrism

 The primary obstacles to success in IM are a person’s

SRC and an associated ethnocentrism
 Self-Reference Criterion (SRC) is an unconscious
reference to one’s own cultural values, experiences,
and knowledge as a basis for decisions.
 Ethnocentrism is the notion that people in one’s own
company, culture, or country know best how to do
things.
 Both the SRC and ethnocentrism impede the ability to
assess a foreign market in its true light.

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Self-Reference Criterion & Ethnocentrism
 Ethnocentrism and SRC can influence an evaluation of the
appropriateness of a domestically designed marketing mix for a
foreign market
 For Example: A US based gasoline brand name Esso means
differently for Japanese and it means “Stalled Car”
 For Example: Uniliver has changed packaging, brand name and
pricing strategies for less developed and low income country
Brazil for its famous detergent product
 For Example: McDonald’s modifies its traditional Big Mac in India,
where it is known as Maharaja Mac
 Be, aware, also that not every activity within a marketing program
is not different for each country----there can be similarities

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Developing Global Awareness
To be globally aware is to have:
 Tolerance of cultural differences and
 Knowledge of cultures, history, world market potential, and
global economic, social, and political trends
 For Example: Punctuality is less important in some cultures
does not make them less productive
 The global structure of Soviet Union along with Russia, Eastern
Europe, China, , India, Africa and Latin America has changed
 Global awareness can be obtained by using various approaches
including selecting managers and a team having global
awareness, by personal relationships in foreign countries, Links
with foreign agents and partners

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Stages of International Marketing
Involvement
 A company has to decided the degree of marketing involvement and
commitment when it goes globally
 Most frequently companies with high-technology, with smaller home
markets and larger production capacities, with management
involvement in IM and others move globally after market research
and details marketing plans and programs
 The stages of IM involvement (As shown linear in coming slide)
shows the involvement of firms in global business and firms can
adopt one approach at a same time or more than one stages
simultaneously
 For Example: Technological products manufacturer due to short life
cycle period considers all the world a home market and reach all
possible customers
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Stages of International Marketing
Involvement
1. No Direct Foreign Marketing
2. Infrequent Foreign Marketing
3. Regular Foreign Marketing
4. International Marketing
5. Global Marketing

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Stages of International Marketing
Involvement
1. No Direct Foreign Marketing
 Companies do not actively cultivate customers outside national
boundaries
 Companies make their products available in foreign countries via
customer contact with the company, via domestic wholesalers or
distributors, via Web surfers by using a website
2. Infrequent Foreign Marketing
 Due to temporary surpluses or variation in demands in domestic
market firms involve in Infrequent Foreign Marketing with little or
no intention of maintaing continuous market representation
 Here, little or no change is seen in the company organization or
product lines
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Stages of International Marketing
Involvement
3. Regular Foreign Marketing
 Here the firm has permanent productive capacity devoted for the
foreign markets but focus is on fulfilling the needs of domestic
customers
 Profits from foreign markets are to be considered as bonus
4. International Marketing
 Companies become MNC’s or International and are fully
committed to and involved in IM activities
 Companies move all over the world with a detailed marketing and
production programs
 Example: America’s air conditioner manufacturer Fedders entered
in joint ventures with a Chinese firm Xinle as “Fedders Xinle”
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Stages of International Marketing
Involvement
5. Global Marketing
 At this stage the most profound change is the orientation of
company towards markets and associated planning activities
 Companies treat the world, including their home market, as one
market
 Market Segmentation decisions are no longer focused on
national borders and instead segments are defined by income
levels, usage patterns and other factors
 The best people in the company began to seek international
assignments and the entire operations--- Organizational
structures, sources of finance, production, marketing and so forth
began to take on a global perspective
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Factors Favoring Faster Internationalization

 Companies with either high technology and/or

marketing-based resources are better equipped to
internationalize than more traditional manufacturing
companies (Tseng et. al., 2007)
 Smaller home markets and larger production capacities
favor internationalization (Fan & Phan, 2007) and
 Firms with key managers well networked internationally
are able to accelerate the internationalization process
(Freeman and Cavusgil, 2007)

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 The Orientation of International Marketing
 Strangeness of the environment is a major problem faced by a
marketer and he has to play the roles of an anthropologist,
sociologist, psychologist, diplomat, lawyer and a businessperson
 Relate the foreign environment to the marketing process and to
illustrate the many ways in which culture can influence the
marketing task
 The cultural environment within which the marketer must
implement marketing plans can change dramatically from country
to country
 IM ranges from the marketing and business practices of small
exporters such as MtM in Pakistan to the practices of global
companies such as Coca-Cola, Motorola and Jhonson & Jhonson

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