International

m
Marketing

Professor: Carla Pennano

2023
Important concepts: definitions

• What is marketing?
• What is International marketing?
• What words come to mind when we think about International Marketing?
• What do we want to know about International Marketing?
• PESTEL analysis
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• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
• Environmental factors
• Legal factors

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Current Definition of Marketing

Marketing is the activity, set of institutions, and processes

for creating, communicating, delivering and exchanging
offerings that have value for customers, clients, partners,
and society at large.
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(American Marketing Association, 2013)
What is Marketing?

• https://www.youtube.com/watch?v=i1xz5Kv-7VY

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What is International Marketing?

• "International marketing is the performance of business activities that direct the

flow of a company's goods and services to its consumers or users in more than
one nation for profit” (Catora, 1995).

• “International marketing is defined as the body of knowledge that aims to promote

and facilitate the processes of exchange of goods, services, ideas and values ​
between suppliers and applicants frommtwo or more countries to satisfy the
needs and/or desires of customers, while allowing the providers (companies,
institutions or individuals) to achieve their purposes regarding income, profits,
services, help or proselytism, which are the reason for their action and their
existence” (Lerma Alejandro, 2006).

• "It is the provision of commercial activities that directs the flow of goods and
services of the company to consumers or users in more than one nation for
profit” (Cateora & Ghauri, 1999).

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What is International Marketing?

• "International marketing refers to the process of planning and conducting

activities across national borders and generating exchanges that satisfy the
objectives of individuals and organizations” (Czinkota & Ronkainen, 2013).

• “International marketing is a multinational process of planning and executing

the conception, pricing, promotion, and distribution of ideas, goods, and
services to create exchanges that satisfy
m individual organizational objectives”
(American Marketing Association, 2020).

• “At a very simple level, international marketing involves the company making
one or more marketing mix decisions across national borders. At a very
complex level, it involves the company establishing production plants abroad
and coordinating marketing strategies throughout the world” (Doole & Lowe,
2001).

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What is International Marketing?
• There is no single definition of international marketing, and there can be
confusion between where international marketing begins and where global
marketing ends.

• Many academics and practitioners talk about international marketing and global
marketing as if they are the same concept and they are actually very similar.

• Global marketing refers to the adoptionmof the same marketing strategy for
worldwide selling of products or services, i.e., considering the whole global
market as one. Whereas, international marketing can be seen as customizing
the marketing strategies to suit the prospective international market.

Global marketing = International Marketing (in this class)

International marketing is simply the application of marketing

principles in more than one country.
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Factors that «push» companies to look for international
markets
• Foreign markets are much larger than the domestic market.
• You reduce the dependency on only one market.
• Foreign markets offer better opportunities to generate more profit than
domestic markets.
• The company needs a larger database of clients in order to achieve
economies of scale.
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• Some of your clients go abroad and demand an
international service – example? FedEx / UPS
• International companies that have the
«backbone» to offer better products or lower
prices may attack the domestic market so the
domestic companies might decide to counter
attack in their international competitor´s
domestic markets – PROS / CONS, Risks?

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Advantages of International Marketing?

• International marketing has

provided an opportunity for
domestic companies to meet the
requirements of customers existing
in vast and varied geographical
market segments.
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• Following are the multiple benefits
of international marketing:

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Advantages of International Marketing?
• International marketing provides for expansion of the business units or
establishing subsidiaries in various countries.
• The sales of the organization can be increased as the company penetrates other
global markets, instead of operating only in the domestic market.
• All the marketing strategies are framed and customized according to the
customer’s needs in the target market.
• The business risks like fluctuation in market demand, economic conditions,
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government policies, etc. can be diversified when the business operates in
multiple countries.
• International marketing promotes two-way communication with consumers
due to the company’s physical existence in the market place.
• The company develops a robust economy by meeting the needs of consumers
in the local markets.
• The company can easily blend with the local markets and can very well
understand the marketing strategies or practices of the domestic players.

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Risks of entering international markets
• Not understanding the preferences, likes and needs of foreign consumers and
offering them products and services that don´t result attractive to them –
examples?

• The company may not understand the business culture in the foreign market and
may incur in grave mistakes when negotiating with people from other countries –
examples?
m
• The company may underestimate the foreign laws and norms and incur in
unexpected extra costs – examples?

• The company may realize (a little too late) that their leaders and top executives
lack the required international experience – examples?

• The commercial legislation in the international market may change, it´s currency
might devaluate, the company might experience a political crisis and expropriate
foreign companies – examples?
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Disadvantages of International Marketing?
• International marketing provides
an edge over the other
internationalization strategies
when it comes to creating
footprints worldwide.

• However, it has certain demerits,

which are discussed below: m

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Disadvantages of International Marketing?
• The cost of operating multiple subsidiaries in different countries is quite high.

• The foreign government’s policies and regulations impose restrictions on

overseas business operations.

• Competition with Local

Companies: The local
business organizations which m
have been existing in the
global target market, emerge
as significant competitors for
the company.

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What is International Marketing?
If we don’t handle international strategies properly, this could happen:

• https://www.youtube.com/watch?v=UdCcbT23Qkk

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Differences between international marketing and domestic
marketing
• Politics
• Culture
• Religion
• Languages, expressions, gestures
• Example: m

• Buying habits
• Quality standards
• Perceptions of products
• Requirements and usage of products
• Other examples you have experienced?
Example: in the US the «o» symbol
means "okay" while the same sign in
Mediterranean countries represents
"cero" or “the worst”. In Tunisia it
means “I'm going to kill you” while in
Japan it means “money”.
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Difference between Local and International Marketing
Domestic marketing
One language, one nationality.
Relatively homogenic markets.
Political factors don´t influence
much.
Exact and simple data available.
Individual companies have little
influence in the environment.
Stable environment.
Homogeneous financial climate.
One currency.
Clear and understandable game
rules
International Marketing
Several languages, nationalities and
cultures.
Fragmented and differentiated
markets.
m
Political factors are vital.
Hard to obtain clear data.
Big distortions from large companies.
Unstability of the environment.
Different financial climate.
Different currencies.
Changing and unclear game rules.
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The decision to internationalize
• The first international marketing decision consists of analyzing whether or not
the company should embark on international marketing activities, that is, in
the conquest of foreign markets.

• It seems clear that in the new

international environment, more and
more companies are opting for the
internationalization alternative. m

• There are even the so-called born

global that are born already focused
on international markets.

• In most cases, these are innovative

companies linked to the digital
economy sector.
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The decision to internationalize
• If companies didn´t have or want to «go international» then….

• Their leaders and top executives wouldn´t have to study other languages
• They wouldn't have to learn about other legal systems
• They wouldn´t have to negotiate in foreign currency whose exchange rates
might fluctuate
• They wouldn´t have to deal with uncertainty in regards to politics or legal issues
m
• They wouldn´t have to redesign their products to adapt to the needs and
expectations of different consumers
• Business would be simpler, safer, less risky

• Then… why do it?

• Why do you think companies look to become international?
• Why do they want to capture international markets?
• Why would they want to sell their products abroad?
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If there are so many complications… why “do” international
marketing then?
• Because the business model was pre conceived as an exporting model

• Because there is saturation in the domestic market

• Because companies want to diversify the risk

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• Because companies want to exploit their total production capacity

• Because other markets might be attractive

• Few competitors / poor competitors
• Huge market / high income
• Life cycle of the product is different

• What other examples can you think about?

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Advantages of going international
• Use all or a large part of the production capacity: there are products whose
sales are concentrated in certain seasons of the year.

• Selling these seasonal products in countries with opposite climatological

seasons (northern and southern hemispheres) will take advantage of the
productive capacity and greater stability in sales will be achieved.

m
• Access to a broader market: internationalization implies access to specific
market segments for each product.

• If it is possible to be present in a large

number of countries, the life cycle of the
product can be lengthened since when it is
in a phase of maturity or decline in
developed markets, with exports it will be
possible to access other markets where the
product is not yet known.
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The decision to internationalize
• Improvement of the image (internal and
external): from the perspective of
communication, the presence in several
countries reinforces the image of the company
both in front of its national and international
clients.

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• Having clients in several countries conveys
an idea of ​solvency and guarantee in the
products and services offered.

• Risk diversification: the presence of the

company in various markets is also a means of
diversifying risk, since at a given moment the
negative results of countries or areas in
recession will be offset by those of countries that
obtain positive growth rates.
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The decision to internationalize
• Continuous learning: finally, the
directors of companies that go
abroad are in contact with very
different markets.

• Therefore, in the development of

their work they learn about
innovative products, m
management techniques,
marketing methods,
communication actions, digital
marketing strategies, etc.

• Many of these experiences and

actions can be applied in the local
market.
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The choice of target markets
• Once internationalization has been chosen as a means of growth, the second
strategic decision is the selection of the markets that offer the greatest
potential.
• There are more than 200
countries in the world, of
which approximately 80
have high purchasing m
potential.

• The exporting company,

regardless of its size and
resources, must have a
marketing information
system that makes it
easier for it to select
target markets.
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The choice of target markets
• Three stages can be distinguished:

• Number of countries: the double alternative of concentration (choosing a small

number of countries to focus your commercial efforts on them) or diversification
(choosing a larger number of countries even though a lower volume of sales is
obtained in each of them) is proposed here.

• Most favorable geographical areas: m focus your efforts on certain geographical

areas that cover homogeneous countries in terms of the criteria to choose the
most favorable. In this election, criteria such as geographical or cultural
proximity, the level of development or the growth prospects of the countries in
the area will prevail.

• Selection of target countries: once the most favorable areas have been chosen,
the company must choose within them, those countries that offer greater
accessibility and business potential, also evaluating the risks involved in
entering them.
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Choice of the form of entry in the chosen markets
• Once the countries have been chosen, the next decision is how to enter each
of them.

• It happens that foreign markets, unlike the national market, have access barriers
and difficulties (geographical, legal, language, cultural) that make it necessary
to seek help to reach the end customer.

m
• Thus, some ways to reach the
foreign client appear that are
more numerous and different
than those that exist to reach the
local client.

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Choice of the form of entry in the chosen markets
• These forms can be classified into four groups:

• Direct export: the company's own export department is aimed at the end customer.

• Indirect export: intermediaries (agents, distributors, trading companies) are used

to reach the final customer.

• Cooperation agreements: the company m seeks

partners in foreign markets with the idea of ​
establishing long-term business relationships that
materialize in license, franchise or joint venture
agreements.

• Establishment abroad: the company can choose

to establish itself in the target market through the
creation of delegations, commercial subsidiaries or
production subsidiaries.
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Environmental analysis
• One of the fundamental steps that must be
taken into account before starting to do
international marketing is the analysis of the
environment.

• There are several tools that can be used for

this purpose:
m
• PESTEL analysis

• PORTER'S 5 FORCES ANALYSIS

• SWOT Analysis

• Traditionally, to analyze the unique nature of

each individual country, a PESTEL analysis is
performed.
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What is the PEST analysis?: http://youtu.be/v7pUv_ZWnyM

• The PEST analysis is a well-known tool when it comes to analyzing the macro
environment.

• It is equally important and useful when applied to the evaluation of the

environment in international marketing.

• PEST analysis means: m

• Political Factors
• Economic factors
• Social Factors and
• Technological Factors

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What is the PEST analysis?:
• An international PEST analysis should consider:

• How easy will it be to move from domestic marketing to international marketing?

• Will your company benefit from making an investment abroad?

• What is the nature of the competition

m
in each individual additional
international market?

• …and many other factors that are

specific to your organization or
industry.

• What else?

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Environmental factors and elements

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PESTEL analysis
• A PESTEL analysis or more recently named PESTELE is a framework or tool used
by marketers to analyze and monitor the macro-environmental (external marketing
environment) factors that have an impact on an organization. The result of which is
used to identify threats and weaknesses which are used in a SWOT analysis.

• A PESTEL analysis is a strategic framework

commonly used to evaluate the business
environment in which a firm operates.
m
• Traditionally, the framework was referred to
as a PEST analysis, which was an acronym
for Political, Economic, Social, and
Technological; in more recent history, the
framework was extended to include
Environmental, Legal and Ethical factors as
well.

https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/
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PESTEL analysis
• In marketing, before any kind of strategy or tactical plan can be implemented, it
is fundamental to conduct a full situational analysis.

• This analysis should be repeated every six months to identify any changes in
the macro-environment.

• Organizations that successfully monitor

and respond to changes in the macro- m
environment can differentiate from the
competition and thus have a competitive
advantage over others.

• The framework is also used to identify

potential threats and weaknesses which
are used in a SWOT Analysis when
identifying any strengths, weaknesses,
opportunities and threats to a business.
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How to do a PESTEL Analysis?

• First step: it is important to get a group of people together from different

areas of the business and brainstorm ideas.
• Second step: consult and seek the
opinions of experts from outside your
business: customers, distributors, suppliers
or consultants who know your business
well. m
• Third step: evaluate and score each of the
items for ‘likelihood’; how likely it is to
happen and ‘impact’; how big an impact it
could have on your business.
• Fourth step: refine your ideas and repeat
until you have a manageable number of
points in each of the six categories.
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Advantages and Disadvantages of a PESTEL Analysis
• It is an essential analysis tool for any strategist’s toolkit but there are some
benefits and challenges associated with it.

• Advantages of a PESTEL Analysis:

• It can provide an advance warning of potential threats and opportunities
• It encourages businesses to consider the external environment in which
they operate m
• The analysis can help organizations understand external trends
• Disadvantages of a PESTEL Analysis:
• Many researchers argued that simplicity of the model that it is a simple
list which is not sufficient and comprehensive
• The most significant disadvantage of the model is it is only based on an
assessment of the external environment

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PESTEL analysis

https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/ 35
Political factors
• These determine the extent to which government and government policy may
impact on an organization or a specific industry.

• These are all about how and to what degree a government intervenes in the
economy.

• Political factors often have an

m
impact on organizations and
how they do business.

• Organizations need to be able

to respond to the current and
anticipated future legislation,
and adjust their marketing
policy accordingly.

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Political factors
• Broadly speaking, political factors are those driven by government actions and
policies. They include, but are not limited to, considerations like:
• Corporate taxation
• Other fiscal policy initiatives
• Free trade disputes
• Antitrust and other anti-competition issues
• Government policy
• Political policy - stability or instabilitymin overseas markets
• Foreign trade policy
• Tax policy
• Labour law
• Environmental law
• Trade restrictions
• Trade, fiscal and taxation policies.

• Example: A multinational company closes several facilities in a higher tax

jurisdiction in order to relocate operations somewhere with lower tax rates and/or
greater state funding and grant opportunities.
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Economic Factors
• An economic factor has a direct impact on the economy and its performance, which
in turn directly impacts on the organization and its profitability.

• Economic factors have a significant impact on how an organization does business

and also how profitable they are. These factors can be further broken down into
macro-economical and micro-economical factors.

• Macro-economical factors deal with themmanagement of demand in any given

economy. Governments use interest rate control, taxation policy and government
expenditure as their main mechanisms they use for this.

• Micro-economic factors are all about the way people spend their incomes. This
has a large impact on B2C organisations in particular.

• Economic factors relate to the broader economy and tend to be expressly financial in
nature.
Source: https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/

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Economic Factors

• Factors include:
• Economic growth
• Interest rates
• Exchange rates
• Inflation
• Employment or unemployment rates
• Raw material costs
• Foreign exchange rates m
• Disposable income of consumers and businesses

• Example: Based on where we are in the economic cycle and what Treasury yields
are doing, an equity research analyst may adjust the discount rate in their model
assumptions; it can have a material impact on the valuations of the companies they
cover.

Source: https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/

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Social Factors
• The social environment and emerging trends helps marketers to further understand
consumer needs and wants in a social setting. They are also known as socio-
cultural factors and involve the shared belief and attitudes of the population. They
refer to shifts or evolutions in the ways that stakeholders approach life and leisure,
which in turn can impact commercial activity.

• These factors are of particular interest as they have a direct effect on how marketers
understand customers and what drives them.m
• Social factors tend to be more difficult to quantify than economic ones.

• Social factors may seem like a small consideration, relative to more tangible things
like interest rates or corporate taxation. Still, they can have a huge impact on entire
industries. Consider how trends towards healthier and more active lifestyles have
impacted the evolution of fitness industries, as well as many changes to the nature
of food products we consume.

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Social Factors
• Examples of social factors include:
• Changing family demographics
• Education levels
• Cultural trends
• Attitude changes
• Population growth
• Consumer beliefs
• Age distribution m
• Health consciousness
• Career attitudes
• Demographic considerations
• Attitudes around working conditions
• Changes in lifestyles / Lifestyle trends

• Example: Post-pandemic, management at a technology firm has had to seriously

reevaluate hiring, onboarding, and training practices after an overwhelming number
of employees indicated a preference for a hybrid, work-from-home (WFH) model.

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Technological Factors
• Technological factors consider the rate of technological innovation and development
that could affect a market or industry.

• The technological landscape

changes really fast and this impacts
largely the way companies market
their products.
m
• Technological factors affect
marketing in three distinct ways:
• New ways of producing goods
and services
• New ways of distributing goods
and services
• New ways of communicating
with target markets

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Technological Factors
• They include:
• Automation
• Technology infrastructure (like 5G, etc.)
• Cyber security
• Changes in digital or mobile technology
• Automation
• Research and development and their impact on costs and competitive
advantage m
• New methods of distribution, manufacturing and logistics

• The speed and scale of technological disruption in the present business environment
are unprecedented, and it has had a devastating impact on many traditional
businesses and sectors – think Uber upending the transportation industry or the
advent of e-commerce revolutionizing retail trade as we know it.

• Example: A management team must weigh the practical and the financial implications
of transitioning from on-site physical servers to a cloud-based data storage solution.

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Legal Factors
• An organization must understand what is legal and allowed within the territories they
operate in.
• They must be aware of changes in legislation and the impact this may have on business.
• Factors include employment legislation, consumer law, healthy and safety, international
as well as trade regulation and restrictions.
• Legal factors include:
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• Employment and consumer protection laws
• Licenses and permits required to operate
• Protection of IP (Intellectual Property)
• product labelling and product safety
• health and safety
• equal opportunities
• advertising standards
• consumer rights and laws
• Industry regulation

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Legal Factors
• Legal factors are those that emerge from changes to the regulatory environment,
which may affect the broader economy, certain industries, or even individual
businesses within a specific sector.

• Regulation can serve as a protective obstacle

for established operators, creating an additional
barrier preventing potential new entrants.
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• Example: A rating agency is assessing the
creditworthiness of a technology firm that has
considerable growth prospects in emerging
markets. The analyst must weigh this growth
trajectory against the inherent risk of IP theft in
some jurisdictions where legal infrastructure is
weak. IP theft can severely undermine a firm’s
competitive advantage.

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Environmental Factors
• Environmental factors are those that are influenced of the surrounding
environment and the impact of ecological aspects.

• With the rise in importance of sustainability, this element is becoming more

central to how organizations need to conduct their business.

• These factors have only really come to the forefront in the last fifteen years or
so. m

• They have become important due to the increasing scarcity of raw materials,
pollution targets, doing business as an ethical and sustainable company, carbon
footprint targets set by governments.

• More and more consumers are demanding that the products they buy are
sourced ethically, and if possible from a sustainable source.

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Environmental Factors
• Examples of environmental considerations are:
• Carbon footprint
• Climate change impacts, including physical and transition risks
• Increased incidences of extreme weather events
• Stewardship of natural resources (like fresh water)
• Recycling procedures, waste disposal and sustainability

• Example: Management at a m
publicly traded firm must
reevaluate internal record
keeping and reporting tools in
order to track greenhouse gas
emissions after the stock
exchange announced mandatory
climate and ESG disclosure for
all listed companies.

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Ethical Factors
• The most recent addition to PESTEL is the extra E - making it PESTELE or
STEEPLE.

• This stands for ethical, and includes

ethical principles and moral or ethical
problems that can arise in a business.

• It considers things such as fair trade, m

slavery acts and child labour, as well as
corporate social responsibility (CSR),
where a business contributes to local or
societal goals such as volunteering or
taking part in philanthropic, activist, or
charitable activities.

Source: https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/

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Ethical Factors
• Big brands often take part in CSR -
examples include:

• Innocent's 'big knit' campaign creating

hats for their drinks to raise money for Age
UK

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• McDonalds' youth programme to provide
pre-employment training and development

• Barclay's Digital Eagles programme which

provides training on coding and
information on digital skills for staying safe
online & improving confidence.

Source: https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/

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PESTEL analysis Case
• Imagine you are part of a multinational company
that is looking into new international markets to
continue growing. The company´s CEO has
hired you – as an expert in the Peruvian market
- to help him determine if they should enter this
market or not. In your group:

• Prepare the PESTEL analysis for them

Peruvian
market for your boss.

• According to the analysis, provide a

recommendation to the CEO whether to enter
this new market or not and provide reasons for
your decision.

• You have 45 minutes to prepare a 10 minute

presentation for the company´s CEO.
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m