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International Mark

eting
P h i l i p R. C a t e o r a
John L. Graham

The Scope and


Challenge
of International
Marketing
Chapter 1
McGraw-Hill/Irwin
International Marketing Iftekhar Amin Chowdhury (IAC)
Foreign Acquisitions
of U.S. Companies
Exhibit 1.1

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

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International Marketing
• Multinational process of planning and
executing the conception, pricing, promotion,
and distribution of ideas, goods, and services
and to create exchanges that satisfy
individual and organizational objectives

• 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
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The International Marketing Task
Exhibit 1.3

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Environmental Adaptation
• Ability to effectively interpret the influence and
impact of the culture in which you hope to do
business
– Cultural adjustments

• Establish a frame of reference


• Avoid measuring and assessing markets against
the fixed values and assumptions of your own
culture

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Environmental Adaptation (Examples)

• Color of Mourning
- Westerner: Black (White considers bridal dress)
- Easterner: White
• Raise a hand and make a circle with the thumb and
forefinger (like zero)
- In US: OK
- In France: Zero / Worthless
- In Japan: Money

[See the photographs at Page 14]

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The Self-Reference Criterion
and Ethnocentrism
• The key to successful international marketing is
adaptation to the environmental differences
from one market to another
• Primary obstacles to success in international
marketing
– SRC
– Associated ethnocentrism

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SRC and Ethnocentrism
• 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
– Reacting to a situation in an offensive to your hosts
• Ethnocentrism
– Nation that one’s own culture or company knows best

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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

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The Self-Reference Criterion and
Ethnocentrism
(Examples)

• Communication Distance (American Vs Asian)


• Refuse the hospitality (American Vs Asian)
• Real Example: US experience regarding “Esso”
(The brand name of gasoline)…in Japan, it
means ‘stalled car’.

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The Self-Reference Criterion and
Ethnocentrism
(Examples)
Successful Stories:

1. A British Manufacturer
In America: Cookies
In Japan: Chocolate Biscuits (McVitie)
2. Unilever
In UK: Paper pack and big in size
In Brazil: Plastic pack and small in size
3. McDonald’s
In America and Europe: Big Mac (with beef patties)
In India: Maharaja Mac (with mutton patties)
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Framework
for Cross-cultural Analysis
1. Define business problem or goal
• Home-country vs. foreign-country cultural traits, habits, or
norms
• Consultation with natives of the target country
1. Make no value judgments
2. Isolate the SRC influence
• Examine it carefully to see how it complicates the
problem
1. Redefine the problem
• Without SRC influence
• Solve for the optimum business goal situation

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Framework
for Cross-cultural Analysis
(Real Story)

Story of an American CEO, who was posted in


Japan and changed the meeting schedule…

What happened ultimately??????

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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

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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

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Stages of International
Marketing Involvement

• No direct foreign marketing


• Infrequent foreign marketing
• Regular foreign marketing
• International marketing
• Global marketing

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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

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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
– Foreign sales decline when demand or surplus
decreases
– May withdraw from international markets
• Little or no change in company organization or
product lines

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Regular Foreign Marketing
• Firm has production capacity devoted to foreign
markets
• Firm employs domestic or foreign intermediaries
– Uses its own sales force
– Sales subsidiaries in important markets
• Products allocated or adapted to foreign markets
as demand grows
• Firm depends on profits from foreign markets

Example: Meter-Man (Producer of agricultural


measuring devices)
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Regular Foreign Marketing

• Director of Sales and Marketing of Meter-Man


quoted –

• “When you start exporting, you say to


yourself, this will be icing on the cake; but
now, I say going international has become
critical to our existence.”

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International Marketing

• Companies are fully committed and involved in


international marketing activities. This generally
entails not only the marketing but also the
production of goods outside home country.

Example: The story of Fedders (Largest


manufacturer of Air conditioner in US) in China
(Sales increased from 5 lacs to 4 million in
five years)

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Global Marketing

• Company treats world, including home market


as one market
• Market segmentation decisions no longer
focused on national borders
– Defined by income levels, usage patterns, or other
factors
• More than half of revenues come from abroad
• Organization takes on global perspective

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Strategic Orientation

• Domestic market extension orientation


• Multidomestic market orientation
• Global market orientation

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Domestic Market Orientation
• International operations viewed as secondary
• Prime motive is to market excess domestic production
• Firm’s orientation remains basically domestic
• Minimal efforts are made to adapt product or
marketing mix to foreign markets
• Firms with this approach are classified as ethnocentric
Example of Meter-Man

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Multidomestic Market Orientation
• Companies have a strong sense that foreign country
markets are vastly different
• Market success requires an almost independent
program for each country
– Separate marketing strategies (mostly polycentric)
– Subsidiaries operate independently of one another in
establishing marketing objectives and plans
– Products are adapted for each market
• Control is decentralized

Example of Fedders

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Global Market Orientation
• Company guided by global marketing orientation
– Marketing activity is global
– Market coverage is the world

• Firm develops a standardized marketing mix applicable


across national boundaries
– Markets are still segmented
– Each country or region is considered side by side with a variety
of other segmentation variables
– Fits the regiocentric or geocentric classifications

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Global Market Orientation
(Example)
McDonald’s:

– Process is standardized in every country


– Logo is same
– Most of the advertisements are similar
– Store decoration and layout almost alike
BUT
– Wine in France and Beer in Germany
– A Filipino Style spicy burger in Manila
– Pork burgers in Thailand

P&G pursue a global strategy for disposable diapers, but


a multidomestic strategy in Asian markets for
detergents. (The strategy differs product to product)

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The Orientation
of International Marketing

• An environmental/cultural approach to international


strategic marketing
• Intended to demonstrate the unique problems of
international marketing
• Discussion of international marketing ranges from
the marketing and business practices of small
exporters to the practices of global companies

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