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Definition of international marketing
“The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations”.
Key international marketing questions faced by a firm 1. How will my product or service fit into the international market? 2. What marketing adjustments are or will be necessary? 3. What global competitive threats should I expect? 4. How can I work with these threats and turn them into opportunities? 5. What are my strategic global alternatives? 6. Trade = Exports + Imports of all goods and services between countries 7. If exports from a country are greater than imports, it results in trade surplus 8. If exports from a country are lower than imports, it results in trade deficit 9. Monthly trade statistics influence stock market fluctuations. 10. One billion $ exports create over 20,000 jobs in any year
Opportunities And Challenges In International Marketing
1. 2. 3. 4. 5. International environment is dynamic and each of the changes require active response. International activity may be crucial to a firm’s survival and growth. Firms and individuals must be capable of adapting to the environment. Countries are interdependent and isolation is impossible today. Interdependence and the global economy
Approaches to Internationalisation
1. 2. 3. 4. Stages approaches Learning approaches Contingency approaches Network approaches
The earliest group of theories to explain this process were the so-called ‘stages approaches’ – firms started with the mode of entry which required the least commitment of resources, and with experience gradually increased their commitment of resources to international activities.
The Learning Approaches theories recognise that internationalisation is a dynamic process. They focus more on evolutionary, sequential build up of foreign commitments over time and recognise the role that psychic distance can play in the process.
Theories of internationalisation are based on contingency theory, whereby the firm evaluates and responds to an opportunity as it occurs, regardless of whether the market is close in psychic distance terms or whether an advanced mode of entry is required.
The network paradigm emphasises the role of linkages and relationships in the internationalisation process. Using this approach, Johanson and Mattsson describe modes of entry in terms of position: • • • International extension International penetration International integration
A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.
Levels of involvement in Global marketing
The Importance of Global Marketing
Global marketing is rapidly becoming a necessity the Internet makes it possible for every marketer to become an international marketer Exporting: Marketing domestically produced goods and services abroad Importing: Purchasing foreign goods, services, and raw materials Global Marketing in the 21st Century & Marketing Decisions 1. 2. 3. 4. 5. 6. Looking at the global environment Deciding whether to go international Deciding which markets to enter Deciding how to enter the markets Deciding on the global marketing problem Deciding on the global marketing organization 2
Why Global Marketing?
1. Exploiting Firm-Specific Capabilities 2. Technological innovations 3. Strong Trade Names 4. Lowering Cost Structure 5. Outsourcing 6. Hub and spokes model 7. Diversification and competitiveness 8. Product/market portfolio 9. Cross-subsidization 10. Country market attractiveness 11. Income 12. Consumer preference 13. Technology and market globalization 14. Saturation of domestic markets: Domestic market saturation in the industrialized countries and growing marketing opportunities overseas. 15. Global competition: Competition around the world and proliferation of the Internet. 16. Need for global cooperation: Global competition brings global cooperation.
Looking at the Global Marketing Environment
1. 2. 3. 4. 5. 6. 7. The International Trade System Tariffs, quotas, embargos, exchange controls, nontariff trade barriers World Trade Organization and GATT Regional free trade zones European Union North American Free Trade Agreement Other free trade areas
Driving Forces Technology Culture Market Needs Cost Free Markets Economic Integration Peace Management Vision Strategic Intent Global Strategy and Action
Restraining Forces Culture Market Differences Costs National Controls Nationalism War Management Myopia Organization History Domestic Focus
Characteristics of globalization
a. b. c. d. e. f. g. h. New regimes of regulation (WTO, NAFTA, etc.)World wide growth of market oriented societies Greater role for private sector Changing nature of the state Growing inequality Increased exchange of goods, values, symbols Compression of time and space--speeding up of change Impacts on both social and cultural homogenization and differentiation. The centrality of migration to global change
A Comparison of Assumptions About Global and International Companies
Ability to compete in national markets is Domestic/national competitive relationships. affected by a firm’s global position. Globally standardized production. Standardization limited by requirements to Adaptations are handled through adapt products to national tastes. modular designs. Global convergence of consumer wants Preferences reflect national differences. and needs. Emphasis distinction. on value-enhancing Products differentiated on the basis of design, features, functions, style, and image.
Consumers prefer a globally Consumers willing to pay more for a standardized good if it carries a lower customized product. price. Life Global product life cycles. All Products are in different stages of the consumers want the most advanced product life cycle in each nation. products. International performance criteria Adjustments to products initially designed considered during design stage. for domestic markets. Products are adapted to global wants Product adaptation is necessary in markets and needs. Restrained concern for characterized by national differences. product suitability. Segments reflect group similarities. Segments reflect differences. Group similar segments together. Customized products for each segments. Fewer standardized markets. Many customized markets. Expansion of segments into worldwide proportions. Acceptance of regional/national differences.
Product Cycle Design
Global product image, sensitive to National product national differences and global needs. national needs. Global standardization of distribution.
National distribution channels.
Benefits of Going Global
a. b. c. d. e. Additional revenues New insights into consumer behavior Alternative distribution strategies Advance notice of new products Positioned well to compete effectively with foreign competitors
International Planning Process
Information derived from each phase, market research, and evaluation of program performance
Phase 1 Preliminary analysis and screening: Matching company/country needs
Phase 2 Adapting the marketing mix to target markets
Phase 3 Developing the marketing plan
Phase 4 Implementation and control
Environmental uncontrollables, company character, and screening criteria
Matching mix requirements
Marketing plan development
Implementation, evaluation, and control
Strategic Orientation: EPRG Schema
Orientation EPRG Schema
Domestic Marketing Extension Multi-Domestic Marketing
Strategic Orientation: EPRG Schema
1. Ethnocentric or Domestic Marketing Extension Concept: Home country marketing practices will succeed elsewhere without adaptation; however, international marketing is viewed as secondary to domestic operations Generally, four distinctive approaches dominate strategic thinking in international marketing: 2. Polycentric or Multi-Domestic Marketing Concept: Opposite of ethnocentrism Management of these multinational firms place importance on international operations as a source for profits Management believes that each country is unique and allows each to develop own marketing strategies locally
Self Reference Criterion
SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions Ethnocentrism refers to the notion that one’s own culture or company knows best how to do things Both the SRC and ethnocentrism impede the ability to assess a foreign market in its true light Reactions to meanings, values, symbols, and behavior relevant to our own culture are different from those of foreign Relying on one’s SRC could produce an unsuccessful marketing program
Avoiding Self Reference Criterion :
1: Define the business problem or goal in home-country cultural traits, habits, or norms 2: Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value judgments 3: Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem 4: Redefine the problem without the SRC influence and solve for the optimum business goal situation
Stages of domestic to global evolution
Management emphasis Focus Marketing strategy Structure Management style Stage one Domestic Domestic Domestic Domestic Domestic Stage two International Ethnocentric Extension International Centralised top down Stage three Multinational Polycentric Adaption Worldwide area Stage four Global Geocentric Extension Adaption creation matrix/mixed
Decentralised bottom up Integrated
Manufacturing stance Mainly domestic Investment policy Performance evaluation Domestic Domestic market share
Mainly domestic Domestic used worldwide Against home country market share
Host country Mainly in each host country
Lowest cost worldwide Cross subsidization
Each host country market Worldwide share
Stages of International Marketing Involvement
In general, firms go through five different phases in In general, firms go through five different phases in going international: going international: No Direct Foreign Marketing No Direct Foreign Marketing Infrequent Foreign marketing Infrequent Foreign marketing Regular Foreign Marketing Regular Foreign Marketing International Marketing International Marketing Global Marketing Global Marketing
Case 1.1 Kenya Off Season Vegetables
Kenya's export of off season and speciality vegetables has been such that from 1957 to the early 1990s exports had grown to 26 000 tonnes per annum. Kenya took advantage of: a) increased health consciousness, increased affluence and foreign travel of West European consumers; b) improved technologies and distribution arrangements for fresh products in Western Europe; c) the emergence of large immigrant populations in several European countries: d) programmes of diversification by agricultural export countries and e) increased uplift facilities and cold store technologies between Europe and Kenya. Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the European "off season" trade by sending small consignments of green beans, sweet peppers, chillies and other commodities to a London based broker who sold them to up market hotels, restaurants and department stores. From these beginnings Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the colonialists, production remained small, under the misguided reasoning that Kenya was too far from major markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya itseff. 8
The 1970s saw an increased trade as private investment in irrigation expanded, and air freight space increased, the introduction of wide bodied aircraft, and trading relationships grew with European distributors. Kenya, emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra, chillies etc.) to the UK growing immigrant population. Kenya was favoured because of its ability to supply all year round - a competitive edge over other suppliers. Whilst the UK dominated, Kenya began supplying to other European markets. Kenya's comparative advantage was based on its low labour costs, the country's location and its diverse agroecological conditions. These facilitated the development of a diversified product range, all year round supply and better qualities due to labour intensity at harvest time. Kenya's airfreight costs were kept low due to government intervention, but lower costs of production were not its strength. This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European immigrant population. Kenya's rapidly growing tourist trade also accelerated its canning industry and was able to take surplus production. In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables (courgettes etc) to lower cost Mediterranean countries, it increased its share in French beans and other speciality vegetables significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major success. With the development and organisation or many small "outgrowers", channelled into the export market and thus widening the export base, the industry now provides an important source of income and employment. It also has a highly developed information system, coordinated though the Kenya Horticultural Crops Development Authority. Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers and vegetables, particularly the former.
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