International Marketing

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 companys 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 - 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
Ones 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 ones 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. McDonalds 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

2. Make no value judgments 3. Isolate the SRC influence

Examine it carefully to see how it complicates the problem Without SRC influence Solve for the optimum business goal situation
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4. Redefine the problem

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 companys 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

Firms 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)

McDonalds: 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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