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International Marketing

Global Firm

● 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
Importance of global marketing
❧ Economies of scale
❧ Lower marketing costs
❧ Power and scope
❧ Consistency in brand image
Uniformity of marketing practices
Global Marketing in
the 21st Century
International Marketing Decisions
2. Looking at the global environment
3. Deciding whether to go international
4. Deciding which markets to enter
5. Deciding how to enter the markets
6. Deciding on the global marketing problem
7. Deciding on the global marketing organization
Global Marketing Environment
❧ The International Trade System
● Tariffs, quotas, embargos, exchange controls,
nontariff trade barriers
● World Trade Organization
● Regional free trade zones
• European Union
• North American Free Trade Agreement
• Other free trade areas
❧ Economic Environment
● Industrial structure
• Raw material exporting economies
• Industrializing economies
• Industrial economies
● Income distribution
❧ Political-Legal Environment
● Attitudes toward international buying
● Government bureaucracy
● Political stability
● Monetary regulations
barter, compensation,
❧ Cultural Environment
● Impact of Culture on Marketing Strategy
• Cultural traditions, preferences, behavior
● Impact of Marketing Strategy on Cultures
• Globalization vs. Americanization
Looking at the Global
Marketing Environment

Deciding Whether to
Go International

Deciding Which Markets

to Enter

Deciding How to Enter

the Market

Deciding on the Global

Marketing Program

Deciding on the Global

Marketing Organization
Deciding Whether to Go international
❧ Not all companies need to go international
● Local businesses
● Domestic can be easier and safer
❧ May be drawn international by global competitor’s
❧ If domestic market growth low, global may bring higher
❧ The company needs to evaluate its abilities and the
consumer and business environments in other countries.
❧ Factors drawing companies into the international arena:
● Global firms offering better products or lower prices
can attack the company’s domestic market.
● The company discovers that some foreign markets
present higher profit opportunities than the domestic
● The company needs a larger customer base to achieve
economies of scale.
● The company wants to reduce its dependence
on any one market.
● The company’s customers are going abroad
and need servicing.
❧ Before going abroad, the company must weigh
several risk:
● The company might not understand foreign customer
preferences and fail to offer a competitively attractive
● The company might not understand the foreign
country’s business culture or know how to deal
effectively with foreign nationals.
● The company might realize that it lacks managers
with international experience.
● The foreign country might change its commercial
laws, devalue its currency, or undergo a political
revolution and expropriate property.
Table 13.1: Blunders in International Marketing
Hallmark cards failed when they were introduced in France. The
French dislike syrupy sentiment and prefer writing their own cards.

Philips began to earn a profit in Japan only after it had reduced the
size of its coffeemakers to fit into smaller Japanese kitchens and
its shavers to fit smaller Japanese hands.

Coca-Cola had to withdraw its two-liter bottle in Spain after

discovering that few Spaniards owned refrigerators with large
enough compartments to accommodate it.

General Foods’ Tang initially failed in France because it was

positioned as a substitute for orange juice at breakfast. The French
drink little orange juice and almost none at breakfast.

Kellogg’s Pop-Tarts failed in Britain because the percentage of

British homes with toasters was significantly lower than in the
United States and the product was too sweet for British tastes.
Deciding Which Markets to Enter
❧ Define international marketing polices and objectives, and
sales volume goals
❧ Decide how many countries to target
❧ Decide on the types of countries to enter
❧ Screen and rank each of the possible international markets
using several criteria
● Market size, market growth, cost of doing business,

competitive advantage, risk level

❧ Companies prefer to sell neighboring countries because they
understand these countries better and control cost better.
Deciding How to Enter the Market
Direct Investment
Amount of Commitment, Risk, Control,
and Profit Potential

Joint Venturing

❧ Indirect export:
❧ The work through independent
intermediaries to export their products
● Occasional exporting: passive level of
involvement in which the company
export from times to times.
● Active exporting:when company

committed to expand its export to

particular market.
● Direct export:
● Companies decide to handle their own
export.the investment and risk are some
greater but potential return.
❧ Licensing-
❧ License a foreign company to use
trademark, manufacturing process, trade
secret, or other item for a fee or royalty
❧ Joint ventures: Join with local investors
❧ Direct investment: -Ultimate form is direct
ownership of foreign-based assembly or
manufacturing facilities.
❧ Can buy part or full interest in a local company.
Deciding on the Global
Marketing Program
❧ Standardized Marketing Mix
● Same basic product, advertising,
distribution, and other elements of the
marketing mix are used in all
international markets.
❧ Adapted Marketing Mix
● The marketing mix elements are
adjusted for each international target
Deciding on the Global Marketing
Five International Product and Promotion Strategies
Don’t Change Adapt
Product Product


Change Straight Product

Promotion Extension Adaptation

Adapt Communication
Promotion Dual
Adaptation Adaptation

Product Invention
Develop New Product
❧ Product Strategies for the Global Market
● Straight product expansion
• Marketing the product with no changes
● Product adaptation
• Altering the product to meet local conditions or
the wants of the foreign market
● Product invention
• Creating new products or services for foreign
● Communication adaptation
● Dual adaptation
❧ Global Promotion Strategies
● Standardized global communication
• Advertising themes are standardized from country to
country with slight modifications
● Communication adaptation
• Advertising messages are fully adapted to local markets
● Dual adaptation: company adopt both the product
and communication.
• Companies have three choices
– Set a uniform price everywhere:
same price all over the world
– Set a market-based price in
each country : what country
can afford,
– Set a cost-based price in
each country: standard markup
on cost.
Whole-Channel Concept for

Seller’s Headquarters

Channels Between Nations

Channels Within Nations

Final User or Buyer

❧ Place (distribution channels)
● Seller’s international marketing headquarters
● Channels between nations
● Channels within foreign nations
❧ Global Distribution Channels
● Whole-channel view
• Seller’s headquarters organization
• Channels between nations
• Channels within nations
• Numbers and types of intermediaries
• Size and character of retail units abroad