The Scope and

Challenge of
International
Marketing
Chapter 1
Globalization of Markets
• Global Perspective:
• Boeing Company example
• Peace Works company example
• Recent events that have impacted international
marketing
• High tech and dot.com company bust in early 2000’s
• September 11th terrorist attacks in U.S.
• Wars in Afghanistan and Iraq
Globalization of Markets
• 4 Prevailing trends that have the most impact on
international business in the future:
• 1. Growth of the World Trade Organization and region
free trade areas (NAFTA, European Union..)
• 2. Trend of developing countries (such as Asia, Latin
America, Eastern Europe) accepting the “free market
system”
• 3. Impact of the internet and other global media
companies (CNN)
• 4. Mandate for companies to properly manage
resources
Globalization of Markets
Why international marketing is so important:
Companies can no longer ignore the effects of
internationally marketing
• Competition no longer exists just from domestic companies
(exhibit 1.1 pg. 7)
• In order to sustain profitability and growth margins of the
past, companies have to look for alternative methods of
marketing their products and services
• “In a study conducted on U.S. manufacturing companies of all
sizes, it was found that multinational companies outperformed
their strictly domestic U.S. counterparts by more than twice as
fast in sales and earned much greater returns on equity and
assets..” (exhibit 1.2 pg. 9)
Globalization of Markets
• Definition of International Marketing:
• “The performance of business activities designed to plan, price,
promote and direct the company’s flow of goods and services to
consumers or users in more than one nation for a profit” (4 P’s)
• What is the difference between marketing
domestically and internationally
• Marketing concepts are universal (goal is to make a profit)
• Difference is that in international marketing ALL environments
have to be taken into consideration when the marketing plan is
developed and executed
• Must consider the legal environment, governmental controls, climate
& weather, cultural beliefs, buyer behavior… (uncontrollable
elements)
International Marketing Task
• The International Marketing Task (exhibit 1.3 pg.
10)
• Marketing Plan (controllable)
• Price, Promotion, Product, Place (distribution)
• Domestic Environment (uncontrollable)
• Political/legal, competition, economy
• Foreign Environment (uncontrollable)
• Structure of distribution, geography and infrastructure,
culture, political/legal, economy, competition, level of
technology…
International Marketing Task
• Other Factors within the Foreign Environment to consider:
• Level of technology
• Crossing Borders 1.3
• Political and legal issues
• Culture
International Marketing Task
• Importance of “uncontrollable elements”
• In order to succeed internationally a foreign company
must understand the impact of the uncontrollable
elements that make up that country’s culture
• “Cultural understanding is like an iceberg – we are not aware
of nine-tenths of it”
• In order to be successful in adapting to the international
markets, the market plan needs to incorporate strategies to
anticipate as much of the uncontrollable factors that influence
both the foreign and domestic markets and allow for
maximum flexibility to adjust for future changes
International Marketing Task
• Obstacles to success in international marketing:
• “SRC” – Self-reliance criterion & ethnocentrism:
• Using one’s culture, values, experiences as a basis for
decisions in international situations
• By reacting to situations in this manner, cultural differences are
ignored, and behavior might be offensive
• The less ego-centric a company is, the greater success it will have
in marketing it’s products and services
Developing Global Awareness
• To be globally aware, a company must have the following
• Objectivity
• Tolerance of cultural differences
• Knowledge of cultures, history, world market potential, and global
economic, social, and political trends
Stages of International Marketing
Involvement
• 1. No Direct Foreign Marketing
• Company does not actively pursue customers in
foreign markets, but receives them thru unintended
channels
• Products are bought abroad through domestic
wholesalers/distributors, website on the internet
• 2. Infrequent Foreign Marketing
• Company sells to foreign markets only when a
temporary surplus of product exists
• Once surplus is gone, foreign activity is gone
• Few companies fit this model because of the need to develop
long term relationships in foreign countries
Stages of International Marketing
Involvement
• 3. Regular Foreign Marketing
• Companies produce their products and services to
primarily sell domestically, but also internationally
• Through domestic/foreign middlemen, sales force in foreign
countries
• 4. International Marketing
• Companies are fully engaged in international
marketing strategies
• Companies are now international or multi-national
Stages of International Marketing
Involvement
• 5. Global Marketing
• Change from its marketing activities to all activities focused in a
global perspective
• In most cases companies sales revenues are more than ½ of its total
revenues
• Treat the world as one market
• Market segment is no longer focused on national borders, rather
such things as income levels, usage patterns, or other factors are
looked across borders
Strategic Approaches to Marketing
Internationally
• 1. Domestic Market Extension Orientation
• International markets are secondary to its domestic
markets
• 2. Multidomestic Market Orientation
• Each country has a specific and separate marketing
plan to adjust to differences
• 3. Global Marketing Orientation
• Marketing activities are global
• Strives for efficiencies of scale through standardization