Im CH-1

INTERNATIONAL MARKETING
1
CHAPTER ONE
The Scope and Challenge of International Marketing
By: Zinabu Girma (MA)

By: Zinabu Girma (MA)
07/03/2023 1
Chapter outline
 International marketing defined
 Types of marketing
 Scope of International marketing
 Domestic Vs International Markets
 The international marketing task
 Environmental adaptations
 Self-reference criterion: an obstacle
 International marketing involvement, Concept, and
orientation
 Opportunities and Challenges in International
Marketing
07/03/2023 By: Zinabu Girma (MA) 2
Introduction
• A firm selling abroad its merchandise often faced
with cultural, economic, and legal systems that are
quite different from those in its home country. Thus a
firm must understand and adapt to a new and
unfamiliar environment.
• A firm moves beyond domestic markets into

international trade for several reasons.

Cont’d…..
• The first is simply the existence of foreign markets.
There is a strong demand for a wide variety of
consumer products in the developed nations of the
world. And within the developing as well as the
developed nations of the world, there is a demand for
business products. Second, as domestic markets
become saturated,
Cont’d
• Third, some countries possess unique natural or

human resources that give them a comparative
advantage when it comes to producing particular
products. Another factor in international expansion is
the possession of a technological advantage.

1.1 What do we mean by international marketing?
• An organization whose products are marketed in two or

more countries is engaged in international marketing
• The fundamentals of marketing apply to international

marketing in the same way they apply to domestic
marketing.
• Marketing concepts, processes, and principles are

universally applicable all over the world
Cont’d
• International markets create attractive opportunities, but

the competition is intense. Success goes to the firms that
understand and adapt to the environmental factors that
influence international marketing.
• International marketing is defined as the 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
Cont’d
• The American Marketing Association (AMA)

defines the term international marketing as follows.
• “International Marketing is the multinational process
of planning and executing the conception, pricing,
promotion and distribution of ideas, goods, and
services to create an exchange that satisfy individual
and organizational objectives. “

1.2 TYPES OF MARKETING
• Domestic marketing is concerned with the marketing

practices with n a marketer’s home country.
• Foreign marketing encompasses the domestic operation

with in a foreign country.
• Comparative marketing - when its purpose is to contrast

two or more marketing systems rather than examine a
particular country’s marketing system for its own sake.

Cont’d
• International marketing must be distinguished

from international trade. International trade is
concerned with the flow of goods and capital
across national borders. The focus of the analysis
is on commercial and monetary conditions that
affect balance of payment and resource transfers.

1.3 Scope of International marketing
• International marketing involves the managements of

marketing not only to but also to some extent in
foreign countries. Thus, other related areas of
international marketing include:
(a). Exporting – Selling to foreign markets
(b). Importing – Buying from abroad
(c). Management of International operations
Cont’d
• Operating marketing and sales facilities abroad.
• Establishing production or assembly facilities in

foreign countries.
• Creating licensing and joint venture arrangements.
• Offering management contract (consultations) and

undertaking turnkey projects abroad.

1.4 Distinction Between Domestic Vs International
Markets
• Domestic marketing involves are set of uncontrollable

derived from the domestic market. International
marketing is much more complex because a marketer
faces two or more sets of uncontrollable variables
originating from various countries.
• A firm marketing mix is determined by the uncontrollable
factors with in each country’s environment as well as by
the interaction between the sets.
Similarities and Dissimilarities between Domestic and International Marketing
1. Similarities:
• The basic management task in broad outline is the
same for export marketing as it is for domestic
marketing. The broad categories of environmental
factors are the same i.e., social, economic, and
political.
Cont’d
• The broad approach to the solution of marketing

problems is identical, namely, the consideration of
alternative methods, in light of the firms environment
to achieve the goal of the firm.
• The basic concepts, activities, and processes of
marketing apply as fully to export marketing as they
do to domestic marketing.
Cont’d
Domestic market International Market
1.One language, one nation, one 1. Many languages, many nations,

culture many cultures
2.Market is much more
2. Markets are diverse and
fragmented
homogeneous
3. Multiple currencies
3.Single currency 4. Exchange controls and tariffs
4.No problems of exchange normal obstacles
controls, tariffs 5. Multiple and unstable business
5.Relatively stable business environments
6.Minimum government 6. Due to national economic plans
interference in business decision government influence usual in
business decisions
7.Data in marketing research
7. Marketing research very
available, easily collected, and
difficult, costly and cannot give
accurate etc. desired accuracy, etc.
1.5 Benefits of International Marketing
 To meet imports of Role of exports in
industrial needs national income
 Debt servicing Increase in the standard
 Rapid economic growth of living
Profitable use of natural International
resources collaboration
Facing competition • Closer cultural relations
successfully • Help in political peace
• Increase in employment
opportunities

Cont’d
 Survival: most countries must trade with others to

survive.
 Growth of overseas markets: developing countries, in
spite of economic & marketing problems are excellent
markets.
• Sales And Profits: foreign markets constitute a large
share of total business of many firms that have wisely
cultivated markets abroad.
Cont’d
 Diversification: Demand for most products is affected by

such cyclical factors as recession and seasonal factors as
climate.
 One way to diversify risk is to consider foreign
markets as a solution for variable demand
 Inflation And Price Moderation: the lack of imported
product alterative forces consumers to pay more, resulting
in inflation and excessive profits for local firms.
Cont’d
 Employment: unrestricted trade improves the world’s GNP and
enhances employment generally for all nations.
 Standard of living: trade affords countries and their citizen’s
higher standards of living than otherwise possible.
 Understanding of Marketing Process: can prove to be
valuable in providing insights for the understanding of
behavioral patterns often taken for granted at home. Coca cola
has applied the lessons learned in Japan to the US and European
markets.
1.6 Why Firms go International /
Reasons for International Marketing
• Increasing the share of • Supporting International
the market specialization
• Foreign Market
• Extending the Product Opportunities
Life Cycle • Small Domestic Market
• Helping Reduce • Unique Product/
Investment Pay-Back Technology Competence
Periods specialization
• Reducing Stock-holding
Costs
• Risk Diversification
Cont’d
Factors drive companies into expanding in
international markets:
 Excess production capacity beyond the home-
country’s demand.
 Low production costs including the cost of labor.
 Low cost of materials along with easy
availability.
 Proximity to international markets.
 Government regulations encouraging
international marketing, like incentives.
Cont’d
Forces that hinder the company’s progress
in the international markets:
 Unfavorable governmental attitudes and policies
towards foreign companies.
 Cross-national treaties, economic pacts and
bilateral agreements on trade.
 Strong acceptance in the host country of another
07/03/2023
country’s products.By: Zinabu Girma (MA) 23
1.7 The International Marketing Task
• The international marketer’s task is more complicated than

that of the domestic marketer because the international
marketer must deal with at least two levels of uncontrollable
uncertainty instead of one.
• Uncertainty is created by the uncontrollable elements of all

business environments like political and legal environment,
social and cultural environment, competitive environment,
economic environment.
Cont’d

1.7.1 Marketing Controllable
• The successful marketing manager constructs a

marketing program designed for optimal
adjustment to the uncertainty of the business
climate. Represents the area under control of the
marketing manager (product, price, promotion
and distribution channel).
• The controllable elements (marketing mix) can
be altered in the long run and, usually, in the short
run, to adjust to changing market conditions,
consumer tastes, or corporate objectives.
1.7.2 Domestic Uncontrollable
• Includes home-country elements that can have a direct

effect on the success of a foreign venture and are out of
the immediate control of the marketer: political and
legal forces, economic climate, and competition
• A political decision involving domestic foreign policy
can have a direct effect on a firm’s international
marketing success
Cont’d
• The domestic economic climate is another important

home-based uncontrollable variable with far-reaching
effects on a company's competitive position in
foreign markets. The capacity to invest in plants and
facilities, either in domestic or foreign markets, is to a
large extent a function of domestic economic vitality.

Cont’d
• Competition within the home country can also

have a profound effect upon the international
marketer’s task. Competition within their
base/home nation affects a firm’s domestic as
well as international plans.

1.7.3 Foreign Uncontrollable

• The more significant elements in the uncontrollable

international environment
• include: 1) political/ legal forces, 2) economic forces, 3)
competitive forces, 4) level of technology, 5) structure
of distribution, 6) geography and infrastructure, and 7)
cultural forces. They constitute the principal elements
of uncertainty an international marketer must cope
within designing a marketing program.
1.8 Environmental adaptations
• To adjust and adapt a marketing programme to
foreign markets, marketers must be able to
interpret effectively the influence and impact of
each of the uncontrollable environmental
elements on the marketing plan for each foreign
market in which they hope to do business.
• In a broad sense, the uncontrollable elements
include the culture; the difficulty facing the
marketer in adjusting to the culture (i.e.
uncontrollable elements of the marketplace) lies
in recognizing their impact.
Cont’d
• In a domestic market, the reaction to much of the
uncontrollable’ (cultural) impact on the marketer’s activities
is automatic ; considering our own conditions, values and
norms while evaluating others the various cultural influences
that fill our lives are simply a part of our history.
• When a marketer operates in other cultures, marketing
attempts may fail because of unconscious responses based on
frames of reference acceptable in one’s own culture but
unacceptable in different environments.
1.9 Self-reference criterion: an obstacle
• The key to successful international marketing is

adaptation to the environmental differences from one
market to another. Adaptation is a conscious effort on
the part of the international marketer to anticipate the
influences of both the foreign and domestic
uncontrollable environments on a marketing mix, and
then to adjust the marketing mix to minimize the
effects.
Cont’d
• The primary obstacle to success in international

marketing is a person’s self-reference criterion (SRC)
in making decisions; that is, an unconscious reference to
one’s own cultural values, experiences and knowledge
as a basis for decisions. The SRC hinders the ability to
assess a foreign market in its true light.
• Considering our own conditions, values and norms
while evaluating others
Cont’d
 To avoid errors in business decisions, the

knowledgeable marketer will conduct a cross
cultural analysis that isolates the SRC influences
and maintains vigilance regarding ethnocentrism. The
following steps are suggested as a framework for
such an analysis.
1. Define the business problem or goal in home-
country cultural traits, By:habits,
07/03/2023 Zinabu Girma or
(MA) norms. 35
Cont’d
2. Define the business problem or goal in foreign-country

cultural traits, habits, or norms through consultation with
natives of the target country. Make no value judgment
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.

1.10 Developing a Global Awareness
The successful businessperson in the 21st century will

have global awareness and a frame of reference that
goes beyond a region or even a country and
encompasses the world. To be globally aware is to have
(1) Tolerance of and a willingness to learn about
cultural differences - Tolerance for cultural differences is
crucial in international marketing. Tolerance is
understanding cultural differences and accepting and
working with others whose behaviors may be different
from yours.
Cont’d
(2) Knowledge of cultures, history, world market

potential, and global economic, social, and political
trends. A globally aware person is knowledgeable about
cultures and history. Global awareness also involves
knowledge of world market potentials and global
economic, social, and political trends. Finally, a globally
aware person will keep side by side of global economic,
social, and political trends, because a country’s prospects
can change as these trends shift direction or accelerate
1.11 Stages of International Marketing
Involvement
• Once a company has decided to be

international, it has to decide the degree of
marketing involvement and commitment it is
prepared to make. In general, one of five but
overlapping stages can describe the
international marketing involvement of a
company.
Cont’d
In general, firms go through five different phases in
going international:
No Direct Foreign Marketing
Infrequent Foreign Marketing
Regular Foreign Marketing
International Marketing
Global Marketing

1. No Direct Foreign Marketing
• The stage of development where the company's products reach
a foreign market through no conscious effort on the part of the
marketer
• A company in this stage does not actively cultivate customers
outside national boundaries; however, this company's products
may reach foreign markets. Sales may be made to trading
companies as well as foreign customers who directly contact
the firm.
2. Infrequent Foreign Marketing
• Temporary surpluses caused by variations in

production levels or demand may result in
infrequent marketing overseas.
• If a marketer is motivated to enter into an
international marketing effort because of
temporary surpluses in the domestic market
3. Regular Foreign Marketing
• At this level, the firm has permanent productive

capacity devoted to the production of goods to be
marketed on a continuing basis in foreign markets.
• A firm may employ foreign or domestic overseas
middlemen or it may have its own sales force or sales
subsidiaries in important foreign markets.
• The primary focus of operations and production is to
service domestic market needs.
4. International Marketing
• Companies at this stage are fully committed and involved

in international marketing activities. Such companies seek
markets all over the world and sell products that are a result
of planned production for markets in various countries.
• This generally entails not only the marketing but also the
production of goods outside the home market. At this point
the company becomes an international or multinational
marketing firm.
5. Global Marketing
• At the global marketing level, the most profound

change is the orientation of the company toward
markets and its planning. At this stage, companies treat
the world, including their home market, as one market.
• The entire operations, its organization structure,
sources of finance, production, marketing, and so forth,
take on a global perspective.

Cont’d
• In contrast to the multinational or international

company that views the world as a series of country
markets (including their home market) with unique sets
of market characteristics for which marketing strategies
must be developed, a global company develops a
strategy to reflect the existing commonalities of market
needs among many countries to maximize returns
through global standardization of its business activities.
1.12 The International Marketing Concepts
• The differences in the international orientation and

approach to international markets that guide the
international business activities of companies can be
described by one of three orientations to international
marketing management:
1. Domestic Market Extension Concept
2. Multidomestic Market Concept
3. Global Marketing Concept
Cont’d
• The differences in the complexity and sophistication of

a company’s marketing activity depend on which
orientation guides its operations.
• Among the approaches describing the different
orientations that evolve in a company in different
stages of international marketing  from casual
exporting to global marketing  is the often-quoted
EPRG schema.
Cont’d
• This schema suggest that firms can be classified as

having an ethnocentric, polycentric, regiocentric, or
geocentric orientation (EPRG), depending on the
international commitment of the firm. " a key assumption
underlying the EPRG framework is that the degree of
internationalization to which management is committed
or willing to move towards affects the specific
international strategies and decision rules of the firm."
Cont’d
• " The EPRG schema is incorporated into

three concepts that follows in that the
philosophical orientations described by the
EPRG schema help explain management's
view when guided by one of the concepts.

Cont’d
1. Domestic Marketing Extension Concept
• The domestic company seeking sales extension of its domestic
products into foreign markets illustrates this orientation to
international marketing. It views its international operations as
secondary to and an extension of its domestic operations; the
primary motive is to market excess domestic production.
Domestic business is its priority and foreign sales are seen as
profitable extension of domestic operations.
Cont’d
• The firm’s orientation is to market to foreign customers in

the same manner the company markets to domestic
customers. The firm seeks markets where demand is similar
to the home market and its domestic product will be
accepted. This domestic market extension concept strategy
can be very profitable; large and small exporting firms
approach international marketing from this perspective.
Firms with this marketing approach are classified as
ethnocentric in the EPRG
07/03/2023
schema.
By: Zinabu Girma (MA) 52
Cont’d
• Sales of domestic products in int. markets.

• Domestic orientation
• International Market secondary

• Firm seeks markets similar to domestic.
• Little adaptation of product or marketing mix.
• Usually produced domestically
Cont’d
2. Multidomestic Market concept
• Once a company recognizes the importance of differences in
overseas markets and the importance of offshore business to the
organization, its orientation toward international business may shift
to a multidomestic market strategy.
• A company guided by this concept has a strong sense that country
markets are vastly different and that market success requires an
almost independent program for each country.

Cont’d
• Firms with this orientation market on a country-by-country

basis, with separate marketing strategies for each country.
• Firms with this orientation would be classified in the EPRG

schema as polycentric.
• Separate operations in each country - production, marketing etc.
• Different strategies and marketing mixes
• Very little interaction
• Markets could be very different.

Cont’d
3. Global Marketing Concept
• A company guided by this orientation or philosophy is
generally referred to as global company, its marketing
activity is global marketing, and its market coverage is the
world.
• Important to the global marketing concept is the premise that
world markets are being " driven toward a converging
commonality" seeking in much the same ways to satisfy their
needs and desires.
Cont’d
• The world as a whole is viewed as the market and the
firm develops global marketing strategy. The global
marketing company would fit the regiocentric or
geocentric classifications of EPRG schema.
• The global marketing concept views an entire set of
country markets as a unit, identifying groups of
prospective buyers with similar needs as a global market
segment and developing a marketing plan that strives for
standardization wherever it is cost and culturally
effective.
Cont’d
• Views the world as one market.

• Develop product and marketing strategies for world
markets.
• Standardize as far as possible, adapt where necessary.
• Economies of scale, transfer of knowledge and
technology, global image, and better competitive
position.
1.13 International marketing orientation
(EPRG schema)
• Ethnocentric - Home country marketing practices
will succeed elsewhere without adaptation; however,
international marketing is viewed as secondary to
domestic operations
• Polycentric - 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

Cont’d
• Regiocentric – Management orientation developing
an integrated regional strategy
• A firm treats a region as uniform market segment and
adapts similar marketing strategy within the region
Example: European union , NAFTA
• Geocentric: views the world as potential market and
strives to develop integrated global strategies
• Sees the world as one market and develops a
standardized marketing strategy for the entire world
1.14 Opportunities and challenges in international marketing
• Rapid changes and discontinuities of newly emerging

forces and dangers, unforeseen influences from
abroad, firms need to prepare themselves and develop
active responses. To help a country remain a player in
the world economy, governments, firms, and
individuals need to respond aggressively with
innovation, process improvements, and creativity.

Cont’d
• The growth of global business activities offers increased

opportunities. International activities can be crucial to a
firm's survival and growth. By transferring knowledge
around the globe, an international firm can build and
strengthen its competitive position. Firms that heavily
depend on long production runs can expand their
activities far beyond their domestic markets and benefit
from reaching many more customers.
Cont’d
• Market saturation can be avoided by lengthening or

rejuvenating product life cycles in other countries.
International marketing enables consumers all over
the world to find greater varieties of products at lower
prices and to improve their life styles and comfort.


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INTERNATIONAL MARKETING

The Scope and Challenge of International Marketing

By: Zinabu Girma (MA)

• A firm moves beyond domestic markets into

07/03/2023 By: Zinabu Girma (MA) 3

• The first is simply the existence of foreign markets.

There is a strong demand for a wide variety of

consumer products in the developed nations of the

world. And within the developing as well as the

developed nations of the world, there is a demand for

business products. Second, as domestic markets

• Third, some countries possess unique natural or

07/03/2023 By: Zinabu Girma (MA) 5

• An organization whose products are marketed in two or

• The fundamentals of marketing apply to international

• Marketing concepts, processes, and principles are

• International markets create attractive opportunities, but

• International marketing is defined as the performance

• The American Marketing Association (AMA)

07/03/2023 By: Zinabu Girma (MA) 8

• Domestic marketing is concerned with the marketing

• Foreign marketing encompasses the domestic operation

• Comparative marketing - when its purpose is to contrast

07/03/2023 By: Zinabu Girma (MA) 9

• International marketing must be distinguished

07/03/2023 By: Zinabu Girma (MA) 10

• International marketing involves the managements of

• Operating marketing and sales facilities abroad.

• Establishing production or assembly facilities in

• Offering management contract (consultations) and

07/03/2023 By: Zinabu Girma (MA) 12

• Domestic marketing involves are set of uncontrollable

• The basic management task in broad outline is the

same for export marketing as it is for domestic

marketing. The broad categories of environmental

factors are the same i.e., social, economic, and

• The broad approach to the solution of marketing

1.One language, one nation, one 1. Many languages, many nations,

07/03/2023 By: Zinabu Girma (MA) 17

 Survival: most countries must trade with others to

 Diversification: Demand for most products is affected by

• The international marketer’s task is more complicated than

• Uncertainty is created by the uncontrollable elements of all

07/03/2023 By: Zinabu Girma (MA) 25

• The successful marketing manager constructs a

• Includes home-country elements that can have a direct

• The domestic economic climate is another important

07/03/2023 By: Zinabu Girma (MA) 28

• Competition within the home country can also

07/03/2023 By: Zinabu Girma (MA) 29

• The more significant elements in the uncontrollable

• The key to successful international marketing is

• The primary obstacle to success in international

 To avoid errors in business decisions, the

2. Define the business problem or goal in foreign-country

07/03/2023 By: Zinabu Girma (MA) 36

The successful businessperson in the 21st century will

(2) Knowledge of cultures, history, world market

• Once a company has decided to be

Infrequent Foreign Marketing

Regular Foreign Marketing

07/03/2023 By: Zinabu Girma (MA) 40