Chapter 1

Global Environmental Drivers

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 International Marketing
Defined
International marketing: Consists
of the activity, institutions, and
processes across national borders
◦ Creates, communicates, delivers, and
exchanges offerings that have value for
stakeholders and society
International Marketing
Defined
Marketing serves as a:
◦ Key agent of societal change
◦ Key instrument for the development
of societally responsive business
strategy
What is International
Marketing?
The process of planning and
conducting transactions across
national borders to create
exchanges that satisfy the objectives
of individuals and organizations.
Simple Definition of
International Marketing

International Marketing is the

performance of business activities
that direct the flow of goods and
services or ideas to customers or
users in more than one country for
a profit.
How international marketing is
different form domestic marketing?
 Countries are different and international
markets are the set of macro-environmental
factors (different laws, cultures,
demographics, religion, beliefs and values).
 The range of problems confronted by a
manager in an international market is wider
and more complex.
 International marketing must find ways to
work within the limits imposed by
government intervention in the international
trade and investment system
 Also, international transactions involve
converting money into different currencies.
International Marketing
Questions
 How will my idea, good, or service fit into the
international market?
 How can marketing contribute to economic
development and improvement of society?
 Should I obtain my supplies domestically or from
abroad?
 What marketing adjustments are or will be
necessary?
 What threats from global competition should I
expect?
 How can I work with these threats to turn them
into opportunities?
 How can we get the price mechanism to work?
 What are my strategic global alternatives?
The Importance of World
Trade
 World trade has grown from $200 billion to
more than $7 trillion in the past three decades.
 Capitalism has replaced the old economic
doctrines.
 Free flow of goods, services and information
 Firms invest on a global scale.
 Cross-sourcing has made production much
more efficient.
 Sharing of new technologies have changed the
way we do business
 Increasingly more difficult to define “where”
products come from.
 New trading blocs are emerging.
Global Linkages
Global linkages bind countries,
institutions, and individuals more
closely than ever.
World trade is bringing about a
global reorientation of corporate
processes
◦ Opening up entirely new horizons
Opportunities and Challenges
in International Marketing

 New strategies need to be predicted

 New plans need to be made
 The way of doing businesses needs
to be changed
 Governments, firms, and individuals
need to respond aggressively with
innovation, process improvements,
and creativity
To become successful an
international marketer needs:

An awareness of global

developments
An understanding of their meaning
An adaptation to the environment
 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 nations for a profit.
 The difference is the “environment”
• Competition, legal restraints, government controls,
weather, fickle consumers, economic conditions,
technological constraints, infrastructure concerns,
culture, and political situations.

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The International Marketing Task

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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…

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 Environmental Adaptation Needed
Differences
Differences are
are in
in the
the uncontrollable
uncontrollable environment
environment of
of international
international
marketing
marketing

Firms
Firms must
must adapt
adapt to
to uncontrollable
uncontrollable environment
environment of
of international
international
marketing
marketing by
by adjusting
adjusting the
the marketing
marketing mix
mix (product,
(product, price,
price,
promotion,
promotion, and
and distribution)
distribution)

Continuum
Adaptation Standardization
(of Marketing Mix) (of Marketing Mix)
INFLUENCED BY 7 ENVIRONMENTAL FACTORS

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 STANDARDIZATION VERSUS
ADAPTATION
• Globalization (Standardization)
– Developing standardized products marketed
worldwide with a standardized marketing mix
– Essence of mass marketing
• Shampoo
• Soap
• Global localization (Adaptation)
– Mixing standardization and customization in a way
that minimizes costs while maximizing satisfaction
– Essence of segmentation
– Think globally, act locally
• L'Oreal – foundation, skin cream
April 11, 2020
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Standarization versus
Adaptation

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 Developing a Global Awareness
To
To be
be globally
globally aware
aware is
is to
to have:
have:

1. Tolerant of Cultural Differences, and

2. Knowledgeable of:
(a) Culture, (b) History, (c) World Market Potential,
(d) Global Economic, Social and Political Trends

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 Stages of International
Marketing
Involvement
In general, firms go through five different phases in going
In general, firms go through five different phases in going
international:
international:

No
No Direct
Direct Foreign
Foreign Marketing
Marketing

Infrequent
Infrequent Foreign
Foreign Marketing
Marketing

Regular
Regular Foreign
Foreign Marketing
Marketing

International
International Marketing
Marketing

Global
Global Marketing
Marketing

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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
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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

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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

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 Strategic Orientation: EPRG Schema
Orientation EPRG Schema

Domestic Marketing (Ethnocentric)

Extension

Multi-Domestic (Polycentric)
Marketing

Global Marketing (Regio/Geocentric)

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 Strategic Orientation: EPRG Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
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

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

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 Strategic Orientation: EPRG Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
3. Regiocentric:
Sees the world as one market and develops a standardized
marketing strategy for the entire world

4. Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world

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 MANAGEMENT ORIENTATIONS
 Ethnocentric Orientation
• Home country is superior to others
• Sees only similarities in other countries
• Assumes products and practices that succeed
at home will be successful everywhere
• Leads to a standardized or extension
approach.
• Foreign operations or markets are viewed as
inferior or subordinate to the home market.
• Headquarter knowledge is applied
everywhere.
• Ex: Nissan
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 MANAGEMENT ORIENTATIONS
 Polycentric Orientation
• Each country is unique
• Each subsidiary develops its own
unique business and marketing
strategies
• Often referred to as multinational
• Leads to a localized or adaptation
approach that assumes products must
be adapted to local market conditions.
• Citicorp
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 MANAGEMENT ORIENTATIONS
 Regiocentric Orientation
• A region is the relevant
geographic unit
• Ex: The NAFTA or
European Union market
• Some companies serve
markets throughout
the world but on a
regional basis
• Ex: General Motors had
four regions for decades.
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European Union 1-29
 MANAGEMENT ORIENTATIONS
 Geocentric Orientation
• Entire world is a potential market
• Strives for integrated global strategies
• Also known as a global or transnational
company
• Retains an association with the
headquarters country
• Pursues serving world markets from a
single country or sources globally to focus
on select country markets. (Stateless)
• Leads to a combination of extension and
adaptation elements.
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Self-Reference Criterion &
Ethnocentrism
 Self-Reference Criterion (SRC) is an
unconscious reference to one’s own cultural
values, experiences, and knowledge as a basis
for decisions.
 Ethnocentrism is the notion that people in
one’s own company, culture, or country know
best how to do things.
 Both the SRC and ethnocentrism impede the
ability to assess a foreign market in its true
light.
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