Pe s e w a Pr e s e n t a t i o n s
Importance & Characteristics of
International Marketing
Increasing importance of international markets due to:
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(a) lowering of barriers to trade and investment
(b) improvements in transportation and logistics
(c) new goods and services with international appeal
(d) advances in communications and emergence of e-commerce
(e) increasing linkages among businesses
(f) internationalization of capital markets
(g) excess capacity in many industries
(h) rapid growth of world trade.
• Innovations and changes create opportunities for some,
challenges and threats to others.
• Combination of firm factors, home country market factors, host
company factors, and global factors explain movement toward
internationalization.
What Is International Marketing?
• International marketing the process of planning and conducting transactions
across national borders to create exchanges that
satisfy the objectives of individuals and organisations
“satisfaction” and “exchange”
• Forms - export-import trade, licensing, joint ventures, wholly
owned subsidiaries, turnkey operations, management
contracts
Key Questions to be Answered
• How will my idea, good, or service fit into the
international market?
• 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?
• What are my strategic global alternatives?
Differences between domestic and international
marketing - marketing variables
• Interactions with, or ways of manipulating,
marketing variables are different
• Firm’ domestic approach can be counterproductive,
inefficient or illegal in foreign markets
• Two more Ps – political power and public opinion
formation -> mega-marketing (Kotler), which has
two implications:
– (1) enlarging the multiparty marketing concept;
– (2) blurring the distinction between environmental and
controllable variables
International, multinational, and global marketing
Terms sometimes used interchangeably, but imply differences in
approach.
• International marketing is a broad term for any type of
marketing across national boundaries.
• Multinational marketing implies a strong commitment to
international marketing, and may be taken to mean that the
marketer develops differentiated products and marketing
strategies for each of its markets. Associated with adjusting
products and practices in each country, with attendant
relatively higher costs.
• Global marketing generally implies that the company tries to
standardize products and marketing practices worldwide in
order to achieve economies of scale and lower prices.
Types of International Operations
• Ethnocentric (or monocentric) - the identity of the
foreign subsidiary is strongly identified with the
parent company.
• Polycentric - few international subsidiaries that are
well integrated and operate on a decentralised basis
• Geocentric - cosmopolitan outlook, high integration
and close co-ordination
Three states of international involvement
• 1. Experimental international involvement – need
stimuli
• 2. Active international involvement – systematic
exploration of foreign market opportunities
• 3. Committed international involvement – constantly
making choices in resource allocation for foreign
markets
International product life cycle
Export
Foreign country B
Foreign country A
Time
International marketing management
• Three basic decisions:
– (1) whether to engage in international marketing activities;
– (2) markets to be served;
– (3) methods or systems to be used.
• Major dimensions of international marketing: exporting, importing, and
management of international marketing operations to and in foreign
countries.
• The marketing program or mix is the planned and coordinated combination
of marketing methods or tools used to achieve a predetermined goal.
• Market-driven versus product- or technology-driven firms; tendency to move
towards market-driven.
• Profitability of any marketing program is situation-specific and influenced by
many variables.
Questions for Discussion
• Compare and contrast domestic and international
marketing.
• Describe some opportunities and challenges in
international marketing created by new advances in
information technology.
• Find the ten largest multinational corporations and
briefly explain their key products. You may wish to
use the websites of publications such as Forbes,
Fortune, Wirtschaftswoche, etc.
Questions for Discussion
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Will the future expansion of world trade be similar to the past?
Does increased world trade mean increased risk?
Is it beneficial for nations to become dependent on one another?
Using WTO data (www.wto.org), identify the following:
– a) the top ten exporting and importing countries in the world
merchandise trade and
– b) the top ten exporting and importing countries of commercial
services
Questions for Discussion
• Why is international trade important to a nation?
• Discuss the role of “voluntary import restraints” in
international marketing.
• What is meant by multilateral negotiations?
• How have consumer demands changed international
trade?
• Discuss the impact of import restrictions on
consumers
International trade
Dr Svetla Marinova
MSc International Business,
International Marketing 2006, Lecture 1, Part B
World Trade Importance
• World trade has grown tremendously in the past
three decades.
• The Iron Curtain is gone and capitalism has replaced
the old economic doctrines.
• Firms invest on a global scale.
• New technologies have changed the way we do
business.
• New trading blocs are emerging.
Growth in World Trade
• World trade in merchandise has grown from
$6.2 trillion in 2000 to over $9 trillion in 2005.
• World trade in services has expanded from
$1.5 trillion in 2000 to $2.1 trillion in 2005.
Trade and Domestic Growth Rates
Export Growth Rates
The Effects of Trade
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Regional Economic Blocs
NAFTA
EU
Mercosur
The Gulf Co-operation Council
ACEAN
Export Promotion Efforts Reasons
• National need to earn foreign currency.
• Encouragement of domestic employment.
• Increase in domestic economic activity
Environmental Scanning
Country Market Analysis
Cultural, Economic, Political, Financial
and Legal Environment
Dr Svetla Marinova,
MSc International Business, 2006
International Marketing, Lecture 1, Part C
The Social Environment
• The product or service should be acceptable to the
society for which it is intended
• Levels at which the marketing mix operates as a
possible agent for change:
– a/ Conventions
– b/ Morals
– c/ Laws
The Cultural Environment
• Various definitions of culture but generally culture may be
viewed as the sum of a group’s learned behavior patterns,
attitudes, and material things. Usually changes slowly over time,
though governmental or other organizations may attempt to
force more rapid change. There are cultural universals that all
cultures have: language, sports, status differentiation, etc.
• The self-referencing criteria when assessing a foreign culture
• Maslow’s hierarchy of needs:
– physiological needs, safety needs, love and belonging, esteem and social
acceptance, self actualisation
• Most global American brands are ethnocentric but with global acceptance why? Can we explain that with Maslow’s hierarchy of needs?
Success and Culture
An understanding of cultural differences
allows marketers to determine when
adaptation may be necessary and when
commonalities allow for regional or
global approaches
Defining Culture
• An integrated system of learned behavior
patterns that are distinguishing characteristics
of the members of any given society.
• The definition encompasses a wide variety of
elements, from materialistic to the spiritual
Elements of Culture
• Elements of Culture
Language
• verbal
• non-verbal
Religion
Values and Attitudes
Manners and Customs
Material Elements
Aesthetics
Education
Social Institutions
Language
• Verbal
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How words are spoken.
Gestures made.
Body position assumed.
Degree of eye contact.
• Local language capability’s
important role in international marketing
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Aids in information gathering and evaluation.
Provides access to local society.
Important to company communications.
Allows for interpretation of contexts.
Nonverbal Language
• Hidden language of cultures
– Time flexibility and sensibility.
– Social acquaintance and rapport.
– Personal physical space and personal touching.
– Non-verbal gestures and signaling.
Manners and Customs
• Potential problem areas for marketers arise from
an insufficient understanding of:
– different ways of thinking.
– the necessity of saving face.
– knowledge and understanding
of the host country.
– the decision-making process
and personal relations.
– the allocation of time
for negotiations.
The Cultural Environment
• Edward Hall
• High context cultures - the silent culture of
communication
• Low context cultures
• Monochronic use of time - do one thing at a time
and adhere to pre-set schedules, M-type people are
called ‘agenda’ cultures
• Polychronic use of time - do many things at a time
and easily modify pre-set schedules, more
committed to persons than to schedules
Context Cultures
• High-context culture
– is where the social context in which what is said strongly
affects the meaning of the message.
– Examples: Japan and Saudi Arabia
• Low-context culture
– is where the meaning of the message is explicitly
expressed by the words and is less affected by the social
context.
– Example: North America
The Cultural Environment
• Hofstede
– Individualism vs. Collectivism
– Power distance
– Uncertainty avoidance
– Masculinity vs. Femininity
• What are the implications for marketers?
Implications of Culture on Marketing:
Cultural affinity zones in Europe
Sweden, Norway, Denmark, Finland
Anglo-Saxon
Europe
UK
Ireland
Holland
Germany
Germany
Luxemburg
Belgium
France/Italy
Spain
Portugal
Greece
Italy
Germany
Austria
France
Switzerland
Implications of Culture on Marketing:
Cultural affinity zones
• Cultural affinity classes exist in terms of age brackets and
across socio-demographic categories
(example: the teenagers in France, Japan, USA)
• Cultural affinity zones correspond to national cultural groups
or cultural groups with similar dimensions
(example: the teenagers in Scandinavia)
• Understanding the general patterns and themes of culture is
not enough for the international marketer. He/she must learn
the specifics of the culture which affect the marketing of the
firm’s products or services.
Making Culture Work
Embrace local culture.
Build relationships.
Employ locals to gain cultural knowledge.
Help employees understand you.
Adapt products and processes to local
markets.
Coordinate by region.
The Economic Environment
• Population/household/urbanization
• GDP per capita
• Income/Purchasing Power Parities (PPP) - how many units
of currency are needed in one country to buy the amount of goods
and services that one unit of currency will buy in another country
• What about self-produced or bartered consumption?
• Variations in market potential in individual markets
The Economic Environment
• Non-tariff barriers /”invisible tariffs”/
– quotas and trade control
– “buying national”
– restrictive customs procedures, reducing the number of
ports of entry for any foreign good
– selective monetary controls - example: advance deposit equal
to the value of the imported good
– restrictive administrative and technical regulations
The Economic Environment
• Dumping
– Sporadic - where surplus is unloaded abroad at
advantageous prices not to be sold in the domestic
market at lower prices as that can create a precedent
for future behaviour
– Predatory - when foreign producers use low prices to
weaken indigenous competition abroad
– Persistent - the continued sales of products at prices
lower than those of its country of origin
The Economic Environment
Infrastructure
• Transportation
• Communications
• Energy
• Organisations providing infrastructure support
services
• Diffusion of Internet technology
• Multinational corporations operating in a market
The Financial Environment
• Commercial risk - refers to the insolvency of, or
protracted payment default by an overseas buyer,
called commercial as it refers to transactions and
commercial banks
• Political risk - beyond the control of either the buyer
or seller
• Foreign exchange risk - related to exchange rate
fluctuations
The Financial Environment
• Credit policy
– favourable credit terms to the buyer
– financing packages (often developed with the help of the
government)
• The extent of credit offered is determined by:
– Firm specific factors
– such as size, experience in international trade
– Market characteristics
– such as degree of economic development, availability of means of
payment
– Factors relating to a particular transaction,
– such as the amount of payment and the need for protection, terms
offered by competitors, the relative strength and attractiveness of the
trading partner
The Political Environment
• Home country:
– Intellectual property rights
– Legislation on payments by companies for environmental
protection
– The government help against grey market activities
– The government may work towards lowering trade barriers
– Governmental restrictions on international marketing
The Political Environment
• Host country
– Political risk
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Ownership risk - expropriation, confiscation, domestication
Operating risk
Transfer risk
Often business become targets for expressing politicalviews
Exchange controls - on the movement of capital or goods
Tax rates
Price controls (in high sensitive sectors such as food or health care)
The Legal Environment
• Theocratic law - a mix of societal, legal and
spiritual guidelines (Islamic law, Hebrew law
• Common law - based on tradition, precedent
and custom and less dependent on written codes
• Code law - based on comprehensive set of
written clauses. All possible legal rules are spelled
out explicitly. Based on Roman law, rigid in nature
The Legal Environment
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Antidumping laws
Laws requiring import and export licensing
Health and safety standards
Rules on genetically modified foods
Rules on advertising
Lobbying providing access to policymakers and
legislators
The Legal Environment
• International law
– European Patent Convention
– International Convention for the protection of
Industrial Property
– Madrid Arrangement for International Registration of
trademarks
– Inter-American Convention for Trademark Protection
– Bilateral treaties of friendship, commerce and
navigation
– International Jurisdiction disputes/arbitration vs.
litigation