l1 chap001 - scope and challenges of international marketing hoa modified 5th aust

7/27/2019 L1 Chap001 - Scope and Challenges of International Marketing Hoa Modified 5th Aust

http://slidepdf.com/reader/full/l1-chap001-scope-and-challenges-of-international-marketing-hoa-modified-5th 1/70

I n t e r n a t i o n a l M a r k e t i n g

The Scope and

Challenge

of InternationalMarketing

Chapter 1

1 4 t h E d i t i o n

P h i l i p R. C a t e o r a

M a r y C. G i l l y

J o h n L . G r a h a m

McGraw-Hill/Irwin International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.



1-2

Chapter 1: What Should You Learn?

• The scope of the international marketing task

• The importance of the self-reference criterion(SRC) in international marketing

• The progression of becoming a global marketer

• The increasing importance of global awareness

• States of international marketing involvement

• Global Marketing

• Strategic orientation of international marketing

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Adapted by Hoa Pham



Discussion

• What is Marketing? What is International Marketing?

• What are the most important and fundamental thing inMarketing?

• Why doing business outside the firm’s country? • What are the major advantages and disadvantages of

international marketing?

• Multinational Company vs. Global Company?

• Self-Reference Criterion vs. Ethnocentrism?

• Global Awareness

1-3



1.What is Marketing?

– The American Marketing Association: “Marketing isan organizational function and a set of processes for creating, communicating, and delivering value tocustomers and for managing customer relationshipsin ways that benefit the organization and its

stakeholders”.

– Essentially:► Marketing deals with identifying and meeting human and social needs. It is

essentially about “meeting needs profitably.”

4



Marketing – basic model

5

Target

Customers

Company Competitors

Need

Physical

Emotional

Competition

QualityPrice

Capability

Product

Price

PlacePromotion

Value



What is Marketing Management?

Marketing management is theart and sc ience

of choosing target marketsand getting, keeping, and growing

customers through

creating, delivering, and communicatingsuperior customer value.

1- 6



Marketing Management Tasks

• Develop market strategies and plans

• Capture marketing insights

• Connect with customers

• Build strong brands

• Shape market offerings

• Deliver value

• Communicate value

• Create long-term growth

7



• Create value for customers by improvingbenefits or reducing price

– Improve the product

– Find new distribution channels – Create better communications – Cut monetary and non-monetary costs and prices – See the video “The $2 daily P&G China – Toyota, Nissan make significant gains in the American market in

1980s by creating superior value propostition – Higher quality and lower prices than those make by GM, Ford…

Value=Benefits/Price

So What International Marketingis all about?



Global Marketing

• Global vs. “Regular ” Marketing- Scope of activities are outside the home-countrymarket



GLOBAL INDUSTRIES

• An industry is global to the extent that a company’sindustry position in one country is interdependent with itsindustry position in another country

Indicators of globalization:

Ratio of cross-border investmentto total capital investmentProportion of industry revenuegenerated by al companies thatcompete in key world regionsRatio of cross-border trade to

worldwide production

Coca Cola spent $5billion worldwide onpromotions andmarketing in 2010



COMPETITIVE ADVANTAGE, GLOBALIZATION& GLOBAL INDUSTRIES

• Focus

– Concentration and attention on core business andcompetence

“ Nestle is focused: We are food and beverages. We are not

running bicycle shops. Even in food we are not in all f ields.

There are certain areas we do not touch…We have no soft

drinks because I have said we wil l either buy Coca-Cola or

we leave it alone. This is focus.”

~Helmut Maucher, former chairman of Nestlé SA~



GLOBAL MARKETING: What It Is & What ItIsn’t

Single Country Marketing Strategy

• Target Market Strategy

• Marketing Mix

– Product – Price

– Promotion – Place

Global Marketing Strategy

• Global Market Participation• Marketing Mix Development

– 4 P’s: Adapt or Standardize?

• Concentration of Marketing Activities

• Coordination of Marketing Activities

• Integration of CompetitiveMoves

S O



STANDARDIZATION vs. ADAPTATION

• Globalization (Standardization)

– Developing standardized products marketedworldwide with a standardized marketing mix

– Essence of mass marketing

• Global localization (Adaptation)

– Mixing standardization and customization in a way

that minimizes costs while maximizing satisfaction – Essence of segmentation – Think globally, act locally




► Adaptation of themarketing mix to theseenvironmental factors,determines the

successful outcome of MNCs’ marketing

• But how?

– Must interpret effectively

the influence and impactof each of theuncontrollable element



1-15

2.International Marketing

• 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 onenation for a profit



1-16

The International Marketing Task

Exhibit 1.3



Controllable factors

o Corporate resources, structures, and corecompetencies that can limit or promote

strategic choiceso 4Ps, channels-of-distribution, research

activities to capitalize on anticipated demand

1-17




1-18

Aspect of foreign environment (uncontrollable)

o Economic forceso Political and legal forces

o Cultural forceso Competitive forceso Level of technologyo Structure of distributiono

Geography and infrastructure So how these uncontrollable factors

impact on MNCs’ marketing strategy?




19




20




21




The Faces of Coca-Cola Around the World

Arabic

Read right to left

Chinese

“delicious/happiness”




McDonald’s Global Marketing



Case 1-1 Starbucks – Going Global Fast

1. Identify the controllable and uncontrollableelements that Starbucks has encountered inentering global markets

2. What are the major sources of risk facing thecompany and discuss potential solutions

3. Critique Starbucks’ overall corporate strategy

4. How might Starbucks improve profitability inJapan?

1-24



1-25

3.SRC and Ethnocentrism

• SRC is an unconscious reference to

– One’s own cultural values, experiences, andknowledge as a basis for decisions

• Dangers of the SRC – Failing to recognize the need to take action – Discounting the cultural differences that exist among

countries

– Reacting to a situation in an offensive to your hosts• Ethnocentrism

– Notion that one’s own culture or company knows best



1-26

• Ethnocentrism and the SRC can influence anevaluation of the appropriateness of adomestically designed marketing mix for aforeign market

• The most effective way to control the influenceof ethnocentrism and the SRC is to recognize their effects on our behavior

SRC and Ethnocentrism



1-27

Environmental Adaptation

• Ability to effectivelyinterpret the influence andimpact of the culture inwhich you hope to dobusiness

– Cultural adjustments

• Avoid measuring andassessing markets againstthe fixed values andassumptions of your ownculture



1-28

The Self-Reference Criterionand Ethnocentrism

• The key to successful international marketing isadaptation to the environmental differences from one market to another

• Primary obstacles to success in internationalmarketing

– SRC – Associated ethnocentrism

– E.g., Pepsi Cola changed in name to Lehar Pepsi togain as much political and cultural support as possible



The Faces of Coca-Cola Around the World

Arabic

Read right to left

Chinese

“delicious/happiness”




McDonald’s Global Marketing



31

Standardized vs. Localized• Standardized its process, logo, most

of its advertising and store décor and

layouts whenever and wherever as

possible

• Standardized Big Mac but localizedMcAloo Tikka potato burger (India),

and vetergian menu

• Advertising slogan “ I’m lovin’it ”, but

“Hawai i sur f ing hula ” promotion in

Japan• Prices: $5.79 in Norway or $3.54 in

the U.S but $1.85 in China

Global Market Orientation



1-32

Frameworkfor Cross-cultural Analysis

1. Define business problem or goal• Home-country vs. foreign-country cultural traits,

habits, or norms• Consultation with natives of the target country

2. Make no value judgments

3. Isolate the SRC influence

• Examine it carefully to see how it complicates the

problem4. Redefine the problem

• Without SRC influence• Solve for the optimum business goal situation



1-33

Developing a Global Awareness

• Tolerance of cultural differences:

– Understanding cultural differences and acceptingand working with others whose behavior may bedifferent from yours

• Knowledge of cultures, history, world marketpotential, and global economic, social, andpolitical trends



1-34

Approaches to Global Awareness

• Select individual managers specifically for their demonstrated global awareness

• Develop personal relationships in other

countries• Have a culturally diverse senior executive staff

or board of directors



1-35

4. Stages of InternationalMarketing Involvement

• No direct foreign marketing

• Infrequent foreign marketing

• Regular foreign marketing

• International marketing

• Global marketing



1-36

No Direct Foreign Marketing

• Products reach foreign markets indirectly

– Trading companies – Foreign customers who contact firm – Wholesalers

– Distributors – Web sites

• Foreign orders pique a company’s interest toseek additional international sales



1-37

Infrequent Foreign Marketing

• Caused by temporary surpluses

– Variations in production levels – Increases in demand

• Firm has little or no intention of maintainingcontinuous market representation

– Foreign sales decline when demand or surplusdecreases

– May withdraw from international markets

• Little or no change in company organization or product lines



1-38

Regular Foreign Marketing

• Firm has production capacity devoted to foreignmarkets

• Firm employs domestic or foreign intermediaries

– Uses its own sales force – Sales subsidiaries in important markets

• Products allocated or adapted to foreign marketsas demand grows

• Firm depends on profits from foreign markets



International Marketing

• Companies are fully committed to and involvedin international marketing activities

• Seeking markets all over the world

• Planning entails not only the marketing but alsothe production of goods outside the homemarket.

1-39



1-40

Global Marketing

• Company treats world, including home marketas one market

• Market segmentation decisions no longer

focused on national borders – Defined by income levels, usage patterns, or other

factors

• More than half of revenues come from abroad

• Organization takes on global perspective

4 St t i M t



1-41

4.Strategic ManagementOrientation

• Domestic market extension orientation

• Multidomestic market orientation

• Global market orientation



1-42

Domestic Market Orientation

• International operations viewed as secondary

• Prime motive is to market excess domesticproduction

• Firm’s orientation remains basically domestic

• Minimal efforts are made to adapt product or marketing mix to foreign markets

• Firms with this approach are classified asethnocentric

D ti M k t O i t ti



1-43

• Ethnocentric Orientation

– Home country is superior to others

– Sees only similarities in other countries

– Assumes products and practices that succeed athome will be successful everywhere

– Leads to a standardized or extension approach

Domestic Market Orientation



44

Examples of Domestic Orientation

• Nissan’s earliest exports were cars and trucks thatdesigned for Japan – vehicles were difficult to start inmany parts of the U.S during the winter months. “We

tried for a long time to design cars in Japan and shove

them down the American consumer’s throat. That did not work very well…”

• Cell phone divisions of Toshiba, Sharp focused

domestic market. Later realized that Nokia, Motorolaand Samsung already dominated key world markets – CEO of Toshiba “We were thinking only about Japan,

we really missed out chance…”



1-45

Multidomestic Market Orientation

• Companies have a strong sense that foreigncountry markets are vastly different

• Market success requires an almost independent

program for each country – Separate marketing strategies – Subsidiaries operate independently of one another in

establishing marketing objectives and plans – Products are adapted for each market

• Control is decentralized



1-46


• Country-by-country basic

• Advertising campaign are localized

o Unilever, Rexona brand had 30 different

package designs and 48 different formulationo Nestle, Nescafe, Nestle Gau in Vietnam

o Classified as Polycentric Orientation

M ltid ti M k t O i t ti



1-47

• Polycentric Orientation (Đa tâm)

– Each country is unique

– Each subsidiary develops its own unique business andmarketing strategies

– Often referred to as multinational

– Leads to a localized or adaptation approach thatassumes products must be adapted to local marketconditions




1-48


• Company guided by global marketing orientation – Marketing activity is global – Market coverage is the world

• Firm develops a standardized marketing mix

applicable across national boundaries – Markets are still segmented – Each country or region is considered side by side with

a variety of other segmentation variables

– Fits the regiocentric or geocentric classifications – E.g., P&G pursue global strategy for disposal diapers but a multi

domestic strategy in Asia market for detergent – http://money.cnn.com/video/news/2012/01/25/n_davos_coca_cola_growth.cnnmoney/

– http://money.cnn.com/video/news/2011/01/06/n_proctor_and_gamble_two_dollar_a_day_consumer.fortune/

http://money.cnn.com/video/news/2012/01/25/n_davos_coca_cola_growth.cnnmoney/

http://money.cnn.com/video/news/2012/01/25/n_davos_coca_cola_growth.cnnmoney/



• Regiocentric Orientation (Trung tâm)

– A region is the relevant geographic unit

► Ex: The NAFTA or European Union market

– Some companies serve markets throughout the worldbut on a regional basis

► Ex: General Motors had four regions for decades

European Union




• 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 countryor sources globally to focus on select country markets

– Leads to a combination of extension and adaptation elements


E l Th C f G l



Example - The Case of General

Motors (GM)

• GM’s Global Brand Hierarchy

• Global brand

• International brand

• Local brand



Global

International

Local

Europe, Middle East, Asia North America,Middle East, Europe North America, Asia

North America North America

United Kingdom Australia Korea



GlobalGlobal

Standardisation

Centralisation

TransnationalTransnational

Export International

Multidomestic Multinational

Adaptation

Autonomy

High

Low

Low High

Pressures of local responsiveness

P r e

s s u r e s o f g l o b a l i n t e g r a t i o n

Type o f MNC Export, Multidomestic, Global, Transnational Indust ry Env i ronment International, Multinational, Global, Transnational Marketing Strategy Standardisation, Adaptation Market ing Structure Centralisation, Autonomy

At Global Corporate Level Perspective



54

At Global Corporate Level Perspective

GI-LR Framework



1-55

Discussion questions

• Discuss the phases of international marketinginvolvement.

• Discuss the conditions that have led to thedevelopment of global markets.

• Differentiate between a global company and amultinational company.

• Differentiate among the three international

marketing concepts.• Discuss the three factors necessary to achieve

global awareness.



1-56

Summary

• The internationalization of American business isproceeding with increasing pace

• The globalization of markets and competitionnecessitates all managers to pay attention to theglobal environment

• International marketing is defined as theperformance of business activities across

national borders



1-57

• Environmental differences must be taken intoaccount if firms are to market products andservices at a profit in other countries

– Laws

– Customs – Cultures

• Self-reference criteria and ethnocentrism limitinternational marketer’s abilities to understand

and adapt to differences prevalent in foreignmarkets

Summary



1-58

Summary

• Solutions to SLC and ethnocentrism – Global awareness – Sensitivity

• Strategic orientations found among managers of international marketing operations

– Domestic market extension orientation – Multidomestic market orientation – Global market orientation



The Value Chain (Porter)

St d di ti Ad t ti d b t



Standardization vs. Adaptation debate

Standardization Customization Contingency

Trends Homogenous market need:information, communication,transportation, technologydevelopmentEconomies to scale, scope, learning

curve

Different needs indifferent countries due toculture, language,economic developmentlevel, political, legal,

customer value and lifestyles.Better satisfy local need.Source of differentiation

S and C are two extremeof one continuum.S and C is very situation-specific issue.Company has to position

itself in the continuum.

Marketing

aspects

Global group of customer: globalcitizen, global language (English),

global market (Triad)Standardization of marketingprogram is essential to compete inglobal market (high quality productat a competitive price)

Marketing program islargely a local issue and

the best course of actionfor a product ought todiffer from market tomarket

depends on internal andexternal factors: target

market, market position,nature of product,environment, andorganization factors.

Globalization Drivers



Industry

Globalization

M a r k e t

D r i v e r s

Cost Drivers Government Drivers

C o m p e t i t i v e

D r i v e r s

Globalization Drivers(Total Global Strategy II, Goege Yip)



Market Drivers

• Homogeneous needs

• Global customers

• Global Language

• Global Culture

• Global Currency

• Global Channels• Transferable marketing

Costs Drivers



Costs Drivers

• Economies of scale and scope

• Learning and experience

• Sourcing efficiencies

• Favorable logistics

• Differences in country costs and skills

• Product development costs

Government Drivers



Government Drivers

• Favorable trade policy

• Compatible technical standards

• Common marketing regulations

Competitive Drivers



Competitive Drivers

• Interdependence of countries

• Competitors globalized or might globalize

The concept of Inter Linked Economy



The concept of Inter Linked Economy(ILE) - Kenichi Ohmae

• Global business has become more and moreimportant and vital for nations, industries, andfirms. Nation can no longer close it door andapplies protectionism. Nations and citizens

around the world are more interlinked than ever before, giving greater opportunity to a borderlessworld.

• Trends leading to borderless world: global

citizen, global language (English), globalproducts, and global competitors.

The concept of Inter Linked Economy



• ILE – Interlinked economy of the Triad, which consists threemajor players in global marketplace, i.e. US, Europe, andJapan (now expand to be Latin American, Europe, andAsia). Interdependencies of economy create opportunitiesand basic security.

• The policy objective for ILE will be ensuring the free flow of information, money, and services, as well as the freemigration of people and corporations.

• ILE has become so powerful and has made the national

borders almost invisible (borderless world). Participation inthe ILE is the key to prosperity for traditional isolationistnations.

The concept of Inter Linked Economy(ILE) - Kenichi Ohmae

Discussion Questions



• What are the basic goals of marketing? Are these goalsrelevant to global marketing?

• What is meant by “global localization?” Is Coca-Cola a global

product? Explain

Discussion Questions

Case Discussion



• Q1. Identify the key elements in McDonald’s globalmarketing strategy. In particular, how does McDonald’sapproach the issue of standardization?

• Q2. Do you think government officials in developingcountries such as Russia, China and India welcome

McDonald’s. Do consumers in these countries welcomeMcDonald’s? Why or why not?

• Q3. Is it realistic to expect that McDonald’s – or any well-known company – can expand globally without occasionally

making mistakes or generating controversy? Why do anti-globalization protesters around the world frequent targetMcDonald’s?

Case Discussion

McDonald’s Expand Globally While Adjusting Its Local Recipe

Looking Ahead



• Read Chapter 4 and 5 Cultural DynamicManagement Style

• Be prepared for case study Samsung classdiscussion in replacement for Quiz 1

Looking Ahead

l1 chap001 - scope and challenges of international marketing hoa modified 5th aust

Documents