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Chapter 1: The Scope and Challenge of International Marketing

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Learning Objectives:1. The benefits of

International markets2. The changing face of US

business3. The scope of international

marketing task4. The importance of SRC5. The increasing importance

of global awareness6. The progression of

becoming a global marketer

Definitions: International marketing, SRC, ethnocentrism, global marketing, skeptics

Questions: 1. “The marketer’s task is same

whether applied in Dimebox, Texas or Dar-es-Salam, Tanzania.” Discuss.

2. Discuss the phases of international marketing involvement

3. Discuss the conditions that have led to the development of global markets

4. Differentiate between global and multinational company

5. Differentiate among the three international marketing concepts

6. Discuss the factors necessary to achieve global awareness

7. Discuss the idea of global orientation

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Global Perspective: Recent Events

2003 SARS outbreak in Asia and Toronto 2003 SARS outbreak in Asia and Toronto

Wars in Afghanistan and IraqWars in Afghanistan and Iraq

Adulterated product scandals in China Adulterated product scandals in China

September 11th attacks on the World Trade Center and PentagonSeptember 11th attacks on the World Trade Center and Pentagon

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Global Perspective: Recent Events

International disagreements between the United States and its alliesInternational disagreements between the United States and its allies

2008 Global credit crisis and recession 2008 Global credit crisis and recession

Global terrorism in Indonesia, Pakistan,India, Spain, Morocco and UKGlobal terrorism in Indonesia, Pakistan,India, Spain, Morocco and UK

Despite these events, international commerce continuedDespite these events, international commerce continued

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Global Business Trends1. Growth of

WTO and regional trade

groups

2.. Global acceptance of

free market system

3. Impact of the Internet on global communications

4. Threats of terrorism and armed conflict

5. Rise of new producers and

consumers

6. Management of global

environmental resources

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Internationalization of Business

Increasing globalization ofmarketsIncreasing globalization ofmarkets

Firms face competition onall frontsFirms face competition onall fronts

Many Canadian companies are foreign controlled:Tim Hortons (US), Labatt (Belgian)

Many Canadian companies are foreign controlled:Tim Hortons (US), Labatt (Belgian)

Firms seeking foreignmarkets to increase profitsFirms seeking foreignmarkets to increase profits

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Company Industry Ownership

Hudson's Bay Company Retail USA

Tim Hortons Food service USA

Labatts Beer Belgium

MacMillan Bloedel Forestry USA

Seagram Distillery France

Corel Software USA

CP Ships Shipping Germany

Fairmont Hotels Hospitality USA/Saudi Arabia

Dofasco Steel Luxembourg

Noranda Mining Switzerland

ATI Technologies Computer chips USA

Stelco Steel USA

Alcan Aluminum Great Britain

Foreign Ownership of Canadian Companies

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The Globalization Debate

Pro-Globalists

Anti-Globalists

Skeptics

Transformationalists

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Skeptics 1. Skepticism is generally any questioning attitude towards

knowledge, facts, or opinions/beliefs stated as facts, or doubt regarding claims that are taken for granted elsewhere.

2. Philosophical Skepticism is an overall approach that requires all information to be well supported by evidence.

3. A person who maintains a doubting attitude, as toward values, plans, statements, or the character of others.

Transformationalists or Hyperglobalist PerspectiveThe authors describe the hyperglobalist perspective as an

approach which sees globalization as a new epoch in human history. This new epoch is characterized by the declining relevance and authority of nation-states, brought about largely through the economic logic of a global market. Economies are becoming “denationalized.”

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International Marketing: A Definition

The activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and

society at large in more than one country.

The activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and

society at large in more than one country.

Marketing concepts, processes, and principles are universally applicable all over the world.

Marketing concepts, processes, and principles are universally applicable all over the world.

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The International Marketing Task

73.Firm Characteristics4.Research

3. Economy

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

1. Competition

1. Competition

2. Technology1.Price 2.Product

5.Promotion 6.Place 6. Geography and

Infrastructure

Foreign Environment(Uncontrollables)

7. Structure ofDistribution

3. Economy

5. Political-Legal

Domestic environment(Uncontrollables)

(Controllables)

2 .Technology

4. Culture

5. Political-Legal

4. Culture

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Major Cultural Obstacles

Self-Reference Criterion (SRC)an unconscious reference to one’s own cultural values,

experiences, and knowledge as a basis for decisions

Risk of SRC:Prevent you from becoming aware of cultural differencesInfluence the evaluation of the appropriateness of a

domestically designed marketing mix for a foreign market

Ethnocentrism the notion that one’s own culture or company knows

best how to do things

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Cross-Cultural Analysis1. Define the business problem in home-country cultural traits,

habits, or norms.

2. Define the business problem in foreign-country cultural traits, habits, or norms. Make no value judgments.

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

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Developing a Global Awareness

To be globally aware is to be:To be globally aware is to be:

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 international:In general, firms go through five different phases in going international:

Infrequent Foreign MarketingInfrequent Foreign Marketing

No Direct Foreign MarketingNo Direct Foreign Marketing

International MarketingInternational Marketing

Regular Foreign MarketingRegular Foreign Marketing

Global MarketingGlobal Marketing

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No Direct Foreign Marketing – Reactive

• Products “indirectly” reach foreign marketsTrading companiesForeign customers who contact firmDomestic wholesalers/distributorsWeb orders

• Foreign orders stimulate a company’s interest to seek additional international sales

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Infrequent Foreign Marketing – Reactive

Caused by temporary surpluses Sales to foreign markets are made as goods become

available

Firm has little or no intention of maintaining continuous market representation

Foreign sales activity declines and is withdrawn when domestic demand increases

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Regular Foreign Marketing – Proactive

Dedicated production capacity for foreign markets

Strategy:Firm employs domestic or foreign intermediariesUses its own sales force or sales subsidiaries

Products are adapted for foreign markets as domestic demand grows

Firms depend on profits from foreign markets

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International Marketing – Proactive

Fully committed and involved in foreign markets and international activities

Production takes place on foreign soil earning firms the MNC (Multinational Corporation) title

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Global Marketing – Proactive

The firm sees the world as one market!Market segmentation is now defined by income

levels, usage patterns, or other factors that span the globe

More than half of its revenues come from abroadThe firm has a global perspective

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The orientation of International Marketing

Three different strategic orientations are found among managers of international marketing operations:

Some see international marketing as ancillary to the domestic operations

A second kind of company sees international marketing as a crucial aspect of sales revenue generation but treats each market as separate entity

Finally a global orientation views the globe as the market-place and market segments are no longer based solely on national borders-common consumer characteristics and behaviors come into play as key segmentation variables applied across countries.