International Marketing

14 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
John L. Graham

The Scope and

Challenge
of International
Marketing
Chapter 1
 Global Perspective:
Global Commerce Causes Peace
• Global commerce during peace time
– Commercial aircraft and space vehicle industries
– Mobile phone industry
– Individuals and small companies
• International markets are ultimately
unpredictable
– Flexibility means survival

1-2
 Events and Trends
Affecting Global Business
• The rapid growth of the World Trade Organization
and regional free trade areas
• The trend toward the acceptance of the free
market system among developing countries in
Latin America, Asia, and Eastern Europe
• The burgeoning impact of the Internet, mobile
phones, and other global media on the dissolution
of national borders
• The mandate to properly manage the resources
and global environment for the generations to
come
1-3
 The Internationalization
of U.S. Business
• Increasing globalization of markets
• Increasing number of U.S. companies are
foreign controlled
– $16.3 trillion in foreign investment in the U.S. – $2.6
trillion more than American overseas investment
• Increasing number of foreign companies building
and buying manufacturing plants in the U.S.
• Increasing difficulty for domestic markets to
sustain customary rates of growth

1-4
 Foreign Acquisitions
of U.S. Companies
Exhibit 1.1

1-5
 Selected U.S. Companies
and Their International Sales
Exhibit 1.2

1-6
 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 one nation for a
profit

1-7
The International Marketing Task
Exhibit 1.3

1-8
 Environmental Adaptation
• Ability to effectively interpret the influence and
impact of the culture in which you hope to do
business
– Cultural adjustments

• Establish a frame of reference

• Avoid measuring and assessing markets against
the fixed values and assumptions of your own
culture

1-9
 The Self-Reference Criterion
and Ethnocentrism
• The key to successful international marketing is
adaptation to the environmental differences
from one market to another
• Primary obstacles to success in international
marketing
– SRC
– Associated ethnocentrism

1-10
 SRC and Ethnocentrism
• SRC is an unconscious reference to
– One’s own cultural values, experiences, and
knowledge 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

1-11
 SRC and Ethnocentrism
• Ethnocentrism and the SRC can influence an
evaluation of the appropriateness of a
domestically designed marketing mix for a
foreign market
• The most effective way to control the influence
of ethnocentrism and the SRC is to recognize
their effects on our behavior

1-12
 Framework
for 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
problem
4. Redefine the problem
• Without SRC influence
• Solve for the optimum business goal situation
1-13
Developing a Global Awareness
• Tolerance of cultural differences:
– Understanding cultural differences and accepting and
working with others whose behavior may be different
from yours
• Knowledge of cultures, history, world market
potential, and global economic, social, and
political trends

1-14
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

1-15
 Stages of International
Marketing Involvement
• No direct foreign marketing
• Infrequent foreign marketing
• Regular foreign marketing
• International marketing
• Global marketing

1-16
 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 to
seek additional international sales

1-17
 Infrequent Foreign Marketing
• Caused by temporary surpluses
– Variations in production levels
– Increases in demand
• Firm has little or no intention of maintaining
continuous market representation
– Foreign sales decline when demand or surplus
decreases
– May withdraw from international markets
• Little or no change in company organization or
product lines

1-18
 Regular Foreign Marketing
• Firm has production capacity devoted to foreign
markets
• Firm employs domestic or foreign intermediaries
– Uses its own sales force
– Sales subsidiaries in important markets
• Products allocated or adapted to foreign markets
as demand grows
• Firm depends on profits from foreign markets

1-19
 Global Marketing
• Company treats world, including home market
as 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

1-20
 Strategic Orientation
• Domestic market extension orientation
• Multidomestic market orientation
• Global market orientation

1-21
 Domestic Market Orientation
• International operations viewed as secondary
• Prime motive is to market excess domestic
production
• 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 as
ethnocentric

1-22
Multidomestic Market Orientation
• Companies have a strong sense that foreign
country 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

1-23
 Global Market Orientation
• 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

1-24
 The Orientation
of International Marketing
• An environmental/cultural approach to
international strategic marketing
• Intended to demonstrate the unique problems of
international marketing
• Discussion of international marketing ranges
from the marketing and business practices of
small exporters to the practices of global
companies

1-25
 Foreign Policy’s Global Top 20
Exhibit 1.4

1-26