(By Michael R.

Czinkota,
Georgetown University, LLkka A.
Ronkainen, Georgetown University)

Applied Marketing
-Spring 08
1
Imported/Smuggled goods we buy/use/consume
every day, every week, every month etc.? goods
and services – movies also!

Since times immemorial (ancient) traders (and

“carriers) frequently fly off to foreign lands and
carry back many items “import” gold, spares,
toys, garments etc.
The Importance of international marketing –
Chinese goods have taken over the entire
planet, it seems.

Applied Marketing -Spring 08

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 Understanding the importance of international
marketing.
 Appreciate the opportunities and challenges
offered by international marketing.
 Recognize the effect of the global environment
on international marketing activities.
 Understand the process of market selection.
 Recognize the process of internationalization.

Applied Marketing -Spring 08 3

Learning objectives – contd.

6. Appreciate the different forms of market entry.

7. Comprehend the international adjustment of

the marketing mix.

8. Understand the steps necessary for

implementing
an international marketing strategy.

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 INTERNATIONAL MARKETING IS ---

“The process of planning & conducting

transactions across national borders to create
exchanges that satisfy the objectives of
individuals & organizations.”

Its forms range from export-import trade, to

licensing, franchising, joint ventures, wholly
owned subsidiaries, & management contracts

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 Basicprinciples of marketing strategy still
apply, but their implementation, complexity, &
intensity may differ substantially.
 Quality
of Chinese goods may differ in
Pakistan & The U.S.
 Questionsto asked to succeed in an I.M. -
next slide.

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1. How will my product fit into the
international market?
2. What marketing adjustments are or will
be necessary?
3. What threats from global and local
competition should I expect?
4. How can these threats be turned into
opportunities?

Foreign markets prove a source of

growth,
profit, and needs satisfaction for the
firm & lead to a higher quality of
life. Applied Marketing -Spring 08 7
Learning Objective 2: opportunities
and challenges in international
marketing

In order to exploit opportunities &

avoid threats in international
markets the firms, individuals,
governments, etc. need to act
aggressively with innovation,
process improvements, and
creativity.

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Opportunities can be created/exploited
in the following ways:

4.Integrate knowledge from around the

globe

6.Expand long-run production,

9.Lengthen & rejuvenate product life

cycles,

11.Competitive supply chains

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Challenges in International
marketing

 International logistics
 Small business mindset – following slide
 Political and economic instability
 Increased competition

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Many believe only MNCs carry out
international marketing

Smaller firms can also be major players:

50% of German exports from firms with 19
or fewer employees
Software developers

Applied Marketing -Spring 08 11

Learning Objective 3:
The international marketing environment

 Key international environments are the

6. Cultural
7. Socioeconomic, and
8. Legal/Political environments
 Different in different countries & within the
same country.

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 Cultural Environment

Challenge:

how to handle the differences

In languages, values & attitudes,

C.B. and how to handle the
impact of these differences on the
implementation of the Marketing
programs in the marketplace.
The international marketer plays
the role of a Change agent trying
to impress on a local consumer
the need to adopt a new product.
Applied Marketing -Spring 08 13
 Cultural – contd.

Cultural lifestyle has (some believe) four

dimensions.
4. Degree of individualism vs. group
decision making
5. Level of equality vs. class differences
6. Uncertainty avoidance; follow rules &
regulations.
7. Attitude towards material
achievement
To foster cultural sensitivity &
acceptance of new
ways of doing things within the
organization,
management must institute internal
training
Applied Marketing -Spring 08 14
Figure 3.2 – Making Culture Work
for You
Embrace Local Culture
Employ Locals to Gain Cultural
Knowledge
Build Relationships – visit, invite
Adapt Products to Local Markets
Help Employees Understand You
Coordinate by Region – like holding
regions meetings and share insights
and strategies.
Applied Marketing -Spring 08 15
 Aging& Elderly populations in the West and
Japan – opportunities offered. Economic
boom changes U.S. market characteristics

 Hugepopulations in some countries - prime

working age and driving both economic and
consumption growth.

 Women who work outside create demand of

packaged food, labor-savings devices &
house hold services.
Applied Marketing -Spring 08 16
 LEGAL AND POLITICAL ENVIRONMENT
 Intellectual property rights is the protection
provided by patents, copyrights, & trademarks.
 WTO
 Common law: based on traditions & customs
 Code law: based on a comprehensive set of
written statutes.
 Antidumping laws: protecting domestic industry
from unfair competition from abroad

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 Learning
Objective 4: international
market selection

The process of target market selection

involves narrowing down potential country
markets to a feasible number of countries and
market segments within them.

Applied Marketing -Spring 08 18

 All Countries Secondary
Data
Preliminary Screen:
1. General country factors Rejected
2. Generic product-specific Countries
factors

Prospective Target
Countries

Estimate Market Potential

by Product Types: Rejected
1. Size of national market Countries
2. Potential of national
market

Applied Marketing -Spring 08 19

 High Market Potential
Countries

Estimate Sales Potential by

Company Products:
1. Product comparisons
Other Target Rejected
2. Competition
Markets 3. Market structure Countries
4. Channel structure
5. Final consumers

Highest Sales Potential

Countries – Target Market

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Identifying Segments in Target Primary
Rejected
Market Data
Segments

Optimal Segment Mix in Target

Market

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 MARKET SELECTION
Concentration vs. Diversification
Few markets vs. Many markets
Dual Concentration
 Focus on a segment in a few countries
 Suitable for smaller companies

Dual Diversification
 Focus on most segments in most markets
 Used by large consumer-products

companies

Applied Marketing -Spring 08 22

 Learning Objective 5: the
internationalization process
 The role of management:
 Managerial commitment to
international markets is crucial
 Become aware of opportunities
 Enter in a limited fashion & evaluate
results
 Managerial commitment
 Motivations to go abroad
 Proactive motivations
 Reactive motivations
Applied Marketing -Spring 08 23
Learning Objective 6: alternative entry
strategies
 Indirect exporting & importing
 Direct exporting & importing
 International intermediaries: help direct &
indirect exporter/importers in
documentation, financing, and
transportation.
 Two major types are EMC and trading
companies.
Export management companies (EMC)
specialize in
performing business services as 24
Applied Marketing -Spring 08
2. Agent: (EMCs) do not take title to the products
but develop marketing strategy and contacts.
3. Distributor: (EMCs) purchase products from the
domestic firm an assumes the trading risk.

The second major intermediary is the trading

company which undertakes exporting, importing,
countertrading, investing, and manufacturing-
wider scope then EMC.

Sogoshosha are the trading companies of Japan:

can purchase products, act as distributor abroad,
or offer services – provide country information etc

Applied Marketing -Spring 08 25

Licensing: an arrangement in which
one firm permits another to use its
intellectual property (patents,
trademarks, copyrights, technology
etc.) in exchange for compensation,
typically a royalty (paid by one firm to
another under licensing & franchising
agreement)
Benefits of Licensing: does not require
huge
capital investment, or detailed
involvement,
earn income on R&D already conducted,
no risk
Applied Marketing -Spring 08 26
Entry strategies – contd.

Franchising is a form of licensing that grants

wholesaler or a retailer exclusive rights to see a
product or a service in a specified area.

Applied Marketing -Spring 08 27

Alternative entry strategies – contd.

 Foreign Direct Investment (FDI)

Investing abroad (buying firms) to gain
certain benefits – local taxes, marketing
considerations and desire for expansion, the
local economy also gains – MNCs also cause
displacement.

- A perspective on foreign direct investors:

viewed with a mixture of awe and dismay-
bring capital, provide employment etc.

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- Types of ownership
full ownership
joint ventures – a collaboration of two or more
organizations each contributing assets, owns the
new subsidiary and share risk.
strategic alliances: are informal or formal
arrangements between two or more companies with
a common business objective – more than vendor-
customer relationship but less than an outright
acquisition, have ongoing flexibility.
They are network of companies that collaborate in
the achievement of a given project – Motorway !
Contractual arrangements (manufacturing)

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learning Objective 7: a company view of international expansion
The central driver of internationalization is the level of managerial commitment.
This commitment will grow gradually from an awareness of international potential to the adaptation of an international strategic
direction.
It will be influenced by the information, experience, and perception of management, which in turn are shaped by motivation and
concerns of the firm.

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Figure 3.5 A Comprehensive Model of International Market Entry and
Development

Domestic
Focus

Alternative Level of Motivations Concerns

Strategies Management • Proactive
Multin commitment • Reactive • Information
ational • Trading • Mechanics
Focus
Export/import • Aware • Communication
• Licensing/Fr- • Interested • Sales Effort
anchising • Trial Intermediaries • Service
• Local Presence • Evaluation • Export • Regulations
alliances • Adaptation Mgmt. Co.
full ownership • Trading Cos
• Facilitators

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 Adjusting the marketing mix:

 International markets are approached in

one of the three ways:

 Standardized approach to international

marketing in which products are marketed with
little or no modification.

 Multidomestic approach in which local

conditions are adapted to in each and every
target market.

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3. Globalization approach: to
international marketing in which
differences are incorporated into a
regional or global strategy that will
allow for differences in
implementation.
“think globally and act locally”

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Three sets of influences shape the final form
of the product and the adjustments to be
made in the marketing mix.
Company Decisions: Profitability, market
opportunity, Policies.
Macroenvironmental Influences: like
Governmental regulations, customer
characteristics, expectations, preferences
etc.
(covered in the first chap.)
Product (characteristics) decisions:
product
constituents, brand, positioning, packaging,
after-sales service etc.
Applied Marketing -Spring 08 34
 learning Objective 8: implementing
marketing programs worldwide - To
keep with the changing conditions
actions have to taken with respect to the
following:
 management process: keeping
relations with the head office and the
local market – flow of information,
globalization calls for centralization
2. organization structure: to keep with
the change, regional product managers
etc. develop long-term strategies, matrix
structure etc.
Applied Marketing -Spring 08 35