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INTERNATIONAL

MARKETING
COURSE 1- Introduction in International
Marketing
Lecturer –Camelia Kailani, PhD Marketing
ASSESSMENT

• 50% - FINAL EXAM (End of semester)


• 10% - Evaluation during courses
• 40% - Class activities
TOPICS

1. Globalization vs internationalization
2. Trends which shape the international business today
3. What is international marketing?
4. International marketing task
5. Differences between domestic marketing and international
marketing
6. Stages of international marketing involvement
7. Orientations in international marketing – EPRG model
8. Types of enterprises in international marketing
What is globalization?
GLOBALIZATION VS INTERNATIONALIZATION
 Whether or not a company wants to participate directly in
international business, it cannot escape the effect of the
ever-increasing number of domestic firms exporting,
importing, and/or manufacturing abroad

 Globalization = a process of interaction and


integration among the people, companies, and
governments of different nations, a process driven
by international trade and investment and aided
by information technology.
 This process has effects on the:
 environment
 culture
In societies
 political system around the
 economic development world
 prosperity
 human physical well-being
 Globalization, consideredby many to be the
inevitable wave of the future, is frequently
confused with internationalization, but is in
fact something totally different.

What is the difference between globalization


and internationalization?
GLOBALIZATION VS INTERNATIONALIZATION

Internationalization refers to the increasing importance


of international trade, international relations,
treaties, alliances, etc. Inter-national, of course,
means between or among nations. The basic unit
remains the nation, even as relations among nations
become increasingly necessary and important.

Globalization refers to global economic integration of


many formerly national economies into one global
economy, mainly by free trade and free capital mobility,
but also by easy or uncontrolled migration. It is the
effective erasure of national boundaries for economic
purposes.
Which are the main trends that
shape the international business
today?
Trends which shape the international business today

• The interdependence of the world


economies.
Of all the trends • The rapid growth of regional free
affecting global trade areas such as EU, NAFTA, ASEAN
business today, five and APEC.
stand out as the • The increase in wealth and growth in
most parts of the world, causing
most dynamic and enhanced purchasing power.
as the ones that are
• The evolution of large emerging
influencing the markets such as Brazil, China, India,
shape of Malaysia, Russia and Poland.
international • Availability of advanced methods of
business: communication and transportation due
to developments in information
technology.
What is international
marketing?
What is international marketing?

International marketing
International marketing is consists of the activity,
the performance of business institutions, and processes
activities that satisfy the across national borders
needs of consumers or users that create, communicate,
in more than one nation for deliver, and exchange
a profit. offerings that have value for
stakeholders and society.
 The marketer’s task is the same whether doing business in
Amsterdam, London or Kuala Lumpur.
 The goal of a business is to make a profit by promoting, pricing
and distributing products for which there is a market. If this is
the case, what is the difference between domestic and
international marketing?
 The only difference in the definitions of domestic marketing
and international marketing is that the marketing activities
take place in more than one country. This apparently minor
difference accounts for the complexity and diversity found in
international marketing operations.
A transaction takes place across national borders
highlights the difference between domestic and
international marketing. The international marketer
is subject to:
a new set of macro-environmental factors
 different constraints
 to quite frequent conflicts resulting from different
laws, cultures, and societies
 The difference is made by the the environment
within which marketing plans must be
implemented – it can change dramatically from
country to country.

 Competition, legal restraints, government


controls, weather, and any number of other
uncontrollable elements can affect the profitable
outcome of good marketing plans
The more foreign markets in which a company operates, the greater the
possible variety of foreign environmental uncontrollables with which to
contend.

Frequently, a solution to a problem in country market A is not applicable to


a problem in country market B.

Marketing Controllables

• marketing mix

Domestic Uncontrollables

• political forces, legal structure and economic climate


political/legal forces

economic forces

competitive forces
Foreign level of technology
Uncontrollables
structure of distribution

geography and infrastructure

cultural forces
Self-Reference Criterion
 The task of cultural adjustment is perhaps the most
challenging and important one confronting international
marketers
 they must adjust their marketing efforts to cultures to which
they are not familiar.

 The primary obstacle to success in international marketing is


a person’s self-reference criterion (SRC) in making decisions,
that is, an unconscious reference to one’s own cultural
values, experiences, and knowledge as a basis for decisions.
The SRC impedes the ability to assess a foreign market in its
true light.
EXAMPLE: In some cultures, the acceptable distance
between individuals is substantially less than that
comfortable to Westerners.
When they, unaware of another culture’s acceptable
distance, are approached too closely by someone
from another culture, they unconsciously react by
backing away to restore the proper distance (i.e.
proper by their own standards) and confusion results
for both parties
 According to a new study, Brits like to keep a metre from
a stranger, 80cm from an acquaintance and just over 50cm
from an intimate or close friend.
 This is in contrast to Argentinians who keep a 76cm
distance for a stranger, 59cm for an acquaintance and
40cm for a friend.
 Whilst Argentinians have the smallest personal space,
Romanians have the largest, preferring to keep 1.3 metres
from someone they’ve just met.
 However once Romanians become friends with someone,
they’re comfortable standing just 40 centimetres apart.
You’re Sick? Is it the Heart, a Virus or Liver? It Depends Where You Are
 From Pharmaceutical companies have commissioned concurrent studies to help them
package and market their products throughout Europe simultaneously, rather than
country by country. This is because they know there are deep-rooted national
differences in how people think about health, disease and medicine. In the United
Kingdom and the Netherlands, people prefer tablets when taking medicine. In France,
suppositories are preferred, while in Germany an injection will do. In different
countries, different organs are believed to be the cause of illness.
 Germans are almost obsessive about the heart and circulation – they are Europe’s
largest consumers of heart medicine.
 Southern Europeans assign almost mystical qualities to the liver. In the United
Kingdom, doctors tend to look for external agents attacking the body and they
prescribe antibiotics.
 If you say you are tired, the Germans would say that it was cardiac insufficiency. In
England they would consider you depressed.
Which are the differences between
domestic marketing and international
marketing?
Differences between domestic marketing and international
marketing
• production, promotion, distribution, and
sale of goods and services in a local
market
Domestic • less risky and easier to conduct
marketing • requires less financial resources
• deals with only a single market
• Low level of uncertainty

• promotion, distribution, and sale of


goods and services in a global market
• more risky and more complex
International • huge financial resources
marketing • deals with several different countries
and markets
• high level of uncertainty
Stages of international marketing involvement

• a company in this stage does not actively


cultivate customers outside national
boundaries
• company’s products may reach foreign
No direct markets
• sales may be made to trading companies
foreign as well as foreign customers who directly
marketing contact the firm
• as companies develop Web sites on the
Internet, many receive orders from
international Internet users
Stages of international marketing involvement

• temporary surpluses caused by variations


in production levels or demand may
result in infrequent marketing overseas
• company’s products may reach foreign
markets
Infrequent • sales to foreign markets are made as
foreign goods become available, with little or no
intention of maintaining continuous
marketing market representation
• as domestic demand increases and
absorbs surpluses, foreign sales activity
is reduced or even withdrawn
Stages of international marketing involvement

• the firm has permanent productive


capacity devoted to the production
of goods and services to be
marketed in foreign markets
Regular foreign • as overseas demand grows,
production is allocated for foreign
marketing markets
• products may be adapted to meet
the needs of individual foreign
markets
Stages of international marketing involvement

• companies in this stage are fully


committed to and involved in
international marketing activities
• companies seek markets all over the
International world and sell products that are a result
of planned production for markets in
foreign various countries
marketing • products may be adapted to meet the
needs of individual foreign markets
• entails the production of goods outside
the home market
Stages of international marketing involvement

• companies treat the world, including


their home market, as one market.
• Market segmentation decisions are
no longer focused on national
Global borders
• market segments are defined by
marketing income levels, usage patterns, or
other factors
• More than half its sales revenues
comes from abroad
Orientations in international marketing –
EPRG model

 EPRG framework was introduced by Wind,


Douglas and Perlmutter.
 This framework addresses the way strategic
decisions are made and how the relationship
between headquarters and its subsidiaries is
shaped.
 EPRG framework consists of four stages in
the international operations evolution
Orientations in international marketing –
EPRG model

1.Ethnocentric Orientation
 There are no changes in product specification,
price and promotion measures between native
market and overseas markets.
Costs Benefits
Ineffective planning due to poor
Simple organization
feedback
Fewer innovations Greater communication and control
Lack of flexibility and responsiveness

Inability to build a high caliber local


organization
Orientations in international marketing –
EPRG model
2. Regiocentric Orientation
 In this approach a company finds economic, cultural
or political similarities among regions in order to
satisfy the similar needs of potential consumers.
Benefits Costs
Culture fit The managers in different regions may
not understand the viewpoint of the
managers employed at the headquarters
Less cost is incurred in hiring the natives There could be a communication barrier
of the host country because of different languages
The nationals of host country can better It may lead to the confusion between
influence the decision of managers at the regional objectives and the global
headquarters with respect to the entire objectives
region
Orientations in international marketing –
EPRG model
3. Polycentric Orientation
 In this approach, a company gives equal importance to every
country’s domestic market. Every participating country is
treated solely and individual strategies are carried out. This
approach is especially suitable for countries with certain
financial, political and cultural constraints.
Costs Benefits
Waste due to duplication Intense exploitation of local markets
Localization costs of "universal" Better sales due to better-informed
products local management
Inefficient use of home-country
More initiative for local products
experience
Excessive regard for local traditions at
More host government support
expense of global growth
Orientations in international marketing –
EPRG model
4. Geocentric orientation
 Geocentric approach encourages global marketing.
Irrespective of the nationality, the company tries to seek the
best target segments and the problems are solved globally
within the legal and political limits.
Costs Benefits
High communication and travel costs Integrated global outlook
More powerful total company
Educational costs at all levels
throughout
Time spent in consensus decision-
Better quality of products and services
making
International headquarters bureaucracy Worldwide use of best resources
"Too wide" distribution of power Improved local country management
Personnel problems, especially those of Greater commitment to global
THANK YOU!