International Marketing

Lidia Briquets
February 2020
TABLE OF CONTENTS
THE SCOPE AND CHALLENGE OF INTERNATIONAL MARKETING

1. International Marketing Defined

2. International Marketing task
3. The Dynamic environment of International Trade
4. The Cultural Environment of Global Markets
5. Assessing global market opportunities
6. Estimating Marketing Demand

DEVELOPING GLOBAL MARKETING STRATEGIES

1. International Marketing Management: planning and organization
2. Products and services: for consumers and for businesses
3. International Marketing channels
4. Integrated Marketing communications and adveritising
5. Pricing in International Marketing

International Marketing February 2020

International Marketing February 2020
International Marketing Defined
UNCERTAINTY AND DIFFERENCES BETWEEN MARKETS
International Marketing Task

The international marketer’s task is more complicated than that of the domestic marketer because the international

marketer must deal with at least two levels of uncontrollable uncertainty instead of one.

• Uncertainty is created by the uncontrollable elements of all business environments

• Each foreign country in which a company operates adds its own unique set of

uncontrollable factors.

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

in country market B.
International Marketing Task

Total environment of an international marketer

1. The inner circle depicts the controllable

elements that constitute a marketer’s decision

area.

2. The second circle encompasses those

environmental elements at home that have

some effect on foreign-operation decisions.

3. The outer circles represent the elements of

the foreign environment for each foreign

market within which the marketer operates.

International Marketing Task
The successful manager constructs a marketing program designed for optimal adjustment to the

uncertainty of the business climate.

1. The controllable elements can be altered in the

long run and, usually, in the short run to adjust to

changing market conditions, consumer tastes, or

corporate objectives.

2. Uncontrollable elements: the marketer must

actively evaluate and, if needed, adapt.

Uncontrollable elements

Domestic environment

Home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition.

Foreign environemnt

The process of evaluating the uncontrollable elements in an international marketing program often involves substantial doses of cultural, political, and economic shock.
The more significant elements in the uncontrollable international environment, include political/legal forces, economic forces, competitive forces, level of technology,
structure of distribution, geography and infrastructure, and cultural forces
International Marketing Task

Environmental Adaptation
International Marketing Task

The Self-Reference Criterion and Ethnocentrism: Major Obstacles

The primary obstacles to success in international marketing are:

• a person’s self-reference criterion (SRC) and

• an associated ethnocentrism.
International Marketing Task

Both the SRC and ethnocentrism

impede the ability to assess a foreign

market in its true light.

When marketers take the time to look

beyond their own self-reference criteria,

the results are more positive.

International Marketing Task

To avoid errors in business decisions:

1. Define the business problem or goal in home-country cultural traits, habits, or norms.

2. Define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation

with natives of the target country. 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.
International Marketing Task - Developing a Global Awareness

To be globally aware is to have

(1) tolerance of cultural differences

(2) knowledge of cultures, history, world market potential, and global economic, social, and political trends.
International Marketing Task - Developing a Global Awareness

Global awareness also involves knowledge of world market potentials and global economic, social, and political

trends. Over the next few decades, enormous changes will take place in the market potentials in almost every

region of the world, all of which a globally aware person must continuously monitor.

Finally, a globally aware person will keep abreast of global economic, social, and political trends, because

a country’s prospects can change as these trends shift direction or accelerate.

 Stages of International Marketing Involvement

Global

International Marketing

Regular Foreign Marketing

Infrequent Marketing

Non direct Foreign

Foreign Marketing

Marketing

These first two stages of international marketing involvement are more reactive in nature and most often do not

represent careful strategic thinking about international expansion.

 The Dynamic environment of International Trade

Balance of Payments

• The system of accounts that records a nation’s

international financial transactions.

• Products and services are exported and imported,

monetary gifts are exchanged, investments are made,

cash payments are made, and cash receipts received, and

vacation and foreign travel occur.

• It is an important economic measure.

The Dynamic environment of International Trade
Protectionism
The Dynamic environment of International Trade

Trade barriers
The Cultural Environment of Global Markets – Culture
The Cultural Environment of Global Markets – Culture
The Cultural Environment of Global Markets – Elements Culture

Cultural Values

Underlying the cultural diversity that exists among countries are fundamental differences in cultural values , that is,

the importance of things and ideas. The most useful information on how cultural values influence various types of

business and market behavior comes from seminal work by Geert Hofstede.

1. Individualism/Collectivism Index.

2. Power Distance Index.

3. Uncertainty Avoidance Index.

4. Cultural Values and Consumer Behavior

The Cultural Environment of Global Markets – Elements Culture

Individualism/Collectivism Index. Power distance index

The Cultural Environment of Global Markets – Elements Culture

Uncertainty Avoidance Index. Cultural Values and Consumer Behavior

Assessing global market opportunities

Breadth and Scope of International Marketing Research

Research can be divided into three types on the basis of information needs:

(1) general information about the country, area and/or market;

(2) information necessary to forecast future marketing requirements by anticipating social, economic, consumer,

and industry trends within specific markets or countries;

(3) specific market information used to make product, promotion, distribution, and price decisions and to develop

marketing plans.
 Assessing global market opportunities

Collecting and assessing the following types of information:

1. Economic and demographic.

2. Cultural, sociological, and political climate

3. Overview of market conditions.

4. Summary of the technological environment.

5. Competitive situation.
 Assessing global market opportunities

The Research Process

 Assessing global market opportunities

Defining the Problem and Establishing Research Objectives

This first, most crucial step in research is more critical in foreign markets because an unfamiliar environment tends to

cloud problem definition.

Once the problem is adequately defined and research objectives established, the researcher must determine the

availability of the information needed.

 Assessing global market opportunities

Problems of Availability and Use of Secondary Data

Availability of Data.

Reliability of Data.

Comparability of Data.

Validating Secondary Data.

As a practical matter, the following questions should be asked to effectively judge the reliability of secondary data

sources:

1. Who collected the data? Would there be any reason for purposely misrepresenting the facts?

2. For what purposes were the data collected?

3. How (by what methodology) were the data collected?

4. Are the data internally consistent and logical in light of known data sources or market factors?
 Assessing global market opportunities

Problems of Gathering Primary Data

Ability to Communicate Opinions. The ability to express attitudes and opinions about a product or concept depends

on the respondent’s ability to recognize the usefulness and value of such a product or concept

Willingness to Respond. Cultural differences offer the best explanation for the unwillingness or the inability of many to

respond to research surveys.

Sampling in Field Surveys. The greatest problem in sampling stems from the lack of adequate demographic data and

available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more

complex and generally less reliable.

Language comprehension.
Estimating Market Demand
 Estimating Market Demand

Expert Opinion

For many market estimation problems, particularly in

foreign countries that are new to the marketer,

expert opinion is advisable.

Analogy

This method assumes that demand for a product

develops in much the same way in all countries, as

comparable economic development occurs in each

country.
Problems in Analyzing and Interpreting Research Information
 Problems in Analyzing and Interpreting Research Information

• First, the researcher must possess a high degree of cultural understanding of the market in which research is being

conducted. To analyze research findings, the social customs, semantics, current attitudes, and business customs of

a society or a subsegment of a society must be clearly understood.

• Second, a creative talent for adapting research methods is necessary. A researcher in foreign markets often is

called on to produce results under the most difficult circumstances and short deadlines.

• Third, a skeptical attitude in handling both primary and secondary data is helpful.
International Marketing February 2020
Benefits of Global Marketing
Benefits of Global Marketing

The debate: standardization or adaptation?

Nestlé case
Planning for Global Markets

• International corporate planning is essentially long term, incorporating generalized goals for the enterprise as a

whole.

• Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and

the long- and short-term goals of the company.

• Tactical planning , or market planning, pertains to specific actions and to the allocation of resources used to

implement strategic planning goals in specific markets.

Alternative Market-Entry strategies
Products and services for customers

Quality and value

Quality can be defined on two dimensions: market-perceived quality and performance quality. Both are important

concepts, but consumer perceptions of a quality product often have more to do with market-perceived quality than

performance quality.
International Marketing channels
International Marketing channels

Import-Oriented Distribution Structure

• Importer controls a fixed supply of goods.

• Demand exceeds supply

• Limited supply create high price

• The customer seeks the supply from a

limited number of middlemen

International Marketing channels

Factors Affecting Choice of Channels

1. Identify specific target markets within and across countries.

2. Specify marketing goals in terms of volume, market share, and profit margin requirements.

3. Specify financial and personnel commitments to the development of international distribution.

4. Identify control, length of channels, terms of sale, and channel ownership.

International Marketing channels

Factors Affecting Choice of Channels

Cost.

(1) the capital or investment cost of developing the channel

(2) the continuing cost of maintaining it.

Continuity. Channels of distribution often pose longevity problems.

Control. The more involved a company is with the distribution, the more control it exerts.

Coverage. Coverage may be assessed by geographic segments, market segments, or both.

Character. The channel-of-distribution system selected must fi t the character of the company and the markets in which it is

doing business.
 Integrated Marketing communications and advertising
Integrated marketing communications (IMC) are composed of advertising, sales promotions, trade shows, personal

selling, direct selling, and public relations.

Integrated Marketing communications and advertising

International Advertising

Seven steps are involved:

1. Perform marketing research.

2. Specify the goals of the communication.

3. Develop the most effective message(s) for the market segments selected.

4. Select effective media.

5. Compose and secure a budget based on what is required to meet goals.

6. Execute the campaign.

7. Evaluate the campaign relative to the goals specified.

Integrated Marketing communications and advertising
The Message: Creative Challenges
Integrated Marketing communications and advertising

Legal Constraints

The directive covering comparative advertising allows implicit comparisons that do not name competitors but bans explicit

comparisons between named products. A variety of restrictions on advertising of specific products exist around the world.

Advertising of pharmaceuticals is restricted in many countries. Advertising on television is strictly controlled in many countries.

Linguistic Limitations

Language is one of the major barriers to effective communication through advertising.

Cultural Diversity

The problems associated with communicating to people in diverse cultures present one of the great creative challenges in

advertising
Pricing in International Marketing

Pricing Objectives
Pricing in International Marketing

Approaches to International Pricing - Full-Cost versus Variable-Cost Pricing

In variable-cost pricing , the fi rm is concerned only with the marginal or incremental cost of producing goods to be sold in

overseas markets..

The full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and

that each unit must bear its full share of the total fixed and variable cost.
Pricing in International Marketing

Approaches to International Pricing - Skimming versus

Penetration Pricing

A company uses skimming when the objective is to reach a

segment of the market that is relatively price insensitive and

thus willing to pay a premium price for the value received.

A penetration pricing policy is used to stimulate market and

sales growth by deliberately offering products at low prices.

Penetration pricing most often is used to acquire and hold

share of market as a competitive maneuver.