Introduction to International Marketing

Prof.Mukul Mishra

Globalization

Defined as process of economic integration of the

entire world through the removal of trade barriers and capital mobility as well as through diffusion of knowledge and information.

Prof.Mukul Mishra

Globalization

Globalization of Production evaluating various locations worldwide so as to take advantage of local resources and optimize manufacturing competitiveness. Globalization of Markets emergence of a borderless world with advances in telecom, transportation, internet .standardized products from global brands like SONY bought by customers all over the world.

Prof.Mukul Mishra

Lets Define Marketing

Kotler The human activity directed at satisfying the wants and needs through exchange process. AMA Process of planning and executing the conception , pricing, promotion and distribution of ideas, goods and services to exchanges that satisfy individual and organizational goals.

Prof.Mukul Mishra

International Marketing Defined

Cateora performance of business activities designed to plan, price, promote and direct the flow of companys goods and services to consumers or users in more than one nation for profit. Keegan Global Marketing is the process of focusing the resources and objectives of an organization on global marketing opportunities and needs.

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International Marketing ?

Thus International Marketing involves:

Identify needs/wants of international customers in different countries. Modify Marketing Mix(4Ps) keeping in view consumer behaviors in different countries and companys objectives. Using various modes of entry to penetrate international markets. Evaluate dynamic international marketing environment and take appropriate decisions.
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The International Marketing Task

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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

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The Self-Reference Criterion and Ethnocentrism (continued)

SRC is an unconscious reference to ones own cultural values, experiences, and knowledge as a basis for decisions. Ethnocentrism is the notion that ones own culture or company knows best how to do things. 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 a way offensive to your hosts
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The Self-Reference Criterion and Ethnocentrism (continued)

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.

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Framework for Cross-cultural Analysis (Adaptation)

1. 2. Define the business problem or goal in home-country cultural traits, habits, or norms. 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. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. Redefine the problem without the SRC influence and solve for the optimum business goal situation.

3. 4.

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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 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
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Reasons for Entering Foreign Markets

Growth Profitability Achieving economies of scale Risk spread Access to imported inputs Uniqueness of product or services Marketing opportunities due to life cycle Spreading R&D cost

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Evolutionary process of global marketing

There are five identifiable stages in the evolution of marketing across national boundaries( Ref. Global Marketing Management by Kotabe & Helsen) 1. Domestic Marketing: Before entry into foreign markets Marketing Focus-Domestic Marketing Mix Decisions-Focused on Domestic Customers.
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Evolutionary process of global marketing

Strategy- based on information about needs/wants of domestic consumers, industry trends, economical, technological, political climate at home. Competition-look at domestic competition Orientation-Ethnocentric (pay little attention to changes in global marketplace e.g. changing lifestyles, market segments, emerging competition & better products yet to arrive in domestic market) Firm vulnerable to sudden changes forced upon it by competition. E.g. U.S automobile & consumer electronics industry suffered from its ethnocentrism in 1960s & 1070s ( neglected imminent competition from Japanese low cost manufacturers)
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Evolutionary process of global marketing

2. Export Marketing : Begins with unsolicited orders from foreign customers. Reluctant at first, gradually learns the benefits of overseas marketing. Motivators-additional marketing outlets, risk spread, more profitability Early export marketing stage indirect exporting ( use trading house services) Later stage as firm gains know how & experience exports directly.

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Evolutionary process of global marketing

Marketing Focus - overseas (targeting and entering foreign markets) Orientation-Ethnocentric Marketing Mix Decisions focussed mainly on domestic customers overseas marketing-generally an extension of domestic marketing decisions made at headquarters

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Evolutionary process of global marketing

3. International Marketing: Firm caters to specific needs or few overseas markets ( noticeable market share) Orientation-Polycentric ( product/promotional adaptation): firm realizing that there exists considerable cultural difference across markets Operation in each market viewed independently. Competition- fiercely competitive marketing strategies by competition. Firm may : allocate a potion of manufacturing for exports/set up manufacturing abroad to utilize inexpensive resources & be closer to consumers.
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Evolutionary process of global marketing

Marketing Focus-Differentiation in country markets by way of developing or acquiring new brands. Marketing Mix Decisions Developing local products depending upon country needs. Decisions by Individual subsidiaries.

Multi Domestic Marketing :

Extreme form of International Marketing Independent foreign subsidiary in each and every foreign market. Subsidiaries operate independently without headquarter control. Product development, manufacturing ,marketing all executed for local market by subsidiary. Few economies of scale benefits. 19 Useful only if consumersProf.Mukul across national markets differ Mishra

Evolutionary process of global marketing

4. Multinational Marketing: Firm realizes benefits of economy of scale in product development, manufacturing & marketing by consolidation on regional basis. Orientation-Regiocentric ( product planning may be standardized within a region but not across) Marketing Mix Decisions-Product standardization within regions but not across them

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Evolutionary process of global marketing

5. Global Marketing: International/Multinational Orientation

results in market fragmentation worldwide (higher costs) Global Marketing refers to: 1. Standardization efforts- marketing programs across different countries ( product offering, promotional mix, price & channel structure) 2. Coordination across Markets-reducing cost inefficiencies & duplication of efforts among national and regional subsidiaries) 3. Global Integration-gain competitive leverage and effective integration of firms competitive campaigns Prof.Mukul Mishra 21 across these markets.

Evolutionary process of global marketing

Marketing Focus-Consolidating firms operations on a global basis Orientation-Geocentric Marketing Mix Decisions Globalization of Marketing Mix Decisions with local variations. Joint Decision making across the firms global operations.

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EPRG Concept
The orientation of firms personnel affects the ability of a company to adapt to a foreign marketing environment Behavioral attributes-EPRG Framework Degree of Internationalization Management commitment Influences International strategies of firm

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EPRG Concept
1. Ethnocentric Orientation:
Belief that ones own culture is superior to others Managers believe that domestic marketing strategy will work in foreign markets too Ignore environmental differences between markets Firms generally do domestic marketing/export marketing as an extension of domestic marketing Ethnocentric companies market their products in countries where demand is similar to home markets Generally used to dispose surplus production in overseas markets Goods manufactured domestically/decisions taken at headquarters. Difficult to sustain once sizeable market share attained.
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EPRG Concept
2. Polycentric Orientation : Highly market oriented Belief-substantial difference exists among various markets. Marketing mix decisions/pricing strategies/product development strategies involve local experts from different countries. Little coordination between affiliates Duplication of activities Economies of scale in international operations cant be achieved.
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EPRG Concept
3. Regiocentric Orientation: Firm treats a region as a uniform market segments similar marketing strategy for the region E.g., McDonaldss doesnt serves pork and slaughters animals through Halal Process in Middle East. 4. Geocentric Orientation: Firm considers entire world as a single market and formulates integrated marketing strategies. Similarities identified between markets for uniform marketing strategy formulation.
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THANK YOU!!

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