International Marketing
International Marketing
16, 17 or 18th 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
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
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
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
US Multinationals in Europe - 60s
Fifteen years from now the world’s third
greatest industrial power, just after the
United States and Russia, may not be
Europe, but American industry in
Europe.!
What Happened?
Jean.J. Servan Schreiber:
Le Defi American, 1967
1924 - 2006
French Journalist and Politician
The 1975 Fortune 500 lists huge, respected corporations
such as Esmark, Gulf & Western, Polaroid, and Singer
that have essentially vanished. They didn't vanish
overnight and they didn't vanish voluntarily. Even some
survivors from 1975 are studies in falling short rather than
flying high. Sears, Roebuck was founded in 1893 and
moved into the Sears Tower in 1973, when Wal-Mart was
a corporate toddler. Today, Wal-Mart is five times the size
of Sears, and Sears has left the building.
Mark Chussil
Chussil, M. (2005), With all this intelligence, why don't we have better strategies? Journal of Business Strategy,
VOL. 26 NO. 1, pp. 26-33.
Fortune 500 Top 10
Rank 2018 2010 2005 1995
1 Wal-Mart Wal-Mart Wal-Mart Mitsubishi
2 Sinopec Royal Dutch Shell BP Mitsui
3 Royal Dutch Shell Exxon Mobile Exxon Mobil Itochu
China Nat. BP Royal Dutch Shell Sumitomo
4 Petroleum
5 State Grid Toyota Motors General Motors General Motors
6 Saudi Aramco Japan Post Holding Daimler Chrysler Marubeni
7 BP China Petrochemicals Toyota Motors Ford motors
8 Exxon Mobile State Grid Ford Exxon Mobile
9 Volkswagen AXA General Electric Nissho Iwai
Toyota Motors China National Total Royal Dutch Shell
10 Petroleum
FORTUNE GLOBAL 500: https://fortune.com/global500/search/
Foreign Acquisitions
of U.S. Companies
U.S. Companies/Brands Foreign Owner
7-Eleven Japan
Ben & Jerry’s (ice cream) U.K.
Budweiser Belgium
Chrysler Italy
Chrysler Building (NYC) Abu Dhabi
Church’s Chicken Bahrain
CITGO Venezuela
Columbia Pictures (movies) Japan
French’s Mustard U.K.
Firestone (tires) Japan
Holiday Inn U.K.
Gerber Switzerland
Selected U.S. Companies
and Their International Sales
Global Revenues Percent Revenues from
Company
(In $ Billions) Outside the U.S.
Amazon 136.0 33.6%
Apple 215.1 60.0%
Boeing 94.6 59.0%
Dow Chemical 48.2 65.5%
Exxon 197.5 73.5%
Ford 151.8 38.5%
General Electric 119.7 70.3%
Intel 59.4 78.2%
Johnson & Johnson 71.9 47.4%
Procter & Gamble 65.3 58.7%
Walmart 482.2 24.5%
Reasons for Going International
• Saturated home market
• Competition
• Excess Capacity
• Advantage in product, skill or technology
• Product life cycle differences
• Geographic diversification
• Organizational reasons
• Financial reasons
Definition of Marketing
Marketing is a societal process by which
individuals and groups obtain what they need and
want through creating, offering, and freely
exchanging products and services of value with
others.
- Philip Kotler
International Marketing Defined
IM is the 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.
According to the American Marketing Association:
“International Marketing is the multi-national process of
planning and executing the conception, prices,
promotion and distribution of ideal goods and services to
create exchanges that satisfy the individual and
organizational objectives.”
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
International Marketing
• The International Marketing is the application
of marketing principles to satisfy the varied
needs and wants of different people residing
across the national borders.
• Simply, the International Marketing is to
undertake the marketing activities in more than
one nation.
The International Marketing Task
Foreign
Environment
7 (uncontrollable) 1
Economic
Political/legal Domestic forces
forces Environment
(uncontrollable)
2
l
ce ga
Co struc
for al/ le
Competitive
mp tu
6
s
Internal Environment
eti re
Forces
c
liti
(controllable)
tiv
Cultural Environmental
Po
forces Product Pricing uncontrollables
7 country market A
Promotion Placement
Environmental
uncontrollables
country market B
5 3
Geography Economic climate Level of
and Technology Environmental
Infrastructure uncontrollables
country market C
4
Structure of
distribution
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
The KOF
Globalization Index
(Top 10 + Selected Countries)
Source: The KOF
Globalization Index–
Revisited, KOF Working
Paper, No. 439 (2018).
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
The Self-Reference Criterion
and Ethnocentrism
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
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
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
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
Specific Managers
1-25
Develop Relationships
Culturally Diverse Executives
Stages of International
Marketing Involvement
• No direct foreign marketing
• Infrequent foreign marketing
• Regular foreign marketing
• International marketing
• Global marketing
No Direct Foreign Marketing
• Products reach foreign markets indirectly
– Trading companies
– Foreign customers who contact firm
– Wholesalers
– Distributors
– Web sites
• Foreign orders stimulate a company’s interest to
seek additional international sales
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
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
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
1-32
Strategic Orientation
• Domestic market extension orientation
• Multidomestic market orientation
• Global market orientation
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
1-34
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
Polycentric
1-35
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
1-36
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
1-37
Thank You
@RamyKhodeir
2-31
