Download in international marketing

The Scope and Challenge of
International Marketing
Chapter 1
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 The benefits of international markets
LO2 The changing face of U.S. business
LO3 The scope of the international marketing task
LO4 The importance of the self-reference criterion
(SRC) in international marketing
LO5 The increasing importance of global awareness
LO6 The progression of becoming a global marketer
1-2
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
1-3
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(迅速成长的) 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 impact of Sino-Korean FTA on China’s Business
1-4
The Internationalization
of U.S. Business
Increasing globalization of markets
Increasing number of U.S. companies are
foreign controlled
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
1-5
Foreign Acquisitions of U.S. Companies
Exhibit 1.1 Foreign Acquisitions of U.S. Companies, Sources: Compiled from annual
reports of listed forms, 2012.
1-6
Exhibit 1.2 Selected U.S. Companies and
Their International Sales
Source: Compied from annual reports of listed firms, 2012
1-7
Chinese Merge and Acquisition
Chinese companies recently surpassed Germany's
to become the world's No 2 in terms of acquisitions,
having spent $21.8 billion on such moves.
"Culture shock and staff integration are usually
more troubling to a merger than financial and
technical integration," said Peter Promnitz, CEO of
Mercer(美世)in Asia-Pacific, one of the world's
largest human resources consulting firms.
In a Mercer survey of 607 top executives around the
world, about 35 percent surveyed said they
consider staff integration the biggest challenge.
1-8
1-9
1-10
International Marketing
Definition
 International Marketing 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
(AMA)
 "international marketing is the multinational process of
planning and executing the conception, pricing, promotion
and distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational
objectives."
1-11
The International Marketing Task
Four
One
Three
Two
1-12
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
1-13
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
1-14
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
1-15
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
1-16
Framework
for Cross-cultural Analysis
Define business problem or goal
 Home-country vs. foreign-country cultural traits, habits, or
norms
 Consultation with natives of the target country
Make no value judgments
Isolate the SRC influence
 Examine it carefully to see how it complicates the problem
Redefine the problem
 Without SRC influence
 Solve for the optimum business goal situation
1-17
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
1-18
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
1-19
Stages of International
Marketing Involvement
No direct foreign marketing
Infrequent foreign marketing
Regular foreign marketing
International marketing
Global marketing
1-20
No Direct Foreign Marketing
Products reach foreign markets indirectly
Trading companies
Foreign customers who contact firm
Wholesalers
Distributors
Web sites
Foreign orders pique（激起） a company’s
interest to seek additional international sales
1-21
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
1-22
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
1-23
International marketing
Companies are fully committed to and
involved in the international marketing
activities
Such companies seek markets all over the
world and sell products that are a result of
planned production for markets in various
countries.
1-24
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
1-25
Factors Favoring Faster
Internationalization
Companies with either high technology and/or
marketing-based resources are better equipped to
internationalize than more traditional
manufacturing companies (Tseng et. al., 2007)
Smaller home markets and larger production
capacities favor internationalization (Fan & Phan,
2007) and
Firms with key managers well networked
internationally are able to accelerate the
internationalization process (Freeman and Cavusgil,
2007)
1-26
The Orientation of International
Marketing
Environmental/cultural approach
Relate the foreign environment to the
marketing process
Illustrate how culture influences the
marketing task
The cultural environment within which the
marketer must implement marketing plans
can change dramatically from country to
country
1-27
Questions
How will Shanghai FTA affect the
international market?
What are the impacts of Sino-Korean FTA on
Chinese Cosmetic Business?
What are some of the problems that Chinese
companies have met in the
internationalization of the business?
1-28