Download Ch.1 The scope and challenge of International Marketing

I.M Exam Revision Notes
Ch.1 The scope and challenge of International Marketing
International Marketing: the performance of business activities to generate profit (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).
Difference between domestic & international market:
● NOT different concepts of marketing
● BUT the environment within which marketing plan to implement
Motivation to go international:
● Saturation of domestic markets
● Opportunities in emerging and developing market
● Expanses from maturity in product life cycle to introduction in a new and emerging
market
● Technological advances make it easier to trade
● Structural changes to the way companies operate may enhances trade
● Government may offer assistance programs, policies.
● Your customers may go offshore so you have to chase them
● Trade blocs, bilateral agreements make it easier to go overseas
● You may have domestic competition from local firms or international firms moving into
your area
● You may have opportunities for cooperation in the region or wider global area.
Foreign Environment Example:
In china, commercial contract can only be entered if that company / individual is “legal person” →
has to be registered with the chinese government.
I.M Exam Revision Notes
Going International - Uppsala Model: a theory that explain how firms gradually intensify their
activities in foreign market. The model proposes that foreign sales begin with occasional export
orders that are followed by regular exports; it specifies that level of commitment with decrease /
cease if performance and prospect are not sufficiently met.
Approaches to internationalisation process with a discussion on factors inhibiting a firm’s
international market entry - overseas markets exposes the firms to a new set of challenges
→ lack of and inability to gain international knowledge
(Objective: can be taught) (Experimental: can only be learnt through personal experience)
Stages of International Involvement:
1. No direct foreign marketing - Not actively cultivating customers outside national
boundaries; Eg. company’s website receive overseas orders
2. Infrequent foreign marketing - Due to temporary surpluses; However, if domestic
demand increase, this will absorb the surpluses and foreign sales withdrawn.
3. Regular foreign marketing - permanent productive capacity devoted to foreign markets
because of increase in overseas profits. However, primary focus still on domestic
market.
4. International marketing - Fully committed, entails production outside home; usually by
joint ventures.
5. Global marketing - Treat the worlds as one market, market segment defined by
consumers’ characteristics. (i.e. Income Level)
Strategic Orientation (Strategic thinking of firms)
→ Difference in complexity and sophistication of company's marketing activity.
1. Domestic market extension orientation
● Seeking sales extension of domestic product into foreign
● Views international operation as secondary to and an extension of domestic
operation
● Primary motive = market excess domestic productions
● Belief: if it sells in domestic, then it will sell anywhere else
● Minimal efforts in adapting marketing mix to foreign
● Seeks markets with similar demand
● Firms with this approach → ethnocentric
I.M Exam Revision Notes
2. Multi-domestic market orientation
● Starts recognising the importance of differences in overseas markets + offshore
business to organization
● Almost independent programs for each country
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Products are adapted for each market. Promotion → Localised
AIms for a adaption to local country markets
Controls are decentralised due to uniqueness of local market require local
marketing input and control.
●
Firms in this orientation → Polycentric
3. Global market orientation
● Market activities global; coverage worldwide
●
Strive for efficiency of scale → develop standardised marketing mix applicable
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across national boundaries
Market segmented based on consumers characteristics
Regiocentric / geocentric classification
Eg. Coca-Cola, Ford Motor
Psychic Distance:
● Perceived differences between home and foreign country, regardless of physical
time and space factors
● Factors preventing the flows of info between firms and market
Eg. Linguistic differences
Cultural Factors: social norms; values; customs
Economic Situation: infrastructure; trade links; competition
Political & Legal System: government stability; import tariffs; tax
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**LESS psychic distances → MORE likely to enter the foreign country**
Companies should only export to countries that they understand then build their
acquired experience to explore opportunities further afield.
Born Global Companies:
● Challenged the stage theory of internationalisation
● Knowledge - intensive
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