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Download Ch.1 The scope and challenge of International Marketing
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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 ● ● ● 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 ● ● ● 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 ● **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 SAMPLE ENDS HERE******