Download THE EVOLUTION OF INTERNATIONAL MARKETING

THE EVOLUTION OF INTERNATIONAL
MARKETING
Vern Terpstra, Professor of International Business, University of Michigan, Ann Arbor,
Michigan
Reviewing the pre- and post-1970 global environment, the author discusses the
implications of changes for international marketers. The discussion is organised around the topical categories of international financial system, international trade patterns, commercial policy, technological changes, and global
competition. The author also elaborates on the likely future developments in
international marketing.
Marketing is adaptation to the market. The
market is a complex set of supply and
demand forces including both macro and
micro elements. As we look at international
marketing in the last part of the 20th century,
it is useful to consider some of the major
global developments that have shaped international marketing practice. Figure 1 gives a
schematic though incomplete view of the
kinds of relationships we will discuss.
Going back to about 1970 we can observe
the global environment of that time. Then
coming up to the present we can note
changes that have occurred and see what
effect these have had on international
marketers. With that background, we may
conjecture about developments for the
remainder of our present century. Thus, this
will be a retrospective and prospective look
at the world of international marketing (see
also Terpstra 1969 and 1985).
The World of 1970
Our historical review will be brief, rather
than exhaustive. We will merely try to indicate the nature of some important
relationships.
International finance. At the beginning of
1970 the Bretton Woods monetary system
was still operating.
In general th'is had meant a high valued
dollar relative to most other currencies. This
led U.S. firms to conduct the majority of their
international marketing by foreign investment rather than by exporting. They had
done this with such success that Servan
Schreiber was led to write his famous book
Le Defi Anrericain in 1966 predicting that by
1981 the third economic power would be, not
Western Europe but American industry in
Western Europe. That illustrates the danger
of forecasting. (Servan Schreiber did not
foresee the arrival of the Japanese.) The relatively low value placed on other currencies
such as the DM and the yen encouraged
Germany and Japan to market abroad via
exports rather than foreign production. The
leading international marketing nations thus
had different strategies for conquering world
markets: the U.S. with primary dependence
on foreign investment; Japan and Germany
depending almost entirely on exports; and
Britain with a relatively even balance
between exports and foreign investment.
International trade. The international trade
statistics for 1970 give an incomplete but
reasonable picture of the participants and
patterns of international marketing for that
period.
Table 1 shows the top twenty importers
in 1970 and Table 2 shows the top twenty
exporters. Looking first at the demand or
market side, Table 1 shows the list of major
markets largely dominated by the OECD
countries. It is not until number 15 that we
find a non-OECD market, the USSR.
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THE EVOLUTION OF INTERNATIONAL MARKETING
Figure 1
GLOBAL DEVELOPMENTS AFFECTING LNTERNATIONAL MARKETING
INTERNATIONAL MARKFnNG MANAGEMENT
GLOBAL DEVELOPMENTS AND PARAMETERS\ I Market
OF INTERNATIONAL MARKETING
Research
1. International Financial System
Floating rates
Exchange control
Balance of payments deficits
2. International Trade Patterns
Shifting comparative advantage
Countertrade
New markets
New suppliers
5. Global Competition
New competitors
New strategies
Strategic alliances
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1. United States
2. West Germany
3. United Kingdom
4. France
5. Japan
6. Canada
7. Italy
8. Netherlands
9. Belgium
10. Sweden
11. Switzerland
12. Australia
13. Spain
14. Denmark
15. U.S.S.R.
16. South Africa
17. Norway
18. Austria
19. Hong Kong
20. Yugoslavia
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SOURCE: IME Dircction of Trnde Statistics, 197'2
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Table 2
TOP TWENTY EXPORTERS, 1970
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Country
Imports (Million U.S.$)
43,959
29,949
21.728
19,114
18,Wl
15,391
14,936
13,394
11,353
7,005
6,487
4,994
4,748
4,404
4,018
3,923
3,697
3,549
2,905
2,876
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Table 1
TOP TWENTY LMPORTERS, 1970
Country
I Price I Promotion
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4. Technology Change
Transportation
Communication
R&D
Production
Product
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3. Commercial Policy
GATT
UNCTAD
Protectionism
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1. United States
2.
3.
4.
5.
6.
7.
8.
9.
10.
West Germany
United Kingdom
Japan
France
Canada
Italy
Netherlands
Belaurn
Sweden
11. Switzerland
12. Australia
13. U.S.S.R.
14. Denmark
15. Venezuela
16. Austria
17. B r a d
18. Hong Kong
19. Norway
20. Saudi Arabia
Exports (Million U.S. $)
43,227
34,232
19,352
19,318
17,935
16,745
13,185
11.764
11,595
6,782
5,154
4,788
3,716
3.355
3,203
2,858
2,739
2,515
2,455
2,424
SOURCE: IMF Dircction of Trnde Statistics. 1972
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THE EVOLUTION OF INTERNATIONAL MARKETING
Table 2, the top twenty exporters, shows
us the supply side, the countries doing
most of the international marketing in
1970. Not surprisingly, the list again is
dominated by OECD countries. It is not
until number 13 that we find a non-OECD
country exporter and again it is the Soviet
Union. In short, in 1970 - as evidenced by
international trade statistics - the only
part for which we can get hard data, international marketing was a game played
largely by OECD countries. They were
conducting almost two-thuds of world trade
among themselves.
Commercial Policy. The 1970 commercial
policy environment was favourable for international marketers.
GATT had just concluded the Kennedy
Round, perhaps the most successful of all
of its trade liberalising negotiations. Though
many of its concessions had not yet been
implemented, the climate was good for international exchange. East-West trade was the
principal area where political restrictions
prevented much exchange between the
protagonists. With China, Russia, and
Eastern Europe included, the Eastern bloc
excluded a large portion of the world from
free exchange. In the industrial market economies, however, international marketers had
some discretion about how they would serve
the market - either by exports or some k i d
of local production.
The micro side. We looked at the macro side
of international marketing - the nations
which were the leading suppliers and
markets in 1970.
Looking at the micro side, the firms doing
the international marketing, it is much more
d i c u l t to get data. Sewan-Schretber was
probably right in 1966 when he identified the
dominant players as the American firms.
Lists of the top ten or fifteen firms in almost
any industry during the 60's showed American firms predominating. One evidence o!
American preeminence is the fact that America's 1970 exports were greater than those
of Britain and Japan combined even though
American f m s depended on foreign
subsidiary sales for most of their international marketing volume.
Looking at the ways firms conducted internahonal marketing in 1970, we note that they
used the methods described in the textbooks.
American firms used the broadest mix of
exporting, licensing, and foreign investment.
The Germans, by contrast, were primarily
exporters to foreign agents and distributors,
and the Japanese relied mostly on the
Japanese trading companies to reach foreign
markets. Whatever channel was employed to
reach foreign markets, however, international marketing was largely done by firms
acting alone, as individual enterprises. Apart
from the occasional joint ventures, or
licensing arrangement, the only collaborator
for the intemational marketer was the foreign
distributor or a trading company.
The academic side. A final way of looking at
intemational marketing in 1970 is to consider
the academic situation in the field at that
time. We can only get imperfect indicators
but they can give us a feel for the situation.
International business was a young
academic discipline in 1970, but international
marketing was a leading sector in the field.
The first AIB cumculum survey in 1969 was
confined to American schools but it showed
that the most frequently taught intemational
course was International Marketing. There
were 65 U.S. schools reportmg at least one
International Marketing course but only 50
teaching International Management and 40
with a course in International Finance. The
s w e y found, however, only 4 doctoral
programmes covering the subject.
On the publications side, there was already
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THE EVOLUTION OF INTERNATIONAL MARKETING
pretty good coverage of international
marketing also. There were several texts and
related books for teaching the subject.
Looking at publications in a broader sense,
Fayenveather's bibliographic service Tkc
lnternational Executive was listing about 100
articles and citations a year on international
marketing. Many of these were not academic
joumals, however, because these joumals
did not have many articles on the subject.
Indeed, 1970 was the first year of publication
of the Journal of lnternatioizal Busiizess Studies.
Interestingly, the lead article in the first issue
was entitled "Marketing Policies in Multinational Corporations."
continuing to dominate the top 20 importers
and exporters.
However, looking at the demand side in
Table 3 we see that rising income and economic development in other parts of the
world, primarily the Pacific, are opening new
markets for international marketers. Four
European countries drop out of the top 20
importers along with South Africa and are
replaced by four Pacific nations and Saudi
Arabia. The four new Pacific import markets
are China (number lo), South Korea, Singapore, and Taiwan.
Table 3
TOP TWENTY IMPORTERS, 1985
Country
The World of the Mid 1980s
International finance. The international
monetary system of the 1980s is characterised
by uncertainty and floating exchange rates
for the major currencies.
There were periods with a declining dollar
and periods with a strong dollar ending
finally with a very strong yen. The main
characteristic, however, was exchange rate
uncertainty which complicated logistics planning for all producers. It is no longer
suffitient to have an export only or a foreign
investment only strategy. Most firms need
some production capability both at home and
abroad to market internationally.
Developments in the international financial
System reinforced by high oil prices from
1973 increased the number and size of
national balance of payments defiats. These
chronic deficits forced more countries to
continue their international trade by barter
and countertrade. Thus this ancient form of
trade became an important element in
"modem" international marketing.
International trade. The world trade situation as revealed by international trade statistics for 1985 shows the OECD countries
Summer 1987
I. United States
2, westGermany
::!:;Ed
Kingdom
5,
6. Italy
7. Canada
8. Netherlands
9, Belgium
10. China
l l . U.S.S.R.
12. Switzerland
South Korea
14. Spain
'5. "0%
16. Sweden
17,
18. Australia
19. Saudi Arabia
20. Taiwan
Imports (Billion U.S. $)
362
158
131
109
108
91
81
65
56
43
39
31
30
30
30
28
26
26
24
24
SOURCE: IMF Dirwtion of Trade Statistics, 1986
Table 4, the supply side, shows similar
changes among the top 20 exporters. The
changes reflect the new competition among
international marketing nations. Four OECD
countries and Venezuela drop from the top
20 and are replaced by three Pacific nations
and Spain and Mexico. The rise of Spain and
Mexico as 19 and 20 in the top 20 results
from various special factors in each case. The
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THE EVOLUTION OF INTERNATIONAL MARKETING
major competitive change, however, is again
in the Pacific where South Korea, China, and
Taiwan come in at numbers 14, 16 and 18
respectively with Singapore just short at
number 21.
Table 4
TOP TWFNTY EXPORTERS, 1985
Country
1. United States
2. West Germany
3. Japan
4. France
5. United Kingdom
6. Canada
7. Italy
8. Netherlands
9. Belgium
10. U.S.S.R.
11. Sweden
12. Hong Kong
13. Saudi Arabia
14. Korea
15. Switzerland
16. China
17. Brazil
18. Tawan
19. Spain
20. Mexico
21. Singapore
Exports (Billion U.S. $)
213
184
177
102
101
90
79
68
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31
30
30
30
29
27
27
26
25
24
24
23
SOURCE: IMF Direction of Trade Statistics, 1986
Commercial policy. The commercial policy
situation of the mid-1980s presents a mixed
picture.
Continuing deficits in a majority of the
world's nations led to protectionist actions
and threats. The Multifibre Agreement
renewal was a kind of multilateral protectionism. At the same time, GATT was
moving toward a new round of negotiations.
International trade volume moved sideways
during the first half of the '80s and international marketers had to rely more on local
production to serve foreign markets. The
Japanese, as the major surplus country, felt
the greatest pressure to localise. The rising
yen accelerated their move offshore.
Although exporting remains an important
form of international marketing, today's
protectionist pressures are forcing many
more firms to include more local content in
their forelgn marketing.
The micro side. Lookinpc at the micro side of
international marketing'& the mid-1980s, the
most dramatic chance is the ~rominent
position of Japanese firms.
Their tremendous growth has been largely
at the expense of American firms who lost
their previous dominance. European firms
have also suffered from the Japanese success.
A further dimension of change is the emergence of multinationals from the periphery,
from countries such as South Korea and
Taiwan. Pi contemporay list of the world's
largest companies in any industry is more
varied and cosmopolitan than in 1970.
Competition is much more international.
Looking at the ways international
marketing is being conducted today, we see
firms from all countries using a wider variety
and combination of approaches than in 1970.
All the classic methods are being used but
there are many innovations and variations
in them. The most significant change is the
increased use of international cooperative
ventures or strategic alliances of various
kinds to accomplish one or more aspects of
the international marketing task. Firms who
are often competitors from different countries, are joining together in production,
product development, market entry, distribution, promotion and branding, and senrice
arrangements. It is getting hard to find a
multinational which is going it alone in its
international marketing. They are going
beyond internalization.
The academic side. Intemational business
and international marketing have become
well established in business school curricula
compared to 1970.
Most schools in the U.S. have some inter-
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THE EVOLUTION OF INTERNATIONAL MARKETING
national dimension according to the 1986 AIB
curriculum survey (Thanopoulos and
Leonard 1986). International marketing was
again the international business course most
frequently offered by schools. About twothirds of undergraduate and graduate business school programmes offered a course in
international marketing. By 1986 there were
many more doctoral programmes in international business than in 1970 and 37 per
cent of them also offered a course in international marketing.
On the publications side of international
marketing, there is some expansion
compared to 1970. Surprisingly, there are no
more textbooks on the subject than there
were in 1970, but the lineup has changed
with new authors coming in and others dropping out. There are, however, new specialist
texts on areas like international advertising
or marketing research. These represent an
expansion of teaching materials along with
the video resources now available.
According to The International Executive for
1985, the international marketing atations
were about the same number as in 1970 and
the topical distribution was very similar also.
In that sense, there was little change or
expansion over the 15 years since 1970. As
noted earlier, however, many of those
citations are not from academic journals.
Looking only at academic journals, there was
a rather significant expansion in the number
of international marketing articles. There is
even a new journal devoted exclusively to
the subject, the 1nternationalMarketing Review.
This quarterly publication, all by itself,
publishes 25 to 30 refereed articles a year on
international marketing.
The future
There will be three major forces affecting
international marketing in the remaining
years of this century. One will be the
continrring integration of the world economy.
Second will be technological change. The relentless march of technology in communications,
information, and transportation is creating,
not only a global village, but also a global
marketplace. People in international finance
already speak of 24 hour markets, for
example. Third, these forces together help to
create a more globalised competitive environment.
These forces have ramifications for all aspects
of international marketing. We will examine
them by looking at the various marketing
functions.
My discussion here is based on my study
of international marketing over the past 24
years and my interpretation of current
trends. The forecasts are obviously conjecture, though there is some empirical evidence
for most of them. They can be considered as
hypotheses for future testing.
Marketing research. A major development
here is that marketing research agencies will
expand both their geographic coverage and
their services.
This will be necessary to meet the needs of
their more internationalised clients. It will be
facilitated by continuing progress in
computers and communications. It will probably also be helped by the mergers taking
place among advertising agencies, many of
whom do marketing research. The logic
underlying the international mergers we see
among financial institutions, accounting
firms, and advertising agencies applies also
to marketing research agencies. Service
organizations need to be as global as possible
to serve their multinational clients. They also
need economies of scale to offer the breadth
and depth of service required. Mergers or
alliances will often be necessary to meet these
constraints.
A second development is that the quality
and variety of marketing research services
will improve. This will be aided both by tech-
Summer 1987
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THE EVOLUTION OF INTERNATIONAL MARKETING
nology and mergers of research organizations. One new kind of service already available is the global product pickup service for
consumer packaged goods manufacturers. A
firm offers to pick up client or competitive
products from supermarkets in up to 120
countries. Alternatively, it can monitor a
variety of information on a set of products in
all those countries. This represents a great
advance in competitive intelligence capability
in international marketing. It also illustrates
how geographic spread and computer and
communications technology will help to
improve the intelligence function in the firm.
In a similar vein, the U.K. company
Adtrack will monitor no less than 600 Asian
publications for its advertising clients. Photocopies of ads will be available. The Asian
programme is a geographic expansion of
their services which previously were limited
to European media. These examples are
models for the future development of
marketing senices.
A third development will be an upgrading
of the in-house marketing research capabilities of international marketing firms. Because
of their greater dependence on foreign
markets and the stronger international
competition they face, firms will need to
increase their investment in marketing
research. This expansion will occur both in
foreign markets and at corporate headquarters. The activities will include competitive intelligence as well as marketing intelligence. Because competition is more international, the firm will want to monitor
competitor's activity in every market possible. This will mean more work in foreign
markets and more coordination by
headquarters.
Product development. In the area of product,
there are four trends that will continue into
the future. One is growing internationalisation of product development. Another is
increased collaboration in product development. A thud is the shortening of the product
life cycle. The fourth is the further globalisation of products.
Product development is already quite internationalised. Many multinational firms have
R & D in several countries. They have a
division of labour between these facilities but
also cooperation and coordination on specific
projects. For example, when Procter &
Gamble developed its new liquid Tide detergent, it drew on special skills and conditions
in both its Japanese and European labs as
well as work done in corporate headquarters
in Cincinnati. Though this was a new development for Procter & Gamble it was more
common for many other multinationals.
This kind of intemationalised product
development will be increasing both because
of necessity and feasibility. It is becoming
more necessary for two reasons: (1) because
of the growing internationalisation of
markets (or "globalisation" as Levitt (1983)
called it) and (2) because of the growing
number of international market segments as
noted by Ohmae (1985). It is becoming more
feasible for two reasons also.
Fist, as firms gain experience with such
coordination it becomes part of their management skills and competitive advantage.
Second, improvements in communications
technology will facilitate it. Staff in different
countries can not only talk together, they can
share pictures and data on their screens. In
the global corporate boardroom, it will be
possible to have good audiovisual communicahon without expensive travel.
Another factor encouraging intemationalisation of R. & D is the availability of lowercost research talent in countries other than
the multinational's home market. Such countries as India, Israel, the Philippines, and
Taiwan offer numbers of skilled people at
much lower rates than in Europe, Japan, or
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THE EVOLUTION OF INTERNATIONAL MARKETING
the United States. For example, India has the
thud largest number of engineers after the I
U.S. and the U.S.S.R. Because of this low
cost resource, electronics firms such as Texas
Instruments have put R & D facilities there.
India is developing its own version of Silicon
Valley in Bangalore.
Another aspect of the internationalisation
of product development is the increasing
amount of collaborative development
between nominally competitive firms,
frequently from different countries. Siemens
joins with Phiips, Honda joins with British
Leyland, and Kodak gets products from the
Japanese. These are just illustrations of
hundreds of collaborations found in Europe,
Japan and the United States.
These strategic parmerings or international
cooperations are not maniages of love but
of necessity. The increasing cost of product
development is going beyond the resources
of even many very large firms. As an
example, in one collaboration, Siemens and
Philips are putting up $4001~1each and their
governments are putting up another $400111.
In the U.S., the antitrust group in the govemment is allowing cooperative R & D by a large '
number of computer and electronics
companies because these firms cannot afford
to compete on an individual firm basis.
The declining life span of the international
product life cycle is another pressure on
product development. It raises the costs and
encourages collaboration in the search for
new products. Historically, when firms
invested in R & D, they had a reasonable
time to recoup that investment through the
sales of the new products coming out of that
R & D. From now on, the period of monopoly
rents from new products is likely to be much
shorter. The intensity of competition and the
speed of technology change with computerassisted R & D have reduced the time any
innovator can be king of the mountain. For
individual firms, that means increased R &
D budgets and a search for strategic collaborations to sunrive as a competitor in this
volatile environment. As Ohmae has noted,
high R & D budgets mean global exploitation
of new products is essential. Most firms need
strategic partners either for the increased R &
D budget or for the necessary international
distribution, or both.
The number and size of international
market segments should continue to grow.
That, along with other factors, will mean an
increasing emphasis on internationalised or
globalised products. Even with these developments, however, Levitt's world of globally
homogenised products is not just around the
comer. We are likely to enter the year 2001
with many products still requiring nationalised adaptation. The European Common
Market has been with us for more than 25
years. The persistence of national differences
within that grouping illustrates the slowness
and difficulty of achieving standardisation in
marketing and products, even among neighbouring countries. Cultural change is a very
slow process compared to technological
change.
A noteworthy U.S. development should be
mentioned here. Some American mass
marketers are beginning to experiment with
regionalised products and marketing wlfhin the
U.S. This illustrates the continuing tension
between standardised and localised products. (Business Week 1987).
Promotion. The field of international
promotion is responding to two forces: the
integration of the world economy and the
push of technology. Several aspects of
promotion will be affected by these forces.
Advertising Messages and Media. The
debate about standardisation of international
advertising messages has been going on at
least a quarter of a century.
It has not been resolved and will not be
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THE EVOLUTION OF INTERNATIONAL MARKETING
resolved before the end of this century.
However, we will see a gradual and steady
increase in the globalisation of advertising
messages. Several different factors will
support this ongoing development.
One factor is the continuing integration
and growth of the international advertising
agencies. Some agencies followed their
clients abroad more than 60 years ago. This
behaviour became a major trend, however,
only in more recent decades with the growth
and spread of the multinationals. Internationalisation became the path of growth
and even survival for many agencies.
Perhaps the greatest comparative advantage
of the international agency in bidding for an
account against a purely national agency is its
ability to coordinate international campaigns.
As a result, these international agencies are
among the major proponents of international, as opposed to national, advertising
messages. Saatchi & Saatchi is the leading
example. Wherever intemational campaigns
are feasible, these agencies will be
developing them and persuading their clients
to use them. It is noteworthy that Saatchi
and Saatchi have put Levitt on their board,
thus gaining a major academic spokesman in
support of their global approach.
A second factor supporting the expansion
of international campaigns and messages will
be the growth of international market
segments. These will increase in number and
size as was noted above. Along with this will
be the increase in the number of globalised
products, also noted earlier. Both of these
developments reflect the growing homogeneity of demand and marketing conditions in
certain product areas. As these products and
market segments become more standardised
or globalised, the advertising addressed to
those segments will also become more
standardised.
Advertising media. A third factor facilitating
the globalisation of advertising messages will
be the further internationalisation of the
advertising media.
Many of the print media have been international for many years, especially the
English-language publications. Yet, they are
continually on the lookout to expand their
international domain. For example, The
Financial Times explores the U.S. and The Wall
Street Jourml expands into Asia and Europe.
Even the China Daily, China's official English
language newspaper, is published simultaneously on three continents: in China, in
New York and San Francisco for North
America, and in London for Western Europe.
Business Mreek is now going into China.
While print media are going more global,
it is radio and television that are the premier
intemational media of the future. More than
anything else, it is radio and TV that will
create the "Global Village" envisioned by
MacLuhan. As the British Peacock committee
discovered, the future of broadcasting will be
decided, not by committees nor by governments, but by the galloping progress of technology. Government's ability to make purely
national regulations about the commercialisation of their broadcast media will be increasingly bypassed by the new technology. The
expanding internationalisation of the media
will bring more and more of the world's
population into the global village. In so
doing, it ~villencourage the globalisation of
advertising messages.
Recognising these globalising trends must
not blind us to the fact that for the foreseeable
future, most advertising will continue to be
done on a national, rather than global basis.
In making this observation there are two
models we might compare. One is the United
States. For many decades, the United States
was a collection of fragmented regional
markets. Gradually, transportation and
communication advances created the
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THE EVOLUTION OF INTERNATIONAL MARKETING
national market we know today. Even today,
however, the majority of advertising in the
United States is done locally in local media.
The other model is the European Common
Market. Though these neighbouring countries were gathered together expressly to
form a common market - or regional village
in MacLuhan's terminology - national media
and national advertising continue their
almost total dominance. International media
and advertising will gain market share,
especially in broadcast media, but will not
become the major factor.
In looking at the development of advertising messages and media for the world
economy as a whole, the European Common
Market experience appears to be a better
predictor of the future than the U.S. experience, at least for the rest of this century.
Ad agencies. Ad agencies were among the
early internationalists. Their international
expansion, usually by mergers or acquisitions, has been going on for a few decades.
It was led historically by the large American agenaes but the current number one is
the young British agency, Saatchi & Saatchi.
The continuing integration of the world
economy, the globalisation of markets, and
improving communications technology will
encourage further acquisitions and alliances.
Many national agenaes who wish to grow
will acquire or be acquired. Dentsu, for
example, is a giant agency, but to go international it depends on alliances andlor
acquisitions.
All of this getting together will result in a
large international oligopoly, with a greater
market share than it has today. However,
this will not mean the end of purely national
agencies. These will always find purely
national clients and niche markets. Neither
does it mean that a half dozen agencies will
rule the world. Jagdish Sheth predicted
recently that just three mega-agencies will
Summer 1987
emerge by 1990: Dentsu, Young and
Rubicam, and a French agency. That illustrates again the danger of forecasting. One
could easily criticise Sheth's choice of
agencies (where is Saatchi & Saatchi, for
example?) but the major disagreement must
be with the idea that only three agencies will
dominate the world market. That is not to
be. There will continue to be a much larger
number of major intemational agencies in the
oligopoly. There are several reasons for this,
among them, diseconomies of scale and
client concern about competitive secrecy.
Along with the growth and geographic
expansion of the large intemational agencies,
there will be an expansion of their services.
The term "full service agency" will take on
broader meaning. They will offer more onestop marketing s e ~ c e sincluding
,
marketing
research, public relations, and marketing
consulting. Their traditional advertising
services will just be one part of a broader line
of marketing services.
Other promotion. There will be evolution in
other areas of promotion besides advertising.
The major forces for change will be the same,
however, - internationalisation and advances
in technology. Sales prontotion sewices will
become more international. They will probably become one of the international
marketing services offered by the major international ad agencies. More firms will want to
consider sales promotion activities as part of
their international marketing programme.
Sales promotion offers greater promotional
variety for the very competitive environment
which is coming. It would be easier for
marketers to integrate this if the same
supplier had marketing capabilities beyond
just advertising and could offer a whole
promotional mix.
Technological progress will increase the
use of impersonal utays of communicating with
customers. Personal selling will be replaced
57
THE EVOLUTION OF INTERNATIONIAL MARKETING
in some cases, but mostly it will be enhanced
by technology. International 800 telephone
numbers will increase greatly and become an
important form of telemarketing and
customer contact just as they are already in
the domestic U.S. market. Overseas distributors and industrial customers can be brought
much closer to the seller by this means. The
technology is obviously available but so far
no firm has organised and offered a fully
international service.
The use of video in international marketing
will increase. Well designed videos can
improve the sales presentation in both
consumer and industrial markets. They
provide the opportunity for uniformly high
quality presentations in different markets,
minimising the importance of differences in
the capabilities of sales personnel. Interactive
video presentations also will allow for
reductions in the size of the sales staff.
Growing computer links between the selling
f i and different levels in the distribution
channel will reinforce these developments.
Barter and countemade. Willingness to
countemade is a form of promotion for firms
wishing to sell to chronic deficit countries.
Countertrade has become an important
form of international trade and marketing
that will not diminish in the rest of this
century. Because of its continuing importance, improved mechanisms and organisational arrangements will arise to enable
firms to do a better job of dealing with the
complications of countertrade. As Behrman
(1986) points out, both coproduction and
countertrade are popular with customer
countries. This is because they perceive in
them an acceptable distribution of the
benefits from the international marketing
transaction.
Therefore,
dealing with
demands for coproduction and countertrade
will become a necessary part of firms' international marketing skills. For large firms,
countertrade will frequently be integrated or
intemalised into their organisation rather
than being handled outside the firm.
Distribution. The fum faces three distribution tasks in its international marketing.
First, finding an entry method into the
foreign market. Second, distribution within
the foreign market. Third, coordinating
global logistics. Developments will be occurring in all three areas but we will focus on
the first two.
Concerning entry into foreign markets,
Ohmae (1985) and others have noted two
considerations. One is the need to enter
many markets, and the other is the importance of being an insider. The need to enter
many markets arises from the high cost of
new product development and the global
nature of competition. A firm must enter
many markets to cover its development costs
and to remain a viable competitor in the
global oligopolies that are emerging.
This internationalisation of leading
companies is already going on as noted by
Dunning and Pearce (1985) in their study of
The World's Largest Industrial Enterprises. It will
continue because of the economic and
competitive
imperatives.
International
marketers will face increasingly globalised
competitors. Competition within individual
foreign nnarkets will also become tougher.
Because many firms will not be able to enter a
sufficient number of markets by themselves,
they will form a variety of international cooperative ventures or strategic partnerships to
get the international coverage needed. AT&
T, once the largest corporation in the world,
has entered several strategic alliances in an
attempt to become a global player as opposed
to a purely American giant. To be a survivor,
it will not be sufficient merely to be the
largest firm in the domestic market, even if
that domestic market is the United States.
The need to be an insider arises primarily
Intemational Marketing Review
58
THE EVOLUTION OF INTERNATIONAL MARKETING
from the need to get around protectionist
barriers. It is reinforced by marketing
considerations such as the need for local
responsiveness and flexibility. Again in this
situation, many firms won't have the capability or the inclination to become an insider
by going it alone. Thus they will again seek
local collaborators, partners or - for the
wealthy - acquisitions. This increasing internationalisation of markets will be a further
pressure and encouragement to more globalised marketing practice.
In terms of market entry, then, we see the
development of global oligopolies in many
industries resulting in more firms entering
more markets. One effect of this will be the
heating up of the competitive environment.
Another effect will be a wide variety and
innovation in entry methods. This is because
many new market entries will be via strategic
partnerships rather than through more
traditional means. Many of these innovations
will not involve equity participation but will
be ad hoc alliances meeting the specific needs
of each partner.
Distribution within foreign markets. I have
just three observations here. One is to note
that there will be a steady and gradual
modernisation of wholesaling and retailing in
most countries of the world. Technological
progress will be one factor behind this development. Another factor will be the further
internationalization of retailing, which is
occurring through acquisitions and affiliations. The spread of international franchising will also play a role. A fourth factor
will be the pressures from the larger number
of international marketers operating in more
markets. They will want more efficient distribution in all their markets and their demands
will help to bring it about.
A related development will be the increase
in large scale retailing in many countries now
dominated by small retailers. Although
"Mom and Pop" stores and the laws
favouring them will not disappear, there will
be strong pressures for evolution. These
forces include economic pressures, consumer
pressures, and producer pressures. Collectively, they will result in more efficient and
larger scale retailing. There are signs of this
even in China. As this occurs it may have
some negative effects for international
marketers in that the larger retailers will have
more power vis a vis the producer. This can
impact on pricing, branding, and other
aspects of the finn's marketing in that
country. The United Kingdom provides a
model of what will be coming eventually in
other countries along this line.
As we noted, international marketers will
have their own impact on modernisation of
the channel. One way they will do this is by
having closer ties with their larger intermediaries or customers. International 800
numbers and computer links with important
customers will help the firm to market better
and improve the performance of the channel
at the same time. General Motors and Levi
Strauss already have computer links with
their retail customers in Europe. Such ties
give them a competitive advantage that will
lead to imitation by others.
Conclusion
International marketing will continue to
evolve as it adapts to its environment. It will
be constrained by developments in the international financial system and continued
protectionist pressures. It will adjust to
threatening world political developments.
International marketers will challenged by
the continued globalisation of competition
and markets. The successful ones will
respond by formulating global strategies, by
sharpening their skills, and seeking alliances
to meet specific needs in their international
marketing programme. They will be aided
Summer 1987
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THE EVOLUTION OF INTERNATIONAL MARKETING
by technological progress which gives them
better information and communication with
their markets.
Because most people in the world want to
live in the global village which is becoming a
global marketplace, international marketers
will find rewarding opportunities for the
remainder of this century. Over 200 years
ago, Adam Smith noted that specialisation
and intemational exchange promoted the
wealth of nations. International marketers
will have increasing opportunities to participate in that process.
References
Behrman, I. N. (1986), 'The Future of International Business and the Distribution of Benefits," Columbia lourno1
of World Business, Twentieth Amiversaq Issue,
(Summer), 15-22.
Business Week (1987), "Marketing's New Look," (January
26). 64-69.
Dunning, Juhn H. and Robert D. P e m e (1985). The
World's Largest Industrial Enterprises. London: Gower.
Levitt, Theodore (1983). "Globalization of Markets."
Hnmnrd Business Reuim?. (May-June), 92-102.
Ohmae, Kenichi (1985), Trind Power: The Coming Shnp of
Globol Competition. New York: The Free Press.
Terpsha, Vem (1969). University Edecntion for Intertrntionnl Business, AIB.
Terpsha, Vem (1985). 'The Changing Environment of
International Marketing," Intemotionnl Marketing
Rmiew. (Autumn). 7-16.
Thanopoulos, John and Joseph W. Leonard (1986). Internotional Business Curriculn - A Globnl Samey, AIB.
International Marketing Review