eprg

Copyright Atomic Dog Publishing, 2002

EPRG Framework…

Scope, Concepts, and Drivers of International Marketing


Chapter Objectives

Define international marketinglevels of international involvement.company orientations and philosophies

toward international marketing.

environmental and firm-specific drivers that direct firms toward international markets.

obstacles to successful international ventures.


Importance of International Marketing

International expansion helps firm: Keep pace with competition Reach a larger marketReap higher profitsProlong the lifecycle of their

products


Levels of International Marketing

Domestic Marketing

Export Marketing

International Marketing

Global Marketing

• Least international commitment

• Domestic focus

• Limited international commitment

• Involves direct or indirect export

• Ethnocentric

• Substantial internationalcommitment

• Focus on individual countries or regions

• Polycentric or Regiocentric

• Extensive internationalcommitment

• Focus on segments, rather than countries or regions

• Geocentric


International Philosophy

Corporation & Business Lines

Human Resources

Marketing &

Sales

Manufacturing& Distribution

Finance

Management internationalization philosophy

affects all functional areas of the corporation.

Based on EPRG framework


EPRG FRAMEWORKETHNOCENTRIC orientationPOLYCENTRIC orientationREGIOCENTRIC orientationGEOCENTRIC orientation


Ethnocentric Orientation

domestic market extension concept:Domestic strategies, techniques, and

personnel are perceived as superiorInternational customers, considered

secondaryInternational markets regarded as

outlets for surplus domestic productionInternational marketing plans

developed in-house by international division


Polycentric Orientationmultidomestic market concept:Focuses on importance and uniqueness

of each international marketMay establish businesses in each target

countryFully decentralized, minimal coordination

with headquartersMarketing strategies = specific to each

countryResult:

No economies of scale, duplicated functions, higher final product costs


Regiocentric Orientationglobal marketing concept:World regions that share

economic, political, and/or cultural traits are perceived as distinct markets

Divisions are organized based on location

Regional offices coordinate marketing activities


Geocentric Orientation

global marketing concept:world is perceived as a total market

with identifiable, homogenous segmentsTargeted marketing strategies

aimed at market segments, rather than geographic locations

Achieve position as low-cost manufacturer & marketer of

product lineProvides standardized product or service

throughout the world


Drivers of International Expansion

CompetitionRegional Economic & Political IntegrationTechnologyImproved Transportation &

TelecommunicationEconomic GrowthTransition to Market EconomyConverging Consumer Needs


Drivers of International expansion,

continued

COMPETITIONMcCann Erickson, the

advertising agency, follows longtime

client, Coke, to all countries where

company is present


Drivers of International Expansion, continued

•Regional agreements • such as NAFTA, MERCOSUR, and the European

Union • lower and eliminate barriers and promote trade

within common markets.•Subsidiaries established in specific

markets • to take advantage of free trade within the region.

REGIONAL, ECONOMIC and POLITICAL INTEGRATION



TECHNOLOGY• Consumers worldwide are exposed to similar products, services, and entertainment.

• The Web & the Internet have revolutionized the way companies conduct business.


• Lower cost and higher quality communication • due to satellite technology,

teleconferencing, and e-mail• Efficient transportation

• due to containerization and • just-in-time technology


TRANSPORTATION and TELECOMMUNICATIONS



• Emerging middle class in big emerging markets • with increasing buying power• Brazil and India

• Opening of new markets previously closed, • such as China and Vietnam

• Emerging economies • are becoming viable trade partners

ECONOMIC GROWTH


Drivers of International Expansion,

• Transition of Eastern Bloc to a market economy • created important new markets

• Created opportunities to transform • inefficient government-owned local companies • into successful enterprises

TRANSITION to a MARKET ECONOMY


Drivers of International Expansion,

• Uniform consumer segments • emerging worldwide:

• global teenagers, global elite

CONVERGING CONSUMER NEEDS


Firm-Specific Drivers

Product Life Cycle Considerations: opportunity to prolong product lifecycle by entering growth markets.

Sales

Intro Growth Maturity Decline

Profits

Sales


Firm-Specific Drivers, High New Product Development Costs:

Firm must look beyond home-country market to recover investment costs


Price competition during maturity drives firm to new international markets

Firm-Specific Drivers,

Standardization, Scale Economies, Cheap Labor

Intro Growth Maturity Decline

Sales

Profits

Sales

Time


Firm-Specific Drivers, Experience Transfers

Experience in one country serves as

basis for strategies in new international markets.


Obstacles to Internationalization

Self-reference CriterionConscious and unconscious reference to own national culture while operating in the

host country

To counter the impact of the self-reference criterion,

select appropriate personnel forinternational assignments

engage in sensitivity training*Lessons in culture differences


Obstacles to Internationalization

Government BarriersRestrictions on foreign corporations

tariffs, import quotas, and other limitations,

such as restrictive import license awards


Obstacles to Internationalization,

Barriers from International CompetitionBlocked channels of distributionExclusive retailer agreementsPrice reductions

at the time of market entryAdvertising blitzes


Chapter Summary

International involvement: Domestic marketing, export marketing,

international marketing and global marketingInternationalization philosophies:

Ethnocentric, polycentric, regiocentric, and geocentric

Drivers of international expansion: Competition, regional integration, removal of

trade barriers, improvements in transportation, telecommunications and technology, converging consumer needs


Chapter Summary

Firm-specific drivers: Prolonging product lifecycle, recovering new product development costs, price competition, standardization, economies of scale and cheap labor, experience transfers

Obstacles to entry: Self-reference criterion, government barriers, competitive barriers

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