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Transcript of International Marketing
International Marketing14th Edition P h i l i p R. C a t e o r a M a r y C. G i l l y John L. Graham
The Scope and Challenge of International MarketingChapter 1McGraw-Hill/Irwin International Marketing 14/e
Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Should You Learn? The changing face of U.S. business The scope of the international marketing task The importance of the self-reference criterion (SRC) in international marketing The progression of becoming a global marketer The increasing importance of global awareness
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
Events and Trends Affecting Global Business The rapid growth of the World Trade Organization and regional free trade areas ( European Union) The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe The burgeoning 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 come1-4
International Marketing International marketing defines as the performance of business activities designed to Plan, Price , Promote, and Direct the flow of a companys goods and services to consumers or users in more than one nation for a profit. profit. The only difference between the definitions of domestic marketing and international marketing is that marketing activities take place in more than one country. country. Marketing concepts, processes, and principles are universally applicable, and the marketer`s task is the same. same.1-5
International Marketing Business`s goal is to make a profit by promoting, pricing, and distributing products for which there is a market. market. What is the difference international marketing? between domestic and
The answer lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. markets.1-6
International Marketing Competition, legal restraints, government controls, weather, consumers, and any number of other uncontrollable elements can and frequently do, affect the profitable outcome. outcome. The marketer cannot control or influence these uncontrollable elements but instead must adjust or adapt to them to achieve profits. profits.
The International Marketing TaskExhibit 1.3
The International Marketing TaskThe inner circle depicts the controllable elements that constitute a marketers decision area. area. The second circle encompasses those environmental elements at home that have some effect on foreign-operation decisions. foreigndecisions. The outer circles represent the elements of the foreign environment for each foreign market within which the marketer operates. operates. As the outer circle illustrate, each foreign market in which a company does business can ( and usually does) present separate problems involving some or all of the uncontrollable elements. elements. Thus , the more foreign markets in which a company operates, the greater is the possible variety of foreign environmental factors with which to contend. contend.1-9
Marketing Decision Factors The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. climate. The inner circle represents the area under the control of the marketing manger. manger. The controllable elements can be altered in the long run, and usually in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. objectives. The outer circles surrounding the marketing decision factors represent the levels of uncertainty created by the domestic and foreign environments. environments. Although the marketer can blend a marketing mix from the controllable elements, the marketer must actively evaluate and if needed adapt with uncontrollable elements. elements.1-10
Aspects of the domestic environmentThe second circle represents the aspects of the domestic environment that are often beyond the control of companies. companies. These include home- country elements that have a direct effect homeon the success of a foreign venture: political and legal forces, venture: economic, climate, and competition. competition.
Aspects of the foreign environmentIn addition to uncontrollable domestic elements, a significant source of uncertainty is the number of factors in the foreign environment that are often uncontrollable. uncontrollable. A business operating in its home country feels comfortable in forecasting the business climate and adjusting business decisions to these elements. elements. The process of evaluating uncontrollable elements in an international marketing program, involves substantial doses of cultural, political, and economic shock. shock. These factors constitute the principal elements of uncertainty an international marketer must cope with in designing a marketing program. program.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
The Self-Reference Criterion and Ethnocentrism The key to successful international marketing is adaptation to the environmental differences from one market to another. another. Adaptation is a conscious effort on the part of the international marketer to anticipate the influence of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. effects.
The Self-Reference Criterion and EthnocentrismPrimary obstacles to success in international marketing: SRC ( the person`s self-reference criterion), The SRC is an selfunconscious reference to one`s own cultural values, experiences, and knowledge as a basis for decisions. Your self reference criterion can prevent you from being aware of cultural differences or from recognizing the importance of those differences. Associated ethnocentrism, the notion that people in one`s own company, culture, or country knows best how to do things. Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market.1-15
SRC and Ethnocentrism SRC is an unconscious reference to Ones 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 ones own culture or company knows best1-16
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
Framework for Cross-cultural Analysis1. Define business problem or goal Home-country vs. foreign-country cultural traits, habits, or norms Consultation with natives of the target country
2. Make no value judgments 3. Isolate the SRC influence Examine it carefully to see how it complicates the problem Without SRC influence Solve for the optimum business goal situation1-18
4. Redefine the problem
Developing a Global Awareness To be globally aware is to have: have: Tolerance of cultural differences: differences: Understanding cultural differences and accepting and working with others whose behavior may be different from yours. yours. The tolerant person understands the differences that may exist between cultures and uses that knowledge to relate effectively. effectively. Global awareness also involves knowledge of cultures, history, world market potential, and global economic, social, and political trends. trends.
Approaches to Global AwarenessGlobal awareness can and should be built into organizations using several approaches: approaches: 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
Stages of International Marketing InvolvementOnce a company has decided to go international, it has to decide the degree of marketing involvement and commitment it is prepared to make. make. These decisions should reflect considerable study and analysis of market potential and company capabilities. capabilities. Many companies begin tentatively in international marketing, growing as they gain experience and gradually changing strategy and tactics as they become more committed. committed. Others enter international marketing after much research and with fully developed long-range plans, prepared to make longinvestments to acquire a market position .
Stages of International Marketing InvolvementIn general, one of five stages can describe the international marketing involvement of a company. company. These include: include: No direct foreign mark