InternationalMarketing

Ogenyi Omar

macmiUan

Contents

List of figures xixList of tables xxiList of mini case studies xxiiiAcknowledgements xxiv

1 Introduction to International Marketing 1Introduction 2The nature of international marketing 2

Contextual determinants of international marketing 3Historical development 4Definition of international marketing 5Relationship with other business fields 5

A theoretical framework for international marketing 7Approaches to internationalization 7

Factors causing internationalization 8The process of firms' internationalization 9

A holistic approach 10The motivation for firms to go international 12

Trade theories and economic development 12Absolute advantage 14Comparative advantage 14The assumptions underlying the principles of comparative advantage 16International trade theories 16Classical trade theory 17

The factor of proportion theory 17The product life cycle theory 18

Foreign direct investment (FDI) 19The eclectic paradigm 19The impact of FDI on national economies 20The determinant factors of FDI 21FDI and risks consideration ' 22

Culture and international marketing development 23East and west cultures 23Cultural influences 24Cultural values 24National culture and consumption patterns 25

Management issues in international marketing 26Summary 27Revision questions 28Seminar case study: Market opportunities and barriers in theChinese emerging market 28Managerial assignment task 31References 31

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2 The International Marketing Environment 34Contents 34Learning objectives 34Introduction 35The international marketing environment 36The international economic environment 39

Economic systems 39Stages of market and economic development 40Competitive analysis 40

The cultural environment 41The interaction of culture and consumer behaviour 42The impact of religion and language 44

The international political environment 45Political imperatives (barriers to operation) 46The political behaviour of international firms 47Political targets 49

The international legal environment 49International law and the Internet 51Consumer protection 52Intellectual property violations 53

Technological developments 55Information technology 56Technology advances 56

Scanning for international marketing opportunities 57Competitive environmental scanning 57International marketing involvement 58

The classification of international markets 58Economic classification . 59

Summary 62Revision questions 62Seminar case study: The international marketing environment:a focus on brands in the grey market 63Managerial assignment task 65References 66

3 The International Marketing Information and Research Process 68Contents 68Learning objectives 68Introduction 69International marketing information systems 69

International marketing information needs 70An information-gathering approach 71

IT and marketing planning 73IT marketing 74Marketing expenditure on IT 74Changes in the employment of marketing mix variables 75Managerial use of IT for making decisions 76

Sources of marketing information 77

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Classification and sources of information 78Data and research for the international marketing process 81

Qualitative research 82Survey methods 82Incorporating technological advances into research design andmethodology 83

The international marketing research environment 85The changing international marketing environment 86The heterogeneity of research contexts 87International marketing research implications 87

The organization of international research 88Measurement and sampling 89Analysis of the findings 90Reporting the findings 91

Research problems in developing countries 91Conducting research in diverse environments 92

Ethical issues in international marketing research 93Ethical issues relating to qualitative research 94Ethical issues relating to quantitative research 95Future directions in ethics 96

Using the Internet for international marketing research 97Exploratory and qualitative research 97Descriptive and quantitative research 99

Summary 100Revision questions 101Managerial assignment task 102References 102

International Competitive Marketing Strategies 104Contents . ' 104Learning objectives 104Introduction 105International market competitive theories 105

The origin and nature of competitive advantage 105The value system 106The competitive strategy 107Competitive advantage in an international market 109International competitive strategy 110Sustainable competitive advantage 110

Corporate and marketing strategy 111Operating strategies 112Strategic options (regional, local, or standardization) 113

Psychic distance and corporate marketing performance 114Psychic distance and organizational performance 115

International marketing and strategic planning 117Factors influencing strategic marketing planning 117Planning formality 120

Generic strategic options in world markets . 121

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International market segmentation 121Composition of a target market 122International targeting strategy 123International market positioning 124Alternative positioning strategies 126Market-based options (MBO) 128Resource-based alternatives 129

International market expansion strategies 131The major strategic alternatives 132

Summary 133Revision questions 134Seminar case study: McDonald's - a global retailer 134Managerial assignment task 136References 136

5 Market Selection Decisions and Entry Strategies 138Contents 138

Learning objectives 138Introduction 139Understanding international markets 139

The elimination of unsuitable markets 140Foreign market selection 140

Internal factors influencing the selection 142Mixed factors influencing the selection 143External factors influencing the selection 145

Decision criteria for choice of market entry mode 147Internal factors 147Mixed factors 149External factors 150

The role of culture in entry decisions 151Culturally close or distant 151

Entry as an international marketing strategy 153Self-start entry (organic growth) strategy 153Franchising arrangements 153Joint ventures 155Acquisition 156International licensing agreements 158

Strategic alliances (co-marketing) 159The goals of strategic alliance 159Motives underlying strategic alliances 160

Partnerships in emerging markets 160The market adaptation and standardization process 162The impact of the Internet on the market selection and entry process 165Summary 166Revision questions 166Seminar case study: The entry of the Silver Streak Restaurant Corporationinto Mexico 167Managerial assignment task 169References 169

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6 Management of Exporting and Importing 172Contents 172Learning objectives 172Introduction 173Export activities and organization 173Direct exporting modes 176

The export agent 177Distributors 178The choice of intermediaries 178

Exporting and logistics 180Terms of sale and delivery 180Terms of payment 182Export finance 186

Government policy and exporting 189Overseas Trade Services (OTS) 189Help elsewhere 190

Export planning 190Imports 191Free trade zones 192Barter and counter-trade 192

Counter-trade 193Buyback 193Offset trading 193Switch trading 194Evidence account 194

Parallel importing (grey marketing) 195The advantages of parallel importing 197The disadvantages of parallel importing 197

Regional trading blocs . •' 199Levels of trading arrangements 199Successful regional trading blocs 199The European Union 201North American Free Trade Agreement (NAFTA) 201Association of South East Asian Nations (ASEAN) 202

Summary 203Revision questions 203Seminar case study: Export marketing challenges in the commercializationof GM crops 204Managerial assignment task 207References 207

7 International Marketing Operations and Planning 209Contents 209Learning objectives 209Introduction 210International marketing operations 210Segmenting the international market 213

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Criteria for successful segmentation 213Consumer market segmentation 214Business (industrial) market segmentation 214Profiling the segments 214

Segmenting international markets 215The nature of international marketing planning 216

Types of planning mode 217Shorter-range planning 218Medium-range planning 218Longer-range planning 218An international marketing plan 218

Strategic planning in the international context 221The meaning of strategy 222

The role of strategic planning 224Company growth 226

Marketing and corporate strategy 226General analysis of strategic options 228

Selecting target markets 228Marketing management 229

Control tools for international marketing planning 230Marketing implementation 231Monitoring action plans 231Challenges to international marketing planning 232Implementation of the international marketing plan 233

Summary 234Revision questions 234Seminar case study: The strategic planning process at Akout pic 235Managerial assignment task 237References 237

8 Product and Brand Decisions for International Marketing 239Contents 239Learning objectives 239Introduction 240The nature of the product in international markets 240International product policy 242Developing new products 242

Degrees of product newness 243Product development strategic orientation 245

International product introduction strategic alternatives 245Product standardization 248

Standardization versus adaptation decisions 250Brand equity and branding decisions 253

Branding decisions 253Brand comparison 254Own-label branding 254The retailer's perspective 256The manufacturer's perspective 257

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National brands (manufacturer's own brands) 258Co-branding 258Global branding 258

The product life cycle (PLC) 259Introduction 259Growth 260Maturity 260Decline 260Problems with the product life cycle 260International product life cycle and strategies 261

New product introduction and development 262In-house product development 262Adoption and diffusion of new products 265Product deletion 267

International product-line management 269Summary 269Revision questions 270Seminar case study: The new product design process - the case of Alpha Ltd 271Managerial assignment task 272References 273

9 Service Strategies for International Marketing 274Contents 274Learning objectives 274Introduction 275The nature of service in international markets 275

International service sectors 276The characteristics of services 276Marketing problems relating to service characteristics 278

Meta-classification of international services 278Service typologies 280

Reflections on the four international service types 282International service process matrix 284Developing a supplementary service model 285Competitive strategy for international service provision 285

Competition and industry drivers 286Coping with technological competition 288

The marketing mix for international services 289The Booms and Bitner framework 290

The international marketing task 292Implications for international marketing 293

International services management 293Appropriate entry modes 293Standardization versus local adaptation 294Service quality considerations 295Regulatory impediments to international service marketing 296Economic impediments 297Cultural impediments - 297

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Summary 297Revision questions 298Seminar case study: The Valamo Monastery (VM) 299Managerial assignment task 301References 301

10 International Channels of Distribution and Logistics Management 303Contents 303

Learning objectives 303Introduction 304

The structure of international marketing channels 304Natural channels of distribution 306Influential factors in international channel design 307

Channel selection and management 313Channel selection 314Appointing suitable agents 314Communication and control of agents 315

Channel motivation and performance evaluation 315Channel membership management 316Channel motivation 316Channel cooperation and conflict 317

Channel agreements and alternative channels 318Power negotiation 318Cultural aspects of negotiations 320Alternative channels of distribution 320Joint ventures 324Strategic alliances 324

Channel strategy for new market entry 325Determinants of choice 325

Grey market influences on distribution management 326The black market (informal economy) 327

International logistics management 327The role of the Internet 329

Aspects of the Internet developments 330The Internet and the value chain 331

Summary 332Revision questions 333Managerial assignment task 333References 333

11 Pricing Decisions in International Markets 335Contents 335Learning objectives 335Introduction 336Determinants of international pricing 336

Competitive structure 338Price structure 338Consumer behaviour 339

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Using pricing strategy as competitive advantage in international markets 339Cost leadership strategy 340Low-price, high-quality strategy 340Focused differentiation strategy 340Brand preference strategy 340

Fundamentals of pricing strategy 341International market skimming 342International market pricing 342Penetration pricing 342

Economic analysis of international pricing issues 343Setting objectives for international pricing 343Price orientations in international marketing 346

Export pricing 348Export pricing objectives 348Export pricing policies 350Export pricing methods 350

International transfer pricing 350International reference pricing (IRP) 352Product dumping in international markets 353International product piracy 354

Scope and kinds of international piracy 354Exchange rate fluctuations 356

Currency risks -• 357Invoice currency policies 358

International counter-trading 359Reasons for counter-trading 359Benefits from counter-trading 361Motivations and reasons for increasing counter-trade 361Difficulties associated with counter-trade 361Barter trading 362Counter purchase 362

Summary 363Revision questions 363Seminar case study: Barter trading in the US radio industry 364Managerial assignment task 365References 366

12 Integrated International Marketing Communications 367Contents 367Learning objectives 367Introduction 368The nature and process of marketing communications 368

The international communication process 368Integrated marketing communications (IMC) 370The meaning of IMC 371

International advertising decisions 373Standardization of international advertising campaigns 374Adaptation of international advertising campaigns 376

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Media selection 377Costs 378Selecting agents 378

International publicity and public relations 379Major constraints on international publicity 379

Personal selling in the international environment 381International sales promotion 382

Sales promotion techniques 383Sales promotional objectives 383Choice of sales promotion techniques r 383

Relationship marketing 386Components of a successful relationship 386

Direct marketing 388Growth of direct marketing 389

Trade shows 389International account management 390

Framework for managing international accounts 391Factors in the management of international accounts 391Examples of companies with international accounts 392International customers 392International channels 392Regional customers and channels 393Transferable marketing 393Lead countries 393International economies of scale 393High product development costs 393Changing technology 394International competitors 394Response to international customers 394

Ethical and cultural issues . 396Summary 397Revision questions 397Seminar case study: International account management 398Managerial assignment task 399References 400

13 International Business-To-Business Marketing 401Contents 401Learning objectives 401Introduction 402The e-commerce markets 402

The characteristics of B2C marketing 404The business markets 406The consumer market 409

Relationship marketing in the B2B context 409The B2B relationship lifecycle 411

The nature of B2B in the international environment 411Buyer behaviour in B2B markets 413

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Problem recognition 415Information search 415Evaluation of alternatives 415Purchase decision 416Post-purchase behaviour 416

Exploring business behaviour in the B2B market 416The participants 419Negotiation process 419Performance monitoring 419After-sales analysis 420

International B2B channel control 420The role of the Internet in developing B2B 422

Innovative theory 422Government issues in B2B transactions 425Summary 426Revision questions 427Managerial assignment task 428References 429

14 Retail Internationalization and Marketing 430Contents 430Learning objectives . 430Introduction 431Global versus international retailing 431The nature of international retailing 432Conceptual framework and internationalization process 434

Conceptual framework 434The internationalization process 436

Internationalization motives and entry strategies 437Retail internationalization drivers 437Retail international expansion motives 438Market entry strategies 439

International market opportunities 443International retail market position and strategies 445International retail format 446

International market power 447Retail management implications 448

Summary 448Revision questions 449Seminar case study: Louis Vuitton Moet Hennessy (LVMH): global retailer 450Managerial assignment task 452References 452

15 The Internet and International Marketing 454Contents 454Learning objectives 454Introduction 455The role of e-commerce in international marketing 455

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E-commerce as a marketing process innovation 457The development of the Internet 458Internet users 460

Technological applications 460The Internet development stage 461Adaptation process 462

The Internet as an international marketing channel 467Business applications of the Internet 468

The Internet and international marketing activities 470Summary 472

Revision questions " 473Seminar case study: The use of the Internet by Scult Software Company (SSC) 473Managerial assignment task 475

References 476

16 Ethics and International Marketing 478Contents 478Learning objectives 478Introduction 479The nature of ethics in international marketing 480

The importance of ethics 480Developments in marketing responsibility 481

Ethics in the international environment 482Corporate social responsibility 484

Social expectations 486Corporate social culture 487Corporate ethical values 488Social responsibility in international marketing 489

International fair trading 491The international fair trade movement 491Business responses to fair trade 493

International marketing of ecological products 495Internationalization of eco-firms 497

The role of consumers 497Consumers' judgement of unethical behaviour 498Consumer response to ethics 498Consumer sophistication 499Consumer boycotts and consumer values 500

Summary 502Revision questions 502Seminar case study: The global revolution in ethical business 503Managerial assignment task 505References 505

Index 507