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The Scope and Challenge of International Marketing
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Objectives
1. Definition of InternationalMarketing
2. The scope of the international
marketing task
3. The increasing importance of globalawareness
4. The importance of the self-referencecriterion (SRC) in international
marketing
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International Marketing: A Definition
International marketing is defined as theperformance of business activities designed to
plan, price, promote, and direct the flow of acompanys goods and services to consumersor users in more than one nation for a profit.
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Global Perspective: Recent Events
Citigroup Loses $9.8 Billion- 2008
Warsin Afghanistan and Iraq
September 11th attacks on the World Trade Centerand
Pentagon
Enronand WorldComscandals
The high-tech bustof 2001
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Global Perspective: Recent Events
2003 SARSoutbreak in Asia
Global terrorism, e.g., Indonesia, Israel,India, England, and Morocco
Contaminated products from China - 2007
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World Trade Importance
World trade has grown from $200 billion to
more than $7 trillion in the past three
decades.
The Iron Curtain is gone and capitalism has
replaced the old economic doctrines.
Firms invest on a global scale.
Increasingly more difficult to define
where products come from.
New trading blocs are emerging.
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0%
2%
4%
6%
8%
10%
12%
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001 Year
Percentage ofGrowth
Trade and Domestic Growth Rates
Trade
Growth
Domestic Growth
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Global Business Trends
1. The rapid growth of the
World Trade Organizationand regional free trade
areas
2. General acceptance of the
free market system among
developing countries
3. Impact of the Internet and
other global media
4. Managing global
environmental resources
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Internationalization of U.S. Business
Increasing globalization of
markets
Firms face competition on
all fronts
Many U.S. companies arenow foreign controlled:Carnation (Swiss),
Daimler-Chrysler (German)
U.S. firms seeking foreign
markets to increase profits
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The International Marketing Task
7
3. Economy
Environmentaluncontrollablescountry market A
Environmentaluncontrollablescountrymarket B
Environmentaluncontrollablescountrymarket C
1. Competition
1. Competition
2. TechnologyPrice Product
Promotion Place or
Distribution
6. Geography andInfrastructure
Foreign Environment(Uncontrollables)
7. Structure ofDistribution
3. Economy
5. Political-Legal
Domestic environment(Uncontrollables)
(Controllables)
2 .Technology
4.Culture
5. Political-Legal
4. Culture
Target
Market
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Major Obstacles to International Marketing
Self-Reference Criterion (SRC)
Ethnocentrism
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Ethnocentrism
Ethnocentrism leads us to make false assumptions about
cultural differences. We are ethnocentric when we use our
cultural norms to make generalizations about other
peoples' cultures and customs.
Such generalizations -- often made without a conscious
awareness that we've used our culture as a universal
yardstick -- can be way off base and cause us to misjudge
other peoples. Ethnocentrism can lead to cultural misinterpretation and it
often distorts communication between human beings.
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Xenocentrism
The opposite of ethnocentrism is xenocentrism
which means preferring ideas and things from
other cultures over ideas and things from your
own culture.
At the heart of xenocentrism is an assumption
that other cultures are superior to your own.
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Ethnocentrism in Business
These people are so dirty.
No wonder this country is third-world, theyre so lazy.
If stupid is as stupid does, then this nation is full of stupidpeople.
You can call such talk as racial slurs, national prejudice or just
plain bigotry. In anthropological circles its called ETHNOCENTRISM.
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Contd.
Ethnocentrism is not confined to any one nation
or people. I have seen the feeling of superiority
displayed among Koreans, Germans, Americans,
Russians, Kenyans and Guatemalans. We nolonger use the term primitive or third-world
but now use the term emerging nations or
cultures.
But no matter how we label people for political
correctness, the attitude of ethnocentrism remains.
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Impact of SRC on IM
In international marketing scenarios, we are talkingabout working in different cultural environmentsand hence a self referenced behavior may not be the"correct" behavior from the perspective target
culture. Hence, realization of this differences of culture andthe possibility of self reference criterion isimportant in international marketing.
This is not such a big issue in domestic marketingsince the cultural difference are not major.
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Developing a Global Awareness
To be globally aware is to have:
1. Tolerantof Cultural Differences, and
2. Knowledgeableof:(a) Culture, (b) History, (c) World Market Potential,
(d) Global Economic, Social and Political Trends
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Strategic Orientation: EPRG Schema
Orientation EPRG Schema
Domestic Marketing
Extension
Multi-Domestic
Marketing
Global Marketing
(Ethnocentric)
(Polycentric)
(Regio-centric)
(Geocentric)
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Ethnocentric Orientation
Domestic strategies, techniques, and personnel
are perceived as superior
International customers , considered secondary
International markets regarded as outletsfor surplus domestic production
International marketing plans developed in-house by
international division Example: Hero cycles and Atlas cycles
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Polycentric Orientation
Polycentric Orientation Multi-domestic market concept:
Focuses on importance and uniqueness of each
international market
May establish businesses in each target country
Fully decentralized, minimal coordination with
headquarters
Marketing strategies = specific to each country
Result: No economies of scale, duplicated functions,higher final product costs
Example: Ford Motors, Toyota, Suzuki, G.M
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Regio- Centric Orientation
Global 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 Example: Pepsi & Coke
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Geocentric Orientation
Global marketing concept:
World is perceived as a total market with identifiable,
homogenous segments
Targeted marketing strategies aimed at market
segments, rather than geographic locations Achieve position as low-cost manufacturer &
marketer of product line
Provides standardized product or service throughoutthe world
Example: Pizza Hut, McDonalds
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Conclusion
Three major market forces today MNCs shouldunderstand
Globalisation (outsourcing)
The fortune at the bottom of the pyramid
The future of competition (co-creation value)
DART- Dialogue-Access-Risk benefits- Transparency
Dialogue implies interactivity, deep engagement, and
ability and willingness to act on customer and thefirm.
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