International Marketing - Chapter 1

The Scope and Challenge of International Marketing

▪ International business encompasses all commercial activities that take place to promote the
transfer of goods, services, resources, people, ideas, and technologies across national
boundaries.

▪ The following triggered international business:

1. Growth of the WTO and free trade agreements such as EU ,NAFTA and GAFTA
2. Developing countries started to accept the free market system
3. Internet, mobile phones and global media (globalization)

▪ As a result:
1. Most business activities are global in scope
2. Business must be prepared to compete in an increasingly interdependent global
economic environment
3. All companies (exporting companies, multinationals, domestic companies) have
become affected by any global events (For example : war in Ukraine, war in Gaza,
Arab spring ,911, …)
4. Internationalization of companies

▪ International Marketing: The performance of business activities designed to plan, price,

promote and direct the flow of a company’s goods and services to consumers or users in
more than one nation for profit. It is simply the marketing of products or services outside
of your brand's domestic audience.

▪ The International Marketing Task: The international marketer’s task is more

complicated than that of the domestic marketer because the international marketer must
deal with at least 2 levels of uncontrollable uncertainty instead of 1. Uncertainty is created
by the uncontrollable elements of all business environments, but each foreign country in
which a company operates adds its own unique set of uncontrollable factors.

o The inner circle: the controllable elements

that constitute a marketer’s decision area
o The second circle: the environmental elements
at home that have some effect on
foreign-operation decisions
o The outer circles: the elements of the foreign
environment for each foreign market within
which the marketer operates.
▪ Each company’s foreign market presents separate problems involving uncontrollable
elements. Thus, the more foreign markets in which a company operates, the greater is the
possible variety of foreign environmental factors with which to deal. Thus, a solution to a
problem in country market A is not applicable to a problem in country market B.

▪ Marketing Decision Factors

o The inner circle represents the area under the control of the marketing manager.
o The marketing manager blends price, product, promotion, channels-of-distribution,
and research activities to capitalize on anticipated demand.
o The controllable elements can be altered to adjust to changing market conditions,
consumer tastes, or corporate objectives.

▪ Aspects of the Domestic Environment

o The second circle represents the aspects of the domestic environment
uncontrollables
o These include home-country elements that can have a direct effect on the success
of a foreign venture
o Example: A political decision involving domestic foreign policy can have a direct
effect on a firm’s international marketing success.

▪ Aspects of the Foreign Environment

o The outer circle represent the foreign environment uncontrollables
o The process of evaluating the uncontrollable elements in an international marketing
program involves substantial doses of cultural, political, and economic shock.
o A business operating in a number of foreign countries might find extremes in
political stability, class structure, and economies

▪ The Need for Environmental Adaptation

o To adjust and adapt a marketing program to foreign markets, marketers must be able to
interpret effectively the influence and impact of each of the uncontrollable
environmental elements on the marketing plan for each foreign market in which they
hope to do business.
o In a broad sense, the uncontrollable elements constitute the culture; the difficulty facing
the marketer in adjusting to the culture lies in recognizing its impact.
o In a domestic market, the reaction to much of the environment’s (cultural) impact on
the marketer’s activities is automatic; the various cultural influences that fill our lives
 are simply a part of our socialization, and we react in a manner acceptable to our society
without consciously thinking about it.

▪ Obstacles to Success in environmental adaptation internationally:

1. Self-Reference Criterion (SRC) is an unconscious reference to one’s own cultural
values, experiences, and knowledge as a basis for decisions.
2. Ethnocentrism is the notion that people in one’s own company, culture, or country
know best how to do things.
Both the SRC and ethnocentrism obstruct the ability to assess a foreign market in its true light.

▪ Fun Facts:
o It's Illegal to Chew Gum in Singapore
o Don't Wear Your Winnie the Pooh T-Shirt in Poland (inappropriate dress)
o Sweden has gone so far as to prohibit all advertising that is deemed to be aimed at
children under 12.
o Alcohol marketing is regulated in many places and banned outright in others,
especially in Muslim countries
o False advertising is banned in China, India and UK
o Infant formula producers such as Nestle marketed their product as a breast milk
replacement in developing countries.

Cross Cultural Analysis:

1. Define the business problem or goal in home-country cultural traits, habits, or norms.
2. Define the business problem or goal in foreign-country cultural traits, habits, or norms
through consultation with natives of the target country.
3. Isolate the SRC influence in the problem and examine it carefully to see how it
complicates the problem.
4. Redefine the problem without the SRC influence and solve for the optimum business
goal situation.

Developing Global Awareness: To be globally aware is to have:

1. tolerance of cultural differences
2. knowledge of cultures, history, world market potential, and global economic, social,
and political trends
Stages of International Marketing Involvement:
• No Direct Foreign Marketing
A company in this stage does not actively cultivate customers outside national boundaries,
however, this company’s products may reach foreign markets.
• Infrequent Foreign Marketing
Sales to foreign markets are made as goods become available (temporary surplus), with little
or no intention of maintaining continuous market representation. As domestic demand
increases and absorbs surpluses, foreign sales activity is reduced or even withdrawn.
• Regular Foreign Marketing
The firm has permanent productive capacity devoted to the production of goods and services
to be marketed in foreign markets. The primary focus of operations and production is to service
domestic market needs. However, as overseas demand grows, production is allocated for
foreign markets, and products may be adapted to meet the needs of individual foreign markets.
• International Marketing
Companies in this stage are fully committed to and involved in international marketing
activities. Such companies seek markets all over the world and sell products that are a result of
planned production for markets in various countries.
• Global Marketing
Companies treat the world, including their home market, as one market. At the global
marketing level, the most profound change is the orientation of the company toward markets
and associated planning activities.

Factors favoring faster Internationalization:

1. Companies with either high technology and/or marketing-based resources
2. Smaller home markets and larger production capacities
3. Firms with key managers well networked internationally