Description
It explains terms in International Marketing like domestic marketing, foreign marketing and comparative marketing.
The Concept of International Marketing
Introduction
• Marketing activity carried out by a firm in more than one country is referred to as international marketing. • Since the firm has to carry out its marketing operations in more than one nation, the task of marketing becomes much more complex compared to domestic marketing. • As in the case of domestic marketing , international marketing involves identifying the needs and wants of customers, conceptualizing and developing products, pricing, promotion and distribution of goods and services, and coordinating marketing activities in international markets.
• Though the fundamentals of marketing are the same as those in domestic markets, in international markets , a variety of environmental factors combine to make marketing decisions of business organization more challenging. • Also known as uncontrollable elements, these are cultural, economical, political, legal and technological factors over which a marketer can exercise little influence. • The challenge in international marketing thus lies in managing the controllable elements of the marketing mix – product, price, distribution and promotion and adapting to ensure marketing success.
International Marketing
• International Marketing involves: I. Identifying needs and wants of customers in international markets, II. Taking marketing mix decisions related to product, pricing, distribution and communication keeping in view the diverse consumer and market behavior across different countries on one hand and firm’s goals towards globalization on the other hand. III. Penetrating into international market using various modes of entry, and IV. Taking decisions in view of dynamic international marketing environment
Globalization
• Globalization is defined as a process of economic integration of the world through the removal of barriers to free trade and capital mobility as well as through the diffusion of knowledge and information.
Driving Forces
Technology
• Technology is a universal factor that crosses national and cultural boundaries. • There are no cultural boundaries limiting its application. • Once a technology is developed , it soon becomes available everywhere in the world. • In regional markets like Europe, the increasing overlap of advertising across national boundaries and the mobility of consumers have created opportunities for marketers to pursue panEuropean product positionings.
Regional Economic Agreements
• A number of multilateral trade agreements have accelerated the pace of global integration. • Nafta is expanding trade among United States, Canada and Mexico. • In Europe, the expanding membership of European Union is lowering barriers to trade within region.
Market Needs and Wants
• Markets around the world have certain cultural universals and cultural differences. • The common elements in human nature provides the opportunity to create and serve the global markets. • Most global markets do not exist in nature. They must be created by marketing effort.
Transportation and Communication Improvements
• The time and cost barriers associated with distance have fallen tremendously over the past 100 years. • One essential characteristic of the effective global business is face to face communication among employers and between the company and its consumers. • In the 90’s ,new communication technologies such as e-mail, fax, and teleconferencing and videoconferencing allowed managers, executives and customers to link up electronically from virtually any part of the world for a fraction of the cost of air travel.
Product Development Costs
• The pressure of globalization is intense when new products require major investments and long periods of development time. • The pharmaceutical industry provides a striking illustration of this driving force where the cost of developing a new drug has increased with time. In 1976 it costed $76 million which increased to $359 million in 1993. • Such costs must be recovered in the global marketplace, as no single national market is likely to be large enough to support investments of this size.
Quality
• Global marketing strategies can generate greater revenue and greater operating margins which in turn support design and manufacturing quality. • Global competition has forced all companies to improve quality. • When a global company establishes a benchmark in quality , competitors must quickly make their own improvements and come up to par.
World Economic Trends
• There are three reasons why economic growth has been a driving force in the expansion of international economy and the growth of global marketing. • First, growth has created market opportunities that provide a major incentive for companies to expand globally.At the same time, slow growth in a company’s domestic market can signal the need to look abroad for opportunities in nations or regions with high rates of growth. • Second, economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies.
• Third, the worldwide movement toward deregulation and privatization is another driving force. • The trend toward privatization is opening up formerly closed markets significantly thereby creating tremendous opportunities.
Leverage
• A global company possesses the unique opportunity to develop leverage. Leverage is simply some type of advantage that a company enjoys by virtue of the fact that it conducts business in more than one country. • Four important types of leverages are – experience transfers, scale economies, resource utilization and global strategy.
Restraining Forces
• • • • • • • • Culture Market Differences Costs National Controls and Barriers Nationalism War Management Myopia Domestic Focus
Underlying Forces of Globalization
• • • • • • • • Growth Profitability Achieving Economies of Scale Risk Spread Access to Imported Inputs Uniqueness of Product of Service Marketing opportunities due to Life Cycles Spreading R&D Costs
Globalization of Production
• The firms evaluate various location world wide for manufacturing activities so as to take advantage of local resource and optimize their manufacturing competitiveness. • The firms in Japan, USA and Europe manufacture at overseas location more than 3 times of their exports output produced in their home country.
Globalization of Markets
• Over the last two decades, technology as the most powerful tool has driven the world towards converging commonality. • Technological strides in telecommunication, transport and travel have created a new consumer segment in the isolated places of the world. • Standardized products are increasingly finding markets across the globe. • The products from the global brands such as GE, Kodak, Sony, Benetton, Colgate etc are few of the several brands preferred and bought by the customers around the world.
Terms in International Marketing
• Domestic Marketing : Marketing practices within the domestic markets. • Foreign Marketing: Methods and practices used in the home market and also applied in overseas markets with little adaptation.For instance an Indian firm using domestic marketing methods for the European market is known as foreign marketing. • Comparative Marketing : Comparative study of two or more marketing systems to find out the differences and similarities.
• International Trade : A macroeconomic term used at national level with a focus on flow of goods and services, and capital across national borders. It also involves analysis of commercial and monetary conditions and their effect on transfer of resources and balance of payments. • International Trade views international markets at the national level from a macroeconomic perspective, little attention is given to company level marketing methods and strategies. • International Business : A much wider term encompassing all commercial transactions that take place between two countries. These transactions including sales, investment, and transportation, may be initiated by government or private companies with an objective to make profit or not.
• International Marketing : It focuses on the firmlevel marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic decisions to compete in the international markets. • Global Marketing : Global marketing treats the whole world as a single market and standardizes the marketing mix of the companies as far as feasible. A global company does not differentiates between a home country and a foreign country and consider itself as a corporate citizen of the world.
Evolutionary Process of Global Marketing
• Research indicates that global marketing is a gradual process occurring in stages rather than through large speculative investments. • The evolution of marketing across national boundaries has five identifiable stages. • These are discussed in next slides.
Domestic Marketing
Marketing Focus Orientation Marketing Mix Decisions Domestic Ethnocentric Focused on domestic customers
• In the initial stages, most companies focus solely on their domestic markets. • The marketing mix decisions are based on the needs and wants of the domestic customers and in response to the competition. • The marketing of most companies in the initial stages tend to be ethnocentric, paying little attention to changes taking place in the international marketing environment. • Ethnocentrism is defined as the predisposition of a firm to be predominantly concerned with its viability and legitimacy only in its home country. • This ethnocentric approach makes domestic companies vulnerable to changes forced upon them by foreign competition.
Exporting
Market Focus Orientation Marketing Mix Decisions Overseas(Targeting and Entering Foreign Markets) Ethnocentric Focused mainly on domestic customers Overseas marketing-generally an extension of domestic marketing Decisions made at headquarters
•This stage model suggests that generally a firm focused on domestic markets begins to export unintentionally by receiving unsolicited orders from overseas markets. •The firm tries to fulfill such orders reluctantly with little strategic orientation. •However the positive experience in fulfilling such overseas market requirements serves as a stimulus to look for repeat orders. •The motivating factors that lead to increased interest in the overseas markets include additional marketing outlets for the firm, less dependence on the domestic markets, risk spread and increased profitability.
International Marketing
Marketing Focus Orientation Marketing Mix Decisions Differentiation in country markets by way of developing or acquiring new brands Polycentric Developing local products depending upon country needs. Decisions by individual subsidiaries.
•Over a period of time the exporting company starts catering to the specific needs of a few overseas markets and established noticeable share in the market. •The growing prominence of the company triggers the existing market players to devise and implement fiercely competitive marketing strategies so as to maintain their presence and supremacy in the market. •Besides the physical distance of an exporting firm,also increases the psychic distance. •This necessitates the adaptation of different marketing strategies for different markets to face the marketing challenges of the specific market. •It is known as polycentric orientation, in which product and promotion adaptations are often made.
• Thus,polycentric orientation refers to the predisposition of a firm to the existence of significant cultural variations across the markets. • It recognizes the differences among markets and respond to the market forces with market specific strategies. • The products are manufactured in the home country with separate product adaptation for different markets. • However, the marketing decisions, such as decisions about product development, branding , distribution, pricing and promotion are taken independently by the marketing department in each country.
Multinational Marketing
Marketing Focus Consolidation of operations on regional basis Gains economies of scale Regiocentric Product Standardization within regions but not across them On regional basis
Orientation Marketing Mix Decisions
•Once a company establishes its manufacturing and marketing operations in multiple markets , it begins to consolidate its operations on regional basis so as to take advantage of economies of scale in manufacturing and marketing mix decisions. •Various markets are divided into regional sub-segments on the basis of their similarity to respond to marketing mix decisions. •Marketing mix decision are based on regional basis which brings economies of scale.
Global Marketing
Marketing Focus Orientation Marketing Mix Decisions Consolidating firm’s operations on global basis Geocentric Globalization of marketing mix decisions with local variations. Joint decision making across firm’s global operations.
•The extreme view of global marketing refers to the use of a single marketing method across the international markets with little adaptation which will lead to: •Reduction of cost inefficiencies and duplication of efforts among national and regional subsidiaries, •Opportunities for the transfer of products, brands, and other ideas across subsidiaries •Emergence of global customers •Improved linkages among national marketing infrastructures leading to the development of a global marketing infrastructure.
Adaptation
• The key to success in international markets lies in a marketers ability to adapt the company’s strategies to the requirements of the overseas markets. • The ability of an international marketer to have an objective evaluation of environmental factors on the marketing mix is severely affected by his cultural conditioning and understanding of the nuances of another culture. • A self reference criterion is an unconscious reference to one’s own cultural values, experiences and knowledge as a basis for decision making.
EPRG Concept
• • • • Enthocentric Orientation Polycentric Orientation Regiocentric Orientation Geocentric Orientation
doc_729067675.pptx
It explains terms in International Marketing like domestic marketing, foreign marketing and comparative marketing.
The Concept of International Marketing
Introduction
• Marketing activity carried out by a firm in more than one country is referred to as international marketing. • Since the firm has to carry out its marketing operations in more than one nation, the task of marketing becomes much more complex compared to domestic marketing. • As in the case of domestic marketing , international marketing involves identifying the needs and wants of customers, conceptualizing and developing products, pricing, promotion and distribution of goods and services, and coordinating marketing activities in international markets.
• Though the fundamentals of marketing are the same as those in domestic markets, in international markets , a variety of environmental factors combine to make marketing decisions of business organization more challenging. • Also known as uncontrollable elements, these are cultural, economical, political, legal and technological factors over which a marketer can exercise little influence. • The challenge in international marketing thus lies in managing the controllable elements of the marketing mix – product, price, distribution and promotion and adapting to ensure marketing success.
International Marketing
• International Marketing involves: I. Identifying needs and wants of customers in international markets, II. Taking marketing mix decisions related to product, pricing, distribution and communication keeping in view the diverse consumer and market behavior across different countries on one hand and firm’s goals towards globalization on the other hand. III. Penetrating into international market using various modes of entry, and IV. Taking decisions in view of dynamic international marketing environment
Globalization
• Globalization is defined as a process of economic integration of the world through the removal of barriers to free trade and capital mobility as well as through the diffusion of knowledge and information.
Driving Forces
Technology
• Technology is a universal factor that crosses national and cultural boundaries. • There are no cultural boundaries limiting its application. • Once a technology is developed , it soon becomes available everywhere in the world. • In regional markets like Europe, the increasing overlap of advertising across national boundaries and the mobility of consumers have created opportunities for marketers to pursue panEuropean product positionings.
Regional Economic Agreements
• A number of multilateral trade agreements have accelerated the pace of global integration. • Nafta is expanding trade among United States, Canada and Mexico. • In Europe, the expanding membership of European Union is lowering barriers to trade within region.
Market Needs and Wants
• Markets around the world have certain cultural universals and cultural differences. • The common elements in human nature provides the opportunity to create and serve the global markets. • Most global markets do not exist in nature. They must be created by marketing effort.
Transportation and Communication Improvements
• The time and cost barriers associated with distance have fallen tremendously over the past 100 years. • One essential characteristic of the effective global business is face to face communication among employers and between the company and its consumers. • In the 90’s ,new communication technologies such as e-mail, fax, and teleconferencing and videoconferencing allowed managers, executives and customers to link up electronically from virtually any part of the world for a fraction of the cost of air travel.
Product Development Costs
• The pressure of globalization is intense when new products require major investments and long periods of development time. • The pharmaceutical industry provides a striking illustration of this driving force where the cost of developing a new drug has increased with time. In 1976 it costed $76 million which increased to $359 million in 1993. • Such costs must be recovered in the global marketplace, as no single national market is likely to be large enough to support investments of this size.
Quality
• Global marketing strategies can generate greater revenue and greater operating margins which in turn support design and manufacturing quality. • Global competition has forced all companies to improve quality. • When a global company establishes a benchmark in quality , competitors must quickly make their own improvements and come up to par.
World Economic Trends
• There are three reasons why economic growth has been a driving force in the expansion of international economy and the growth of global marketing. • First, growth has created market opportunities that provide a major incentive for companies to expand globally.At the same time, slow growth in a company’s domestic market can signal the need to look abroad for opportunities in nations or regions with high rates of growth. • Second, economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies.
• Third, the worldwide movement toward deregulation and privatization is another driving force. • The trend toward privatization is opening up formerly closed markets significantly thereby creating tremendous opportunities.
Leverage
• A global company possesses the unique opportunity to develop leverage. Leverage is simply some type of advantage that a company enjoys by virtue of the fact that it conducts business in more than one country. • Four important types of leverages are – experience transfers, scale economies, resource utilization and global strategy.
Restraining Forces
• • • • • • • • Culture Market Differences Costs National Controls and Barriers Nationalism War Management Myopia Domestic Focus
Underlying Forces of Globalization
• • • • • • • • Growth Profitability Achieving Economies of Scale Risk Spread Access to Imported Inputs Uniqueness of Product of Service Marketing opportunities due to Life Cycles Spreading R&D Costs
Globalization of Production
• The firms evaluate various location world wide for manufacturing activities so as to take advantage of local resource and optimize their manufacturing competitiveness. • The firms in Japan, USA and Europe manufacture at overseas location more than 3 times of their exports output produced in their home country.
Globalization of Markets
• Over the last two decades, technology as the most powerful tool has driven the world towards converging commonality. • Technological strides in telecommunication, transport and travel have created a new consumer segment in the isolated places of the world. • Standardized products are increasingly finding markets across the globe. • The products from the global brands such as GE, Kodak, Sony, Benetton, Colgate etc are few of the several brands preferred and bought by the customers around the world.
Terms in International Marketing
• Domestic Marketing : Marketing practices within the domestic markets. • Foreign Marketing: Methods and practices used in the home market and also applied in overseas markets with little adaptation.For instance an Indian firm using domestic marketing methods for the European market is known as foreign marketing. • Comparative Marketing : Comparative study of two or more marketing systems to find out the differences and similarities.
• International Trade : A macroeconomic term used at national level with a focus on flow of goods and services, and capital across national borders. It also involves analysis of commercial and monetary conditions and their effect on transfer of resources and balance of payments. • International Trade views international markets at the national level from a macroeconomic perspective, little attention is given to company level marketing methods and strategies. • International Business : A much wider term encompassing all commercial transactions that take place between two countries. These transactions including sales, investment, and transportation, may be initiated by government or private companies with an objective to make profit or not.
• International Marketing : It focuses on the firmlevel marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic decisions to compete in the international markets. • Global Marketing : Global marketing treats the whole world as a single market and standardizes the marketing mix of the companies as far as feasible. A global company does not differentiates between a home country and a foreign country and consider itself as a corporate citizen of the world.
Evolutionary Process of Global Marketing
• Research indicates that global marketing is a gradual process occurring in stages rather than through large speculative investments. • The evolution of marketing across national boundaries has five identifiable stages. • These are discussed in next slides.
Domestic Marketing
Marketing Focus Orientation Marketing Mix Decisions Domestic Ethnocentric Focused on domestic customers
• In the initial stages, most companies focus solely on their domestic markets. • The marketing mix decisions are based on the needs and wants of the domestic customers and in response to the competition. • The marketing of most companies in the initial stages tend to be ethnocentric, paying little attention to changes taking place in the international marketing environment. • Ethnocentrism is defined as the predisposition of a firm to be predominantly concerned with its viability and legitimacy only in its home country. • This ethnocentric approach makes domestic companies vulnerable to changes forced upon them by foreign competition.
Exporting
Market Focus Orientation Marketing Mix Decisions Overseas(Targeting and Entering Foreign Markets) Ethnocentric Focused mainly on domestic customers Overseas marketing-generally an extension of domestic marketing Decisions made at headquarters
•This stage model suggests that generally a firm focused on domestic markets begins to export unintentionally by receiving unsolicited orders from overseas markets. •The firm tries to fulfill such orders reluctantly with little strategic orientation. •However the positive experience in fulfilling such overseas market requirements serves as a stimulus to look for repeat orders. •The motivating factors that lead to increased interest in the overseas markets include additional marketing outlets for the firm, less dependence on the domestic markets, risk spread and increased profitability.
International Marketing
Marketing Focus Orientation Marketing Mix Decisions Differentiation in country markets by way of developing or acquiring new brands Polycentric Developing local products depending upon country needs. Decisions by individual subsidiaries.
•Over a period of time the exporting company starts catering to the specific needs of a few overseas markets and established noticeable share in the market. •The growing prominence of the company triggers the existing market players to devise and implement fiercely competitive marketing strategies so as to maintain their presence and supremacy in the market. •Besides the physical distance of an exporting firm,also increases the psychic distance. •This necessitates the adaptation of different marketing strategies for different markets to face the marketing challenges of the specific market. •It is known as polycentric orientation, in which product and promotion adaptations are often made.
• Thus,polycentric orientation refers to the predisposition of a firm to the existence of significant cultural variations across the markets. • It recognizes the differences among markets and respond to the market forces with market specific strategies. • The products are manufactured in the home country with separate product adaptation for different markets. • However, the marketing decisions, such as decisions about product development, branding , distribution, pricing and promotion are taken independently by the marketing department in each country.
Multinational Marketing
Marketing Focus Consolidation of operations on regional basis Gains economies of scale Regiocentric Product Standardization within regions but not across them On regional basis
Orientation Marketing Mix Decisions
•Once a company establishes its manufacturing and marketing operations in multiple markets , it begins to consolidate its operations on regional basis so as to take advantage of economies of scale in manufacturing and marketing mix decisions. •Various markets are divided into regional sub-segments on the basis of their similarity to respond to marketing mix decisions. •Marketing mix decision are based on regional basis which brings economies of scale.
Global Marketing
Marketing Focus Orientation Marketing Mix Decisions Consolidating firm’s operations on global basis Geocentric Globalization of marketing mix decisions with local variations. Joint decision making across firm’s global operations.
•The extreme view of global marketing refers to the use of a single marketing method across the international markets with little adaptation which will lead to: •Reduction of cost inefficiencies and duplication of efforts among national and regional subsidiaries, •Opportunities for the transfer of products, brands, and other ideas across subsidiaries •Emergence of global customers •Improved linkages among national marketing infrastructures leading to the development of a global marketing infrastructure.
Adaptation
• The key to success in international markets lies in a marketers ability to adapt the company’s strategies to the requirements of the overseas markets. • The ability of an international marketer to have an objective evaluation of environmental factors on the marketing mix is severely affected by his cultural conditioning and understanding of the nuances of another culture. • A self reference criterion is an unconscious reference to one’s own cultural values, experiences and knowledge as a basis for decision making.
EPRG Concept
• • • • Enthocentric Orientation Polycentric Orientation Regiocentric Orientation Geocentric Orientation
doc_729067675.pptx