Chapter 1

The Scope and Challenge of International Marketing

McGraw-Hill/Irwin

2005 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Learning Objectives

1.
1. The
The changing
changing face
face of
of U.S.
U.S. business
business
2.
2. The
The scope
scope of
of the
the international
international marketing
marketing task
task
3.
3. The
The increasing
increasing importance
importance of
of global
global awareness
awareness
4.
4. The
The progression
progression of
of becoming
becoming aa global
global marketer
marketer
5.
5. The
The importance
importance of
of the
the self-reference
self-reference criterion
criterion (SRC)
(SRC) in
in
international
international marketing
marketing

Preface

Never
Never before
before in
inAmerican
American history
history have
have U.S.
U.S. businesses,
businesses, large
large
and
and small,
small, been
been so
so deeply
deeply involved
involved in
in and
and affected
affected by
by
international
international business.
business.A
Aglobal
global economic
economic boom,
boom, unprecedented
unprecedented
in
in modern
modern economic
economic history,
history,has
has been
been under
under way
way as
as the
the drive
drive for
for
efficiency,
efficiency,productivity,
productivity,and
and open,
open, unregulated
unregulated markets
markets sweeps
sweeps
the
the world.
world. Powerful
Powerful economic,
economic, technological,
technological, industrial,
industrial, political,
political,
and
and demographic
demographic forces
forces are
are converging
converging to
to build
build the
the foundation
foundation of
of
aa new
new global
global economic
economic order
order on
on which
which the
the structure
structure of
of aa
one-world
one-world economic
economic and
and market
market system
system will
will be
be built
built
(Cateora
(Cateora and
and Graham)
Graham)

Global Perspective: Recent Events

Information
Information technology
technology boom
boom of
of the
the late
late 1990s
1990s

The
The high-tech
high-tech bust
bust of
of 2001
2001

Enron
Enron and
and WorldCom
WorldCom scandals
scandals
September
September 11th
11th attacks
attacks on
on the
the World
World Trade
Trade Center
Center
and
and Pentagon
Pentagon
Wars
Wars in
in Afghanistan
Afghanistan and
and Iraq
Iraq

Global Perspective: Recent Events

International
International conflict
conflict among
among China,
China,
Taiwan,
Taiwan, and
and the
the United
United States
States

2003
2003 SARS
SARS outbreak
outbreak in
in Asia
Asia
Global
Global terrorism,
terrorism, e.g.,
e.g., Indonesia,
Indonesia, Israel,
Israel,
India,
India, and
and Morocco
Morocco
Transcending
Transcending these
these events,
events, international
international
commerce
commerce continued
continued

Global Business Trends

1.
1. The
The rapid
rapid growth
growth of
of the
the
World
World Trade
Trade Organization
Organization
and
and regional
regional free
free trade
trade
areas,
areas, e.g.,
e.g., NAFTA
NAFTAand
and the
the
European
European Union
Union

2.
2. General
General acceptance
acceptance of
of the
the
free
free market
market system
system among
among
developing
developing countries
countries in
in Latin
Latin
America,
America, Asia,
Asia, and
and Eastern
Eastern
Europe
Europe

3.
3. Impact
Impact of
of the
the Internet
Internet and
and
other
other global
global media
media on
on the
the
dissolution
dissolution of
of national
national
borders,
borders, and
and

4.
4. Managing
Managing global
global
environmental
environmental resources
resources

Internationalization of U.S. Business

Increasing
Increasing globalization
globalization of
of
markets
markets

Many
Many U.S.
U.S. companies
companies are
are
now
now foreign
foreign controlled:
controlled:
Carnation
Carnation (Swiss),
(Swiss),
Daimler-Chrysler
Daimler-Chrysler (German)
(German)

Firms
Firms face
face competition
competition on
on
all
all fronts
fronts

U.S.
U.S. firms
firms seeking
seeking foreign
foreign
markets
markets to
to increase
increase profits
profits

International Marketing: A Definition

International
International marketing
marketing is
is defined
defined as
as the
the
performance
performance of
of business
business activities
activities designed
designed to
to plan,
plan,
price,
price, promote,
promote, and
and direct
direct the
the flow
flow of
of aa companys
companys
goods
goods and
and services
services to
to consumers
consumers or
or users
users in
in more
more
than
than one
one nation
nation for
for aa profit
profit
Marketing
Marketing concepts,
concepts, processes,
processes, and
and principles
principles are
are universally
universally
applicable
applicable all
all over
over the
the world
world

The International Marketing Task

Foreign Environment
(Uncontrollables)
7. Structure of
Distribution

1. Competition
Domestic environment
(Uncontrollables)

Environmental
uncontrollables
country market A

(Controllables) 1. Competition
Price
Product
2. Technology
Target
5. PoliticalEnvironmental
7
Market
Legal
uncontrollables
6. Geography and
country
Promotion Place or 2 .Technology
Infrastructure
market B
Distribution
4.
Culture
Environmental
3. Economy
uncontrollable
5. Political3. Economy
s
Legal
country
market C
4.
Culture

Environmental Adaptation Needed

Differences
Differences are
are in
in the
the uncontrollable
uncontrollable environment
environment of
of international
international
marketing
marketing
Firms
Firms must
must adapt
adapt to
to uncontrollable
uncontrollable environment
environment of
of international
international
marketing
marketing by
by adjusting
adjusting the
the marketing
marketing mix
mix (product,
(product, price,
price,
promotion,
promotion, and
and distribution)
distribution)

Continuum
Adaptation
(of Marketing Mix)

Standardization
(of Marketing Mix)

INFLUENCED BY 7 ENVIRONMENTAL FACTORS

Self-Reference Criterion (SRC)

and Ethnocentrism:Major Obstacles
SRC is an unconscious reference to ones own cultural
values, experiences, and knowledge as a basis for
decisions
Ethnocentrism refers to the notion that ones own culture
or company knows best how to do things
Both the SRC and ethnocentrism impede the ability to
assess a foreign market in its true light
Reactions to meanings, values, symbols, and behavior
relevant to our own culture are different from those of
foreign
Relying on ones SRC could produce an unsuccessful
marketing program

Avoiding the Self Reference Criterion

To
To avoid
avoid the
the SRC,
SRC, the
the following
following steps
steps are
are suggested:
suggested:
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. Make no value
judgments
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 a Global Awareness

To
To be
be globally
globally aware
aware is
is to
to have:
have:
1. Tolerant of Cultural Differences, and

2. Knowledgeable of:
(a) Culture, (b) History, (c) World Market Potential,
(d) Global Economic, Social and Political Trends

Stages of International Marketing

Involvement
In
In general,
general, firms
firms go
go through
through five
five different
different phases
phases in
in going
going
international:
international:
No
No Direct
Direct Foreign
Foreign Marketing
Marketing
Infrequent
Infrequent Foreign
Foreign Marketing
Marketing
Regular
Regular Foreign
Foreign Marketing
Marketing
International
International Marketing
Marketing
Global
Global Marketing
Marketing

Strategic Orientation: EPRG Schema

Orientation

EPRG Schema

Domestic Marketing
Extension

(Ethnocentric)

Multi-Domestic
Marketing

(Polycentric)

Global Marketing

(Regio/Geocentric)

Strategic Orientation: EPRG Schema

Generally, four distinctive approaches dominate strategic thinking in
international marketing:

1. Ethnocentric or Domestic Marketing Extension Concept:

Home country marketing practices will succeed elsewhere

without adaptation; however, international marketing is
viewed as secondary to domestic operations
2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally

Strategic Orientation: EPRG Schema

Generally, four distinctive approaches dominate strategic thinking in
international marketing:

3. Regiocentric:

Sees the world as one market and develops a standardized

marketing strategy for the entire world
4. Geocentric:

Regiocentric and Geocentric are synonymous with a Global

Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world

Road Map of the Course

Introduction to International Marketing

Understanding the External Environments
Evaluation of Global Market Opportunities
Developing Global Marketing Strategies
Implementing Global Marketing Strategies