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The Scope of International Marketing

The Scope of International Marketing. Chapter 1. CULTURAL IQ!  Japan is a high context culture, where small gestures convey great meaning. Which is an appropriate behavior in Japan? A. Covering your mouth when you laugh B. Winking to convey agreement

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The Scope of International Marketing

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  1. The Scope of International Marketing Chapter 1

  2. CULTURAL IQ! •  Japan is a high context culture, where small gestures convey great meaning. Which is an appropriate behavior in Japan? • A. Covering your mouth when you laugh • B. Winking to convey agreement • C. Speaking in a loud, forceful voice •  True or false: Never keep your left hand in your pocket while shaking hands with your right in Germany. •  Spitting is grotesque in many places, but is actually against the law in which country? • A. St. Thomas • B. St. Martin • C. Singapore •  You are the sole passenger on a bus in Bahrain. A man enters, and chooses the seat next to you. True or false: He intends to start a conversation with you.

  3.  You are greeting a new associate in France. As you firmly grasp his hand, heartily pumping it up and down, he looks a bit bemused. This is because: • A. He's relieved you didn't kiss him. • B. The French handshake is more of a handclasp, with no pumping action. • C. He wishes you had kissed him. •  True or false: Before female executives travel to Brazil, they should be certain their nails are well-manicured. •  You feel good after your big sales call in Stockholm, Sweden. It's a surprise to you, then, when they don't accept the deal. This could be because during the meeting, you: • A. Leaned backward in your chair and crossed your arms • B. Rested your ankle on your knee the whole time • C. Laughed loudly • D. All of the above

  4. Lecture Outline • The Internationalization of U.S. Business • International Marketing Defined • The International Marketing Task • Marketing Controllables • Domestic Uncontrollables • Foreign Uncontrollables • Self-Reference Criterion • Internationalization Process • Phases of international Involvement • Domestic Market Expansion • Multi-Domestic Market Concept • Global Marketing Concept

  5. John F. Welch, Jr. "Our vision has been described to you for a decade. We believed that only businesses that were number-one or number-two in their markets could win in the increasingly competitive global arena. Those that could not were to be fixed, closed or sold." Chairman and CEO, General Electric

  6. Globalization of Business and Markets • Until recently, competition for U.S. markets was only among U.S. businesses with the same relative cost of money, labor and product è U.S market now includes competitors from all over the world

  7. Why internationalization? • Saturation of U.S. markets

  8. Foreign Acquisitions of U.S. Companies U.S. Company Foreign Owner Keebler (Cookies and other foods) Britain J. Walter Thompson (Advertising) Britain Spiegal (Catalog retailing) Germany Mack Trucks (Automotive) France Giant Food Stores (Supermarkets) Netherlands Pillsbury, Burger King, Pearle Vision Britain CBS Records (Music and Entertainment) Japan Carnation (Coffee-Mate, Friskies pet food) Switzerland Chesebrough-Pond’s (Vaseline) Netherlands SOURCE: Adapted from “The 100 Largest Foreign Investments in the U.S.,” Forbes, July 18, 1994, pp. 266-270.

  9. Why internationalization? • Saturation of U.S. markets • Higher ROI in foreign markets

  10. Some Big U.S. Players in the Global Game* Foreign Revenues % of Total Foreign Profits % of Total Foreign Assets % of Total Company 51.4 Ei du Pont de Nemours 99.8 37.3 52.1 Proctor & Gamble 65.1 40.7 67.0 Coca-Cola 67.8 48.6 48.8 Eastman Kodak 41.5 32.4 43.9 Motorola 84.8 34.6 49.1 Johnson & Johnson 54.6 43.9 35.5 Sara Lee 41.3 45.0 64.5 Colgate-Palmolive 67.0 46.9 67.5 Gillette 61.4 65.7 49.0 Compaq Computer 63.6 40.5 46.9 McDonald’s 45.1 46.9 32.0 Avon Products 59.9 48.3 *1993 data. SOURCE: Adapted from “The 100 largest Multinationals: Getting the Welcome Carpet,”Forbes, July 18, 1994, pp. 276-279.

  11. Why internationalization? • Saturation of U.S. markets • Higher ROI in foreign markets • Establish early position in world markets

  12. Industry U.S. Japan Europe Energy Equipment & Services 93% 1% 6% Aerospace & Military Technology 76 15 23 Data Processing & Reproduction 73 22 5 Electronic Components & instruments 62 36 2 Beverages & Tobacco 63 16 20 Health & Personal Care 49 20 31 Leisure & Tourism 46 16 38 Forest Products & Paper 51 17 32 Energy Source 46 13 41 Metals-Nonferrous 30 31 39 Recreation & other Consumer Goods 33 61 6 Food & hh Products 33 22 46 Electrical & Electronics 21 51 28 Chemicals 28 30 42 Industrial Components 24 45 31 Automobiles 37 35 28 Machinery & Engineering 19 46 35 Appliances & hh Durables 8 67 26 Metals-Steel 105733 ALL INDUSTRIES (SALES) 37% 32% 31% ALL INDUSTRIES (PROFITS) 48% 16% 37% Share of Global Sales (1987-92)

  13. Invented Here, Made Elsewhere U.S. Invented Technology 9 0% Phonographs 1% 9 0% Color TVs 1 0% 1 9 7 0 4 0% Audiotape Recorders 0% N O W 1 0% Videotape Recorders 1% 9 9% Machine Tools 3 5% Telephones 9 9% 2 5% 8 9% Semiconductors 6 4% 9 8% Computers 7 4% 0 20 40 60 80 100

  14. “Every American company is international, at least to the extent that its business performance is conditioned in part by events that occur abroad”

  15. Definition of International Marketing • The performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than nation for profit.

  16. What’s the difference between international marketing and domestic marketing? • The environment in which marketing strategies have to be implemented

  17. The International Marketing Task 7 Foreign environment (uncontrollable) 1 Economic forces Political/legal forces Domestic environment (uncontrollable) 2 7 Competitive structure Political/ legal forces Competitive Forces (controllable) Cultural forces Environmental uncontrollables country market A Price Product 3 Channels of distribution Promotion Environmental uncontrollables country market B 6 Level of Technology Geography and Infrastructure Economic climate Environmental uncontrollables country market C 4 5 Structure of distribution

  18. Self-Reference Criterion (SRC) • An unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions

  19. International Marketing Concepts Concept EPRG Schema Domestic Market Extension (Ethnocentric) Multi-Domestic Market (Polycentric) Global Marketing (Regio/Geocentric)

  20. Coca-ColaGlobal Marketing Strategy Think Globally Act Locally

  21. Examples of Global Marketing Product Design Canon photocopier/McDonalds/Toyota/Ford Brand Name Marlboro/Coke/Pepsi/Mercedes/Caterpillar Product Positioning Colgate toothpaste/Unilever fabric softener Packaging Gillette razors Advertising Strategy Coca-Cola/British Airways/Benetton Sales Promotion IBM Distribution Benetton/United Distillers American Express/Hertz Customer Service

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