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Chapter 1INTRODUCTION TO

INTERNATIONAL MARKETING

Prepared by Robin Roberts

Griffith University


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Learning objectives

After studying this chapter, you should be able to:

Describe the growth of Asian markets and

the implication for global trade andinternational marketing

Explain the aspects of the international

trade and business environment that have

made understanding international marketing

imperative


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Learning objectives

Discuss the evolution of global marketing

Outline key processes involved in planning,

implementing and monitoring an internationalmarketing strategy

Understand the comparative advantage,

international product cycle and internalizationtheories in relation to international trade and

investment


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Overview

Increasingly global environment for

todays marketing manager

However, not a new phenomenon

The Silk Road

Trade Routes from Ancient Rome

The focus should be not the nature but

the rate and type of change

US$12.5 trillion in world trade in 2005

vs. US$6.5 trillion in 1998


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The Asian century

Historically for most of the 20th century

the triad regions have dominated world

trade

North America, Western Europe and Japan

Increasingly, it is the Big Emerging

Markets (BEMs) which are now having an

impact CEA, India, South Korea, Mexico, Brazil,

Argentina, South Africa, Poland, Turkey &

ASEAN


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The Asian century

Increasing amount of competitioncoming from the BEMs

There is a desire for modernity in these

markets which fuels theircompetitiveness and growth

Infrastructure and energy needs will

prove to be problematic as they grow


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Why understanding international

marketing is imperative

1. Saturation of domestic markets forces

companies to look elsewhere

2. The nature of competition has changed in terms of market share, country source

and global reach


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3. International competition also brings

about global cooperation

partnerships between Toshiba and Sony,

from Japan with US computermanufacturer IBM

4. The impact that the internet and

e-business has made on the global

business landscape


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5. Changing nature of the world economy

Shift in the worlds largest companies

Less US and Japanese centric

Consider the make up of the largest 100

companies in the world

6. Domestic companies cannot avoid

competitive pressure from globallyoriented firms




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Top 100 largest organisations

Table 1.1The worlds 100 largest

organisations, by country,

1970 - 2009


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International trade versus

international business

International trade

The process of exporting and importing

goods between a nation and other

countries in the world

International business

A combination of international trade and

foreign production of goods for sale


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Evolution of international

and global marketing

Shift in management

paradigms

Traditional paradigm

rooted in USmanagement theory

More of a global

approach now

Marketing strategies are

based on an

organisations degree of

experience and nature ofoperations in

international markets

Organisations do, however,

evolve over time


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Evolution of international and

global marketing

Five Stages

1.Domestic marketing

2.Export marketing3.International (country-by-country)

marketing

4.Multinational (region-by-region)marketing

5.Global marketing


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Evolution of global marketing


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Domestic marketing

An approach which organisations focus on

the domestic market and domesticcompetition only

Ethnocentric

Product development for home country

customers

Marketing mix decisions made at head office

level


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global marketing

Domestic marketing examples:

Your local pizza shop

Your car mechanic

A national bank that does not operate

outside the boundaries of the country


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Export marketing

Organisations sell their product or

service directly or indirectly to overseasbuyers

Ethnocentric

Product development mainly determined by

home market needs

Marketing mix decisions made at head

office level


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global marketing

Export marketing examples:

A clothing company that exports to the

country adjacent to it A food company that exports its produce

to another country without changing

anything about the product


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global marketing

International marketing

(country-by-country)

Marketing functions are adapted to foreign

market demands

Polycentric

Local product development based on local

needs

Marketing mix decisions made in each country


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global marketing

International marketing examples:

A food marketer who changes the taste

of the product to suit local tastes

A retailer who adapts their stores to

allow for aesthetics and tastes of locals

Can also include multi-domestic

Foreign subsidiaries operating independently ofone another without control from the

organisations head office

l l d


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global marketing

Multinational marketing

(region-by-region)

The organisation realises economies ofscale by standardising operations on a

regional basis

Regiocentric

Product planning is standardised within

region but not across

Marketing mix decisions made regionally

l i i i l d


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global marketing

Multinational marketing examples:

A bookstore chain that makes

adjustments to its store layout andproduct range within (rather than across)

regions

A jewellery store that uses a differentcelebrity endorsement in Asian markets

compared to North American markets

E l i f i i l d


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global marketing

Global Marketing

An organisation strives for efficiencies of

scale by developing a standardisedmarketing mix across national, regional

and global markets

Geocentric

Global products with local variations

Marketing mix decisions made jointly with

mutual consultation

E l i f i i l d


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global marketing

Global marketing examples:

A global hair care brand adjusts the

product formula to allow for differentconditions in different countries

A global advertising agency maintains its

global branding but adjusts its mix to

allow for local conditions such as access

to media

E l i f i i l d


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global marketing

Global marketing key concerns

Impact of environmental factors on global

marketing

Impact of the Internet on global marketing

E l i f i i l d


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global marketing

Global marketing Impact ofEnvironmental Factors

Location

Singapore and its central location in Asia

Culture

Halal products produced in Dubai or Pakistan

Availability of human resources Education in Bangalore, India

Geographic/physical landscape

Hong Kong and its deep water port


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International marketing planning

and strategy development

Changing the controllable variables

The Marketing Mix

Understanding the need to fit the strategyto the environment

The necessity for effective planning

Same concerns as domestic marketing

planning, except the major interest is with

international marketing variables


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Theories of international trade and

the multinational organisation

Comparative advantage theory English economist, David Ricardo

A country can gain from engaging in trade

even if it has an absolute advantage ordisadvantage

Absolute advantage

The situation in which one region can

produce goods with lower unit labour

requirements than any other region and so

is able to export these goods


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Principles of international trade1. Countries benefit from international trade

2. International trade increases worldwide

production through specialisation3. Exchange rates are determined primarily by

traded goods

Factor endowment theory Based on notions that nations possess

different amounts of land, labour, capital that

determine a nation's comparative advantage




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International product cycle theory

Explains a realistic, dynamic change in

international competition over time and

place through: Economies of scale and scope

Technological gap

Preference similarity




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Summary

You should now have an understanding of:

The growth of Asian markets and

the implication for global trade and

international marketing

The aspects of the international

trade and business environment that have

made understanding international marketingimperative

The evolution of global marketing


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Summary

The key processes involved in planning,

implementing and monitoring an international

marketing strategy

The role of comparative advantage,

international product cycle and internalization

theories in relation to international trade and

investment


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