Chapter 1

The Scope and Challenge of

International Marketing

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 Evaluation
SECTION POINTS CONTENT (%)

1.1 Attendance (10%)

1. Process score (30%) 1.2 Written test (10%)
1.3 Exercises/hands on (10%)

2. Middle term
Group presentation
- report(20%)

3. Final Examination (50%) Multiple choice questions

 Overview of Chapter 1

• What is International Marketing?

• Benefits of International Marketing
• International marketing task
• Self-reference criterion and
Ethnocentrism
• Developing a global mindset
• Stages of international marketing
involvement
• The orientation of international marketing

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 Internationalization of
U.S. Business (1 of 2)
• The world is one market – increasing
globalization of markets
• Sony, Norelco, Samsung, Honda, Toyota,
Nescafe
• Many U.S. companies are foreign
controlled
• 7-Eleven and Firestone – Japan
• Carnation – Switzerland
• Wall Street Journal – Australia
• Smith & Wesson – Britain
• Zenith – South Korea (LG Electronics)

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 Foreign Acquisitions
of U.S. Companies
Exhibit
1.1

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 Internationalization of
U.S. Business (2 of 2)
• Foreign companies are here to stay in
the U.S. and compete with U. S.
companies
• The great worldwide acquisitions both by
U. S. and foreign companies
• Global markets are a necessity
• Foreign earnings a higher percentage of
profits
• Multinationals outperform domestic firms
• Global value increased through global
diversification
• Intensifying domestic competition
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 Selected U.S. Companies
and Their International
Sales
Exhibit
1.2

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 International Marketing
• International marketing is defined as
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 nations for a profit.
• The difference is the “environment”
• Competition, legal restraints, government
controls, weather, fickle consumers,
economic conditions, technological
constraints, infrastructure concerns, culture,
and political situations.

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 The International Marketing
Task
Exhibit
1.3

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 Environmental
Adaptation
• The most challenging and important
adaptation international marketers must
make is cultural adjustments.
• Must establish a frame of reference
• Time-conscious Americans vs. Time-is-
not-an-asset thinking Latin Americans
• Hand gestures vary between countries
• “Cultural Conditioning” – be aware of
home cultural references before making
decisions

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 Obstacles to Adaptation
• Adaptation is a conscious effort on the
part of the international marketer to
anticipate the influences of both the
foreign and domestic uncontrollable
factors on a marketing mix and then to
adjust the marketing mix to minimize the
effects.
• Two primary obstacles are:
• Self-Reference Criterion (SRC)
• Ethnocentrism

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 Self-Reference Criterion
(SRC)
• Self-Reference Criterion (SRC) is an
unconscious reference to one’s own
cultural values, experiences, and
knowledge as a basis for decision.
• Risk of SRC:
• Prevent you from becoming aware of
cultural differences
• Influence the evaluation of the
appropriateness of a domestically
designed marketing mix for a foreign
market

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 Ethnocentrism
• The notion that people in one’s own
company, culture, or country know best
how to do things.
• Risk of Ethnocentrism:
• Impedes the ability to assess a foreign
market in its true light

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 Beyond Obstacles
to Adaptation
• The most effective way to control the
influence of SRC and Ethnocentrism is:
• To recognize the effects on our behavior
• To recognize that there may be more
similarities than differences between
countries
• To conduct cross-cultural analysis

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 Cross-Cultural Analysis
1. Define business problem or goal in home-
country cultural traits, habits, or norms
2. Define business problem or goal in
foreign-country cultural traits, habits, or
norms through consultation with natives
of target country
3. Isolate the SRC influence and examine it
carefully to see how it complicates the
problem
4. Redefine the problem without SRC
influence and solve for the optimum
business goal situation
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 Developing
Global Awareness
• Tolerance of cultural differences
• You do not have to accept as your own the
cultural ways of another, but you must
allow others to be different and equal
• Knowledge of cultures, history, world
market potential, and global economic,
social, and political trends

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 Approaches to
Global Awareness
• Select individual managers that express
a global awareness orientation
• Develop personal relationships in foreign
countries
• Must have the support of a culturally
diverse senior executive staff or board of
directors

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 International Marketing
Involvement - Stages

No
No Direct
Direct Infrequent
Infrequent Foreign
Foreign
Foreign
Foreign Marketing
Marketing Marketing
Marketing
Global
Global
Marketing
Marketing
Regular
Regular Foreign
Foreign International
International
Marketing
Marketing Marketing
Marketing

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 No Direct Foreign
Marketing – Reactive
• Products “indirectly” reach foreign markets
• Trading companies
• Foreign customers who contact firm
• Domestic wholesalers/distributors
• Web orders
• Foreign orders stimulate a company’s interest
to seek additional international sales

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 Infrequent Foreign
Marketing – Reactive
• Caused by temporary surpluses
• Sales to foreign markets are made as
goods become available
• Firm has little or no intention of
maintaining continuous market
representation
• Foreign sales activity declines and is
withdrawn when domestic demand
increases

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 Regular Foreign
Marketing – Proactive
• Dedicated production capacity for foreign
markets
• Strategy:
• Firm employs domestic or foreign
intermediaries
• Uses its own sales force or sales
subsidiaries
• Products are adapted for foreign markets
as domestic demand grows
• Firms depend on profits from foreign
markets
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 International Marketing –
Proactive
• Fully committed and involved in foreign
markets and international activities
• Production takes place on foreign soil
earning firms the MNC (Multinational
Corporation) title
• Fedders being “proactive:”
• Looked to Asia for future growth after
stymied U.S. sales
• Designed new types of air conditioner unit
for the Chinese market
• Plan to introduce new product in the U.S!
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 Global Marketing –
Proactive
• The firm sees the world as one market!
• Market segmentation is now defined by
income levels, usage patterns, or other
factors that span the globe
• More than half of its revenues come from
abroad
• The firm has a global perspective

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 Summary (1 of 2)
• It is imperative for firms to pay attention
to the global environment in the wake of
intense globalization of markets and
competition.
• The difference between domestic
marketing and international marketing is
the environment that consist of laws,
customs, and cultural differences.
• Key obstacles to successful international
marketing are self-reference criterion
(SRC) and Ethnocentrism

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 Summary (2 of 2)
• Global awareness and sensitivity are
solutions to the obstacles of SRC and
ethnocentrism
• Five different international marketing
involvement strategies were discussed: No
direct foreign marketing, infrequent
foreign marketing, regular foreign
marketing, international marketing, and
global marketing
• Firms must have global orientation – the
world is seen as one market

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 Review Questions
1. How can the increased interest in
international marketing can be explained?
2. Discuss the five phases of international
marketing involvement.
3. Discuss the conditions that have led to
the development of global markets.
4. Differentiate between a global company
and a multinational company.
5. Differentiate among the three
international marketing concepts.
 Exercise

1. Prepare your lifelong plan to be

globally aware.
2. Discuss the three factors necessary
to achieve global awareness.
3. Define and discuss the idea of
global orientation.
 Exercise

Visit the Bureau of Economic Analysis

homepage (http:// [Link]). Select the
section “International” and find the most
recent information on foreign direct
investments in the United States. Which
country has the highest dollar amount of
investment in the United States? Second
highest?