Chap 1 4 International MKTG

International Marketing
• Scope of International Marketing

• Relevance and significance
• Need for International Trade
• Differences between Domestic and
International
Botla/Iamee/IM/Chap1 1
Coke gets it wrong
• The name Coca-Cola in China was first
rendered as Ke-kou-ke-la. Unfortunately, the
Coke company did not discover until after
thousands of signs had been printed that the
phrase means “bite the wax tadpole” or
“female horse stuffed with wax” depending
on the dialect.
Coke gets it right?
• Coke then researched 40,000 Chinese
characters and found a close phonetic
equivalent “ko-kou-ko-le”, which can be
loosely translated as “happiness in the
mouth”.
• (competition in 1930s)
Pepsi and KFC
• In Taiwan, the translation of the Pepsi slogan
“Come alive with the Pepsi Generation” came
out as “Pepsi will bring your ancestors back
from the dead.”
• Also in Chinese, the Kentucky Fried Chicken
slogan “finger-lickin’ good” came out as “eat
your fingers off.”
Sex
• Ford had a problem in Brazil when the Pinto
flopped. The company found out that Pinto
was Brazilian slang for “tiny male genitals”.
Ford pried all the name plates off and
substituted Corcel, which means horse.
Sex, second instalment
• When Parker Pen marketed a ballpoint pen in
Mexico, its ads were supposed to say “It won’t
leak in your pocket and embarrass you”.
However, the company mistakenly thought
the Spanish word “embararzar” meant
embarrass. Instead the ads said that “It won’t
leak in your pocket and make you pregnant”.
Sex, yet again
• Chicken-man Frank Perdue’s slogan, “It takes
a tough man to make a tender chicken”, got it
terribly mangled in another Spanish
translation. A photo of Perdue with one of his
birds appeared on billboards all over Mexico
with a caption that explained “It takes a hard
man to make a chicken aroused”.
Divided by a common language
• In an effort to boost orange juice sales in
predominantly continental breakfast eating
England, a campaign was devised to extol the
drink’s eye-opening, pick-me-up qualities.
Hence the slogan, “Orange juice. It gets your
pecker up”.
What is different about IM?
• Examples of linguistic problems
• How many languages in the world?
• Country<>language
– USA - growth of Spanish
– 1/4 population Hispanic in 20 years
• language >>>culture
• translation relatively easy - culture more
complex
More than languages
• Law
– first aspect
• How does law affect marketing?
• Prohibition
– alcohol, tobacco, sex, GM foods
• Restrictions
– children
• Obligations
Obligations
• Packaging
– contents, languages, child-proof
• Environmental standards
– emissions, disposal
• Ownership and access to market
– mandatory joint ventures
Sanitary & Phytosanitary (SPS)
regulations
• sanitary (human and animal health) measures and
phytosanitary (plant health)
• Often used as non-tariff barrier (NTB)
– eg fireblight – big dispute with Australia
• Essential to preserve good reputation of
exports
– Eg Listeria in NZ cheese to Holland
Laws not merely national
• many laws are supra-national
– European Union
• ‘International’ presumes nations
• Nation states becoming less relevant
• Globalisation
The end of the nation state?
• Market <> country<>culture
• Most countries have a number of cultures
• Most cultures are found in a number of
countries
• Distinction between IM and Marketing
becoming increasingly blurred
• Growth of global products
• All marketing global marketing?
What does this mean?
• IM is marketing in a more complex
environment
• All aspects of market planning have to be
reexamined
• What works in one place MAY not work in
another
• Course adds knowledge of international
business environment to your knowledge of
marketing
Insights
In Hong Kong, a German businessperson is driving
a Lexus; he’s wearing Bruno Magli shoes, Irish
cashmere socks, Calvin Klein underwear, an
Armani suit, with a Gucci belt. He has a Mont
Blanc pen, in his Italian shirt. He’s going to meet
an American investor at a KFC restaurant, for a
Coke. After lunch, they stop for a Baskins-Robbins
(actually a foreign firm) ice cream sundae.
--- OK, that’s a stretch.
When he gets home, sitting on an ottoman, he
has an Absolut vodka nightcap, while listening to
American country western music.
Global Marketing
• Marketing has become more complex.
• Increases in new products, product extensions, high
cost of distribution and shelf space.
• Expansion of retailer control and power, changing
media habits, overload of information, and array of
communication choices.
• Ultimate goal of programs
• Timing goals
Global Integration Forces
Driving Forces
• Technology
• Culture
• Market Needs
• Costs
• Free Markets
• Economic Integration
• Peace
• Strategic Intent
• Management Vision, Strategy and Action
Global Integration Forces
Restraining Forces
• Culture
• Market Differences
• Costs
• National Controls
• Nationalism
• Peace vs. War/ Stability
• Management Myopia
• Organization History
• Domestic Focus
Challenges
• Markets can present higher profit
opportunities than present markets.
• Markets can offer size but not profits.
• Company needs a larger customer base for
economies of scale.
• Present customers are needing service and
products as they go international.
Major Decisions
• Deciding to go abroad
• Deciding which markets
• Deciding how to enter markets
• Deciding on marketing programs
• Deciding on marketing organization
Global Marketing
• Denotes the use of advertising and marketing on a
global basis.
• Marketing is at the threshold of a new and exciting
era: e-business, e-commerce and e-marketing
• Business has two basic functions: marketing and
innovation (Drucker)
• New era of competition, demanding customers
• More stakeholders (customers, employees, media).
Global Marketing
• Companies need new set of guidelines, values and
insight
• Marketing is a Strategic Business Concept
• Marketing is too important to be left to the
Marketing Department. (David Packard)
• Formulated, integrated, long-term
• Hold to the responsibilities of customers, employees,
investors
Objectives of International Marketing
• To exploit market potential and growth to the
optimum extent
• To aim at marketing operations that exploit the
advantages of economies of scale
• To learn from the leading markets through
technology, innovation and competition
• To increase competitive pressure in stronghold
markets to make space for survival and sustenance
• To explore the scope of diversification of products,
services and markets
• To gain comprehensive knowledge on doing overseas
business successfully, especially with regard to cross-
cultural differences Botla/Iamee/IM/Chap1 24
Domestic VS International Marketing
-- Definition of Domestic Marketing

-- Definition of International Marketing
NB: Basic tenets of marketing concepts is applied
whether it is domestic or international marketing. It
revolves around the controllable and uncontrollable
factors that governs the pragmatic marketing
scenario.
Continued….
In Continuance:
Uncontrollable Factors:
1. Macro Environment-
Uncontrollable Factors are:
-- Economic
-- Political
-- Logistics (controllable to a
certain extent only, especially
in the domestic market )
-- Competition
-- Legal Affairs
-- Socio-cultural
-- Geography
In Continuance:
Micro Environment-the
Controllable Factors:
-- Product
-- Price (subject to certain
limitations, taking competitors
offer prices into consideration)
-- Place
-- Promotion
Assignment
• How can you internationalize your virtual
company?
Chap 2:
Transition
from Domestic
to International Markets
Transition from Domestic to
International Markets
4 Approaches
1.Ethnocentric Approach
2.Polycentric Approach
3.Regiocentric Approach
4.Geocentric Approach
Ethnocentric Approach
• Exports excessive production to foreign
countries
• Foreign country is seen as extension of
domestic markets
• Foreign market is seen like a new region
• Export department monitor s the export
operations under the supervision of marketing
personnel of the domestic company
Polycentric Approach
• Establishing a foreign subsidiary company
• Separate CEO for foreign subsidiary
• Decentralizes all operations, delegates
decision-making to executives to foreign
subsidiary
• Key personnel from home country
• Design products based on the host country
environment
Regiocentric Approach
• After successfully operating in foreign country,
thinks of exporting to the neighboring
countries of host
• Foreign subsidiary considers the regional
environment
• It makes the same products with different
market strategies
Geocentric Approach
• Entire world is treated like a single country
• Employees are selected from the entire globe
• Operated with a number of subsidiaries
• Activities of subsidiaries are coordinated by
the headquarter
• Each subsidiary acts like an independent and
autonomous company for formulating
marketing strategies
EPRG Model - Characteristics
Ethnocentric Polycentric Geocentric
Approach International Each country is The world is one
operations are relatively common market
secondary independent
Vision Centered on the Each market is Global vision of
domestic market unique the world
Priority Searching for Taking into Unifying

identical consideration differences in
segments in differences in the world market
foreign markets foreign markets
Planning center National Subsidiary in World
headquarters each country headquarters
Structure International Division for Matrix structure
division each zone
EPRG Model - Characteristics
Ethnocentric Polycentric Geocentric
Staff Citizens from Citizens from Most qualified
the domestic each market
market
Marketing Extension Adaptation Extension,
strategy Adaptation,
Creation
Management Centralized Decentralized Integrated and
style interactive
Production Domestic Local Low-cost
sources of
supply
Partnerships Agent, licensing Joint-ventures Strategic
alliances
Performance Domestic market Local market World market
Chap 3
International Market
Environment
International Market Environment
• Economic environment
• Social and Cultural environment
• Political and legal environment
• Technological environment
• Business customs in International markets
Elements of Culture
• Language
• Religion
• Values & Attitudes
• Manners & Customs
• Material Elements
• Aesthetics
• Education
• Social Institutions
• Cultural universals - Manifestations of the total way of life that are

common to all cultures (elements such as body adornments, courtship,
etiquette, family, gestures, joking, mealtimes, music, personal names,
status differentiation, and trade etc.)
International Political Issues.
• Nationalism, sovereignty, imperialism, power,

ideologies, national interests, political risk...
IK
Political/Legal Concerns of International
Marketers
 Home country political and legal circumstances
 Host country political and legal circumstances host country.
 Bilateral and multilateral agreements, treaties, and laws
governing the relations between host and home countries.
• Home country government policies and the legal systems have a major impact
on a firm’s opportunities abroad. Examples:
• Minimum wage legislation affects the international competitiveness of a firm
using highly labor intensive production processes.
• The cost of domestic environment safety regulations may also significantly
affect the pricing policies of firms in their international marketing efforts
Consequences Of Political Actions.
• Indigenization/Domestication
• Nationalization (Acceptable according to international law if it satisfies public
purpose & includes compensation)
• Expropriation (prompt, effective, fair compensation)
• Confiscation (no compensation)
• Local content laws
• Local hiring laws
• Discriminatory taxes
• Discriminatory pricing of resources
• Joint-venture pressure
• Import/Export controls, embargos, sanctions, etc.
• Selective boycotts
• Price controls
• Terrorism, etc.
IK
Legal Environment
• Home country laws
• Host country laws
• International law
• Two major legal systems popular worldwide are:

– Common law - Based on tradition and depends less on written
statutes and codes than on precedent and custom.
– Code law - Based on a comprehensive set of written statutes
that spell out legal rules explicitly; based on Roman law.
International Law
– No enforceable body of international law exists;
– Treaties and agreements respected by a number of countries
influence international business operations.
– Firms are restricted by both home and host country laws.
In case of a conflict in deciding which country’s law to follow,

firms can choose either arbitration or litigation.
• Litigation often involves extensive delays and is very costly.
• Arbitration procedures should always be included in the
original contract.
Ethical Issues
• The ethical obligations faced by multinational
enterprises include:
– Corporate governance and responsibility
– Intellectual property rights
– Bribery and corruption
Chap 4:
International Market
Entry Strategies
Why Firms go International
Proactive Stimuli Reactive Stimuli
• Profit advantage • Competitive pressures
• Unique products • Overproduction
• Technological advantages • Stable or declining domestic
• Exclusive information sales
• Economies of scale • Excess capacity
• Market size • Saturated domestic markets
• Proximity to customers and
ports
Foreign Market Entry Strategies – 1.
(A) Exporting (Casual, Indirect, Direct)
(B) Contractual Agreements
 Licensing (patents, technology, trade secrets)
 Franchising (brand, managerial know-how)
 Subcontracting (from prime contractors)
 Contract manufacturing (for foreign brands)
 Turnkey Operations
 Co-production Agreements
 Management Contracts
(IK)
Foreign Market Entry Strategies – 2.
(C) Joint Ventures (minority/majority equity)
(D) Wholly-Owned Subsidiaries
» Local Sales only
» Local Assembly & Sales
» Local Production & Sales
» Local Production, Sales & Export
• Start-up of new operations
– Merger with an existing enterprise
– Acquisition of an existing enterprise
– Greenfield investment
Exporting
• Export management companies (EMCs)
– Domestic firms that perform international
marketing services as commission representatives
or distributors for other firms.
– Two primary forms of operation
• Take title to goods and operate internationally.
• Perform services as agents.
Exporting
• Trading companies
– The most famous trading companies are the sogoshosha of
Japan.
– Reasons for the success of the Japanese sogoshosha:
• The firms are organized to gather, evaluate, and translate
market information into business opportunities.
• Their vast transaction volume provides them with cost
advantages.
• They serve large markets around the world and have
transaction advantages.
• They had access to capital, both within Japan and in the
international capital markets.
Going International
• E-commerce
– The ability to offer goods and services over the
Web.
– Various methods to market products over the
internet:
• Development of corporate websites.
• Business-to-consumer and consumer-to-business
forums.
Going International
• E-commerce concerns - Firms must be ready
to:
– Provide 24-hour order taking and customer
support service.
– Have the regulatory and customs-handling
expertise to deliver internationally.
– Have an understanding of global marketing
environments for further development of business
relationships.
Licensing and Franchising
Advantages of licensing
– Capital investment or knowledge or marketing strength is not required.
– Additional return on R&U investments already incurred.
– Reduces the risk of R&D failures
– Ongoing licensing cooperation and support enables the Licensee benefits
from new developments.
– Allows a firm to test a foreign market without major investment of capital
or management time.
– Preempts a market for competition, especially if the licensor’s resources
permit full-scale involvement only in selected markets.
– Increases protection of intellectual property rights.
Licensing and Franchising
– Disadvantages of licensing
• Licensor gets limited expertise.
• Licensor creates its own competitor.
• Allows multinational corporations (MNCs) to capitalize
on older technology.
Foreign Direct Investment
• Types of ownership - Joint ventures
– Collaborations of two or more organizations for
more than a transitory period.
– Partners share assets, risks, and profits, though
equality of partners is not necessary.
– Reasons for joint ventures are governmental and
commercial.
Advantages of joint ventures Disadvantages of joint

– Pooling of resources. ventures
– Better relationships with – Different levels of control
local organizations. are required.
– The partner’s knowledge – Difficulty in maintaining
of the local market. the relationship.
– Minimize exposure to – Disagreements over
political risk. business decisions.
– Tap local capital markets. – Disagreements over
profit accumulation and
distribution (profit
repatriation).
• Firms are categorized as:
– Resource seekers - Search for natural and human
resources.
– Market seekers - Search for better opportunities to
enter and expand within markets.
– Efficiency seekers - Attempt to obtain the most
economic sources of production.
• Positive perspectives on foreign direct
investors
– Bring in capital, economic activity, and
employment.
– Transfer technology and managerial skills.
– Encourage competition, market choice, and
competitiveness.
• Negative perspectives on foreign direct
investors
– Drain resources from host countries.
– Starve smaller capital markets.
– Discourage local technology development.
– Bring in outmoded technology.
– Create new competition for local firms.

Chap 1 4 International MKTG

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Chap 1 4 International MKTG

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International Marketing

• Scope of International Marketing

-- Definition of Domestic Marketing

Priority Searching for Taking into Unifying

• Cultural universals - Manifestations of the total way of life that are

• Nationalism, sovereignty, imperialism, power,

• Two major legal systems popular worldwide are:

In case of a conflict in deciding which country’s law to follow,

Advantages of joint ventures Disadvantages of joint

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