2005 Prentice Hall1-*Chapter 2EPRG FRAMEWORK

IntroductionEPRG ModelEthnocentric: everything is centered on the domestic market.

Polycentric: several important foreign markets exist.

Regiocentric: the market is composed of several large economic regions.

Geocentric: the world is one large global market.

2005 Prentice Hall1-*Management OrientationsEthnocentric:Home country is Superior, seesSimilarities in foreignCountriesRegiocentric:Sees similarities and differences in a worldRegion; is ethnocentric or polycentric in its view of the rest of the worldGeocentric:World view, seesSimilarities andDifferences in homeAnd host countriesPolycentric: Each host country IsUnique, sees differencesIn foreign countries

2005 Prentice Hall1-*The EPRG frameworkEthnocentrismCompany strategies consistent with the belief that domestic strategies, techniques, and personnel are superior to foreign ones and therefore provide the most effective framework for the companys overseas involvementAssociated with national arrogance & home country superiority and Assumes what succeeds in the home country will also succeed in other countriesDomestic and international companiesStandardized approach to marketingForeign markets are secondary to the domestic marketE.g. Nissan in 60s, Coke in the late 80s/early 90s

2005 Prentice Hall1-*The EPRG frameworkPolycentrismOpposite of ethnocentrism each country market is uniqueHighly localized / adapted approach to marketingMultinational companies Local kingdomsCompany strategy predicated on the assumption that each countrys market is unique and should be addressed individually, with a country-specific marketing mix.E.g. Citicorp in the 90s.E.g. Ford (separate product lines to meet the individual markets) Ford Escort

2005 Prentice Hall1-*The EPRG frameworkRegiocentrismTreat a world region as one homogeneous market (e.g. NAFTA region; the EU, etc.)Localization / adaptation for the region; ethnocentric or polycentric view of the rest of the worldCompany strategies that view world regions as distinct markets that share economic, political and/or cultural traits that will respond to a regionwide marketing approach.E.g. PepsiCo Panamerican trade market or European Union, etc

GeocentrismWorld view focused on standardizing programs but will adapt if indicated by researchGlobal / transnational company / a blurring of national identityE.g. Toyota 2005 Prentice Hall1-*The EPRG framework

EPRG Model - Characteristics

EthnocentricPolycentricGeocentricApproachInternational operations are secondaryEach country is relatively independentThe world is one common marketVisionCentered on the domestic marketEach market is uniqueGlobal vision of the worldPrioritySearching for identical segments in foreign marketsTaking into consideration differences in foreign marketsUnifying differences in the world marketPlanning centerNational headquartersSubsidiary in each countryWorld headquartersStructureInternational divisionDivision for each zoneMatrix structure

EPRG Model - Characteristics

EthnocentricPolycentricGeocentricStaffCitizens from the domestic marketCitizens from each marketMost qualifiedMarketing strategyExtensionAdaptationExtension, Adaptation, CreationManagement styleCentralizedDecentralizedIntegrated and interactiveProductionDomestic LocalLow-cost sources of supplyPartnershipsAgent, licensingJoint-venturesStrategic alliancesPerformance measuresDomestic market shareLocal market shareWorld market share

2005 Prentice Hall1-*Forces Affecting Global Integration and Global MarketingDriving ForcesRegional economic agreementsConverging market needs and wantsMedia & InternetTransportation and communication improvementsProduct development costsWorld economic trendsLeverageRestraining ForcesManagement myopiaOrganizational cultureNational controlsNationalism anti-globalization protests

2005 Prentice Hall1-*LeverageAn advantage by virtue of the companys experience in several countriesExperience transfersScale economiesResource utilizationGlobal strategy

**Ethnocentrism is sometimes associated with attitudes of national arrogance or assumptions of national superiority.Company personnel with an ethnocentric orientation see only similarities in markets, and assume that products and practices that succeed in the home country will be successful anywhere.

The term polycentric describes managements belief or assumption that each country in which a companydoes business is unique. This assumption lays the groundwork for each subsidiary to develop its own unique business and marketing strategies in order to succeed; the term multinational company is often used to describe such a structure.

In a company with a regiocentric orientation, a region becomes the relevant geographic unit; managements goal is to develop an integrated regional strategy.

A company with a geocentric orientation views the entire world as a potential market and strives to develop integrated world market strategies.

***The next slide will show the interplay between the driving and restraining forces. This slide outlines what these forces include.

Regional economic agreements, converging market needs and wants, technology advances, pressure to cut costs, pressure to improve quality, improvements in communication and transportation technology, global economic growth, and opportunities for leverage all represent important driving forces; any industry subject to these forces is a candidate for globalization.

Despite the impact of the driving forces identified previously, several restraining forces may slow a companys efforts to engage in global marketing. In addition to the market differences discussed earlier, important restraining forces include management myopia, organizational culture, national controls, and opposition to globalization. As