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 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.

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

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

Lecture Outline

John F. Welch, Jr.Chairman and CEO, General Electric

"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."

Until recently, competition for U.S. markets was only among U.S. businesses with the same relative cost of money, labor and product

U.S market now includes competitors from all over the world

Globalization of Business and Markets

Why internationalization?

Saturation of U.S. markets

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 Investmentsin the U.S.,” Forbes, July 18, 1994, pp. 266-270.

Why internationalization?

Saturation of U.S. markets

Higher ROI in foreign markets

Some Big U.S. Players in the Global Game*

*1993 data.SOURCE: Adapted from “The 100 largest Multinationals: Getting the Welcome Carpet,”Forbes, July 18, 1994, pp. 276-279.

Company Foreign Revenues% of Total

Foreign Profits% of Total

Foreign Assets% of Total

Ei du Pont de Nemours 51.4 99.8 37.3

Proctor & Gamble 52.1 65.1 40.7

Coca-Cola 67.0 67.8 48.6

Eastman Kodak 48.8 41.5 32.4

Motorola 43.9 84.8 34.6

Johnson & Johnson 49.1 54.6 43.9

Sara Lee 35.5 41.3 45.0

Colgate-Palmolive 64.5 67.0 46.9

Gillette 67.5 61.4 65.7

Compaq Computer 49.0 63.6 40.5

McDonald’s 46.9 45.1 46.9

Avon Products 32.0 59.9 48.3

Why internationalization?

Saturation of U.S. markets

Higher ROI in foreign markets

Establish early position in world markets

Share of Global Sales (1987-92)

Energy Equipment & Services 93% 1% 6%Aerospace & Military Technology 76 15 23Data Processing & Reproduction 73 22 5Electronic Components & instruments 62 36 2Beverages & Tobacco 63 16 20Health & Personal Care 49 20 31Leisure & Tourism 46 16 38Forest Products & Paper 51 17 32Energy Source 46 13 41Metals-Nonferrous 30 31 39Recreation & other Consumer Goods 33 61 6Food & hh Products 33 22 46Electrical & Electronics 21 51 28Chemicals 28 30 42Industrial Components 24 45 31Automobiles 37 35 28Machinery & Engineering 19 46 35Appliances & hh Durables 8 67 26Metals-Steel 10 57 33ALL INDUSTRIES (SALES) 37% 32% 31%ALL INDUSTRIES (PROFITS) 48% 16% 37%

Industry U.S. Japan Europe

Invented Here, Made Elsewhere

U.S. Invented Technology

Phonographs

Color TVs

Audiotape Recorders

Videotape Recorders

Machine Tools

Telephones

Semiconductors

Computers7 4%

9 8%6 4%

8 9%2 5%

9 9%3 5%

9 9%1%

1 0%0%

4 0%1 0%

9 0%1%

9 0%

0 20 40 60 80 100

1 9 7 0

N O W

“Every American company is international, at least to the extent

that its business performance is conditioned in part by events that

occur abroad”

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.

What’s the difference between international marketing and domestic marketing?

The environment in which marketing strategies have to be implemented

7

The International Marketing Task

Political/legalforces

Economicforces

1

2

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

Competitivestructure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

Self-Reference Criterion (SRC)

An unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions

International Marketing Concepts

Domestic Market Extension (Ethnocentric)

Multi-Domestic Market (Polycentric)

Global Marketing (Regio/Geocentric)

Concept EPRG Schema

Coca-ColaGlobal Marketing Strategy

Think Globally

Act Locally

Examples of Global Marketing

Product Design

Brand Name

Product Positioning

Packaging

Advertising Strategy

Sales Promotion

Distribution

Customer Service

Canon photocopier/McDonalds/Toyota/Ford

Marlboro/Coke/Pepsi/Mercedes/Caterpillar

Colgate toothpaste/Unilever fabric softener

Gillette razors

Coca-Cola/British Airways/Benetton

IBM

Benetton/United Distillers

American Express/Hertz