International
Marketing
Dr. Minhaz Uddin Ahmed
Associate Professor
School of Business Administration
Jiangsu University of Science and Technology
Chapter One
SCOPE, CONCEPTS, AND DRIVERS
OF INTERNATIONAL MARKETING
International Marketing
• The processes involved in
– Creation
– Production
– Distribution
– Promotion
– And pricing
• Of products, services, ideas, and experiences
For
International Markets
Why not happy with domestic marketing?
• To grow bigger
• To upgrade status
• To distribute overproduce
• To prolong the product life cycle
• To grab new opportunities in international
environment
• To benefit from tax advantages
In fact, there are many other factors
• Competition & proactiveness
– FedEx vs DHL: FedEx ignored low-income countries
which caused large sum of money for later promotion
• Regional Integration
– EU, NAFTA, and other free trade zone: lower or no
trade barrier;
– simplified trading process encourage companies to go
international.
– Ford Germany: A case of US company having German
citizenship. Its trade in EU doesn’t need customs or
other paper works.
Cont…
• Technology
– Media and Internet reach national products to
international markets
• Improved telecommunication and transportation
– Cheap & convenient telecommunication,
teleconference.
– International inter-modal shipping;
– efficient and rapid air travel;
– frequent interaction.
– Some issues are time-difference and local holidays
Cont…
• Economic Growth
– Increased buying power;
– large middle class;
– preference for foreign brands
• Transition to Market Economy
– Eastern European Socialist bloc countries;
– Closed economies;
– deregulation;
– top international brands’ partnering with local low-
performing companies
Cont…
• Converging Consumer need
– satellite television and Internet;
– diffusion of information,
– advertising about international brands,
– shaping consumer desire and brand preferences
• Product life cycle
– to prolong product life cycle;
– late maturity, decline stage;
– increase consumer base; higher profit;
– move to markets where demands are higher
• Recover product development cost
– high-tech products, electronics, pharmaceuticals.
Need higher sales and enlarge market to recover
initial product development costs. So, it’s not a
choice, it’s a must.
• Economies of Scale
– higher sales in a larger market will reduce fixed
costs per unit
• Cheap labor
• Experience Transfer:
– Colgate-Palmolive – Axion dishwashing paste in
Latin America – adapted to local practice – later
introduced into Central and Eastern Europe –
success!
Obstacles to Internationalization
• Self-Reference Criterion
– Conscious and unconscious reference to won national
culture, norms, values, knowledge, experience in the
process of making decisions in the host country
– Poor adaptation to local business environment
– Stereotyping, assuming own culture is superior to foreign
culture
– Fail to understand local consumers, their needs, local
business culture and practice
– Breakdown in communication
– Eye contact in US and Japan
– Social rapport building in Latin America or southern
Europe
Government Barriers
• Trade liberalization vs protectionism
• Tariff and nontariff trade barriers
• Pressure from WTO
International Competition
• International competitors can
– Block channels of distribution
– Bind retailers into exclusive agreements
– Slashing prices temporarily to prevent product
adoption
– Engaging in advertising blitz
• Marlboro (price slash and heavy advertisement) vs
Assos in Greece)
Different approaches of international
Marketing practices
• Ethnocentric Approach
– Emphasis on product research and development
– High-performance products
– Consider domestic strategies, techniques, and
personnel are superior to foreign ones
– International market is for absorbing surplus domestic
production
– US firms sell products, along with, american life-styles
and traditions (Hollywood movies; entertainments)
– Disney: Not well accepted in Europe
Polycentric Approach
• Opposite to ethnocentric approach
• Aware of local cultures and demands
• Decentralized and Autonomous subsidiaries
– Problems:
– Cannot benefit from economies of scale
– Repetition of jobs
– Higher cost of final products because of
customization
Regiocentric Approach
• common economic, political, and cultural
traits among different neighboring countries
in a region (e.g. EU, North America, ASIAN)
• PepsiCo: Vienna (Austria) controls Eastern
European operations – common marketing
strategies
Geocentric Approach
• Entire world is a potential market
• But should be customized according to local
traits
• Unlike polycentric approach, geocentric
approach coordinates worldwide operations
• Often the objective is to be a low cost
manufacturer and marketer
• McDonald’s: foods are adapted to local tastes
