class slides module 1-introduction to international marketing

Prof. Anand Narasimha

In this module we will learn about…

Definition and Scope of International Marketing

International Marketing Orientations

‘Globalization’ and ‘Glocalization’

Why Companies pursue International Marketing

Driving and Restraining Forces for International Marketing

Ethical issues in International Marketing

10 Commandments of International Marketing

Definition & Scope of International Marketing

Do the terms ‘International Marketing’ and ‘Global Marketing’ mean the same thing, or is there any difference between the two?

International Marketing

• Marketing of products, services, ideas or entities across geographical borders to foreign markets

• From ‘home country’ to ‘host’ countries

Global Marketing

• Targeting products, services, ideas and entities to consumers across the globe based on their similarities and differences

• Looks at the world as a ‘borderless’, seamless entity

• Offshoot of ‘Globalization’

• A more evolved form of ‘International Marketing’

Domestic Marketing Exporting

International/Multinational Marketing Global Marketing

EVOLUTION

Domestic Marketing

• Marketing that is aimed at a single market (firm’s home market).

• Firms face only one set of competitive, economic and market issues.

Export Marketing

• When a firm sells its products outside its home base of operation and products are physically shipped from one market to another.

• Domestic market remains of primary importance.

• Major challenge: the selection of appropriate markets, determination of appropriate product modifications to meet the requirements and development of export channels.

International Marketing

• Much more directly involved in the local marketing environment

• Is likely to have sales subsidiaries

• Necessary adaptations to the firm’s domestic marketing strategy

• Participate in the entire marketing mix for the foreign markets

• Major challenge: the need to understand the different local environments.

Multinational Marketing

• The result of development of multinational corporations.

• Maximum amount of localization

• MNCs operate in several foreign countries as if the firms were local companies

• Multi-Domestic strategy: each strategy is tailored to a particular local market

• Major challenge: to find the best possible adaptation of a complete marketing strategy for an individual country

Global Marketing

• Opportunities for economies of scale and enhanced competitiveness will be greater if marketing strategies are integrated into a global scale

• Global marketing strategy a single strategy for a product, service or company for the entire global market

• Rather than tailor a strategy perfectly to an individual market, the company settles on one general strategy that can be applied throughout the world, while at the same time maintaining flexibility to adapt to local market if necessary.

• Major challenge: design marketing strategies that can work well across multiple markets

Let’s talk about examples of the types of companies/strategies

International Marketing = Global Marketing

• While academicians define the two terms distinctly, in the industry they are used interchangeably

• Especially in today’s ‘Globalized World’

• In our course we will treat both terms as one and the same for the sake of simplicity and use the term: ‘International Marketing’

• We will also use a common, widely used term for the firms: ‘MNC’ (Multinational Corporation)

In today’s context an MNC is a firm that as a rule-of-thumb:

- Generates more than 50% of its revenue from outside its home country

- Has direct operations in more than 20 countries

What are the similarities and differences between Domestic Marketing and International Marketing?

• Similarities: basic concepts, practices and tools are almost identical, key success factors are the same

• Differences: more variables, more complexity, cultural differences, legal constraints, information sources, managing distances, entry mode choices

International Marketing Complexity

• Value Creation & Competitive Advantage: varied macro & micro environments and competition

• Customer needs & wants: cross-cultural diversity

• STP: country/region-based variables & decisions

• Branding: country of origin affect

• Marketing Mix: extension, adaptation or creation

Product

Price

Place

Promotion

• Marketing discipline is universal but markets and customers across geographies are quite different

• Three domains of knowledge relevant to International Marketing• Cross-Cultural Knowledge

• Country/ Regional Knowledge

• Cross-Border Transactions Knowledge

• Strategies for ‘Extension vs. Adaptation vs. Creation’

Find out more about the different ways in which International Marketing and Global Marketing are defined.

International Marketing Orientations

• Ethnocentric: 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.

Ethnocentric Polycentric Regio/Geocentric

Approach International operations are secondary

Each country is relatively independent

The world/region is one common market

Vision Centered on the domestic market

Each market is unique Global/Regional vision of the world

Priority Searching for identical segments in foreign markets

Taking into consideration differences in foreign markets

Unifying differences in the world/regional markets

Planning center National headquarters Subsidiary in each country

World/Regional headquarters

Structure International division Division for each zone Matrix structure

Ethnocentric Polycentric Regio/Geocentric

Staff Citizens from the domestic market

Citizens from each market

Most qualified from the world/region

Marketing strategy Extension Adaptation Extension, Adaptation, Creation

Management style Centralized Decentralized Integrated and interactive

Production Domestic Local Global/Regional low-cost sources of supply

Partnerships Exporting, Licensing Joint-ventures, Franchising

Strategic alliances, Direct investments

Performance measures

Domestic market share

Local market share Global/Regional market share

Let’s discuss examples of these

Four cases of internationalization of a firm

The early starter The late starter

The lone

international

The international

among others

Degree of

internationalization

of the firm

Low

High

Degree of internationalization of the market

Low High

Top Global Firms Based in Developing Markets

• America Movil

• Cemex

• China Mobile

• CNOOC

• Embraer

• Gazprom

• Haier

• Huawei Technologies

• Infosys Technologies

• Koc Holding

• Lenovo Group

• MMC Norilsk Nickel

• Mahindra & Mahindra

• Hisense

Globalization and Glocalization

Globalization

The production and distribution of products and services of a homogenous/standardized type and quality on a worldwide basis, based on the assumption that the world is converging and becoming similar

Yesterday’s Globalism

In yesterday’s ‘one-size-fits-all’ world, big companies could often migrate something that was a hit in the U.S. or Europe with a little tweaking

• Mercedes-Benz, traded on its reputation for building highly engineered automobiles to drive into foreign markets.

• Coca-Cola Co. and Marlboro cigarettes traded on their “Americaness” to create large overseas following.

• Sony Corp. found that compact, economical and reliable electronics like the Walkman, struck a chord with people everywhere.

Today’s Globalism

Times have changed…

No company can safely assume there will be viable foreign markets for an existing product.

Any company seeking to expand globally needs to ask if its offerings are culturally and socially appropriate for its targeted market.

Today’s Challenges

Companies find it difficult to succeed in new markets that are culturally unfamiliar

They often underestimate differences in the patterns of daily life in the new markets

This makes it difficult to develop products and services that fit peoples’ lives

It becomes difficult to extend their brand and manage culturallydiverse teams

Hybrid Strategy

It’s often a mistake to set out to create a worldwide strategy. Better results come fromstrong regional/local strategies, brought together into a global whole

‘Glocalization’

Think Global. Act Local.

At best, global marketing activities may exist at a strategic level, while at an operational/tactical level they are becoming less appropriate

Western companies are now paying a great deal of attention to the growing number of people with expendable income in China, India, and other developing/emerging regions where the cultures are very different from those in the West.

Today, the Global Marketing Strategy used by firms is to employ the practice of:- standardizing marketing activities where cultures are similar - adapting them where cultures are different

In the case provided, which elements of HSBC’s strategy are ‘global’ and which are ‘local’?

Do a comparative study of the different view points on the Globalization of business and its evolution

The New Reality

Emergence of a Networked Global Marketplace

Global Competition among Global Companiesfor Global Consumers

In Hong Kong, a German businessman is driving a Lexus Hybrid;he’s wearing Salvatore Ferragamo shoes, Irish Cashmere socks, Calvin Klein underwear, an Armani suit, with a Gucci belt and Ray Ban sunglasses.He has a Mont Blanc pen, in his Hugo Boss shirt pocket and is carrying an Apple i-phone 6S.He’s going to meet an American investor at a Starbucks.On the way back home late evening, he picks up a Baskin-Robbins ice cream sundae. When he gets home, sitting on his Ikea Couch, he enjoys a Bacardi with Coke, while listening to Blues and Jazz on his Bang & Olufsen music system. He also orders a Pizza from Dominos from his Mobile App. on Google Plus and checks his T witter, Face Book and Linkedin updates.

Why Companies pursue International Marketing

• Activities in the international arena are of eminent importance to companies in achieving maximum growth potential

• For US-based companies, 75% of sales potential is outside the US.

• For Japanese companies, 85% of potential is outside Japan.

• For German and EU companies, 94% of potential is outside Germany.

• About 90% of Coca-Cola’s and McDonalds operating income is generated outside the US.

• Trend: A large number of industries will be dominated by a handful of global companies

PROACTIVE MOTIVES

• Accelerating profit and growth

• Aligning with national economic policies

• Driving leadership vision and desire

• Extending unique competencies and competitive advantage

• Leveraging brand power

• Tapping foreign market opportunities-for market development

• Developing economies of scale-for cost advantage

• Availing tax benefits

REACTIVE MOTIVES

• Competitive moves and pressure

• Small and saturated domestic market

• Overproduction/excess capacity

• Tactical opportunities/ unexpected orders

• Change in trade policies & regulations

Driving and Restraining Forces for International Marketing

DRIVING FORCES

• Global economic integration

• Regional economic agreements

• Slow-down in developed markets

• High growth in emerging markets

• Converging consumer aspirations

• Rising price-quality expectations

• Increasing cost of doing business

• Highly networked world

• Growth of Internet, E-Commerce and Technology

• Peace, political stability and free markets

RESTRAINING FORCES

• Management myopia

• Ethnocentric organization culture

• National controls

• Cultural differences

• Limited long- term Investment potential

• Conflicts and political instability

• Economic downturns

What are the factors that are driving, as well as inhibiting, Indian Companies from going Global?

Ethical Issues in International Marketing

Is Globalization of business the new form of Imperialism?What is your point-of-view on this?

Is Free Basics truly promoting digital equality, or is there a hidden agenda behind this of Face Book?

10 Commandments for International Marketing

1. Understand similarities and differences in the global landscape

2. Don’t take shortcuts in marketing and brand building3. Establish a robust marketing infrastructure4. Embrace integrated marketing strategies and

new technologies5. Cultivate business partnerships6. Balance standardization and adaptation7. Balance global and local control8. Define operable guidelines9. Implement a global brand equity measurement system10. Be ethical and socially responsible

Do an analysis of any global brand that you think is following the ‘10 Commandments’ and demonstrate how?

Assignment-1: KYC of a Global Corporation/MNC (10 marks)

A large MNC will be assigned to each team and they will make a KYC (Know Your Company) presentation, with specific focus on the company’s ‘Global Strategies and Operations’.

Companies assigned will be such as P&G, Nestle, Tata Motors, Google, Amazon, Samsung, Coca Cola …