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Drivers and obstacles in International Marketing

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Levels of International Marketing Involvement

Domestic Marketing

Export Marketing

International Marketing

Global Marketing

• Low or no international commitment

• Domestic focus

• Limited international commitment

• Direct or indirect exporting

• Substantial internationalcommitment

• Focus on countries or regions

• Extensive internationalcommitment

• Focus on market segments rather than countries or regions

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International Expansion: Drivers in the Business Environment

• The primary drivers in the business environment are: Competition Regional Economic and Political Integration Technology Improvements in Transportation and

Telecommunication Economic Growth Transition to a Market Economy Converging Consumer Needs

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Drivers in the Business Environment (contd.)

Competition

• Competitive pressure from international companies will force the company to expand to new markets, even less profitable ones. Example: McCann Erickson, the advertising

agency, followed longtime client, Coca Cola, Inc., to all countries where Coke was present – until recently.

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Drivers in the Business Environment (contd.)

• Integration facilitates international trade for companies in member countries, and for companies from countries outside of the area.• Example: Regional agreements such as NAFTA, MERCOSUR,

and the European Union lower and eliminate barriers and promote trade within these markets. Subsidiaries can be established in these markets to take advantage of free trade within the region.

• Practice: look these terms up• NAFTA• MERCOSUR

Regional Economic and Political Integration

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Drivers in the Business Environment (contd.)

Technology• Media development: consumers worldwide are exposed

to similar products, services, and entertainment, and marketing communications.

• The Internet offers small and medium enterprises in both high- and low-income countries unlimited international exposure.

• Technology offers a broad reach to these businesses whose advertising budget cannot cover the high cost of international broadcast and print advertising.

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Drivers in the Business Environment (contd.)

• Lower cost and higher quality communication due to satellite technology, teleconferencing, and e-mail.

• The introduction of containers in intermodal transportation and electronic communication between suppliers and customers greatly facilitates the transportation of physical goods.

Transportation and Telecommunications

Container ship in the port ofRotterdam

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Drivers in the Business Environment (contd.)

• Economic growth created markets of high potential for international brands, while also opening previously closed markets. Emerging middle class with increasing buying power in big

emerging markets such as those of Brazil and India. Opening of new markets that were previously closed, such

as those of China and Vietnam, and those of the former Eastern Bloc.

Economic Growth

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Drivers in the Business Environment (contd.)

• Transition to a market economy created important new markets and opportunities to transform inefficient government-owned companies into successful enterprises.

• Poland, the Czech Republic, Slovakia, Slovenia, Hungary, Romania, and Bulgaria are members of the European Union.

• Slovenia is already a member of the European Monetary Union.

• China and Vietnam are opening doors to multinationals.

Transition to a Market Economy

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Drivers in the Business Environment (contd.)

• Consumers’ exposure (through media, travel) to global brands created

• demand for global products

• worldwide loyalty to international brands.

• The emergence of uniform consumer segments facilitates marketing strategies worldwide.

• Examples of consumer segments worldwide: • global teenagers• global elite

Converging Consumer Needs

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Firm-Specific Drivers (contd.)

Experience Transfers

Companies benefit from lessons they learn in different parts of the world and transfer their knowledge to other markets they serve.

.

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Obstacles to Internationalization

• The primary obstacles to internationalization are:

• the self-reference criterion

• government barriers

• competitive barriers.

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Obstacles to Internationalization

•Self-reference Criterion

Conscious and unconscious reference to own national culture and home-country norms while operating in the host country, which can prevent firms from adapting to local business environments and serving the needs of local consumers.

Practice: find examples of companies who experienced the self-reference criterion

To counter the impact of the self-reference criterion, the corporation must:

- Select adaptable personnel for international assignments.- Sensitize expatriates to the local culture.

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Obstacles to Internationalization (contd.)

• Government Barriers

Restrictions placed on international corporations by imposing:

- Tariffs- Import quotas- Other limitations, such as restrictive import license

awards.

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Obstacles to Internationalization (contd.)

• Barriers Imposed by International Competition

Among the competitive barriers international companies commonly encounter are:

- Blocked channels of distribution- Exclusive retailer agreements- Price cutting - Advertising blitzes