International marketing

Definitions, scope and issues

DEFINITIONS

‘the objective is, as in domestic markets, to understand the customer and market needs and strive to meet them with the capabilities the organization has at its disposal’.

‘adapt familiar techniques to unfamiliar circumstances.’

Fifield and Lewis ‘International Marketing Strategy’ 1995

Kotabe and Helsen – orientation framework

Type of marketing Domestic

marketing Export marketing International

marketing Multinational

marketing Global marketing

Orientation Ethnocentric Ethnocentric Polycentric

Regiocentric

Geocentric

Keegan and Schlegelmilch - business classification

Domestic – export focus International – Multi domestic

strategy Global/Transnational – globally

integrated strategy

Economic background

The world economy - Glossary

Gross Domestic Product (GDP)=A country’s total output of goods and

services Balance of (merchandise) trade= exports-

imports World output=sum of all countries’ GDPs World trade=total exports + imports Disposable income=total income-essential

purchases

The world economy - Glossary

Foreign Direct Investment (FDI)=Foreign manufacturing/operations

located in a host country Portfolio investment=short term foreign

investment in equities, commodities, currencies etc

These are a key source of financial flows between countries

WORLD TRADE *(exports + imports) and world output, 1990-2000

World trade growing at <6%p.a. 12% in 2000

World output growing at <2% p.a. 4% in 2006

* Merchandise

Exports and imports of goods % GDP (2000)

Region/country

Exports Imports

N. America 17%(27) 23%(20)

W.Europe 40%(32) 40%(40)

Japan 8%(.4) 6%(1)

Asia 27%(14) 23%(14)

Latin America

6%(12) 6%(11)

( )=1948

Share of global exports and imports of services (2000) – top 5 exporters

Region/country

Exports Imports

North America

19% 14%

U.K. 7% 6%

France 6% 4%

Germany 6% 9%

Japan 5% 8%

Disposable income threshold

$10,000 (£6.5k) :virtually no disposable income

$20,000 (£11k): considerable purchasing power

Trade Blocs

‘Regional economic arrangements’ (from free trade to economic union)

Big Emerging Markets (BEMs)

Chinese Economic Area (CEA)China and HK, Taiwan

Association of Southeast Asian Nations (ASEAN) Indonesia, Brunei, Malaysia, Singapore,

Thailand, the Philippines, Vietnam Customs union: low internal tariffs and

common external tariff

Other BEMs

India, S. Korea, Mexico, Brazil, Argentina, S. Africa, Poland, Turkey.

‘Regional economic arrangements’ (from free trade to economic union)

North American Free Trade Area (NAFTA)

US, Canada and Mexico

Low internal tariffs, with local content laws

Mercado Cooperativo Sur (MERCOSUR):Brazil, Argentina, Uruguay, Paraguay Free trade area

European Union (EU) Germany, France, Italy, UK, Spain, Greece, Portugal, Belgium, Netherlands, Austria, Sweden, Denmark, Finland, Ireland, Luxemburg,

New members from 1 May 2004Cyprus, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia. Towards monetary union

TODAY’S ECONOMIC DRIVERS

Technology which impacts on: Communications:

Foreign travel Global advertising Web-based trading

Costs of production Customisation Access to information Logistics

TODAY’S ECONOMIC DRIVERS

De-regularization and privatisation:

The Global Village - Cultural convergence

Evidenced by:

Emergence of global market segments eg young, urban professional:

Nike trainers (US, made in China) Toshiba laptops (Japanese) Nokia mobiles (Finnish) AOL ISP (US) BMW car (German)

The Global Village (cont.)

This has led to: Growth in product standardization (see

Levitt 1983) Growth in ‘global’ brands Mergers, acquisitions and strategic

alliances: Swatch and Mercedes (electric car) Ford and Jaguar cars AOL and Time Warner

THE KEY QUESTIONS

Do we go international/global? Where do we operate? How do we enter and operate? What do we offer? Should it be adapted? What are the implications for the

marketing mix?

An analytical frameworkInformation areas

Issues Decisions

Consumers Segment profiles: size and relevance

Fit? Profitable? Suitable?

Company S&W, objectives Competence? Entry strategy? Standardise?

Country Socio/econ, logistics, stability

Entry strategy? Standardise? Risk?

Culture Beliefs, behaviour, symbols

Standardise or adapt?

Currency Stability Pricing, profits

Competition Who (S&W), 5 Forces? Competitive strategy (Porter, Hamel and Prahalad)

Other?