Chapter 1: International Marketing Orientation and Perspectives PDF

CHAPTER 1 INTERNATIONAL MARKETING ORIENTATION AND PERSPECTIVES LEARNING OUTCOMES:  Understand differences between international and domestic marketing.  Explain international marketing terms.  Appreciate the variety of consumers and their worlds.  Appraise in...

CHAPTER 1 INTERNATIONAL MARKETING ORIENTATION AND PERSPECTIVES LEARNING OUTCOMES:  Understand differences between international and domestic marketing.  Explain international marketing terms.  Appreciate the variety of consumers and their worlds.  Appraise international marketing from multiple perspectives.  INTRODUCTION There are number of major differences between international and domestic marketing. Consequently, international marketing is more complex and more exciting The differences between international and domestic marketing  International marketing is more complex than domestic marketing, because there are more uncertainties in exporting to foreign markets.  In particular , geographical borders, differing political systems and regulations, international regulations, currency conversions and cultural variety are all issues that make international marketing more complex. The differences between international and domestic marketing  Borders and changing borders  Changing currencies  Language  Legislation Definitions and scopes in international marketing  The study of international marketing involves learning and remembering a few new definitions and concepts over and above those learned for domestic marketing.  The following definitions provide an initial introduction and cover international marketing concepts and discussion of recent trends, such as globalization, which impact on the international marketing process. Definitions and scopes in international marketing  EXPORTING – it is a business activity of meeting the demand for goods or services in foreign markets. Goods are produced in the home market and transported to the foreign market. Services are planned in the home market and usually delivered by foreign marketing nationals on behalf of the foreign company employers.  EXPORTING CAPABILITY – A company may perform well in its domestic markets but may not be able to adapt new strategies to fit new foreign markets. Three (3) elements are central to developing an export capability; 1. environment; 2. firm itself; 3. strategy. Definitions and scopes in international marketing  P S Y C H I C D I S TA N C E – i s a m e a s u r e o f t h e o v e r a l l differences between a home and export market, which, if high, makes exporting more complex and difficult. Differences between markets include INFRASTRUCTURES, CUSTOMS,TRADING REGULATIONS, LANGUANGE AND CURRENCY.  INTERNATIONAL MARKETING – is the business process of identifying and meeting foreign consumer needs with relevant value for mutual advantage.  INTERNATIONAL MARKETING  What is meant by “foreign”? In the world today , ‘foreign’ usually refers to countries other than the one any individual lives in; but ‘foreign’ is a complex idea. It is clear that a number of factors contribute to ‘foreign-ness’, these include:  NATIONHOOD – an independent country with geographical boundaries and a governing body.  LANGUAGE  CULTURE – different customs and traditions that typify the people of that country. Definitions and scopes in international marketing  INTERNATIONALISATION – is the process of transforming a domestic marketing management system into an international marketing management system overtime. Another definition is it’s the process of adapting a firm’s operations to the international environment.  GLOBALISATION – is the process of reducing trade barriers across the world by the promotion of free trade ideals. It also means the increased integration of the world economy by new transport and communication technologies that have driven multidirectional flows of culture. Definitions and scopes in international marketing  INTERNATIONAL MARKETING ORIENTATION – is the ability to an exporting or international business unit to gather and use relevant information about foreign markets and their consumer needs, with the explicit authority of the senior management , to deliver benefits to those consumers for mutual advantage. Definitions and scopes in international marketing  GLOBAL MARKETING – a company’s pro- active willingness to adapt a global perspective instead of a country-by-country or region-by-region perspective in developing a marketing strategy. Consumers and their worlds  Increasing complexity  Over-consumption  Optimism and prosperity  Consumer power  Cosmopolitan consumers  Multicultural societies Consumers and their worlds  INCREASING COMPLEXITY – there are many trends that add to the complexity of living in the modern world. These trends are exemplified by the poles between individual and community choice.  OVER-CONSUMPTION – consumption , while central to international marketing, should be seen in its proper perspective as one aspect of human activity. Like culture , consumption is driven by political and economic philosophy and the economic assumption that people will always want more has underpinned modern and post- modern economic and marketing theories.  Consumers and their worlds  OPTIMISM AND PROSPERITY - other non-profit theories influence the scope and range of international marketing. If citizens as consumers are happy enough with a lower standard of living , that is fewer personal goods and services, compared to more affluent societies, then there may be less opportunity to market to them with traditional marketing expectation that some goods will become socially fashionable.  Consumers and their worlds  CONSUMER POWER – a similar theme relates to consumer power. What does it mean? Consumer power refers to consumer sovereignty and the ability of the consumer to choose which products and services are most likeable by purchasing them.  Consumer power means purchasing power. The commercial decision about entering an overseas market will initially depend upon the general purchasing power within the target economy.  Consumers and their worlds  COSMOPOLITAN CONSUMERS – consumers , worldwide, can also display cosmopolitan traits. To be cosmopolitan means the desire to widen your horizons by immersing yourself in a range of different culture experiences. The cosmopolitan consumer avoids local consumption patterns and strives to seek self-expression from more culturally diverse sources. Consumers and their worlds  MULTICULTURAL SOCIETIES – multiculturism is significant to all international marketing activities. It is affected by and associated with other social changes that emphasize youth, gender, gay culture, global religious communities and trans- national movements , as well as problems, e.g. pollution , security and crime. PERSPECTIVES FOR INTERNATIONAL MARKETING  Rapid globalizing changes and different consuming patterns prompt a discussion of perspectives that affect international marketing.  A perspective is frequently referred to as paradigm. A paradigm shift means a complete change in how majority of people view an important part of their world.  PERSPECTIVES FOR INTERNATIONAL MARKETING  Ethics  Development  The environment  International and National Protocols  Culture  International Marketing Practice  Dealing with uncertainty  Satisfying and reaching consumers  ETHICS  Ethicsthe moral code that drives actions and behavior, both individual and organizational. It is introduced here because of its importance to all aspects of international businesses in the twenty-first century.  DEVELOPMENT  Differences in religion , education and social patterns all lead to different approaches to economic and social development.  International marketers in communist/collectivist countries like China work on the mass production, low cost/price efficiency principle to promote economic development and prosperity  THE ENVIRONMENT  The world is divided into ecological creditors and debtors, pinpointing those nations and regions that are consuming more than what they are producing in terms of bio-capacity.  Canada, Scandinavia, South America, Russia, Australia and Africa are mostly net contributors to bio-capacity, whereas America, Europe, the Middles East, North Africa, India and China mostly over-consume of bio-capacity.  The environmental perspective is driven by pan-national institutions and pressure groups concerned with the effects that industrial development and consumerism are having on the earth’s natural equilibrium in terms of climate, natural resources , other animals and plants, waste disposal and international harmony.  INTERNATIONAL AND NATIONAL PROTOCOLS  Protocols – are sets of rules that organizations and countries commit to but which may not be legally binding or enforceable.  Embargo – complete ban to an activity.  Sanctions - ban on some trading activities.  Unilateral – one way barrier.  Multilateral – imposed by agents.  Bilateral – imposed on each other by equal measures.  CULTURE  Culture is an influencing perspective or point of view that plays an important role in defining the approach to international marketing and is linked to ethics.  There are several other cultural dimensions which provide a framework for understanding cultural diversity in consumer and industrial markets.  These are :  1. COLLECTIVE/INDIVIDUAL  2. POWER DISTANCE  3. MASCULINE/FEMININE  4. UNCERTAINTY TOLERANCE  5. SHORT-LONG-TERM ORIENTATION INTERNATIONAL MARKETING PRACTICE  International marketing is any marketing activity that has to be carried out across a country’s national border. While international marketing is important , it is not necessarily practiced in all businesses , industrial and service markets, and product and and production orientations may prevail.  DEALING WITH UNCERTAINTY  The core task for business decision making is to identify the source of and measure the level of risk involved in any business action.  The level of risk and its measurement is important because it reflects the level of uncertainty about the future outcome of any decision and action.  When risk is high, for example entering new markets with little appropriate infrastructure, then the entrepreneur is looking for high returns. DEALING WITH UNCERTAINTY  RISK ( of delivering the outcome or not ) e.g., market share, reputation, turnover, shareholder/asset value, global/international position, loyalty, sustainability.  REWARD – Volume of profit, turnover, market share, revenue, votes, aims achieved; value reputation , relationships, sustainability, assets.  REACTIONS – favorable/adverse, e.g; , market and competitors  RESOURCES – acquired, depleted, forecasted, un foreseen. SATISFYING AND REACHING CONSUMERS  All markets, whether domestic or international, are made up of consumers and buyers. These market pl ayers can be whol e organizations or corporations or individual people.  Consumer types, for international marketing purposes, are further complicated by differences in: 1. LANGUAGE, AFFECTING PROMOTION AND COMMUNICATION; 2. SOCIETY, AND THEREFORE BUSINESS SYSTEMS AND STRUCTURE THAT MAKE NETWORKING AND CONTACTS MORE DIFICULT; 3. THE TOTAL VARIETY AND COMPEXITY OF INDIVIDUALS’ PERSONAL CHOICES, WHICH MAKES IDENTIFICATION VIABLE CONSUMER PRODUCTS AND SEGMENTS MORE DIFFICULT.