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INTERNATIONAL
MARKETING
STRATEGY
Australia ● Brazil ● Japan ● Korea ● Mexico ● Singapore ● Spain ● United Kingdom ● United States
ISOBEL DOOLE
ROBIN LOWE
FIFTH EDITION INTERNATIONAL
MARKETING
STRATEGY
ANALYSIS, DEVELOPMENT AND
IMPLEMENTATION
International Marketing Strategy, 5th Edition
Isobel Doole and Robin Lowe
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1 2 3 4 5 6 7 8 9 10 – 10 09 08
To Andrew and Sylvia
and to our children;
Rob, Libby and Will,
Catherine and Jonathan
PART 1 ANALYSIS 1
1 An introduction to international marketing 3
2 The international trading environment 37
3 Social and cultural considerations in international marketing 71
4 International marketing research and opportunity analysis 103
PART 2 STRATEGY DEVELOPMENT 143
5 International niche marketing strategies for small and medium-sized enterprises 145
6 Global strategies 187
7 Market entry strategies 231
8 International product and service management 263
PART 3 IMPLEMENTATION 305
9 International communications 307
10 The management of international distribution and logistics 345
11 Pricing for international markets 381
12 International marketing implementation through enabling technologies 417
BRIEF CONTENTS
vii
List of figures, tables, illustrations and dilemmas xii
Preface xv
Acknowledgements xxi
Walk through tour xxii
Accompanying website xxiv
PART 1 ANALYSIS 1
1 An introduction to international
marketing 3
The strategic importance of international
marketing 4
The international marketing environment 7
Differences between international and
domestic marketing 20
The international market planning
process 22
Case study Flatbread goes round the world 34
2 The international trading
environment 37
World trading patterns 38
The reasons countries trade 42
Barriers to world trade 44
The development of world institutions
to foster international trade 48
The development of world trading groups 52
The European Union 55
The Free Trade Area of the Americas 59
The Asian Pacific trading region 62
ix
CONTENTS
China 64
Case study Should governments support
domestic companies investing in
foreign markets? 67
3 Social and cultural considerations
in international marketing 71
Social and cultural factors 72
What is culture? 72
Culture and consumer behaviour 80
Analysing cultures and the implications
for consumer behaviour 83
Cross-cultural analysis 85
Social and cultural influences in
business-to-business marketing 91
Case study Leapfrogging the
banking system 100
4 International marketing research
and opportunity analysis 103
The role of marketing research and
opportunity analysis 104
The role of international marketing research 104
Opportunity identification and analysis 106
International marketing segmentation 110
The international marketing information
system 117
Primary research in international markets 123
Case study Segmenting the global
mobile phone gaming market 134
Integrative learning activities 137
Integrative learning activity 1 138
International marketing planning: analysis 138
PART 2 STRATEGY
DEVELOPMENT 143
5 International niche marketing
strategies for small and
medium-sized enterprises 145
The SME sector and its role within the
global economy 146
The nature of SME international
marketing strategies 151
The nature of international development 160
International strategic marketing
management in SMEs 167
International entrepreneurship and fast growth 179
The future of SME internationalisation 182
Case study Ebac – dipping their toes
further into the water 183
6 Global strategies 187
The alternative views of globalisation 188
Alternative strategic responses 197
International marketing management for
global firms 206
Case study Conglomerate breaks out
from India 227
7 Market entry strategies 231
The alternative market entry methods 232
Indirect exporting 234
Direct exporting 239
Foreign manufacturing strategies without
direct investment 245
Foreign manufacturing strategies with direct
investment 249
Cooperative strategies 253
Case study When joint ventures go wrong 259
8 International product and service
management 263
The nature of products and services 264
The components of the international
product offer 268
Factors affecting international product
and service management 270
Product policy 277
Managing products across borders 279
Image, branding and positioning 283
New product development 292
Case study Lego 298
Integrative learning activity 2 301
International marketing planning: strategy
development 301
PART 3 IMPLEMENTATION 305
9 International communications 307
The role of marketing communications 308
The fundamental challenges for international
marketing communications 312
International marketing communications
strategy 317
The integration of communications 320
The marketing communications tools 323
Developing profitable, long-term marketing
relationships 338
Case study Google to dominate online ads? 342
10 The management of international
distribution and logistics 345
The challenges in managing an international
distribution strategy 346
Selecting foreign country market
intermediaries 347
x CONTENTS
Building relationships in foreign
market channels 355
Trends in retailing in international markets 358
The management of the physical distribution
of goods 367
Case study Merry Management Training 379
11 Pricing for international markets 381
Domestic vs international pricing 382
The factors affecting international pricing
decisions 382
Developing pricing strategies 392
Problems of pricing and financing
international transactions 395
Problems in multi-national pricing 396
Problems in managing foreign currency
transactions 404
Problems in minimising the risk of
non-payment in high-risk countries 406
Administrative problems resulting from
the cross-border transfer of goods 411
Case study Beta Automotive 414
12 International marketing
implementation through enabling
technologies 417
The enabling technologies 418
The Internet and e-business 423
International e-markets and
e-marketing 425
The impact of e-business on international
marketing 429
International marketing solution
integration 430
The impact on international marketing
strategy 434
Moving to a customer-led strategy 442
Case study India showing IBM
the way? 445
Integrative learning activity 3 449
International marketing planning: implementation,
control and evaluation 449
Index 455
CONTENTS xi
LIST OF FIGURES
1.1 The environmental influences on international
marketing 7
1.2 The Big Mac index 13
1.3 Aspects of international market planning 25
1.4 Some typical stakeholders of multinational enterprises 26
1.5 Essential elements of the international marketing plan 30
2.1 Global trade flows 38
2.2 Market entry barriers 45
2.3 Regional trading areas of the world 55
3.1 A cultural framework 74
3.2 Cultural influences on buyer behaviour 80
3.3 The contextual continuum of differing cultures 86
3.4 Power distance/individualism dimensions across cultures 88
4.1 Nature of competition and level of market development 108
4.2 The four-risk matrix 109
4.3 Business portfolio matrix 111
4.4 Market profile analysis 118
4.5 The international marketing research process 124
5.1 The multilateral aspects of the internationalisation
process 160
5.2 Geographic development of SMEs 161
5.3 Growth for niche marketers 162
5.4 McKinsey 7S framework 167
5.5 Ansoff growth matrix 170
5.6 Factors affecting SME internationalisation 171
5.7 Product structure 174
5.8 Geographic structure 175
5.9 Levels of internationalisation 176
5.10 Characteristics of successful international
business-to-business marketers 177
6.1 The international competitive posture matrix 198
6.2 Alternative worldwide strategies 199
6.3 Globalisation push and pull factors 201
6.4 The conceptual framework of a firm 215
6.5 Functions of different management levels 216
6.6 Development of strategy 217
6.7 International planning problems 223
7.1 Market entry methods and the levels of involvement in
international markets 232
7.2 Risk and control in market entry 233
7.3 The components of the export marketing mix 239
8.1 The product–service continuum 265
8.2 The three elements of the product or service 269
8.3 The international product life cycle 280
8.4 The portfolio approach to strategic analysis (BCG matrix) 282
8.5 The brand value equation 286
8.6 Brand valuation 289
8.7 New product categories 292
8.8 The arguments for and against centralisation
of R and D 296
9.1 External, internal and interactive marketing 309
9.2 The dimensions of external marketing communications 310
9.3 Push and pull strategies 318
9.4 Internal and external international communications
programmes 322
10.1 Distribution channels for business goods 349
10.2 Distribution channels for consumer goods 349
10.3 Global retailer categories 364
10.4 The export order and physical process 375
11.1 Three types of grey market 400
11.2 A framework for selecting a coordination method 402
11.3 The export order process 412
12.1 The vicious circle of technology and competitive
advantage 420
LIST OF TABLES
1.1 The world’s ten mega cities in 2015 10
2.1 Top 10 world exporters in merchandise, 2007 39
2.2 Percentage change on previous year in real GDP/GNP
and consumer prices 40
2.3 Trade balances in merchandise trade 41
2.4 The heavy burden of debt 49
2.5 Main types of trade associations 53
xii
LIST OF FIGURES, TABLES,
ILLUSTRATIONS AND DILEMMAS
4.3 Statistics in Siberia 122
4.4 Use of multi-client studies 126
4.5 The use of qualitative research to overhaul global
brand image 129
5.1 Fairtrade networking to supply the supermarkets 149
5.2 Tariff reduction prompts innovation 151
5.3 Salmon or eggs: which comes first? 153
5.4 Beatson Clark: defining a niche in a commodity market 156
5.5 Creating a mobile music software niche 157
5.6 Family networking 164
5.7 Azim Premji – from cooking oil to IT billionaire 168
6.1 A new direction for IBM and Lenovo 192
6.2 Gillette planning a close shave 197
6.3 ABB: a new model of global entrepreneurialism – good
while it lasted? 203
6.4 Airbus 205
6.5 LG innovating to the top 210
6.6 Cars designed for emerging markets 214
6.7 Mittal: ready to iron out a possible culture clash? 226
7.1 In search of the 99p bargain 235
7.2 The future of Sogo shosha 238
7.3 High-flying Brazilian exporter 240
7.4 Mr Men: a licence to storm the US market 248
7.5 HSBC buying problems in the US 251
7.6 Absolut privatisation in Sweden 252
7.7 Chrysler: dissolving a merger 253
7.8 Buying into a joint venture to win work in the future 255
8.1 Flying low cost with frills or no frills 267
8.2 Apple’s lead challenged 271
8.3 Tiger Balm: relieving the pains of warlords
and sports stars 281
8.4 Core competence and centralisation in
consumer products 283
8.5 Cooperation after a century of fighting 284
8.6 The sincerest form of flattery 291
8.7 China promoting IP rights 293
8.8 Restarting the innovation culture at Motorola 297
9.1 Corporate identity and the Olympic Games 311
9.2 Negativity in advertising 313
9.3 Pepsi – promoting to tribes 317
9.4 Dove uses consumer-created ads 328
9.5 James Bond – licensed to sell 332
9.6 Charity begins in the neighbourhood 335
9.7 Corruption concerns at BAE 336
10.1 Internet retailing helps Western countries
penetrate Japan 351
10.2 Thai military leaders restrict the expansion of Tesco 353
10.3 Dell Computers 357
3.1 Cultural values and their relevance to consumer
behaviour 76
3.2 The main silent languages in overseas business 79
3.3 Differences in buyer–seller relationships styles 95
4.1 The 12C framework for analysing international markets 118
4.2 Online databases 120
4.3 A comparative evaluation of survey methods for use in
international marketing research 131
5.1 The difference between exporting and international
niche marketing 155
6.1 The top 15 transnational companies by foreign
assets 2005 189
6.2 Top 10 companies: index of transnationality 2005 190
6.3 Top 12 companies from developing economies: index of
transnationality 2005 ranked by foreign assets 191
6.4 The global pyramid of wealth 213
7.1 Who provides what in partnerships between firms from
developed and developing countries 254
8.1 The best global brands 2006 288
9.1 Top 10 global advertisers 327
9.2 The characteristics of the Internet – the Six ‘I’s 336
10.1 Retailers – typical differences between developing and
developed countries 360
10.2 Top ten global food retailers 363
11.1 The effect of additional export sales on contribution 387
11.2 Escalation of costs through exporting 388
LIST OF ILLUSTRATIONS
1.1 The beautification of the ageing baby boomers 9
1.2 When is a Parma ham not a Parma ham? 11
1.3 Cadbury’s in political faux pas 17
1.4 Indian brands emerge from the shadows 18
1.5 Divine Chocolate Ltd 23
1.6 Fisherman’s Friend 32
2.1 The comparative advantage of China and India 43
2.2 To protect or not to protect? 47
2.3 Skoda has the last laugh 59
2.4 The Irish gem 60
2.5 The Asian blue chip tigers 63
3.1 Cadbury’s: Lady Purple or Aunty Violet? 75
3.2 Written language: but what does it mean? 78
3.3 Localising websites 79
3.4 France: image vs reality? 88
3.5 The use of humour in international advertising 90
3.6 How the ethical consumer makes decisions 97
4.1 Dr Martens goes ethnographic 113
4.2 Goodyear global segmentation research 115
LIST OF FIGURES, TABLES, ILLUSTRATIONS AND DILEMMAS xiii
10.4 Comparative retailing traditions 361
10.5 The Irish retailing environment 364
10.6 Nightmare logistics in Cameroon 374
11.1 Consumer credit fuels consumer purchases 392
11.2 Debt in the Euro zone 397
11.3 Dealing with non-SEPA payments 399
11.4 Grey clouds cause black anger 400
11.5 Countertrade deals for GEC 409
11.6 Is Ikea changing its global competitive base? 410
12.1 A new challenge for the energy sector 419
12.2 Mobile phones aid African development 421
12.3 Jack Ma creating Chinese entrepreneurs 428
12.4 Toyota supply chain challenges in Bangalore 432
12.5 The future development of online sales 439
12.6 Specialist publishers have their finger on
the pulse 443
LIST OF DILEMMAS
1.1 How do you sell to subsistence farmers in Africa? 14
1.2 How does a city sell itself internationally? 29
2.1 Knitted pullovers threaten the US and EU 66
3.1 Skoda 83
3.2 Mittelstand vs US executives 85
4.1 Dutch flowers to the US 106
4.2 Optcan assess Saudi Arabia 107
4.3 How to research the Canadian market 123
5.1 International marketing helping social enterprises 150
5.2 Dyson – still cleaning up? 180
6.1 Toyota – growing too fast? 194
6.2 Unilever: redefining product policy for a global future 219
7.1 Global marketing or local heritage 247
7.2 Airbus: creating a new competitor? 256
8.1 The football stitching game 276
8.2 Trying to ensure that diamonds are forever 277
9.1 Self-reference criteria in advertising decisions 323
9.2 Measuring online and offline promotion effectiveness 337
10.1 Local distributors vs the global operators 359
10.2 Cisco Systems 368
11.1 Pricing caravan parks for European customers 397
11.2 Can we avoid the currency risk without losing
our customers? 405
12.1 Technology convergence: one brand or pick and mix? 422
12.2 Social networking sites can make or break
product marketing 435
xiv LIST OF FIGURES, TABLES, ILLUSTRATIONS AND DILEMMAS
xv
Introduction
Markets and marketing are becoming ever more international in their nature
and managers around the world ignore this fact at their peril. To achieve
sustainable growth in markets that are becoming increasingly global, or merely
to survive in domestic markets that are increasingly attacked by international
players, it is essential that organisations understand the complexity and
diversity of international marketing and that their managers develop the skills,
aptitudes and knowledge necessary to compete effectively around the globe.
This new and completely revised edition of International Marketing
Strategy continues to meet the needs of the international marketing student
and practitioner in an up to date and innovative manner. It recognises the
increasing time pressures of both students and managers and so strives to
maintain the readability and clarity of the previous editions, as well as providing
a straightforward and logical structure that will enable them to apply their
learning to the tasks ahead.
The book continues to incorporate new, significant and relevant material
with learning innovations that ensure its continued status as the best-selling
UK text on international marketing strategy.
Structure of the book
As in previous editions, the book is divided into three main subject areas –
analysis, strategy development and implementation – each of which has four
chapters. For each chapter the learning objectives for the reader are stated at
the outset and these lead to the key themes of the chapter, which are explored
in the text. Illustrations of the key issues are provided along with examples of
the kind of practical dilemmas faced by international marketing managers.
Success in international marketing is achieved through being able to
integrate and appreciate the interaction between the various elements of the
international marketing strategy development process and this is addressed in
two ways. First, at the end of each chapter a case study is included. Whilst the
main focus of the chapter case study is on integrating a number of the themes
of the chapter, the reader should also draw on their learning from the chapters
that have gone before to give a complete answer. Second, at the end of each
part there is a more comprehensive integrative learning activity for the reader
that focuses on international marketing strategy development. At the end of
Part 1 this activity is concerned with analysis, at the end of Part 2 with strategy
development and at the end of Part 3 with implementation. The format for
these learning activities is similar so that the three integrative learning
PREFACE
PREFACE
activities, when added together, integrate all the learning from the book and
provide a practical and comprehensive exercise in international marketing strategy development for the reader.
New to this edition
A number of chapters have been revised and updated to ensure the inclusion of
the latest developments in international marketing. Each chapter now has a case
study that encourages further reflection and discussion on the key themes of
the chapter.
In Chapter 1 we have included a full section introducing international marketing
planning. The chapters (5 and 6) on international marketing in SMEs and global
firms have been expanded to include the management and planning implications
of the strategy development issues highlighted within the chapter.
In this new edition Chapter 12 focuses on how technology not only supports
and enables the international marketing process in areas such as customer
relationship management, value and supply chain management, but is also
changing the process by which the future strategies of organisations in
international markets are being formulated.
The majority of the case studies, illustrations and dilemmas are new or updated.
Material is used from around the world and includes a number of cases and
illustrations from Asia, Latin America, Eastern Europe and Ireland. The authors
have endeavoured to cater for the needs of readers who are developing their
international marketing skills in Europe, the Americas, Asia, Australasia or other
parts of the world. Each illustration and dilemma has a question highlighting a
specific issue that should be considered.
The Integrative Learning Activity is an innovative section at the end of each part
with the objective of encouraging readers to integrate their learning from the
chapters and the parts. By obtaining and analysing data through secondary
sources, typically through the Internet, the reader is able to proceed through the
steps of the international marketing strategy process, thus acquiring further
knowledge and using this opportunity to practise a number of their international marketing skills.
How to study using this book
The aim of the book is for readers to have an accessible and readable resource for
use both as a course book and for revision. The text is also recommended reading
for students of the CIM qualifications.
It has a clear structure which is easy to use and easy for the reader to follow,
thus making it ideal for incorporation into a course delivered in a 12-week
teaching semester. Its geocentric view of international marketing, with examples
of good practice in competing internationally from around the globe, makes it
ideal for use with courses with multicultural students.
International Marketing Strategy has been developed to help the reader
learn, understand and practise a number of elements of the international
marketing strategy process. The process involves the analysis of a situation,
development of a strategy against a background of a number of strategic
options and the implementation of the chosen option. It is important to
recognise that there is not one ‘right’ strategy, because success is ultimately
determined by many factors and, besides, it will usually take a number of
years before the strategy can be seen finally as a success or failure. Therefore,
this book provides a framework, within the parts and chapter structure, in
xvi
PREFACE xvii
which to understand and evaluate the factors that should be taken into
account (and which should be dismissed too) in building an international
marketing strategy.
Structure of the book
Parts
The three parts focus on the topics of analysis, strategy development and implementation. Each part contains an introduction to the four chapters that have been
grouped together.
PART 1 ANALYSIS
Part 1 focuses on analysing the international marketing environment. It provides an
introduction to how the international marketing environment influences how firms
operate. It explores the changing nature of the environment and explains the structures that support and control international trade. Also considered are the social
and cultural influences on customer buying behaviour in international markets.
Frameworks and processes that provide the means to systematically identify
and evaluate marketing opportunities and carry out market research across the
world are explained.
xviii PREFACE
CASE STUDIES AT THE END OF EACH CHAPTER
PART 1 ANALYSIS
Chapter 1
Flatbread goes round the world explores the success
and the reasons behind the success of a Mexican flour
product company expanding throughout America,
Europe and Asia.
Lego explores the toymaker’s attempts at diversifica
tion in the face of declining sales and profits, and the
outcomes of this diversification.
Integrative Learning Activity
Chapter 2
Should governments support domestic compa
nies investing in foreign markets? This case exam
ines the role of government support agencies in
assisting and advising companies trading and invest
ing overseas.
Future Global Players examines the different
starting points and means used by newcomers from
developing economies to cultivate global brands.
Chapter 3
PART 3 IMPLEMENTATION
Leapfrogging the banking system investigates the
mobile phone banking revolution taking place in
Africa.
Chapter 9
Google to dominate online ads? This case looks at
bigger corporations taking over more independent
Chapter 4
Segmenting the global mobile phone gaming
market addresses the issues arising from Cometa
Wireless Gaming Systems’ attempt to sell mobile
phone games to a global market.
Chapter 10
Merry Management Training presents the problems
arising when a Western management training consul
Integrative Learning Activity
Li Ning analyses the opportunities in the domestic
and global market for the leading sports supplier in
China.
PART 2 STRATEGY DEVELOPMENT
Chapter 5
Ebac – dipping their toes further into the water
looks at the options and measures taken by a dehumid
ifier company to combat similar, cheaper Asian imports.
former and current means of internationalisation
and assesses IBM’s history and future as a ‘globally
integrated enterprise’.
Chapter 6
Conglomerate breaks out from India focuses on
Tata Sons group’s approach to becoming more
competitive and global.
Microsoft attempts to market its newest products,
competing with other companies as well as its own
earlier software.
Chapter 7
When joint ventures go wrong. Unforeseen factors
cause major problems in promising mergers between
companies from developed and developing countries.
Chapter 8
networking sites and the ensuing issues (legal, advertising and user-related).
tancy and a small Dubai consultancy firm enter into
a friendly informal agreement.
Chapter 11
Beta Automotive explores the strengths and weaknesses
of a Singaporean entrepreneur looking to exploit the
grey market in auto parts on an international basis.
Chapter 12
India showing IBM the way? This case touches on
Integrated Learning Activity
PART 2 STRATEGY DEVELOPMENT
Part 2 explains the international marketing strategy options available for small
and medium-sized firms and also the largest organisations that will enable them
to compete effectively in global markets. The factors that affect the choice of strategy are considered as well as the challenges that are posed to the managers of
these strategies.
A key decision for most organisations is which market entry method to use to
exploit the market opportunities from the many options available. This is then followed by the selection and development of the products and service strategy that
determine the portfolio that will be offered to customers.
PART 3 IMPLEMENTATION
Part 3 deals with the international communication, distribution and pricing strategies that support the introduction and development of the business in the various
worldwide markets. The different local market factors that affect implementation
are considered. These factors may allow the associated implementation programmes
and processes to be standardised across different markets but, frequently, it is necessary to adapt the strategies to suit local needs.
Finally, technology plays a key enabling role in international marketing strategy implementation. It supports the programme and process delivery and also provides opportunities for creativity that allow innovative firms to gain competitive
advantage.
Readers should realise that these groupings of chapter topics within parts are
primarily to provide a clear structure and layout for the book. In practice, however, there is considerable overlap between analysis, strategy development and
implementation topics. For example, product strategy and market entry are considered by organisations in some situations to be implementation issues, and
technology might be used to support analysis, set the overall international marketing strategy or support implementation.
Chapters
After a brief introduction to each chapter the learning objectives for the chapter
are set out: these should provide the focus for study. To help to reinforce the
learning and encourage the reader to explore the issues more fully the chapters
contain a number of additional aids to learning.
Illustrations
The illustrations that have been provided are not present just to reinforce a key
issue or learning point that has been discussed within the chapter: the questions
that have been added are intended to enable the reader to reflect upon the deeper
and broader implications too and thus provide a further opportunity for discussion.
Our aim is that the settings for the illustrations be as diverse as possible, geographically, culturally, by business sector, size and type of organisation, in order to try to
help the reader consider the situations described from alternative perspectives.
Dilemmas
The dilemmas included emphasise the point that there are few simple and straightforward management decisions in international marketing. Organisations and
PREFACE xix
managers often face difficult problems that require a decision. The dilemmas
within a chapter provide the opportunity for the reader to identify those factors
that should be taken into account in coming to the decision and, hopefully, consider rather more creative ideas that lead to decisions and solutions that add
greater value.
Case studies
The case studies provide the opportunity for the reader to carry out more comprehensive analysis of key chapter topics before deciding what strategic decisions
or plans should be made. These short cases provide only limited information and,
where possible, readers should obtain more information on the case study subject from appropriate websites in order to complete the tasks. The reader should
start with the questions that have been supplied in order to help guide the analysis or discussion. After this, however, the reader should think more broadly
around the issues raised and decide whether these are indeed the right questions
to ask and answer. International markets change fast and continuously and new
factors that have recently emerged may completely alter the situation.
Integrative learning activities
At the end of each of the three parts of the book we have included an Integrative
Learning Activity. Their purpose is to integrate the four chapters that make up
each of the parts. More importantly, however, is that as a whole the three activities provide a framework for planning an international marketing strategy and
give the opportunity for readers to consider the practical issues involved in
developing, planning and implementing an outline international marketing
strategy. The objective of these activities is to provide a vehicle through which
the reader is able to develop practical skills in research, analysis, evaluation and
strategy development. In completing these activities you will need to synthesise
the various strands and themes explored throughout the book and apply them
to a practical situation.
Web support
The textbook is fully supported by the accompanying website that can be found at
www.cengage.co.uk/doole5. This enables students and lecturers to access a number of resources in order to explore the subject further. Lecturers can use the site
to access valuable online teaching resources, including a full set of PowerPoint
slides to accompany the text and hints and tips on how to use the case studies,
illustrations etc. in a classroom situation. Students are able to access learning
resources to accompany the textbook and hotlinks to other websites that may be
useful in exploring the cases and illustrations in the text.
ID, RL
xx PREFACE
Inevitably, in the task of writing this textbook we have had help, support and
valuable contributions from many people. We would especially like to thank our
colleagues from Sheffield Hallam University and other univerisities who have
contributed a number of case studies and illustrations.
We are indebted to our students from many countries, the managers of many
businesses in South Yorkshire, who have freely given their time to share their
expert knowledge of international niche marketing, and managers in many larger
companies, including IBM and Shell, who have discussed with us the challenges
they face in global marketing. Over the years they have all helped to shape and
influence our view of international marketing strategy.
The team at Cengage Learning have always encouraged us and we are grateful
for their professionalism in turning the manuscript into its finished form.
Every effort has been made to obtain permission from the copyright holders for
material reproduced in this book. Any rights not acknowledged here will be
acknowledged in subsequent printings if due notice is given to the publisher.
xxi
ACKNOWLEDGEMENTS
INTRODUCTION
Managers around the globe are recognising the increasing necessity for their companies and organisations to
develop the skills, aptitudes and knowledge to compete effectively in international markets.
The emergence of a more open world economy, the globalisation of consumer tastes and the unabated
expansion of Internet access globally all increase the interdependency and interconnections of nation
economies across the globe. The need for managers to develop the skills to respond to these pressures affects
companies of all sizes.
In this chapter, the reader will be introduced to the concepts of international marketing, enabling them to
acquire an appreciation of the complexities of marketing on an international basis and of how this activity differs
from operating purely in domestic markets. In the following sections we will define international marketing,
examine the important trends in the global marketing environment and introduce the reader to the international
marketing strategy development and international marketing planning process.
AN INTRODUCTION TO INTERNATIONAL
MARKETING
CHAPTER 1
3
LEARNING OBJECTIVES
After reading this chapter you should be able to:
■ Explain and use the SLEPT factors to assess international markets
■ Discuss the differences between export marketing, international and global marketing
■ Understand the criteria required to evaluate a company’s international marketing strategy
■ Appreciate the key steps in the international marketing planning process
Learning objectives Listed at the start of each
chapter, highlighting the key concepts covered in
that chapter.
and faster to apply questionnaires to existing and potential customers around the
world by using the Internet. Customer behaviour can be monitored on websites
by tracking navigation through the site to provide new insights, thought processes
and predict likely purchasing intentions.
The Internet provides some negative information as well, from blogs and social
networking sites, as Dilemma 12.2 shows. Firms can suffer considerable damage
at the hands of such sites and Dell suffered badly in 2005, prompting the
company to set up its own blog, www.dell2one.com to try to explain and
counteract the damage.
As we discussed in Part 1, organisations are collecting this type of information in
a much more systematic way. For example, Procter & Gamble and Unilever have a
database of observed behaviour accessible to staff worldwide through an intranet.
The impact of technology on international
strategy development
For some firms their international marketing strategy is inextricably linked to
technology either because of the nature of the business, in the case of firms such
as IBM, Microsoft and Acer, or because it is the route to market in the case of
Expedia, Dell and CDWow.
CHAPTER 12 INTERNATIONAL MARKETING IMPLEMENTATION THROUGH ENABLING TECHNOLOGIES 435
DILEMMA 12.2
500 votes and this provides a good start towards getting a
story on the front page. The different aspect of this type of
site from other sites, such as Google and Yahoo, that also
aggregate stories is that they rank stories and also recognise
the vocal nature of their users and that some are regarded
as opinion formers.
There are many implications for marketing. For example, a
casual remark by a senior company executive will be pounced
upon by users. When he dismissed a rival product, Wii, as ‘an
impulse buy’, a Sony senior executive attracted 270 comments,
generally criticising Sony as arrogant and complaining about
the high cost of Sony’s Playstation 3. These individual stories
may seem insignificant but they add up.
In 2005 a blogger and media commentator, Jeff Jarvis,
complained about his problems with online computer seller,
Dell, and this triggered an avalanche of similar complaints
which led to a drop in Dell’s share price. This does not illustrate
the power the Internet gives to one person, rather it provides
a focus for many similar individual complaints from other users
to gather together.
Of course, marketing companies may see the opportunity
to exploit this grass roots marketing by providing the ‘seed’
stories, but the risks if they were to do so are potentially huge
because of the backlash if consumers found out. They see
these websites as their own and not part of traditional media,
and object if they are invaded by big marketing firms.
The dilemma is how can firms use social networking
websites for their advantage without alienating the users?
SOURCE: ADAPTED FROM D. RUSCHE ‘ONLINE OPINION GIVES POWER TO THE PEOPLE’, SUNDAY TIMES, 18 FEBRUARY, 2007
Social networking sites can make or
break product marketing
Social networking is having a significant effect on the way that
consumers now search for information about products and
services they wish to buy. Consequently, this has implications
for the international marketing strategies of firms.
Research by Yahoo in 2006 showed that 77 per cent of
consumers are influenced by Internet research and on average
customers spent 12 hours researching a potential purchase
online but 15 hours on research of more expensive products,
such as a television.
Increasingly significant in acting as sources of information
are social networking websites such as Digg.com, Reddit,
Newsvine and Stumbleupon, which rely on users to create
content by sending in their own stories or links to stories they
have found on the Web. Users vote for the stories they most
like and add their own content. The most voted for stories end
up on the front page, where they attract more attention and
so the snowball effect continues.
Whilst on the one hand complainers from the US on the
Digg website, a site claiming 20 million visitors per month,
were saying that ‘Steve Jobs and Apple don’t produce good
tech, they produce good marketing’, other contributors were
more positive. Smaran Dayal, an 18-year-old from Pune, India
was observing that Apple’s computers and iPods were
revolutionary products. Dayal has 500 ‘friends’ who track
his Apple stories, so any recommendations he makes carry
Dilemmas International marketing dilemmas and
associated questions are located throughout the
text and provide a forum for classroom and
tutorial discussion.
WALK THROUGH TOUR
CHAPTER 6 GLOBAL STRATEGIES 227
SUMMARY
■ The increase in global business activity has resulted from a number of drivers in the environment,
particulary through technological developments. Clearly it is communications and information
technology that have had the greatest effect on creating a global marketplace. Firms have also
accelerated the move towards greater globalisation by developing a worldwide presence and
strategy, and offering similar products and services.
■ To exploit global markets firms have developed appropriate strategies for their particular situation. These
range from multidomestic strategies, in which each market is seen as separate and individual, through to
globally standardised strategies in which the firm has identified one global segment with similar needs. In
practice, the largest firms are too complex for one simple strategy to be appropriate and so they use a
combination of different strategies to build global efficiency, local effectiveness and knowledge assets.
■ In the past global trade has been dominated by MNEs from developed countries, but now companies
from emerging markets that have built their capability and resources in the domestic market, are
becoming global players investing in developed countries too. The competitive advantage that they have
built in their home market must then be tested in the global marketplace.
■ To succeed globally firms must build global appeal through globally recognised brands, but also
innovate as the basis of competitive advantage in many industries changes continually.
■ An increasingly common feature of transnational strategies is the greater level of cooperation between
firms that would otherwise be competitors, customers or suppliers.
■ To enable managers to set and control the operations of the business an appropriate organisation
structure is needed. International managers must also be able to recruit and develop the right staff
that will have the skills necessary to deal with the complexity, diversity and conflicting challenges of global
business development.
KEYWORDS
Competitive Global reach Organisation
advantage Global sourcing structure
Control Globalisation Standardisation/
Global appeal International manager adaptation
Global brand Market access Transnationality
Global presence Mergers of equals World Wide Web
in an organisation that perhaps resembles a private equity fund,
is not so common in developed countries but is still favoured in
emerging markets, and there are a number of examples in India
and China. The activities that have bound these businesses
together in the conglomerate model in the past have often been
manufacturing or international trading. Western multinationals,
however, seem to have focused on global branding and
marketing, and outsourcing manufacturing wherever possible.
CASE STUDY
Conglomerate breaks out from India
Over the last two decades multinationals from developed
countries have focused on their core activities where there
appeared to be the most attractive global market opportunities.
For many firms this has meant withdrawing from sectors by
selling off unwanted parts of the business. The conglomerate
model, in which hundreds of often disparate businesses are held
Summary Featured at the end of every chapter, the
summary captures the key issues in each chapter,
helping you to assess your understanding and revise
key content.
CHAPTER 2 THE INTERNATIONAL TRADING ENVIRONMENT 67
KEYWORDS
Asian Free Trade Area Economic and Monetary Union Mercosur
Association of South East Exchange Rate Mechanism Non-tariff barriers
Asian Nations Free Trade Area of the Americas Single European Market
Balance of payments Hard currency Tariff
Comparative advantage International Development Association Trade deficit
Copenhagen criteria International Monetary Fund Trading blocs
Doha Round International product life cycle World Bank
fireworks and simply waited for the money to arrive.
When it didn’t they ran out of cash and were closed by
the bank.
■ A major PLC was used to Letters of Credit (a way of
ensuring prompt payment) taking 9 months to be paid.
A chance conversation between the Finance Director and
a bank manager led them to train the staff and reduce
the payment to 1 month. They had £14 million
in outstanding letters of credit – just think how much
extra cash they now have.
■ A sausage manufacturer sent a large consignment of
sausages to the USA. Sadly they hadn’t received approval
from the US Food and Drink Administration which
controls food quality in the USA. They had to pay to
have the sausages quarantined and returned.
These kind of things happen every week, all of them hugely
costly to the companies and entirely avoidable.
The role of the government support agencies is therefore
primarily to ensure that companies reduce risk in international
business by being fully prepared.
Outward investment
Traditionally governments have primarily been concerned with
helping companies reduce risk when trading overseas by
learning the basics of international trading. The examples
outlined above are problems which could be avoided with
basic training. Of course once you understand the basics and
you have put them into practice by trading with one country
you can do the same in another.
Another very high-risk activity is when companies make
investments overseas for the first time. However, public
support agencies such as UKTI provide little support for this
area of activity.
Investing overseas for the first time is often far more risky
than trading overseas because companies are investing a lot
of time and money in developing a business presence
CASE STUDY
Should governments support domestic
companies investing in foreign markets?
As well as trying to protect domestic markets, governments try
to help domestic companies export to international markets.
They regard this as important because companies that
trade successfully on international markets tend to be more
profitable and innovative. This in turn means that they
generate more wealth, employ more people and pay more tax
to their governments.
The UK provides support to businesses trying to trade
overseas through an organisation called UK Trade and
Investment (UKTI) which has offices in the UK and in
embassies and Consular Offices throughout the world.
Until recently support has focused on providing subsidies to
travel overseas and to attend overseas trade fairs. The staff
based in UKTI offices around the world carry out market
research on behalf of UK companies to identify whether there
is demand in the foreign market and to provide lists of
contacts, possible agents etc. They also help open doors for
companies, particularly to senior politicians and senior
managers in the markets being investigated.
With the advent of cheap travel, the significant amounts of
information available on the internet and a rapid increase in
consultants providing specialist support overseas, the focus
of the support of UKTI has shifted to working with companies
to build knowledge and skills so they are able to be more
professional in their approach to international business and
reduce the risk of costly mistakes, such as:
■ A firework company in the UK won a major contract in
Hong Kong. The company employed 13 staff all year
and a few more at the peak sales period just prior to
the British Guy Fawkes night on 5 November where
traditionally there are a lot of firework displays. The Hong
Kong contract was their first overseas sale and required a
major up front investment in materials by the company to
fulfil the order. Rather than arrange payment in advance
or ensure they got paid on delivery, they dispatched the
Keywords Highlighted throughout the book where
they first appear, and alerting you to core concepts
and techniques. Listed at the end of every chapter
and emboldened within the text.
xxii
■ Subsidies to help native industries. When the US announced increased
wheat subsidies to US farmers, they outraged the Australian and Canadian
wheat farmers who saw it as a direct attack on their international
markets. Without comparable government support, they felt they were
unable to compete with US wheat in these markets.
■ Building expertise in certain key areas. This is another way to achieve
comparative advantage. The Japanese identified biotechnology as a key
area where they have comparative strength and so have targeted it as
a priority research area.
Some countries use international trade to buy in a comparative advantage, buying
in highly developed products and so speeding up their development. Porter
(1990) suggests that countries can build a national advantage through four major
attributes:
■ Factor conditions: the nation’s position in factors of production such as
skilled labour or infrastructure necessary to compete.
■ Demand conditions: the nature of demand in the home country.
■ Related and supporting industries: the presence or absence of supplier
industries and related industries that are internationally competitive.
■ Firm strategy, structure and rivalry: the conditions in the nation governing
how companies are created, organised and managed and the nature of
domestic rivalry.
CHAPTER 2 THE INTERNATIONAL TRADING ENVIRONMENT 43
ILLUSTRATION 2.1
by 2010 it will be in third place, behind America and Japan.
China and India make an interesting contrast in their technological development. They have roughly the same population,
but China spends 2.5 times as much on technology as India
does. It is the world’s largest mobile phone market, and the
second-largest market for PCs. China had around 110 million
Internet users compared with 51 million in India, and China
has 430 million mobile phone users, versus 120 million in
India. The two countries are adopting technology at different
paces and in different ways.
A further difference is that China’s manufacturing strength
means hi-tech gear is available locally at low cost, whereas
India must import it. India has focused more on software
and services, which can be delivered via networks without
bureaucratic interference, unlike China which has focused on
competing in physical goods. However, India is seen as playing
an invaluable role in the global innovation chain. Motorola,
Hewlett-Packard, Cisco Systems, Google and other tech giants
now rely on their Indian teams to devise software platforms
and the tech hubs in such places as Bangalore. These companies are spawning companies producing their own chip
designs, software, and pharmaceuticals at an exhilarating pace
of innovation.
QUESTION Compare and contrast the alternative strategies
of China and India to build a comparative advantage.
SOURCE: ADAPTED FROM ‘THE TECHNOLOGY INDUSTRY: DIFFERENT STROKES’, THE ECONOMIST, 7 OCTOBER
2006 AND ‘CHINA–INDIA, THE CHALLENGE’, BUSINESS WEEK, AUGUST 2005
The comparative advantage of China
and India
In a report published 2006 by the OECD listing the world’s
250 largest technology firms, measured by revenue, companies
from China, Hong Kong and India appeared for the first time
and the number from Taiwan more than trebled. The figures
for China mask the fact that many Western companies have
operations there, which is why they are now the world’s largest
exporter of technology goods. Domestically, China is now the
sixth-biggest buyer of hi-tech goods and services in the world;
PHOTO CREDIT: KEVIN FOY/ALAMY
Illustrations Illustrative real-life examples are
featured throughout the text, showing international
companies’ marketing strategies, accompanied
by a question.
CHAPTER 2 THE INTERNATIONAL TRADING ENVIRONMENT 67
KEYWORDS
Asian Free Trade Area Economic and Monetary Union Mercosur
Association of South East Exchange Rate Mechanism Non-tariff barriers
Asian Nations Free Trade Area of the Americas Single European Market
Balance of payments Hard currency Tariff
Comparative advantage International Development Association Trade deficit
Copenhagen criteria International Monetary Fund Trading blocs
Doha Round International product life cycle World Bank
fireworks and simply waited for the money to arrive.
When it didn’t they ran out of cash and were closed by
the bank.
■ A major PLC was used to Letters of Credit (a way of
ensuring prompt payment) taking 9 months to be paid.
A chance conversation between the Finance Director and
a bank manager led them to train the staff and reduce
the payment to 1 month. They had £14 million
in outstanding letters of credit – just think how much
extra cash they now have.
■ A sausage manufacturer sent a large consignment of
sausages to the USA. Sadly they hadn’t received approval
from the US Food and Drink Administration which
controls food quality in the USA. They had to pay to
have the sausages quarantined and returned.
These kind of things happen every week, all of them hugely
costly to the companies and entirely avoidable.
The role of the government support agencies is therefore
primarily to ensure that companies reduce risk in international
business by being fully prepared.
Outward investment
Traditionally governments have primarily been concerned with
helping companies reduce risk when trading overseas by
learning the basics of international trading. The examples
outlined above are problems which could be avoided with
basic training. Of course once you understand the basics and
you have put them into practice by trading with one country
you can do the same in another.
Another very high-risk activity is when companies make
investments overseas for the first time. However, public
support agencies such as UKTI provide little support for this
area of activity.
Investing overseas for the first time is often far more risky
than trading overseas because companies are investing a lot
of time and money in developing a business presence
CASE STUDY
Should governments support domestic
companies investing in foreign markets?
As well as trying to protect domestic markets, governments try
to help domestic companies export to international markets.
They regard this as important because companies that
trade successfully on international markets tend to be more
profitable and innovative. This in turn means that they
generate more wealth, employ more people and pay more tax
to their governments.
The UK provides support to businesses trying to trade
overseas through an organisation called UK Trade and
Investment (UKTI) which has offices in the UK and in
embassies and Consular Offices throughout the world.
Until recently support has focused on providing subsidies to
travel overseas and to attend overseas trade fairs. The staff
based in UKTI offices around the world carry out market
research on behalf of UK companies to identify whether there
is demand in the foreign market and to provide lists of
contacts, possible agents etc. They also help open doors for
companies, particularly to senior politicians and senior
managers in the markets being investigated.
With the advent of cheap travel, the significant amounts of
information available on the internet and a rapid increase in
consultants providing specialist support overseas, the focus
of the support of UKTI has shifted to working with companies
to build knowledge and skills so they are able to be more
professional in their approach to international business and
reduce the risk of costly mistakes, such as:
■ A firework company in the UK won a major contract in
Hong Kong. The company employed 13 staff all year
and a few more at the peak sales period just prior to
the British Guy Fawkes night on 5 November where
traditionally there are a lot of firework displays. The Hong
Kong contract was their first overseas sale and required a
major up front investment in materials by the company to
fulfil the order. Rather than arrange payment in advance
or ensure they got paid on delivery, they dispatched the
Case studies A longer and in-depth case study is
provided at the end of every chapter. They draw upon
real-world companies and help to demonstrate theory
in practice. Each case is accompanied by questions to
test the reader’s understanding.
260 PART 2 STRATEGY DEVELOPMENT
DISCUSSION QUESTIONS
1 Outline the market entry methods and the levels of involvement associated with the development of a
company’s globalisation process from initial exporting through to becoming a global corporation. Specify
what you consider to be the important criteria in deciding the appropriate entry method.
2 Selecting the market entry strategy is the key decision many companies have to take in expanding into
overseas markets because it involves both risk and levels of control. Using examples to illustrate your
answer, explain how risk and control are affected by different entry methods.
3 International marketing of intellectual property, such as technological inventions, creative works, the
performing arts and consultancy pose particular challenges for market entry. Using examples to illustrate
your answer, explain what the particular challenges might be and what criteria might be used for selecting
an appropriate strategy.
4 Why is acquisition often the preferred way to establish wholly-owned operations abroad, and what are its
limitations as an entry method?
5 Projects that involve large amounts of development money are sometimes undertaken through a strategic
alliance. Explain the rationale behind this form of global partnering and outline the major advantages and
disadvantages of the arrangement.
banks that it will not allow to be taken over. HSBC has
responded by pursuing local incorporation, something only
recently allowed, and made investments in the Bank of
Shanghai and Ping An, an insurance firm, but these are far
less attractive options.
A smaller number of firms that had a better understanding
of the situation were able to legally end their joint ventures
without too much pain. Unilever shut down more than a
dozen joint ventures and Coca-Cola and Starbucks bought out
their Chinese partners.
The moral of this experience confirms conventional
wisdom about forming joint ventures – to ensure the joint
ventures will be successful the most careful planning should
focus on how to end them.
QUESTIONS
1 What are the factors that a multinational firm should
consider when deciding to use a joint venture as a
market entry strategy for a developing country? What
are the potential benefits and risks in taking this
course of action?
2 Develop an outline international marketing strategy for a
joint venture between Danone, a French multinational
food company, and a food producer from a developing
country. Explain which companies would be responsible
for providing the leadership and decision-making for the
various activities detailed.
global ambitions of their own and do not want to be
constrained by a global multinational partner who may want
to curtail these ambitions. The joint venture partners frequently
argued about the allocations of profits and decisions on
investments.
China itself has also changed: having become a member of
the World Trade Organisation it had to agree to be more open
legally. As the domestic economy grew more rapidly than anyone expected domestic capital was freely available, with the
result that there was little need for money from foreign
investors. As the Chinese market became one of the most
attractive in the world and sentiment in China became more
nationalistic and self-reliant the balance of power shifted
between the Chinese and foreign partners, and providing
access to China for foreign partners was of much less interest.
Whilst Wahaha originally knew little about business and
welcomed a partner, it now is aware of all the attractive possibilities and it objects to the fact that it must clear plans with
its foreign majority owner before going ahead, especially as
Danone is pursuing alternative strategies in China through its
joint ventures with other Chinese companies. Even worse,
Danone wants full ownership of the firm. Things came to a
head when Danone eventually realised that Wahaha was
operating a parallel firm, marketing similar products. The companies are involved in an acrimonious public dispute.
HSBC’s problems are the result of success. Bank of
Communication’s assets have grown so much that it has now
been included in the Chinese government’s list of powerful
Discussion questions Short discussion questions
appear at the end of every chapter. This feature
encourages readers to review and/or critically assess
their understanding of the main topics covered
in the chapter.
■ Understand the complexities of researching
international markets and be able to identify
possible solutions
The scenario: Li Ning
China’s best known gymnast, Li Ning, won three gold medals a
t the 1984 Olympics but he rather regretted the fact that he
was not able to wear Chinese labelled sportswear
because the sector was dominated by foreign-owned
sports goods. His solution was to set up his own sports
goods company, Li Ning Sports Goods Company. The
company has now grown to become the largest sports
goods company in China with a turnover of 3,180 million Chinese yuan (RMB) (US$411 million) and now
dominates the Chinese sportswear market, with a bigger
share than companies such as Nike and Reebok. The
group has established an extensive distribution and
retail network throughout China and has 4,297 stores.
In 2005 Li Ning formed a joint venture with AIGLE
whereby they now have the exclusive right to manufacture, market and distribute AIGLE sports products in
China for the next 50 years.
The Chinese market environment
Since China joined the World Trade Organisation many
Chinese tariff and other trade barriers have reduced,
allowing sports goods companies from the West, such
as Nike and Adidas, to compete more strongly in China,
but Li Ning has fought back by building its own brand
and promoting its products.
The firm is also very aware of Chinese customer
attitudes to sport. Only 15 per cent of people aged 15–35
from the Chinese mainland play sport regularly
compared to 50 per cent in the US. However, this is
now starting to change. With greater leisure time and
spending power than ever before, Chinese people have
developed a national obsession with sports and leisure
activities. This in turn has led to a boom in the number
INTERNATIONAL MARKETING
PLANNING: ANALYSIS
Introduction
In this activity we explore the issues facing a Chinese
company that is trying to develop a global marketing
strategy which will then explore the international
marketing opportunities they have identified.
As a medium-sized enterprise, Li Ning faces issues as
to how he should internationalise and how quickly.
Perhaps most importantly at this stage he needs to
develop a thorough understanding of the complexities
of the international marketing environment in which he
is competing and decide how to segment the global
market, which segment he should target, and how to
develop a positioning strategy to achieve competitive
leverage. Increasing global competition in this market
necessitates greater innovation not just in products and
services, but in all aspects of the operation of the firm.
To understand such issues we need to build the skills to
research, analyse and evaluate how such factors impact
international strategy development. We hope the reader
will develop these skills in this activity.
Learning objectives
On completing this activity the reader should be able to:
■ Identify and analyse international market
opportunities
■ Use appropriate conceptual frameworks to
develop a transnational segmentation
methodology on which to base a global
marketing strategy
■ Identify sources of information, methods of
information collection and methods of information
analysis suitable for international marketing
operations
INTEGRATIVE LEARNING ACTIVITY 1
138
Integrative learning activities A series of in-depth
learning activities is presented at the end of each
part. Each one integrates the four chapters of the
associated part.
xxiii
ACCOMPANYING WEBSITE
Visit the International Marketing Strategy accompanying website at www.cengage.co.uk/doole5 to find further
teaching and learning material including:
FOR STUDENTS
■ Internet projects
■ Multiple choice questions for each chapter
■ Case Studies and accompanying questions from the text
■ Related weblinks
FOR LECTURERS
■ Instructor’s Manual – including teaching notes, how to use
the text and answers to the questions within the text
■ Downloadable PowerPoint slides
■ Case Study teaching notes to accompany cases within
the text
■ Additional Case Study Material from the fourth edition with
full commentaries to use as a teaching aid – ideal for
classroom and tutorial discussion
■ Cases and notes from the previous edition
xxiv ACCOMPANYING WEBSITE
1
AIMS AND OBJECTIVES
Knowledge and an understanding of the markets in which companies
operate are important for all business activities. In international
markets, because of geographical distances and the complexities of
operating in a number of disparate markets where risk and uncertainty
are high, the need for knowledge and understanding becomes of
paramount importance. It is this issue that is central to Part 1 of this
book. The chapters in this section concentrate on helping the reader
generate a greater understanding of the concepts of the international
marketing process and the international environment within which
companies operate. It aims to extend the range of understanding
in order to enable the reader to deal with international marketing
situations and to develop the skills to analyse and evaluate nondomestic markets, which in turn will enable their firms to compete
effectively in world markets.
In Chapter 1 we focus on the international marketing environment.
The book uses the SLEPT approach to understanding the complexities
of the environmental influences on international marketing, thus
enabling the reader to acquire an appreciation of the complexities of
marketing on an international basis. We examine what is meant by
international marketing and introduce the reader to the international
market planning process. We also examine the reasons for success
and failure in international marketing strategies and the characteristics
of best international marketing practice.
In Chapter 2 the focus is on gaining an understanding of the international trading environment. We first examine, at a macro level, the
development of international trading structures and the changes in
trading patterns, as well as reviewing the major international bodies
formed to foster world trade. The evolution of trading regions is analysed
and the implications to international marketing companies assessed.
In Chapter 3 we take a fairly detailed look at the social and cultural
influences in international marketing. The components of culture are
1 An introduction to international
marketing
2 The international trading
environment
3 Social and cultural
considerations in
international marketing
4 International marketing
research and opportunity
analysis
PART 1 ANALYSIS
examined together with the impact of these components on international marketing. We then look at how cultural influences impact on buyer behaviour across
the globe both in consumer markets and in business-to-business markets and
discuss methods that can be used to analyse cultures both within and
across countries.
In Chapter 4 the focus is on the identification and evaluation of marketing
opportunities internationally. Segmentation of international markets is discussed,
and how to prioritise international opportunities. The marketing research
process and the role it plays in the development of international marketing
strategies are also examined. The different stages in the marketing research
process are discussed, with particular attention being paid to the problems in
carrying out international marketing research in foreign markets and coordinating
multi-country studies.
2 PART 1 ANALYSIS
INTRODUCTION
Managers around the globe are recognising the increasing necessity for their companies and organisations to
develop the skills, aptitudes and knowledge to compete effectively in international markets.
The emergence of a more open world economy, the globalisation of consumer tastes and the unabated
expansion of Internet access globally all increase the interdependency and interconnections of nation
economies across the globe. The need for managers to develop the skills to respond to these pressures affects
companies of all sizes.
In this chapter, the reader will be introduced to the concepts of international marketing, enabling them to
acquire an appreciation of the complexities of marketing on an international basis and of how this activity differs
from operating purely in domestic markets. In the following sections we will define international marketing,
examine the important trends in the global marketing environment and introduce the reader to the international
marketing strategy development and international marketing planning process.
AN INTRODUCTION TO INTERNATIONAL
MARKETING
CHAPTER 1
3
LEARNING OBJECTIVES
After reading this chapter you should be able to:
■ Explain and use the SLEPT factors to assess international markets
■ Discuss the differences between export marketing, international and global marketing
■ Understand the criteria required to evaluate a company’s international marketing strategy
■ Appreciate the key steps in the international marketing planning process
Last year’s international trade in merchandise exceeded US$10.5 trillion and
world trade in services is estimated at around US$2.4 trillion. Whilst most of us
cannot visualise such huge amounts, it does serve to give some indication of the
scale of international trade today.
This global marketplace consists of a population of 6.6 billion people which is
expected to reach 10 billion by 2050 according to the latest projections prepared
by the United Nations.
Global wealth is increasing and this is reflected in higher demand. Increasing
affluence and commercial dynamism has seen nations across Asia, Central and
Eastern Europe emerge as high growth economies. Increasing affluence and
demand simply means that consumers will actively seek choice, with the result
that globally competition is intensifying as companies compete to win the battle
for disposable income.
Population growth and increased affluence together have helped create a
‘global youth culture’ – teenagers now account for 30 per cent of the population
globally. In many countries, more than half the population is pre-adult, creating
one of the world’s biggest single markets, the youth market. Everywhere adolescents project worldwide cultural icons, Nike, Coke, Gap and Sony Walkman,
as well as Sega, Nintendo and the Sony Playstation. When ‘virtual reality’ is
commonplace, the one-world youth culture market will exceed all others as a
premier global market segment. Parochial, local and ethnic growth products may
face difficult times.
Older consumers are also increasingly non-national in their identity, if not in
their personal identity then from the perspective of the consumable fabric of their
lives. They drive international cars, take foreign holidays, watch international
programmes on television, use international hardware and software. On the
supply side, multinational and global corporations are increasing in size and
embracing more global power. The top 500 companies in the world now account
for 70 per cent of world trade and 80 per cent of international investment. Total
sales of multinationals are now in excess of world trade, which gives them a
combined gross product of more than some national economies.
To strategically position themselves for global competitiveness, companies
are consolidating through mergers, acquisitions and alliances to reach the scale
considered necessary to compete in the global arena. At the same time, there is a
trend towards global standardisation, as companies strive for world standards for
efficiency and productivity. In Europe last year mergers and acquisitions were
worth US$ 1.59 trillion, in the USA $1.54 trillion. The Indian company Tata took
over Corus making them the world’s largest steel producer, overtaking Mittal
(Dutch) who in the same year took over Aecelor of Luxembourg. In Germany
e.ON bid for Endesa of Spain. GSK have a number of global alliances in the pharmaceutical market, creating the world’s largest research-based pharmaceutical
company. Such trends can also be seen in the service sector. In the US, Morgan
Stanley and Dean Witter merged to offer global investment as well as global private
banking and credit card services. There has also been an increase in the number
of joint ventures and international strategic alliances to compete in mature
markets. Xerox entered into a joint venture with Fuji to consolidate their global
position and the Siemens and Fujitsu joint venture is now the only computer
hardware company in Europe following the global consolidation of that sector.
The global marketplace is no longer the summation of a large number of
independent country markets but much more multilateral and interdependent,
economically, culturally and technically. Information moves anywhere in the
4 PART 1 ANALYSIS
THE STRATEGIC IMPORTANCE OF
INTERNATIONAL MARKETING
world at the speed of light, the ease of transmission being facilitated by the
convergence of long distance telecoms, cuts in the cost of electronic processing
and the exponential growth in Internet access.
The combination of all these forces has meant that all companies need to
develop a marketing orientation which is international in nature and that companies need managers who have the skills to analyse, plan and implement strategies across the globe. It is for these reasons that international marketing has
become such a critical area of study for managers and an important component
of the marketing syllabus of business faculties in universities.
So perhaps now we should turn our attention to examining exactly what we
mean by international marketing.
What is international marketing?
Many readers of this textbook will have already followed a programme of study in
marketing but, before explaining what we mean by international marketing, let us
reflect for a few moments on our understanding of what is meant by marketing
itself. The Chartered Institute of Marketing defines marketing as the ‘Management
process responsible for identifying, anticipating and satisfying customer requirements profitably’. Thus marketing involves:
■ focusing on the needs and wants of customers
■ identifying the best method of satisfying those needs and wants
■ orienting the company towards the process of providing that satisfaction
■ meeting organisational objectives.
In this way, it is argued, the company or organisation best prepares itself to
achieve competitive advantage in the marketplace. It then needs to work to
maintain this advantage by manipulating the controllable functions of marketing
within the largely uncontrollable marketing environment made up of SLEPT
factors: i.e. Social, Legal, Economic, Political and Technological.
How does the process of international marketing differ? Within the international
marketing process the key elements of this framework still apply. The conceptual
framework is not going to change to any marked degree when a company moves
from a domestic to an international market; however, there are two main differences. First, there are different levels at which international marketing can be
approached and, second, the uncontrollable elements of the marketing environment are more complex and multidimensional given the multiplicity of markets
that constitute the global marketplace. This means managers have to acquire
new skills and abilities to add to the tools and techniques they have developed in
marketing to domestic markets.
International marketing defined
At its simplest level, international marketing involves the firm in making one or
more marketing mix decisions across national boundaries. At its most complex, it
involves the firm in establishing manufacturing/processing facilities around the
world and coordinating marketing strategies across the globe. At one extreme there
are firms that opt for ‘international marketing’ simply by signing a distribution
agreement with a foreign agent who then takes on the responsibility for pricing,
promotion, distribution and market development. At the other extreme, there are
huge global companies such as Ford with an integrated network of manufacturing
plants worldwide and who operate in some 150 country markets. Thus, at its most
complex, international marketing becomes a process of managing on a global
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 5
scale. These different levels of marketing can be expressed in the following terms:
■ Domestic marketing, which involves the company manipulating a series of
controllable variables such as price, advertising, distribution and the
product/service attributes in a largely uncontrollable external environment
that is made up of different economic structures, competitors, cultural
values and legal infrastructure within specific political or geographic
country boundaries.
■ International marketing, which involves operating across a number of foreign
country markets in which not only do the uncontrollable variables differ
significantly between one market and another, but the controllable factors in
the form of cost and price structures, opportunities for advertising and
distributive infrastructure are also likely to differ significantly. It is these
sorts of differences that lead to the complexities of international marketing.
■ Global marketing management, which is a larger and more complex
international operation. Here a company coordinates, integrates and controls
a whole series of marketing programmes into a substantial global effort.
Here the primary objective of the company is to achieve a degree of synergy
in the overall operation so that by taking advantage of different exchange
rates, tax rates, labour rates, skill levels and market opportunities, the
organisation as a whole will be greater than the sum of its parts.
This type of strategy calls for managers who are capable of operating as
international marketing managers in the truest sense, a task which is far broader
and more complex than that of operating either in a specific foreign country or
in the domestic market. In discussing this, Sarathy et al. (2006) comment that ‘the
international marketing manager has a dual responsibility; foreign marketing
(marketing within foreign countries) and global marketing (co-ordinating
marketing in multiple markets in the face of global competition)’.
Thus, how international marketing is defined and interpreted depends on
the level of involvement of the company in the international marketplace.
International marketing could therefore be:
■ Export marketing, in which case the firm markets its goods and/or services
across national/political boundaries.
■ International marketing, where the marketing activities of an organisation
include activities, interests or operations in more than one country and
where there is some kind of influence or control of marketing activities
from outside the country in which the goods or services will actually be
sold. Sometimes markets are typically perceived to be independent and a
profit centre in their own right, in which case the term multinational or
multidomestic marketing is often used.
■ Global marketing, in which the whole organisation focuses on the selection
and exploitation of global marketing opportunities and marshals resources
around the globe with the objective of achieving a global competitive
advantage.
The first of these definitions describes relatively straightforward exporting
activities, numerous examples of which exist. However, the subsequent definitions
are more complex and more formal and indicate not only a revised attitude to
marketing but also a very different underlying philosophy. Here the world is seen
as a market segmented by social, legal, economic, political and technological
(SLEPT) groupings.
In this textbook we will incorporate the international marketing issues faced
by firms, be they involved in export, international or global marketing.
For all these levels the key to successful international marketing is being able
to identify and understand the complexities of each of these SLEPT dimensions
6 PART 1 ANALYSIS
of the international environment and how they impact on a firm’s marketing
strategies across their international markets. As in domestic marketing, the
successful marketing company will be the one that is best able to manipulate
the controllable tools of the marketing mix within the uncontrollable environment. It follows that the key problem faced by the international marketing
manager is that of coming to terms with the details and complexities of the
international environment. It is these complexities that we will examine in the
following sections.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 7
FIGURE 1.1
The environmental influences on
international marketing
THE INTERNATIONAL MARKETING
ENVIRONMENT
The key difference between domestic marketing and marketing on an international
scale is the multidimensionality and complexity of the many foreign country markets
a company may operate in. An international manager needs a knowledge and
awareness of these complexities and the implications they have for international
marketing management.
There are many environmental analysis models which the reader may have
come across. For the purposes of this textbook, we will use the SLEPT approach
and examine the various aspects and trends in the international marketing environment through the social/cultural, legal, economic, political and technological
dimensions, as depicted in Figure 1.1.
Social/cultural environment
The social and cultural influences on international marketing are immense.
Differences in social conditions, religion and material culture all affect consumers’
perceptions and patterns of buying behaviour. It is this area that determines the
extent to which consumers across the globe are either similar or different and so
determines the potential for global branding and standardisation.
A failure to understand the social/cultural dimensions of a market are complex
to manage, as McDonald’s found in India. It had to deal with a market that is
40 per cent vegetarian, had an aversion to either beef or pork among meat-eaters
and a hostility to frozen meat and fish, but with the general Indian fondness for
spice with everything. To satisfy such tastes, McDonald’s discovered it needed to
do more than provide the right burgers. Customers buying vegetarian burgers
wanted to be sure that these were cooked in a separate area in the kitchen using
separate utensils and sauces like McMasala and McImli were developed to satisfy
the Indian taste for spice. Interestingly however, these are now innovations they
have introduced into other markets.
Cultural factors
Cultural differences and especially language differences have a significant impact
on the way a product may be used in a market, its brand name and the advertising
campaign.
Initially, Coca-Cola had enormous problems in China as Coca-Cola sounded
like ‘Kooke Koula’ which translates into ‘A thirsty mouthful of candle wax’. They
managed to find a new pronunciation ‘Kee Kou Keele’ which means ‘joyful tastes
and happiness’.
Other companies who have experienced problems are General Motors whose
brand name ‘Nova’ was unsuccessful in Spain (‘no va’ in Spanish means ‘no go’).
Pepsi Cola had to change its campaign ‘Come Alive With Pepsi’ in Germany as,
literally translated, it means ‘Come Alive Out of the Grave’. In Japan McDonald’s
character Ronald McDonald failed because his white face was seen as a death
mask. When Apple launched the iMac in France they discovered the brand name
mimicked the name of a well established brand of baby laxative – hardly the image
they were trying to project.
Operating effectively in different countries requires recognition that there may
be considerable differences in the different regions. Consider northern Europe
versus Latin Europe, the northwest of the USA versus the south or Bejing and
Taipei. At the stage of early internationalisation it is not unusual for Western firms
to experience what appear to be cultural gaps with their counterparts in Latin
America and Asian countries as well as in different regions of those countries. A
campaign by Camay soap which showed a husband washing his wife’s back in the
bath was a huge success in France but failed in Japan, not because it caused
offence, but because Japanese women viewed the prospect of a husband sharing
such a time as a huge invasion of privacy.
On the other hand, some commentators argue there are visible signs that social
and cultural differences are becoming less of a barrier. The dominance of a
number of world brands such as Microsoft, Intel, Coca-Cola, McDonald’s, Nike
etc., all competing in global markets that transcend national and political boundaries, are testimony to the convergence of consumer needs across the globe.
However, it is important not to confuse globalisation of brands with the
homogenisation of cultures. There are a large number of global brands but even
these have to manage cultural differences between and within national country
boundaries.
There are also a number of cultural paradoxes which exist. For example, in
Asia, the Middle East, Africa and Latin America there is evidence both for the westernisation of tastes and the assertion of ethnic, religious and cultural differences.
There are more than 600 000 Avon ladies now in China and a growing number of
them in Eastern Europe, Brazil and the Amazon (see Illustration 1.1).
In northern Kenya you may find a Sambhuru warrior who owns a cellular telephone. Thus, whilst there is a vast and, sometimes, turbulent mosaic of cultural
differences, there are commentators who believe there is evidence that a global
village is potentially taking shape which, as Kenichi Ohmae (2005) says, ‘will be a
nationless state marked by the convergence of customer needs that transcends
political and cultural boundaries’.
8 PART 1 ANALYSIS
The social/cultural environment is an important area for international marketing
managers and we will return to this subject in a number of chapters where we
examine the various aspects of its strategic implications. Chapter 3 is devoted to
a full examination of the social and cultural influences in international marketing.
In Chapter 5 we will examine the forces driving the global village and its strategic
implication to companies across the world.
Social factors
Growth and movement in populations around the world are important factors
heralding social changes. Eighty per cent of the world’s population live in developing countries; by 2025 this is likely to reach 85 per cent. Two out of every five
people live in China and India. However, whilst world population is growing
dramatically, the growth patterns are not consistent around the world.
Over the next half century, Africa’s population will almost treble. China’s
population will rise much more slowly from 1.2 billion to 1.5 billion. With a population of 1.53 billion people, India will have more inhabitants than China in 50 years’
time. Europe is the only region where the population is expected to decline; any
increase in population in high income countries is entirely due to migration.
There are also visible moves in the population within many countries, leading
to the formation of huge urban areas where consumers have a growing similarity
of needs across the globe. By 2010, 50 per cent of the world’s population will live
in urban areas: the world is moving into gigantic conurbations. The population
of greater Tokyo is soon to be close to 30 million and Mexico City 20 million.
Cities such as Lagos, Buenos Aires and Djakarta will soon outstrip cities such as
Paris, London and Rome. In the year 2015, no European city will be in the top
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 9
ILLUSTRATION 1.1
countries. China, Russia and South Korea and Brazil are turning
into huge markets. In India, sales of anti-ageing creams are
growing by 40 per cent a year. Avon is expanding rapidly in
Eastern Europe and Russia as well as in South America. Brazil
now has more than 900 000 Avon ladies.
Global competition in the market is becoming increasingly
intense. Unilever and Procter and Gamble, facing maturity in
many of their traditional businesses, are devoting more
resources to developing global beauty brands. Luxury product
manufacturers such as Dior, Chanel and Yves St Laurent are
moving into mainstream beauty products and many of the
global giants are growing by buying up smaller brands. Japan’s
Kao have gone into the hair dye market by buying John Frieda
while Estée Lauder has acquired Stila, MAC and Bobbi Brown,
all of which are innovative and growing make-up brands.
The traditional global beauty brands established by such
companies as L’Oréal, Elizabeth Arden and Helena Rubenstein
are now having to fight hard in a global market where
traditionally they have earned huge margins and enjoyed
continuous growth for many years.
QUESTION Outline the reasons for the changing structure
of the global beauty market.
SOURCE: ANTHONY GRIMES, UNIVERSITY OF HULL
The beautification of the ageing
baby boomers
Analysts at Goldman Sachs estimate that the global beauty
industry is worth about 100 billion US dollars a year and is growing at up to 7 per cent a year, more than twice the rate of the
developed world’s GDP. This growth is being driven by richer,
ageing baby-boomers and increased discretionary income in
the West, and by the growing middle classes in developing
30 and 17 of the world’s mega cities of 10 million plus will be in emerging markets.
This has powerful implications for international marketing. These cities will be
markets in themselves. Urban dwellers require similar products (packaged
conveniently and easy to carry). Similarly, they demand services, telephones and
transportation of all kinds and modern visual communications. It also means, for
the incoming company, that customers are accessible. They are identifiable and
firms can communicate with them efficiently via supermarkets, advertising and
other marketing communication tools. Table 1.1 shows the ten mega cities in the
world forecast for 2015.
Legal environment
Legal systems vary both in content and interpretation. A company is not just
bound by the laws of its home country but also by those of its host country and
by the growing body of international law. Firms operating in the European Union
are facing ever-increasing directives which affect their markets across Europe.
This can affect many aspects of a marketing strategy – for instance advertising – in
the form of media restrictions and the acceptability of particular creative appeals
(see Illustration 1.2). Product acceptability in a country can be affected by minor
regulations on such things as packaging and by more major changes in legislation.
In the USA, for instance, the MG sports car was withdrawn when the increasing
difficulty of complying with safety legislation changes made exporting to that
market unprofitable. Kraft Foods sell a product called Lifesavers, which are very
similar to the Nestlé Polo brand, in many countries. Using EU law, Nestlé attempted
to stop the sale of Lifesavers in the EU purely to protect their market share.
It is important, therefore, for the firm to know the legal environment in each
of its markets. These laws constitute the ‘rules of the game’ for business activity.
The legal environment in international marketing is more complicated than in
10 PART 1 ANALYSIS
TABLE 1.1 The world’s ten mega cities in 2015
City Country Population (millions)
Tokyo Japan 26.4
Mumbai India 26.1
Lagos Nigeria 23.2
Dhaka Bangladesh 21.1
Sao Paulo Brazil 20.4
Karachi Pakistan 19.2
Mexico City Mexico 19.2
New York USA 17.4
Jakarta Indonesia 17.3
Calcutta India 17.3
SOURCE: UNITED NATIONS
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 11
ILLUSTRATION 1.2
When is a Parma ham not a Parma ham?
The European Court of Justice has decided that it is illegal
for the world-famous Parma ham to be sliced and packaged
outside the Italian region that gives Parma ham its name.
The ruling was a victory for the 200 or so producers of
Parma ham who had launched their legal action against
Asda, a UK food retailer. The case hinged on the court’s
interpretation of geographical indications – EU-protected
trademarks that recognise the importance of products
closely associated with a particular place, whether it be
Parma ham, French champagne, Spanish sherry or Stilton
cheese from Britain. The Parma producers argued that slicing
the ham was an important process that had to be done
locally. Asda argued they should be free to slice and pack
the ham where they chose in order to cut costs and reduce
the price to consumers. The court showed it was more
concerned with the protection of the ham producers’ rights
than market efficiency. However strangely Asda can still use
the Parma name when the meat is sliced on a delicatessen
counter in front of shoppers?
The question is, how will the world view the decision?
Some commentators use such examples to question the
commitment of the European Union to freeing trade and
becoming more competitive.
QUESTION Do you think the court decision protects local
market diversity across European markets, or does it act as a
restrictive trade practice?
SOURCE: ADAPTED FROM THE ECONOMIST, 21 MAY 2003 AND ‘ASDA SLAMS “HAM-FISTED” PARMA RULING’ BBC NEWS 20 MAY, 2003
domestic markets since it has three dimensions: (1) local domestic law; (2)
international law; (3) domestic laws in the firm’s home base.
■ Local domestic laws. These are all different! The only way to find a route
through the legal maze in overseas markets is to use experts on the separate
legal systems and laws pertaining in each market targeted.
■ International law. There are a number of international laws that can affect the
organisation’s activity. Some are international laws covering piracy and hijacking,
others are more international conventions and agreements and cover items
such as the International Monetary Fund (IMF) and World Trade Organisation
(WTO) treaties, patents and trademarks legislation and harmonisation of legal
systems within regional economic groupings, e.g. the European Union.
■ Domestic laws in the home country. The organisation’s domestic (home
market) legal system is important for two reasons. First, there are often export
controls which limit the free export of certain goods and services to particular
marketplaces, and second, there is the duty of the organisation to act and
abide by its national laws in all its activities, whether domestic or international.
It will be readily understandable how domestic, international and local legal
systems can have a major impact upon the organisation’s ability to market into
PHOTO CREDIT: CUBOIMAGES SRL/ALAMY
particular overseas countries. Laws will affect the marketing mix in terms of
products, price, distribution and promotional activities quite dramatically. For
many firms, the legal challenges they face in international markets are almost a
double-edged sword. Often firms operating internationally face ethical challenges
in deciding how to deal with differing cultural perceptions of legal practices.
In many mature markets they face quite specific and, sometimes, burdensome
regulations. In Germany, for instance, environmental laws mean a firm is responsible for the retrieval and disposal of the packaging waste it creates and must
produce packaging which is recyclable, whereas in many emerging markets there
may be limited patent and trademark protection, still evolving judicial systems,
non-tariff barriers and an instability through an ever-evolving reform programme.
China earned notoriety in the past for allowing infringements of copyright and
blatent piracy. However, this is now changing. Some governments are reluctant to
develop and enforce laws protecting intellectual property partly because they
believe such actions favour large, rich, multinationals. Anheuser Busch (USA) and
Budvar (Czech Republic) have been in constant litigation over the right to use the
name Budweiser in the European Union and both companies have recently been
legally deemed the right to use it.
Piracy in markets with limited trademark and patent protection is another
challenge. Bootlegged software constitutes 87 per cent of all personal computer
software in use in India, 92 per cent in Thailand and 98 per cent in China, resulting
in a loss of US$8 billion for software makers each year.
India is regarded by many firms as an attractive emerging market beset with
many legal difficulties, bureaucratic delay and lots of red tape. For example, shoes
cannot be imported in pairs but have to be imported one at a time – which causes
huge problems for shoe manufacturers who need to import shoes as production
samples. The way many of them overcome the problem is by importing the left
shoe via Madras and the right shoe via Mumbai. Companies such as Mercedes
Benz, Coca-Cola and Kellogg have found the vast potential of India’s market
somewhat hard to break into. Its demanding consumers can be difficult to read
and local rivals can be surprisingly tough. Political squabbles, bureaucratic delays
and infrastructure headaches are also major obstacles.
Economic environment
It is important that the international marketer has an understanding of economic
developments and how they impinge on the marketing strategy. This understanding is important at a world level in terms of the world trading infrastructure
such as world institutions and trade agreements developed to foster international
trade, at a regional level in terms of regional trade integration and at a country/
market level. Firms need to be aware of the economic policies of countries and
the direction in which a particular market is developing economically in order to
make an assessment as to whether they can profitably satisfy market demand and
compete with firms already in the market.
Amongst the 194 countries in the world, there are varying economic conditions,
levels of economic development and Gross national income (GNI) per capita.
Gross national income in the world is US$62 trillion (purchasing power parity
[ppp]); however, it is not shared equitably across the world. The United Nations
classes 75 per cent of the world’s population as poor, that is, they have a per capita
income of less than US$3470, and only 11 per cent of the population as rich,
meaning they have a per capita income of more than US$8000. Perhaps more
startling is the UN claim that the richest 50 million people in the world share the
same amount of wealth as the poorest 3000 million. Such disparities of incomes
set particular challenges for companies operating in international markets in
terms of seeking possible market opportunities, assessing the viability of potential
12 PART 1 ANALYSIS
markets as well as identifying sources of finance in markets where opportunities
are identified but where there is not capacity to pay for goods.
Another key challenge facing companies is the question as to how they can
develop an integrated strategy across a number of international markets when
there are divergent levels of economic development. Such disparities often make
it difficult to have a cohesive strategy, especially in pricing.
The Economist ‘Big Mac’ Index ( Figure 1.2) is a useful tool which illustrates
the difficulties global companies have in trying to achieve a consistent pricing
strategy across the world. It provides a rough measure of the purchasing power
of a currency. UBS, a bank in the USA, uses the price of the Big Mac burger to
measure the purchasing power of local wages around the world. It divides the
price of a Big Mac by the average net hourly wage in cities around the world. A
worker from Jakarta must work for almost 1–12 hours to buy a Big Mac, but a
Moscow wage buys the burger in 25 minutes and a Tokyo salary buys one in just
ten. This causes problems for McDonald’s in trying to pursue a standard product
image across markets. Priced in US dollars, a Big Mac in Switzerland would cost
US$5.21, whereas in China it would be US$1.31.
In order to examine these challenges further we divided the economies into
developed economies and less developed economies.
The developed economies
The developed economies of the North American Free Trade Area (NAFTA),
European Union (EU) and Japan account for 80 per cent of world trade. For many
firms this constitutes much of what is termed the global market. Even though
many companies call themselves global, most of their revenues and profits will be
earned from these markets. In the European Union nearly 70 per cent of the
international goods traded are traded within the European Union; in NAFTA,
50 per cent of goods exported are to other members of NAFTA. This leads some
commentators to argue that most competition, even in today’s global marketplace, is more active at a regional level than a global level. It is from these
developed economies that the global consumer with similar lifestyles, needs and
desires emanates. However, emerging markets are now becoming more economically powerful and moving up the ranks, especially such countries as Brazil,
Russia, India and China.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 13
FIGURE 1.2
The Big Mac index
SOURCE: ©THE ECONOMIST NEWSPAPER LIMITED,
LONDON (AUGUST 31ST 2006)
The emerging economies
In countries such as Brazil, Russia, India and China, (the BRIC economies) there is
a huge and growing demand for everything from automobiles to cellular phones
and all are viewed as key growth markets where there is an evolving pattern of
government-directed economic reforms, lowering of restrictions on foreign investment and increasing privatisation of state-owned monopolies. All these emerging
economies herald significant opportunities for the international marketing firm.
Such markets often have what is termed as a ‘dual economy’. Usually there tends
to be a wealthy urban professional class alongside a poorer rural population.
Income distribution tends to be much more skewed between the ‘haves’ and the
‘have nots’ than in developed countries. From negligible numbers a few years ago,
China now has a middle class of 100 million which is forecast to grow to 500 million
in the next century. Brazil and Indonesia have middle classes of 25 million each.
Less developed countries
This group includes underdeveloped countries and less developing countries.
The main features are a low GDP per capita, a limited amount of manufacturing
activity and a very poor and fragmented infrastructure. Typical infrastructure
weaknesses are in transport, communications, education and healthcare. In addition,
the public sector is often slow-moving and bureaucratic.
It is common to find that less developed countries (LDCs) are heavily reliant
on one product and often on one trading partner. In many LDCs this product is
the main export earner. In Angola, for instance, the sole export is oil and in the
Sudan oil accounts for 99 per cent of their exports. In addition, three-quarters of
LDCs depend on their main trading partner for more than one-quarter of their
export revenue. The risks posed to the LDC by changing patterns of supply and
demand are great. Falling commodity prices can result in large decreases in earnings for the whole country. The resultant economic and political adjustments may
affect exporters to that country through possible changes in tariff and non-tariff
barriers, through changes in the level of company taxation and through restrictions on the convertibility of currency and the repatriation of profits. In addition,
substantial decreases in market sizes within the country are probable.
A wide range of economic circumstances influences the development of the
less developed countries in the world. Some countries are small with few natural
resources and for these countries it is difficult to start the process of substantial
economic growth. Poor health and education standards need money on a large
scale, yet the pay-off in terms of a healthier, better-educated population takes time
to achieve. At the same time, there are demands for public expenditure on
transport systems, communication systems and water control systems. Without
14 PART 1 ANALYSIS
DILEMMA 1.1
build brand loyalty which is difficult in a market where
there is a lack of trust in a foreign US company .The
other dilemma is given the levels of illiteracy, how do
they educate the farmers to use the equipment and
how do KickStart get their message across given the
small budget they have for such activities?
QUESTION How should KickStart approach this market?
How do you sell to subsistence farmers
in Africa ?
KickStart International is a non-profit organisation
that sells irrigation systems to subsistence farmers in
Africa. The customers are hard to reach. They live hours
from major cities and many are illiterate. Even though
they are a non-profit organization, KickStart needs to
real prospects for rapid economic development, private sources of capital are
reluctant to invest in such countries. This is particularly the case for long-term
infrastructure projects and, as a result, important capital spending projects rely
heavily on world aid programmes. Marketing to such countries can be problematic,
as in the case of KickStart in Dilemma 1.1.
Currency risks
Whilst we have examined economic factors within markets, we also need to bear
in mind that in international marketing transactions invariably take place between
countries, so exchange rates and currency movements are an important aspect of
the international economic environment. On top of all the normal vagaries of
markets, customer demands, competitive actions and economic infrastructures,
foreign exchange parities are likely to change on a regular if unpredictable
basis. World currency movements, stimulated by worldwide trading and
foreign exchange dealing, are an additional complication in the international
environment. Companies that guess wrongly as to which way a currency
will move can see their international business deals rendered unprofitable
overnight. Businesses that need to swap currencies to pay for imported
goods, or because they have received foreign currency for products they have
exported, can find themselves squeezed to the point where they watch their
profits disappear.
In Europe, the formation of the European Monetary Union (EMU) and the
establishment of the Single European Payments Area (SEPA) has led to greater
stability for firms operating in the market. The formation of the European
Monetary Union and the introduction of the single currency across Europe has
had important implications for company strategies which we will discuss in
Chapter 2, when we examine regional trading agreements, and in Chapter 11,
when we look at pricing issues in international marketing.
Political environment
The political environment of international marketing includes any national or
international political factor that can affect the organisation’s operations or its
decision making. Politics has come to be recognised as the major factor in many
international business decisions, especially in terms of whether to invest and how
to develop markets.
Politics is intrinsically linked to a government’s attitude to business and the
freedom within which it allows firms to operate. Unstable political regimes
expose foreign businesses to a variety of risks that they would generally not face
in the home market. This often means that the political arena is the most volatile
area of international marketing. The tendencies of governments to change regulations can have a profound effect on international strategy, providing both
opportunities and threats. The invasions of Afghanistan and Iraq have brought
market development opportunities for some but market devastation for others
and higher political risk in neighbouring markets for all. The instability in the
Middle East and the continued threat of global terrorism have served to heighten
firms’ awareness of the importance of monitoring political risk factors in the
international markets in which they operate. Lesser developed countries and
emerging markets pose particularly high political risks, even when they are
following reforms to solve the political problems they have. The stringency of
such reforms can itself lead to civil disorder and rising opposition to governments,
as has been seen recently in Indonesia, Venezuela, Brazil and Argentina.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 15
Political risk is defined as a risk due to a sudden or gradual change in a local
political environment that is disadvantageous or counter productive to foreign
firms and markets.
The types of action that governments may take which constitute potential
political risks to firms fall into three main areas:
■ Operational restrictions. These could be exchange controls, employment
policies, insistence on locally shared ownership and particular product
requirements.
■ Discriminatory restrictions. These tend to be imposed on purely foreign
firms and, sometimes, only firms from a particular country. The USA has
imposed import quotas on Japan in protest at non-tariff barriers which they
view as being imposed unfairly on US exporters. They have also imposed
bans on imports from Libya and Iran in the past. Such barriers tend to be
such things as special taxes and tariffs, compulsory subcontracting, or loss of
financial freedom.
■ Physical actions. These actions are direct government interventions
such as confiscation without any payment of indemnity, a forced takeover
by the government, expropriation, nationalisation or even damage to
property or personnel through riots and war. In 2001 the Nigerian
government claimed ownership of Shell’s equipment and machinery
without any prior warning.
Investment restrictions are a common way governments interfere politically in
international markets by restricting levels of investment, location of facilities,
choice of local partners and ownership percentage. When Microsoft opened its
Beijing office, it planned to use its Taiwan operations to supply a Mandarin
language version of Windows. The government not only wanted such an operating
system to be designed in China but also insisted on defining the coding standards
for Chinese characters’ fonts, something Microsoft had done independently
everywhere else in the world. In a flurry of meetings with officials, Bill Gates
argued that the marketplace, not the government, should set standards. But the
Chinese electronics industry threatened to ban Windows and president Jiang
Zemin personally admonished Gates to spend more time in China and ‘learn
something from 5000 years of Chinese history’. Gates sacked the original
management team and promised to cooperate with Beijing.
The World Trade Organisation has led negotiations on a series of worldwide
agreements to expand quotas, reduce tariffs and introduce a number of
innovative measures to encourage trade amongst countries. Together with the
formation of regional trading agreements in the European Union, North and
South America and Asia, these reforms constitute a move to a more politically
stable international trading environment. An understanding of these issues is
critical to the international marketing manager, which is why in Chapter 2
we examine in some detail the patterns of world trade, the regional trading
agreements and the development of world trading institutions intended to
foster international trade. In Chapter 4 we will examine in some detail the
procedures, tools and techniques which can help the analysis and evaluation of
opportunities across such markets.
The political and economic environments are greatly intertwined and, sometimes, difficult to categorise. It is important, however, that a firm operating in
international markets assesses the countries in which it operates to gauge the
economic and political risk and to ensure they understand the peculiarities and
characteristics of the market they wish to develop. Illustration 1.3 examines
Cadbury’s, who caused huge offence by their misreading of political sentiments
in India.
16 PART 1 ANALYSIS
Technological environment
Technology is a major driving force both in international marketing and in the
move towards a more global marketplace. The impact of technological advances
can be seen in all aspects of the marketing process. The ability to gather data on
markets, management control capabilities and the practicalities of carrying out
the business function internationally have been revolutionised in recent years
with the advances in electronic communications.
Satellite communications, the Internet and the World Wide Web, client–server
technologies, ISDN and cable as well as email, faxes and advanced telephone
networks have all led to dramatic shrinkages in worldwide communications.
Shrinking communications means, increasingly, that in the international
marketplace information is power. At the touch of a button we can access information on the key factors that determine our business. News is a 24 hours a day
service. Manufacturers wanting to know the price of coffee beans or the relevant
position of competitors in terms of their share price or new product activity have
it at their immediate disposal.
As wireless technology renders land cables and telephone lines redundant,
developing countries are abandoning plans to invest in land-based communication.
They are bypassing terrestrial communication systems, enabling them to catch up
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 17
ILLUSTRATION 1.3
Cadbury’s in political faux pas
The Indian division of Cadbury-Schweppes suffered
embarrassment around the world and incensed large
swathes of Hindu society by running a newspaper advertisement
comparing its Temptations chocolate to the war-torn region of
Kashmir. The ad carried the tagline:
‘I’m good. I’m tempting. I’m too good to share. What am I?
Cadbury’s Temptations or Kashmir?’.
To make sure nobody missed the point, the ad’s creators laid
the ‘too good to share’ catch-line over a map of Kashmir.
The ad caused a national outcry. Arguments over Kashmir
have taken India and Pakistan to the brink of nuclear war:
using them to sell chocolate was perhaps not the wisest thing
to do. Indian politicians were shocked at the very mention of
sharing the territory and threatened nationwide protests. To
add insult to injury the advertisement was timed to appear on
15 August, India’s Independence Day. Cadbury’s British roots
may have made the ad even harder to swallow. It was British
colonial rulers who, at partition in 1947, drew the boundary
line between India and Pakistan that the two nations have
battled over ever since.
Though Cadbury India has apologised, it does show that in
global markets, multi-nationals can’t hide their blunders for long.
QUESTION What are the dangers of a company making
such blunders when it operates globally?
PHOTO CREDIT: BARRY LEWIS/ALAMY
SOURCE: ADAPTED FROM THE ECONOMIST, 22 AUGUST 2002 AND BBC NEWS ONLINE 7 OCTOBER 2002
with and, in some cases, overtake developed countries in the marketplace. In emerging
economies consumers are jumping from no telephone to the latest in global communications technology. Wireless application protocol (WAP) technology allows
online services to be available to mobile phone users on the move, wherever they
happen to be in the world. The use of Global System for Mobile Communications
(GSM) technology enables mobile phone operators to determine the location of a
customer globally to send them relevant and timely advertising messages.
British Airways operates its worldwide online operations from Mumbai: everything from ticketing to making an ‘exceptional request’ facility, such as wheelchair
assistance needed for a passenger can be managed from the centre in Mumbai.
Increasingly companies are using India as a centre for their global online customer
service operations. The ease of hiring computer-literate graduates by the hundred,
who are intelligent, capable, keen and inexpensive to hire, as is local property to
rent, makes India an attractive location (see Illustration 1.4).
THE INTERNET AND THE WORLD WIDE WEB (WWW)
The Internet and the access gained to the World Wide Web has revolutionised
international marketing practices. Airlines such as EasyJet and RyanAir have
helped completely change the way we book our airline reservations. EToys, a virtual
company based in the US, has no retail outlets but a higher market capitalisation
than Toys’R’Us. Firms ranging from a few employees to large multinationals have
realised the potential of marketing globally online and so have developed the
facility to buy and sell their products and services online to the world.
18 PART 1 ANALYSIS
ILLUSTRATION 1.4
seller owns the intellectual property, not just the brainpower for
hire. Mixing his metaphors wildly, Rajesh Hukku, the founder and
chairman of i-flex, argues that Indian firms otherwise risk being
doomed forever to providing ‘the cheap labour at the bottom of
the food chain’.
At a time when there has been a protectionist backlash in
America and Europe against the outsourcing of IT jobs to India
and fears of decline in the industry as margins and costs are
being further reduced, Indian software firms are emerging
from the shadows and fighting in the global market under
their own brand names.
Last year, Nasscom, the Indian industry’s lobby group, estimated that India captured just 0.2 per cent of a global market of
US$180 billion for software products. It expects that to increase,
but recognises the obstacles. The product business depends on
heavy investment in sales, marketing and branding and the ability
to market globally against fierce and rich competitors.
A recent success has been the tie up with Financial Services
Inc. (FSI) in the USA to launch FLEXICUBE as a hosted offering to
community banks in the US. FLEXCUBE will help community
banks in the USA to compete with large banks and financial
institutions on an equal footing.
QUESTION How should new brands in developing
countries compete against established US global brands?
SOURCE: ADAPTED FROM THE ECONOMIST, 8 MAY 2003 AND HTTP://WWW.THEHINDUBUSINESSLINE.COM I-FLEX TO
LAUNCH CORE BANKING SOLUTION 15 NOVEMBER 2006
Indian brands emerge from the shadows
FLEXCUBE is the world’s best-selling banking-software product.
For many years Indian technicians have been beavering away
writing code to be sold as an American or European brand. Now
India’s own brands are starting to fight in the global markets in
their own right. Indian marketing professionals have been arguing for some time that IT exports would be more secure if they
relied less on outsourcing and were ‘products’, where the Indian
PHOTO CREDIT: FREDRIK RENANDER/ALAMY
An estimated 1.2 billion people – some 17 per cent of the global population – now
have access to the Internet. However, for many this will be through public-based
Internet services in cafes etc. The United Nations estimate that global e-business
is now worth more than US$10 trillion, most of which is business-to-business
(B2B), not business-to-consumer (B2C) purchases.
The Internet has meant huge opportunities for small and medium-sized
enterprises (SMEs) and rapid internationalisation for many. It has enabled them
to substantially reduce the costs of reaching international customers, reduce
global advertising costs and made it much easier for small niche products to find
a critical mass of customers. Because of the low entry costs of the Internet it has
permitted firms with low capital resources to become global marketers, in some
cases overnight. There are, therefore, quite significant implications for SMEs
which will be examined further in Chapter 5, where we discuss in some detail the
issues in international marketing pertinent to SMEs.
For all companies, the implications of being able to market goods and services
online have been far reaching. The Internet has led to an explosion of information
to consumers, giving them the potential to source products from the cheapest
supplier in the world. This has led to the increasing standardisation of prices
across borders or, at least, to the narrowing of price differentials as consumers
become more aware of prices in different countries and buy a whole range of
products via the net. In B2C marketing this has been most dramatically seen in
the purchase of such things as flights, holidays, CDs and books. The Internet, by
connecting end-users and producers directly, has reduced the importance of
traditional intermediaries in international marketing (i.e. agents and distributors) as more companies have built the online capability to deal direct with their
customers, particularly in B2B marketing. To survive, such intermediaries have
begun offering a whole range of new services, the value added element of their
offering no longer being principally in the physical distribution of goods but
rather in the collection, collation, interpretation and dissemination of vast
amounts of information. The critical resource possessed by this new breed of
‘cybermediary’ is information rather than inventory. The Internet has also
become a powerful tool for supporting networks both internal and external to
the firm. Many global firms have developed supplier intranets through which
they source products and services from preferred suppliers who have met the
criteria to gain access to their supplier intranets. It has become the efficient
new medium for conducting worldwide market research and gaining feedback
from customers.
Thus the Internet produces a fundamentally different environment for international marketing and requires a radically different strategic approach affecting
all aspects of the marketing process. Not all forays into Internet marketing have
been successful. Many early dotcom high growth companies became ‘dot.bombs’
when they failed to sustain their early promise. Levi Strauss stopped its Internet
selling operation after finding the cost of servicing returned goods was greater
than the revenue generated from new sales.
The dual technological/cultural paradox
On one hand commentators view technological advancement and shrinking
communications as the most important driving force in the building of the global
village where there are global consumers who have similar needs. On the other
hand, to access this global village a person invariably needs a command of the
English language and access to a whole range of equipment. In many markets we
stumble against the paradox that whilst in some countries there is a market of
well-educated and computer-literate people, in other countries the global
electronic highway completely bypasses them.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 19
Despite all that has been said in previous sections, many developing and
emerging markets are characterised by poor, inadequate or deteriorating
infrastructures. It is estimated that only 10 per cent of the world’s population has
direct access to a PC and only 7 per cent have direct access to the Internet.
Essential services required for commercial activity, ranging from electric power to
water supplies, from highways to air transportation and from phone lines to
banking services are often in short supply or unreliable. There are also major
disparities in the cost of accessing the Internet. In the USA, accessing the Internet
for 20 hours per month would cost 1 per cent of a person’s average income;
in Mexico it would cost 15 per cent of a person’s average income. However, in
Bangladesh the same amount of access is equivalent to 278 per cent of the average
income and in Madagascar 614 per cent, hardly making access to the Internet
feasible for the average person, even if it is technically available.
The huge population shifts discussed earlier have also aggravated the technical
infrastructure problems in many of the major cities in emerging markets. This
often results in widespread production and distribution bottlenecks, which in
turn raises costs. ‘Brown outs’, for instance, are not uncommon in the Philippines,
even in the capital city Manila, where companies and offices regularly lose electric
power and either shut down in those periods or revert to generators. Fragmented
and circuitous channels of distribution are a result of lack of adequate infrastructure. This makes market entry more complicated and the efficient distribution
of a product very difficult. Pepsi Cola in Eastern Europe have a large number of
decentralised satellite bottling plants in an attempt to overcome the lack of a
distribution infrastructure.
The reader will find that we will examine the impact of the Internet on the
relevant marketing practices and processes as we move through the chapters of
the book. Chapter 12 of this edition is devoted to examining the implications
for the international marketing strategies of companies of such trends in the
technology environment.
20 PART 1 ANALYSIS
DIFFERENCES BET WEEN INTERNATIONAL
AND DOMESTIC MARKETING
As we have seen in the previous sections, there are many factors within the
international environment which substantially increase the challenge of international marketing. These can be summarised as follows:
1 Culture: often diverse and multicultural markets
2 Markets: widespread and sometimes fragmented
3 Data: difficult to obtain and often expensive
4 Politics: regimes vary in stability – political risk becomes an important
variable
5 Governments: can be a strong influence in regulating importers and foreign
business ventures
6 Economies: varying levels of development and varying and sometimes
unstable currencies
7 Finance: many differing finance systems and regulatory bodies
8 Stakeholders: commercial, home country and host country
9 Business: diverse rules, culturally influenced
10 Control: difficult to control and coordinate across markets.
The international competitive landscape
A major difference for managers operating on international markets is the impact
all these currents and cross-currents have on the competitive landscape. Wilson
and Gilligan (2003) define marketing as ‘getting the competitive advantage
and keeping it’. The task of achieving this in a competitive environment where
firms are subject to local, regional and global competition can be immensely
challenging. This is especially so if indigenous local competitors are supported
by the government of the country.
Across international markets, advanced countries are seeing significant
competition from both emerging markets and less developed countries who
are exploiting modern technology and their own low labour costs to compete in
markets no longer so protected by tariff walls.
The complexity of competition is also heightened by the strategic use of international sourcing of components by multinationals and global firms to achieve
competitive advantage.
Given the nature of the challenges and opportunities identified above and the
speed of change within the international environment, this means that substantially different pressures are being placed upon management than if they were
purely operating in domestic markets. It follows from this that the manager of
international marketing needs a detailed knowledge and understanding of howparticular environmental variables impact on a firm’s international marketing
operations.
Perlmutter (1995) identified nine cross-cultural management incompetencies
which led to failure across a spread of country markets. He defined these
core incompetencies as ‘the bundle of activities and managerial skills that are
mis-matched in a great variety of countries where firms do business’.
The first three are interrelated and relate to the failure to be market driven.
1 Inability to find the right market niches.
2 Unwillingness to adapt and update products to local needs.
3 Not having unique products that are viewed as sufficiently higher added
value by customers in local markets.
4 A vacillating commitment. It takes time to learn how to function in countries
such as Japan.
5 Assigning the wrong people. Picking the wrong people or the wrong top
team in an affiliate.
6 Picking the wrong partners. There is a list of difficulties in building alliances;
a main limitation is picking partners who do not have the right bundle of
capabilities to help reach the local market.
7 Inability to manage local stakeholders. This includes incompetence in
developing a satisfactory partnership relationship with unions and
governments.
8 Developing mutual distrust and lack of respect between HQ and the affiliates
at different levels of management.
9 Inability to leverage ideas developed in one country to other countries
worldwide.
If such mistakes are not to be made in your marketing strategies it is essential to
ensure that the company has a robust and rigourous approach to its international
marketing plannning processes. Approaches to achieving this will be discussed in
the following sections.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 21
In international marketing the very complexity of handling the diverse range of
factors that must be considered make planning and control a difficult activity to
carry out satisfactorily. For large global companies, the problem becomes one of
how to structure the organisation so that its increasingly complex and diverse
activities around the world can be planned and managed effectively, its goals can
be achieved and its stakeholders’ expectations satisfied.
In this section we look at the international marketing planning and control
process and consider how managers can respond to the challenges posed in the
previous sections by ensuring they have robust strategy development and market
planning processes.
The planning process
The planning process is the method used by the management of the firm to
define in detail how it will achieve its current and future strategic aims and objectives. In doing this, it must evaluate the current and future market opportunities,
assess its own current and potential capabilities and attempt to forecast how
those changes over which it has no control might help or hinder its efforts to
reach its objectives.
The international planning process must allow the company to answer the
following three marketing questions.
1 Where is the company now?
2 Where does it want to go?
3 How might it get there?
These questions are fundamental for the majority of businesses whether they are
large or small, simple or complex, and they emphasise the firm’s need to prepare for
the future to ensure its own survival and growth within the increasingly
competitive international environment. There is an implication in these questions
that the future is likely to be significantly different from the past, so planning is
inevitably about forecasting and implementing change which determines the very
nature and future direction of the organisation.
The starting point of the planning process for any company is to set long-term
goals and objectives which reflect its overall aspirations. These goals cannot be
set in isolation, however, as the company’s history and current levels of success
in its different country markets are usually major determinants of its future. Other
factors, too, over which the company has little control in international markets,
such as the economic and political situation of the countries in which it is operating,
the response of the competition and the diverse background, behaviour and
expectations of its customers, all have a major impact upon the company’s
operations and will have a significant effect on determining whether or not it will
meet its goals.
Too many firms, particularly smaller ones, fail to prepare contingency plans to
cope with the unexpected and, in some cases, even the predictable events in international markets: they are often surprised and unprepared for success too. When
unexpected events occur, many companies too easily ignore the plan and develop
new strategies as they go along. Whilst it may be possible to survive in a relatively
uncomplicated domestic environment by reacting rapidly to new situations as
they arise, it is impossible to grow significantly in international markets, as an
overly reactive management style is usually wasteful of opportunities and resources.
22 PART 1 ANALYSIS
THE INTERNATIONAL MARKET
PLANNING PROCESS
In international markets, planning and control is essential for both day to day
operations and the development of long-term strategies in order to manage the
differences of attitudes, standards and values in the extended parts of the organisation and avoid the problems of poor coordination and integration of the
diverse activities. The plans which are developed must be sufficiently flexible to
cope with unfamiliar cultures, rapidly changing political, economic and competitive environments, and the effects of unexpected events which affect global companies in one way or another throughout the world on an almost daily basis.
As a company moves into international markets, having previously been marketing solely to domestic markets, the processes of planning and control remain
largely the same, but the complexity of the process increases dramatically. In a
domestic situation misunderstandings between different departmental managers
can be relatively quickly sorted out with a face to face discussion, but in the international situation this is much harder and often impractical. More impersonal
communications, along with longer lead times, different cultures and the use of
different languages, results in seemingly inconsistent and often negative attitudes
in international managers.
Major evolutionary stages of planning
As most companies move gradually into international markets they go through the
major evolutionary stages of planning: the unplanned stage, the budgeting stage,
the annual business planning and the strategic planning stage (see Illustration 1.5).
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 23
ILLUSTRATION 1.5
The mission of Divine Chocolate is to bring fair trade
chocolate to the mainstream world markets. Their milk chocolate recipe was developed with UK tastes in mind, and both
Divine and Dubble were created to a quality standard and
designed to compete with major brands. Prices also matched
those of equivalent products already available on the market.
In July 2006 the Body shop donated their shares in Divine
Choclate Ltd to Kuapa Kokoo, which now owns 45 per cent of
the company. With this very special farmer–ownership model
for the business and two successful Fairtrade brands, Divine has
a strong appeal to today’s more conscientious consumer.
Armed with a delicious product and a compelling story,
and the clout of supporting charities such as Comic Relief (UK)
and Christian Aid, Divine Chocolate has succeeded in getting
both Divine and Dubble listed in all the top UK supermarkets,
as well as many independents. They also supply chocolate for
own label products in the Co-op and Starbucks in the UK. The
company now has the USA and other European markets in
their sights. However, given their limited resources, can they
build on their UK success and take their message to new countries and new cultures with very different consumer behaviour
patterns and varying attitudes to the importance of fairtrade?
QUESTION How can the Divine Chocolate Company
develop a marketing plan to help them develop into new
international markets?
SOURCE: JEANETTE BAKER, SHEFFIELD HALLAM UNIVERSITY. ADAPTED FROM WWW.DIVINECHOCOLATE.COM AND WWW.DUBBLE.CO.UK
Divine Chocolate Ltd
Kuapa Kokoo is a cooperative of small-scale cocoa farmers in
Ghana, who set up Divine Chocolate Ltd (formerly the Day
Chocolate Company). The company buys all its cocoa at fair trade
prices which means the farmers receive a guaranteed minimum
price of US$1600 per tonne of cocoa, plus a social premium of
US$150 per tonne which they invest in farm and community
development projects. Divine Chocolate have two brand names,
Divine and Dubble, which carry the Fairtrade Mark licensed by
the international Fairtrade Labelling Organisation (FLO).
PHOTO CREDIT: DIVINE CHOCOLATE LTD
The unplanned stage: In its early stages of international marketing, the company
is likely to be preoccupied with finding new export customers and money to
finance its activities. Frequently business is very unpredictable and is consequently unplanned, so that a short-term ‘crisis management’ culture emerges.
The budgeting stage: As the business develops, a system for annual budgeting
of sales, costs and cash flow is devised, often because of pressure from external
stakeholders such as banks. Being largely financial in nature, budgets often take
little account of marketing research, product development or the longer term
potential of international markets.
Annual business planning: Companies begin to adopt a more formalised annual
approach to planning by including the whole of the business in the planning
review process. One of three approaches to the process of international market
planning generally emerge at this stage:
1 Top-down planning: this is by far the simplest approach, with senior
managers setting goals and developing quite detailed plans for middle and
senior staff to implement. To be successful, this clearly requires the senior
managers to be closely in touch with all their international markets and for
the business to be relatively uncomplicated in the range of products or
services offered. It has the advantage of ensuring that there is little
opportunity for misinterpretation by local managers, but the disadvantage
of giving little opportunity for local initiative. Most of the strategic decisions
at McDonald’s and Coca-Cola are taken in the US, and by Sony in Japan.
2 Bottom-up planning: in this approach the different parts of the company
around the globe prepare their own goals and plans and submit them to
headquarters for approval. Whilst this encourages local initiative and
innovation, it can be difficult to manage as the sum of the individual parts
that make different demands on resources, financial returns and marketing
profiles rarely add up to a feasible international development plan.
3 Goals down, plans up: in an attempt to benefit from the positive elements
of the first two approaches, this third approach is based upon senior
management assessing the firm’s opportunities and needs, setting corporate
global objectives and developing broad international strategies. Financial
goals are then set for each part of the company, which has the responsibility
for developing individual strategies and plans to achieve these targets.
For this approach to work effectively the senior management generally
allows considerable flexibility in the way that the goals are achieved by
the component parts of the firm around the globe. This approach is
adopted particularly by companies that have a very diverse portfolio
of businesses and products.
The strategic planning stage: So far, the stages discussed have been concerned
with relatively short-term planning (one to two years), but for many aspects of
international marketing such as new market entry, growth strategies and brand
management, much longer-term planning is essential. By developing strategies
for a five year timescale, it is possible to avoid short-term, highly reactive and
frequently contradictory and wasteful activity. The annual marketing plan then
becomes a more detailed version of the five year strategic plan which can be
rolled forward year on year.
The obvious benefits of strategic planning are that all staff can be better motivated
and encouraged to work more effectively by sharing a vision of the future. There
are, however, potential dangers too. Long-term strategic plans often fail to cope
with the consequences of unexpected events, either environmental or political.
There is often confusion between managers over what are strategic issues and what
are operational tactics. What a manager in a foreign subsidiary might consider to be
a strategic issue, such as achieving a substantial market share increase in the
24 PART 1 ANALYSIS
country, might be regarded as an operational matter by a senior manager at the
headquarters, which does not consider success in that particular country a priority
for the company.
The international marketing planning process
There are a number of elements in the international marketing plan, as detailed
in Figure 1.3.
STAKEHOLDER EXPECTATIONS
The complexities of the international marketing environment mean another major
difference for companies competing on international markets is that the company
has many more organisations and people who have a stake in how they conduct their
business and so consequently many more stakeholders whose differing expectations
they have to manage. The ability of a company to pursue its chosen marketing
strategy is determined to a large degree by the aims and expectations of the stakeholders, who directly or indirectly provide the resources and support needed to
implement the strategies and plans. It is important to clearly identify the different
stakeholder groups, understand their expectations and evaluate their power,
because it is the stakeholders who provide the broad guidelines within which the
firm operates. Figure 1.4 identifies the typical stakeholders of a multinational
enterprise. Body Shop, the environmentally conscious UK toiletries retailer, is always
likely to have problems balancing the widely differing pricing and profit expectations
and environmental concerns of its franchisees, customers and shareholders.
Whilst the senior management of the firm aim usually to develop and adopt
strategies which do not directly oppose these stakeholder expectations, they do,
of course, frequently widen or alter the firm’s activities due to changes in the
market and competition. Moreover, a wide range of stakeholders influence what
multinational enterprises (MNEs) do by giving greater attention to the political,
commercial and ethical behaviour of the organisations as well as taking more
interest in the actual operation of the business and the performance and safety
of the products. As a result of this, companies need to explain their strategies and
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 25
FIGURE 1.3
Aspects of international marketing
planning
plans to shareholders through more detailed annual reports, to staff through a
variety of briefing methods and to pressure groups and the community in general
through various public relations activities, particularly when their activities have an
impact on the local environment or economy. In international marketing it is
particularly important that the firm addresses the concern of its host country stakeholders, who may be physically and culturally very distant from the headquarters.
Particular attention should be paid to the different expectations of the
stakeholders and their power to influence the firm’s strategic direction. Given
the different expectations of the firm’s stakeholders it is inevitable that conflicts
will occur. For example, shareholders usually want a high return on their investment and may expect the firm to find countries with low production costs, but
the workers in these countries want an adequate wage on which to live. It is often
the firm’s ability to manage these potential conflicts that leads to success or
failure in international marketing.
International pressure groups are another important stakeholder MNEs have
to manage. Global communications and the ability of the Internet to draw together
geographically dispersed people with shared interests have led to the growing
power of globally based pressure groups. Such has been the success of a number
of these, it is now the case that pressure-groups are seen by many global operators
as one of the key stakeholders to be considered in international strategy decision
making. The role of pressure groups in global markets tends to be to raise awareness of issues of concern. Among those that have received wide press coverage
affecting international marketing strategies are:
■ the Greenpeace efforts to raise awareness to threats on the environment
■ the anti-globalisation lobby demonstrating against the perceived dark global
forces they see manifested in the World Trade Organisation
■ the anti-child labour movement.
Gap, the clothes manufacturer and retailer, responded to a revelation that
companies who had a licence to produce their products were using child labour
by applying the employment guidelines and dismissing the ‘child’. This only
exacerbated the anger of the pressure groups. Levi, another target of the anti-child
26 PART 1 ANALYSIS
FIGURE 1.4
Some typical stakeholders of
multinational enterprises
labour movement, finding themselves exposed to the same bad publicity, dismissed the child but agreed to fund the child’s education up to the point
when they would be eligible to seek employment. This pacified the pressure
group in the short term, but one is left wondering what Levi would do if they
subsequently discovered that there were another few thousand under-age
employees across other factories they use, or if there was a sudden influx of
employees that were recruited and then declared themselves under age in order
to seek educational support.
One of the main roles of international public relations is to try to manage the
expectations and aspirations of pressure groups and all the stakeholders of a
company. In international marketing one of the key responsibilities is to establish
good practice to respond to publicity generated by pressure groups on issues
where they have been seen not to meet stakeholder expectations.
As the international business environment becomes more competitive, dynamic
and complex, there is a greater need for individual managers to be aware not
simply of their immediate situation, but also of the possible impact of changes
taking place in surrounding areas too.
Situation analysis
Situation analysis is the process by which the company develops a clear understanding of each individual market and then evaluates its significance for the
company and for other markets in which the business operates. As the international business environment becomes more competitive, dynamic and complex,
there is a greater need for individual managers to be aware not simply of their
immediate situation, but also of the possible impact of changes taking place in
surrounding areas too. Individual national markets can be both surprisingly
similar and surprisingly dissimilar in nature, and it is important to understand
these linkages and the implications of the changes which take place. Chapters 2
and 3 give the reader a detailed insights onto the factors to consider in carrying
out a situational analysis of the international marketing environment.
The processes and procedures for segmenting international markets and
carrying out the necessary research to build the situational analysis are examined
in some depth in Chapter 4.
A detailed analysis of each of these factors as they affect both the local and
international market environments is necessary in order to forecast future
changes. The most frequently adopted approach by firms is to extrapolate past
trends. However, with so many factors to consider and the increasing frequency
with which unexpected events seem to occur, it may be extremely difficult and
misleading to build up one all-embracing vision of the future. Firms are responding
to this uncertainty by developing a series of alternative scenarios as the basis of the
planning process. An effective, robust strategy needs to contain contingency plans
to deal with a variety of situations in which the company might find itself.
Resources and capabilities
In stressing the need to analyse and respond to external forces over which even
global companies have little control, there can be a temptation amongst some
managers to believe that the current capabilities of the organisation are inadequate
when facing the future. A more thorough analysis of the firm’s situation is needed
and the SWOT framework (analysing the firm’s strengths, weaknesses, opportunities
and threats) is appropriate for this purpose. It is important therefore to audit not
just the most obvious company weaknesses but also the strengths of the company,
which are often taken for granted but which are really its source of competitive
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 27
advantage. This is particularly important in international markets as, for example,
customer and brand loyalty may be much stronger in certain markets than others,
and products which may be at the end of their life in the domestic market may be
ideal for less sophisticated markets. SWOT analysis should, therefore, be carried
out separately on each area of the business by function, product or market
and focus upon what action should be taken to exploit the opportunities and
minimise the threats that are identified in the analysis. This will lead to a clearer
evaluation of the resources that are available or which must be acquired to ensure
the necessary actions are carried out.
Knowledge management
The increasing globalisation of business, particularly because it is being driven
by information technology, has led many firms to re-examine what contributes to
their global competitive advantage. They have recognised the fact that it is the
pool of personal knowledge, skills and competencies of the firms’ staff that
provides its development potential and they have redefined themselves as
‘knowledge-based’ organisations. Moreover, these firms have acknowledged that
they must retain, nurture and apply the knowledge and skills across their
business if they wish to be effective in global markets. The growth potential can
only be exploited if the firm becomes a learning organisation in which the good
practice learned by individual members of staff can be ‘leveraged’, transferred and
built upon throughout its global activity.
Corporate objectives
Having identified stakeholder expectations, carried out a detailed situation analysis
and made an evaluation of the capabilities of the company, the overall goals to be
pursued can be set. It is important to stress that there is a need for realism in this,
as too frequently corporate plans are determined more by the desire for short-term
credibility with shareholders than with the likelihood that they will be achieved.
The objectives must be based on realistic performance expectations rather than on
a best case scenario. Consideration must also be given to developing alternative
scenarios so that realistic objectives can be set and accompanied by contingency
plans in case the chosen scenario does not materialise.
The process adopted for determining long-term and short-term objectives is
important and varies significantly depending on the size of the business, the
nature of the market and the abilities and motivation of managers in different
markets. At an operational level, the national managers need to have an achievable
and detailed plan for each country, which will take account of the local situation,
explain what is expected and how performance will be measured. For most
companies the most obvious international strategic development opportunities
are either in increasing geographical coverage and/or building global product
strength. This is discussed in much further detail in Chapter 5 from the viewpoint
of the SME and in Chapter 6 from the viewpoint of globally based organisations.
Dilemma 1.2 helps you consider this question from the viewpoint of a government
trying to sell the strategic presence of a city.
Marketing strategies
Having set the objectives for the company, both at corporate and the subsidiary
level, the company will develop detailed programmes of the marketing strategies
and activities which will achieve the objectives. Decisions will need to be made
as to how the company will segment and target its international markets? How will
28 PART 1 ANALYSIS
it position itself in different international markets. How will it add value to its
efforts through its product portfolio, communications, distribution and pricing
strategies? It is this that is at the heart of the following chapters of this book as
we take the reader through the detailed considerations in developing an international marketing strategy. A central consideration in marketing strategy development for international markets is the dilemma facing all international managers as
to how far they can standardise marketing strategies in different country markets.
This essential question will be examined as we go through different aspects of
international marketing strategy development and implementation.
Implementation of the marketing plan
Having agreed the overall marketing strategy, plans for implementation are
required at a central and local subsidiary level. Firms usually allocate resources to
individual subsidiaries on a top-down basis, but this needs to be modified to
include the special allocations made to enable foreign subsidiaries to resource
specific market opportunities or difficulties encountered in particular markets.
Agreement is reached through a process of discussion between the operating
department and management levels. Detailed budgets and timescales can then be
set for all areas of marketing including those outside agencies (such as marketing
researchers, designers and advertising agencies) in order to ensure that their
contributions are delivered on time and within the budget. Some allowance must
be made for those activities which might be more difficult to estimate in terms of
cost or time, such as research and development of new products.
We have, so far, emphasised the need for careful, detailed and thorough
preparation of the plan, but it is essential that the plan is action oriented and
contains programmes designed to give clear direction for the implementation,
continuous evaluation and control of all the firm’s marketing activity. The plan must
therefore be: strategic, by fulfilling the corporate and marketing objectives and coordinating the individual strategic business unit (SBU) plans, tactical, by focusing
upon individual SBU marketing activities in each country, and implementable, by
detailing the individual activities of each department within the SBU.
The control process
The final stage of the planning process is setting up an effective system for obtaining
feedback and controlling the business. Feedback and control systems should be
regarded as an integrated part of the whole planning process, and they are essential
in ensuring that the marketing plans are not only being implemented but are still
appropriate for the changing international environment.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 29
DILEMMA 1.2
such as New York, Munich, Tokyo and New Delhi.
However, it now wishes to ensure a more strategic
presence in three key regions – the Euro Zone,
China and Central America – and is trying to decide
whether it should take a different approach to setting
up its centres and where such centres should be
located in these regions.
QUESTION How would you advise the Ontario ministry to
solve this dilemma?
How does a city sell itself internationally?
Ontario in Canada has set expanding the city’s international strategic presence as a major priority. They
view this strategy as essential to attracting job-creating
investments to the province, which will also connect
Ontario’s companies with the contacts and information
they need to succeed in a global economy. It already
has a number of international marketing centres
located within the Canadian embassies in places
There are three essential elements of the control process:
1 Setting standards: the standards that are set need to be relevant to the
corporate goals such as growth and profits reported by financial measures,
return on capital employed and on sales, and non-financial indicators,
e.g. market share. Intermediate goals and individual targets can be set by
breaking the plan down into measurable parts which when successfully
completed will lead to the overall objectives being achieved. The standards
must be understandable, achievable and relevant to each local country situation.
2 Measuring performance against standards: to obtain measurements and
ensure rapid feedback of information, firms use a variety of techniques,
including reports, meetings and special measurements of specific parts of the
marketing programme, such as cost–benefit analysis on customers, product
lines and territories or marketing audits for a thorough examination of every
aspect of marketing in a particular country. They also use benchmarking,
which allows comparisons of various aspects of the business, such as efficiency
of distribution, customer response times, service levels and complaints, with
other companies that are not necessarily from the same business sector.
3 Correcting deviations from the plan: perhaps the most difficult decisions
that must be made are to determine when performance has deviated
sufficiently from the plan to require corrective action to be taken either
by changing the plan or the management team charged with the
responsibility of carrying out the plan.
A checklist of the essential elements of the international marketing plan is
summarised in Figure 1.5.
30 PART 1 ANALYSIS
FIGURE 1.5
Essential elements of the
international marketing plan
Reasons for success
Hamel and Prahalad (1996) suggest the firms operating globally that succeed
are those that perceive the changes in the international environment and are
able to develop strategies which enable them to respond accordingly. The firms
that will do well will base their success largely on the early identification of
the changes in the boundaries of markets and industries in their analysis
of their international marketing environment. Management foresight and
organisational learning are therefore the basis of a sustainable competitive
advantage in global markets.
The increasing globalisation of business, particularly because it is being driven
by information technology, has led many firms to re-examine what contributes to
their global competitive advantage. They have recognised the fact that it is the
pool of personal knowledge, skills and competencies of the firm’s staff that provides
its development potential and they have redefined themselves as ‘knowledgebased’ organisations. Moreover, these firms have acknowledged that they must
retain, nurture and apply the knowledge and skills across their business if they
wish to be effective in global markets. The growth potential of international
markets can only be exploited if the firm becomes a learning organisation in
which the good practice learned by individual members of staff in one market can
be leveraged and built upon throughout its global activity.
However, firms are increasingly vulnerable to losing these valuable personal
assets, because of the greater mobility of staff, prevalence of industrial espionage
and the security risks and abuse associated with the Internet. Moreover, with the
increase in communications it is becoming more difficult to store, access and
apply the valuable knowledge that exists amongst the huge volume of relatively
worthless data that the company deals with. Consequently, effective knowledge
management is now critical for success. This means having Web-enabled database
systems that facilitate effective data collection, storage in data warehouses and
data mining (the identification of opportunities from patterns that emerge from
detailed analysis of the data held).
Successful global operators use the knowledge gained to assess their strengths
and weaknesses in light of their organisational learning and ensure they have the
company capability and resources to respond to their learning in order to sustain
their competitive advantage. This is particularly important in international
markets as, for example, customer and brand loyalty may be much stronger in
certain markets than others, and products that may be at the end of their life
in the domestic market may be ideal for less sophisticated markets. In the
dynamic international markets, therefore, if a firm is to succeed it must develop
the ability to think, analyse and develop strategic and innovative responses on an
international, if not global scale, perhaps such as Mrs Lofthouse did for the
Fishermans Friend in Illustration 1.6.
Characteristics of best practice in
international marketing
It is apparent, therefore, that firms and organisations planning to compete effectively in world markets need a clear and well-focused international marketing
strategy that is based on a thorough understanding of the markets which the
company is targeting or operating in. International markets are dynamic entities
that require constant monitoring and evaluation. As we have discussed, as
markets change so must marketing techniques. Innovation is an important
competitive variable, not only in terms of the product or service but throughout
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 31
32 PART 1 ANALYSIS
ILLUSTRATION 1.6
Fisherman’s Friend
Fisherman’s Friend lozenges were initially developed for sailors
and Fleetwood fishermen who were working in the severe
weather conditions of the North Atlantic fishing grounds. For an
entire century the company made around 14lb of lozenges a
month which were only sold in the local area. However, when
Doreen Lofthouse joined the company she set about expanding the market by selling into towns throughout Lancashire and
Yorkshire. Distribution then spread throughout the UK, before
expanding overseas. Norway was a logical starting point and it
is now the market with the highest sales per head of population.
Surprisingly, the lozenge was a success in many hot countries
too. Italy was the largest export market at one point before
being overtaken by Germany. Although the lozenge needs no
adaptation – a cough needs no translation – promotion of
Fisherman’s Friend differs greatly from country to country. The
traditional concept has been the centre of advertising in the UK,
but overseas promotional themes are quite different. An Italian
TV commercial showed a girl who breathed so deeply after
eating a lozenge that the buttons pop off her blouse to reveal
her cleavage; in Denmark a man breathes fire; in the Philippines
butterflies flutter against pastel shades accompanied by gentle
music. Fisherman’s Friend is now available in over 100 countries
worldwide and in many it is seen as a strong sweet, not as
medicated confectionery. Exports now account for over 95 per
cent of the company’s total production.
QUESTION What are the reasons for the success of
Fisherman’s Friend?
PHOTO CREDIT: ALL IMAGES REPRODUCED WITH PERMISSION FROM FISHERMAN’S FRIEND
the marketing process. Countertrading, financial innovations, networking and
value-based marketing are all becoming increasingly important concepts in the
implementation of a successful international strategy.
The challenge, then, of international marketing is to ensure that any international strategy has the discipline of thorough research and an understanding
and accurate evaluation of what is required to achieve the competitive advantage.
Doole (2000) identified three major components to the strategies of firms
successfully competing in international markets:
■ A clear international competitive focus achieved through a thorough
knowledge of the international markets, a strong competitive positioning and
a strategic perspective which was truly international.
■ An effective relationship strategy achieved through strong customer relations,
a commitment to quality products and service and a dedication to customer
service throughout international markets.
■ Well-managed organisations with a culture of learning. Firms were innovative
and willing to learn, showed high levels of energy and commitment to
international markets and had effective monitoring and control procedures
for all their international markets.
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 33
SUMMARY
■ In this chapter we have discussed the growing strategic importance of international marketing and
examined the issues associated with successfully competing in international markets. The chapter
examines the main differences between domestic and international marketing, the different levels at
which international marketing can be approached and the more complex and multidimensional
uncontrollable elements of the international marketing environment.
■ We have examined the major aspects of the SLEPT factors in the international marketing environment.
The environments in which international companies must operate is typically characterised by
uncertainty and change – factors which, taken together, increase the element of risk for international
marketing managers.
■ It has been suggested that marketing managers need to have a properly planned approach to any
international activity because, without this, the costs and likelihood of failure are likely to increase.
We examined the international marketing planning and control process and considered how managers
can respond to the challenges posed in the international marketing environment by ensuring they have
robust strategy development and market planning processes.
■ The reasons for success and failure on international markets were examined and it was
suggested the firms operating globally that succeed are those that perceive the changes in the
international environment and are able to develop strategies which enable them to respond
accordingly. Management foresight and organisational learning are therefore the basis of
a sustainable competitive advantage in global markets.
■ The reader has been introduced to many of the concepts that are important to the
international marketing management process and will have gained an understanding of the
issues to be addressed. All the various aspects of the international marketing strategy process
introduced in this chapter will be examined in more detail in the following chapters. In Chapter 2
the international trading environment and the trends and developments in trading patterns
will be examined.
34 PART 1 ANALYSIS
United States and in 1987 it began expanding its operations
across the globe, opening plants in Honduras, El Salvador,
Guatemala and Venezuela. It now has plants in Europe and
most recently China.
The Asian market presents a very exciting development for
Gruma. The company established their presence on continental
China in the first instance and then gradually expanded their
penetration of markets across Asia to the Middle East. It has
already established distributorships in Japan, Korea, Singapore,
Hong Kong, Thailand, the Philippines, Taiwan and India.
How has a Mexican company with a niche food product
like cornflour succeeded so well in international markets?
According to Martinez and Haddock, the answer lies in the
fact that many of the markets they have focused on are
emerging markets which tend to follow the same path of
development. These emerging markets exhibit a natural life
cycle – a predictable pattern of consumer demand that is
evident in steel, wheat, consumer products, and every other
major economic sector. What Gruma are following in their
international expansion is the tried and tested method of
leveraging the similarities across from market to market and
growing their company accordingly. The root of the success of
Gruma has been their ability to observe the life cycle of
emerging markets around the world and expertly time their
entry into these markets.
However, the other key factor has been their ability to adapt
their products to local market tastes. Their key competitive
advantage in international markets is based not on their
product but the ability to roll any kind of flour, from corn to
wheat to rice, into saleable flatbread. Most people from India do
not eat corn tortillas, but they do eat a flatbread called naan,
made from wheat, which Gruma sells in the United Kingdom
and plans to sell in India. The Chinese don’t eat many corn
tortillas, but they buy wraps made by Gruma for Peking duck.
Gruma also follow a policy of deploying a senior ‘beachhead’ team to enter the new market in which they are
building a presence. In China, the beachhead team had skills
honed through many years of experience in Latin America
and was already primed to develop the necessary market
CASE STUDY
Flatbread goes round the world
Gruma S.A.B. de C.V is located near Monterrey, Mexico, and
produces corn flour and other flour products, which it processes
into tortillas and related snacks for markets worldwide. Its brand
names include Maseca, Mission, and Guerrero. Its customers
include supermarkets, mass merchandisers, smaller independent stores, restaurant chains, food service distributors and
schools. The company began operations in 1949. In the early
1970s, Gruma launched its product on the Central American
markets, specifically in Costa Rica. In 1976 it expanded to the
SOURCE: ADAPTED FROM WWW.GRUMA.COM AND MARTINEZ AND HADDOCK (2007)’ THE FLATBREAD FACTOR’, STRATEGY AND BUSINESS, SPRING
KEYWORDS
Cross-currents Global youth culture Multinational enterprise
Cultural paradoxes Globalisation North American Free
Currents Gross national income Trade Area
Emerging economics International marketing Piracy
European Union International trade Purchasing power parity
Export marketing Less developed economies World trade
Global marketing World Trade Organisation
PHOTO CREDIT: REPRODUCED WITH PERMISSION FROM WWW.GRUMA.COM
CHAPTER 1 AN INTRODUCTION TO INTERNATIONAL MARKETING 35
DISCUSSION QUESTIONS
1 What are the major environmental influences which impact on international marketing? Show how they
can affect international marketing strategies.
2 Using examples, examine the reasons why marketing strategies fail in international markets.
3 Identify three major global pressure groups. Examine how they have influenced the international
marketing strategies of particular firms.
4 What skills and abilities are necessary requirements for an effective international marketing manager?
Justify your choices.
5 How can marketing managers accommodate the multiplicity of international markets into a cohesive
international marketing strategy and plan?
References
Dicken, P. (2007) Global shift-mapping the changing contours of the world economy, 5th edn. Sage.
Doole, I. (2000) ‘How SMEs Learn to Compete Effectively on International Markets’, Ph.D.
El-Kahal, S. (2006) Introduction to international business. McGraw-Hill.
Economist, The (2006) ‘ “The new titans”:a survey of the world economy’, 16 September.
Haliburton, C. (1997) ‘Reconciling global marketing and one to one marketing – A global individualism response’, in Doole, I.
and Lowe, R. (eds), International marketing strategy – contemporary readings, ITP.
Hamel, G. and Prahalad, C.K. (1996) Competing for the future. Harvard Business School Press.
Hofstede, G. (2003) Culture’s consequences: comparing values, behaviours, institutions and organisations across nations
international differences in work-related values, 2nd edn. Sage.
Kotabe, M.and Helsen, K. (2008) Global marketing management, 4th edn. J. Wiley and Sons.
Ohmae, K. (2005) The next global stage: the challenges and opportunities in our borderless world. Pearson Education.
Perlmutter, M.V. (1995) ‘Becoming globally civilised, managing across culture’, Mastering Management Part 6, Financial Times,
1 December.
Porter, M.C. (1990) The competitive advantage of nations. Macmillan.
Quelch, J. and Deshpande. R. (2004) The global market: developing a strategy to manage across borders .Wiley and Sons.
Rugimbana, R. and Nwankwo, S. (2003) Cross cultural marketing. Thomson Learning.
Sarathy, R., Terpstra, V. and Russow, L.C (2006) International marketing, 9th edn. Dryden Press.
Wilson, R. and Gilligan, C. (2003) Strategic marketing management: planning implementation and control, 3rd edn,
Butterworth-Heinemann.
QUESTIONS
1 Evaluate the reasons behind the success of Gruma S.A.B.
de C.V.
2 What environmental factors can be monitored to help
decision makers recognise when it is the optimum time
to enter a market?
insights to feed into their marketing campaign. Thus, observed
trends in China such as a decrease in home cooking among
dual-career professionals, increasing penetration of fast food
chains, an increase in cold storage in supermarkets and rapid
improvements in the logistics and distribution channels were
all utilised in thinking through the Gruma market-building
strategy in China.
7S framework 168
12C framework 118
Absolut 252
adaptation 199, 200, 272–3
product 272–4
advertising 326–7
assistance 356
humour 90, 315
international 315
negativity 313
online 337
press 329
self-reference criteria 323
standardisation 315
television 327–8
aesthetics 75
AFTA see Asian Free Trade Area
agencies
creative 329
external perspective 329
financial 329
research 127–8
specialist knowledge 329
Airbus 256
Ama, A. 112
Anheuser Busch 247
annual business planning
bottom-up 24
goals down, plans up 24
top-down 24
APEC see Asia Pacific Economic Cooperation
Apple 157, 271, 435, 450–1
Asea Brown Boveri (ABB) 203
Asia Pacific Economic Cooperation
(APEC) 62–4
Asian Free Trade Area (AFTA) 54
Asian Tigers 63
Association of South East Asian Nations
(ASEAN) 52, 64
attitude 75–6, 80
Au, A.K. 316
baby boomers 9
BAE 336
Balabanis, G. 152, 161, 221
balance of payments 50
banks 100–1, 407
Barham, K. 224
barrier to entry 153
barriers to entry
marketing 44–6
minimum scale barriers 367
non-tariff 46–8
Cadbury’s 17, 75
Cagni, P. 204
Cameroon 374
Canada 123
capabilities 27–8
capital 352–3
caravan parks 397
Cassill, N. 154
category management 362
Cavusgil, S.T. 164, 199, 384
celebrity endorsement 331–2, 333
Chaffey, D. 339, 340, 427, 429
Chan, A.K. 316
Chan, P.S. 243
channel selection 350
capital required/costings 352–3
company objectives/competitive
activity 351–2
control, continuity, communication 354
coverage needed 353–4
customer characteristics/culture 350–1
market characteristics 352
China 64–5
comparative advantage 43
entrepreneurs 428
EPZs/SEZs 375
IP rights 293
joint ventures 259–60
market environment 138–9
Microsoft 16
product copies 291, 392
Chitkara, A.R. 295
Cirque du Soleil 179
Cisco Systems 368
common market 52
communications
adaptation 315–17
agencies/consultancies 329
build relationships 311–12
challenges 312–17
coordination/planning 321–2
corporate identity 310–11
existing/potential customers 319–20
external 309–10
failure 312–13
globalisation 196
integration 320–2
interactive 309
intermediaries 354
internal 308–9
mix 308
on-line 335
product/service differentiation 310
role 308–12
tariff 45–6
transfer pricing 402–3
Bartlett, C.A. 206, 222
Beatson Clark 156
Behfar, K. 224
beliefs 73
Bergson, S. 163
BERI 110
Blackwell, R.D. 83
Bolz, J. 201
Bond (James) films 332
born global 160
Branch, A.E. 373, 377
brand piracy 289–90
branding strategies 287–9
endorsing 288–9
line 288
product 288
range 288
source 289
umbrella 287
brands
aspirational 286
attribute 286
building 208
business-to-business 210–11
categories 286–7
experience 286
international 285
management 208–11
piracy 289–90
positioning 290–1
value 287
Brandt, W. 223
Brazil 240
Brett, J. 224
Brislin, R.W. 130
Bronder, C. 256
Brown, L. 154
build to order (BTO) 371
business portfolio matrix
primary 111
secondary 111–12
tertiary 112
business to business (B2B) 426,
427–8
buying process 93
government 92–3
negotiation styles 93–5
organisational 92
social/cultural influences 91–9
business to consumer (B2C) 426–7
business unit integration 321
buyer-seller relationships 355
INDEX
455
Entries in bold are included in the end-of-chapter keywords lists.
communications (continued)
stakeholders 330–1
standardisation 314–17
strategy 317–20
technology impact 438
tools 323–38
typology 89–91
company
allegations 314
factors 172–3, 383–4
objectives/activity 351–2
comparative advantage 42–3
comparative research 109
competition
globalisation 195
international landscape 21
international posture 197–9
pricing 391, 393
competitive advantage 207–8
competitive focus 178
competitive risk 405
competitive strategies
cost leadership 169
differentiation 169
focus 169
Confucian dynamism 89
consortia 125
consultancies 329
consumer behaviour 80
consumer credit 392
consumer packaged goods (CPG) 293
consumers
buying involvement 82
pricing factors 391
risk 82
segmentation 116–17
contract manufacture 247–8
control 219–21
benchmarking 220
correcting deviations from
plan 220
good practice 221
intermediaries 354, 356–7
market entry 233–4
measuring performance against
standards 220
self-assessment 221
setting standards 220
technology impact 438
cooperation agreements 407, 408–9
cooperative organisations 348
cooperative strategies 253–7
Copenhagen Criteria 58
corporate
charity 335
identity 311, 331
objectives 28, 383–4
costs
economies of scale 389
export 388–9
fixed production cost 386–7
internal structures 391
learning curve 389–90
marginal 387–8
pricing 386–90
reduction 389–90
sales volume 386–8
counterfeiting 98–9, 313
countertrade 407–8, 408
advantages 409–10
barter 408
compensation trading 408
cooperation agreements 408, 408–9
counter-purchase 408
definition 408
disadvantages 410, 410–11
offset 408
switch deals 408
country of origin effects 283–5
Crick, D. 150, 161
cross-border transfers 396
administrative problems 411–13
export order process 412–13
pricing 411–12
cross-cultural analysis 85
culture/communication typologies 89–91
dimensions 87–9
high/low context approach 85–7
cross-cultural marketing
bribery and corruption 96–8
counterfeiting 98–9
ethical issues 95–6
piracy 98
cross-cultural research 105
cross-currents 21
Cullen, J.L. 257
cultural dimensions
Confucian dynamism 89
individualism 87
masculinity 89
power distance 87
uncertainty avoidance 87–9
vs. rate of product adoption 91
cultural factors 8–9, 72
influence in B2B marketing 91–9
product adaptation 272–3
cultural identity 83
cultural learning 79–80
cultural paradoxes 8, 19–20
cultural sensitivity 75
culture
analysing 82–5
beliefs 73
benefits of overseas manufacturing 246
buying process 81–2
cognitive style 82
components 74–7
consumer behaviour 80–2
consumer involvement 82
customs 73
definition 72–3
distribution channels 350–1
language 77–9
layers 73–4
perceived risk 82
social institutions/local conventions 81
values 73
currency transactions, risk 15
currents 21
customer relationship management (CRM)
312, 340–1, 433
customer service 368–9
customer-led strategy 442–3
integrated/coordinated approach 444
lifetime/short-term revenue 443
one-to-one relationships 443
quality focus 443
win-win position 444
customers
communications 319–20
distributor characteristics/culture 350–1
customise 433–4, 443
customs 73
customs union 52
Czinkota, M.R. 150, 350
Daimler-Chrysler 253
data mining 362
Davidson, H. 320
De Beers 277
debt 397
Dell Computers 357
Demack, S. 178
Deshpande, R. 225
developed economies 13
Diamontopolous, A. 384
differentiated marketing 112
direct channels 352
direct marketing 158–9, 244–5, 330
distribution
globalisation 196
local vs global 359
management challenges 346–7
marketing implications 365–6
distribution channel
capital required 353
cashflow 353
competitive activity 351–2
contractual process 354
distributors 348
indirect/direct 348–9
inefficiencies 367
relative costs 353
selection of intermediaries 337–54
technology impact 437–8
updating 357
distribution channel structures 359
distributors 242–3
Divine Chocolate Ltd 23
documentation, distribution 375–6
Doha Round 51–2
domestic market 6
domestic purchasing 235
domestically delivered or developed
niche services 151
Doole, I. 33, 176, 178
Dove 328
Dr Martens 113
dumping excess capacity 388
Dyson 180
e-commerce 151, 158–9, 423–5
customer-led strategy 442–4
impact 429–30
limitations 439–40
e-markets 425–6
B2B 427–8
B2C 426–7
C2B 429
C2C 428
e-procurement 427
456 INDEX
Ebac 183–4
economic environment 12–13
economic union 52
economies of scale 194, 389
education 74
effective consumer response 362
elastic demand 386
Electronic Data Interchange
(EDI) 368
Embraer 240
emerging economies 14
EMU see European Monetary Union
enabling technologies 418–19
enculturation 79
entrepreneurship 179–81
environment
climate change 419
pricing 383
products 275
Eppinger, S.D. 295
ethical challenges 96
ethics 95–6
bribery and corruption 96–8
child labour 276
counterfeiting 98–9
cross-cultural 95–9
piracy 98
products 274
ethnocentric 392
EuroMosaic 114, 116
European Monetary Union (EMU) 15, 52,
57, 57–8, 396, 398
European Union (EU) 10, 55–9
Eurozone 397, 404
exchange rate 395, 396, 405
fluctuation 405–6
risk 404–5
Exchange Rate Mechanism
(ERM) 57
exhibitions 325
existing markets 106
export administration 411
export houses 236
export marketing 6
export processing zones (EPZs) 374–5
export sales contract
Incoterms 377–8
uncertainty 377
exporting 239
exports 152
agents 241–2
costs 388–9
direct 239–45
direct marketing 244–5
distributors 242–3
experimental 177
franchising 243–4
indirect 234–8
management contracts 243
motivation 152–3
order process 412–13
passive 176
pricing 411–12
proactive 152–3, 177
reactive 152, 177
successful 239–41
well-established 177–8
failures of communication 312–13
Fairtrade 148, 149
field work
data analysis 133
interviewee bias 132
interviewer bias 132–3
Fill, C. 320
Finkelstein, S. 212
Fisherman’s Friend 32
fixed production cost 386
Flaherty, T.B. 441
foreign currency 395, 404
foreign direct investment (FDI) 158
foreign manufacture
assembly 250
company acquisitions and mergers 251–3
contract 247–8
direct investment 249–53
licensing 248–9
reasons for setting up 245–6
wholly-owned subsidiary 245, 250–1
without direct investment 245–9
foreign market channels 347
forfaiting 407
France 88
franchising 243–4, 276
free trade area 52
Free Trade Area of the Americas (FTAA) 61
Frelinghuysen, J. 326
FTAA see Free Trade Area of the
Americas
function-specific hubs 427
GEC 409
generic marketing strategies 169
competitive 169–70
growth 170
segmentation, targeting, positioning 169
geocentric 393
geographical criteria 111–12
Ghoshal, S. 206, 222
Gillette 197
Gilligan, C. 318
global
appeal 207
brand 207
marketing 6
presence 207
reach 207, 211–12
segments 116
youth culture 4
global sourcing 193
economies of scale 194
labour 193
local markets 194
logistic costs 194
quality 193
supply 194
taxes/duties 194
technology, innovation, ideas 193–4
global strategy 199–200
implementation 207
management 206–7
standardised 201–4
globalisation 28, 187
alternative strategic responses 197–206
alternative views 188–96
communication 196
company strategy, business programmes,
processes 196
competition 195
cooperation 195–6
core products/services 195
customer requirements 195
distribution 196
drivers 191–6
industry standards 193
market access 192
market opportunities 192–3
retail 363–5
sourcing 193–5
technology 195
globally integrated supply chain 369
Gogel, R. 197, 198
Goodnow and Hansz temperature
gradient 110
Goodyear 115
Google 342
government
buyer behaviour 92–3
company allegations 314
contacts 245
regulations 245
support 67–8, 150–1
Green, J. 339
Green, M.J. 377
grey marketing 396, 398–9
lateral importing 400
parallel importing 399
re-importing 399
Griffin, A. 296
Grimes, A. 176, 178
gross national income (GNI) 12
Gruma S.A.B. de CV 34–5
Gudykunst, W.B. 90
Hamill, J. 442
hard currency 47
Hardman, D. 163
Harris, S. 165
Hart, S.L. 213, 214, 296
Hassan, S.S. 113, 116
Hennessey, H.O. 80
heterogeneity 265
hierarchical country segmentation 116–17
hierarchy of needs (Maslow’s) 81
high context cultures 85–6
high-risk countries 406–11
high-risk markets 395
Hirsh, E. 287
Ho, S. 284
Hofstede, G. 73, 85, 87–9, 91
Holt, D.B. 209
Honeycutt, E.D. 325
Horovitz, J. 339
Howard, E. 275
HSBC 251
Huang, Y. 316
Hutton, R. 246
i-Phone 157
IBM 255, 445–6
IDA see International Development
Association
INDEX 457
Ikea 410
image
company 285
product 284–5
IMF see International Monetary Fund
imports 157–8
lateral 400
parallel 314, 399
re-importing 399
incipient markets 107
Incoterms 377
cost, insurance, freight (CIF) 377–8
ex-works (EXW) 377
free on board (FOB) 377
India
Cadbury-Schweppes 17
child labour 276
comparative advantage 43
IBM 445–6
IT 18
Toyota 432
indirect channels 348
indirect exporting 234
individualism 87
industry-specific hubs 427
inelastic demand 386
information and communication technology
(ICT) 423
information technology (IT)
369–70, 424
inseparability 265
intangibility 265
integrated supply chain 345
interactive customer marketing 362
interactive shopping 366
intermediaries
advertising assistance 356
building relationships 355–8
channel selection 337–54, 347
controlling 354, 356–7
cooperative organisations 348
disintermediation/reintermediation
429–30
distribution 371–2
export agents 348
export distributors 348
financial assistance 356
indirect/direct channels 348–9
Internet 429–30
motivating 355–6
retailing 361–2
territorial protection 356
internal cost structures 391
international/domestic marketing
differences 20–1
International Bank for Reconstruction and
Development (IBRD) 48–9
international branding 285
International Development Association
(IDA) 50
international manager 224
international marketing 6
defined 5–7
described 5
strategic importance 4–5
International Monetary Fund (IMF) 47, 50
international niche marketing 154
international product life cycle 42, 280
international product offer 268–70
international product portfolio 277
international trade 4
internationalisation 165
barriers 153–4
nature of development 160–5
stages 175–8
supply chain 165–6
Internet 18–19, 418
auctions 366
business transactions 425
characteristics 336
e-business 423–5
e-markets/e-marketing 425–9
information online 425
legislation 440–2
market entry 436
organisation sites 424–5
pure exchanges 366
retailing 351, 366–7
service online 425
single buyer markets 366
websites 424
Ireland 60, 364
Italy 397
Japan
countertrade 409
distribution 350–1
retailing 351
wholly-owned subsidiaries 251
Jeannet, J.-P. 80
Johnson, J.P. 441
joint ventures 253–6, 259–60, 276
just in time (JIT) 370
Kaitiki, S. 289
Kaplan, S. 427
Katsikea, C.S. 150, 161, 162, 239, 240
Keegan, W.J. 377
keiretsu 196, 350–1
Keller, K.L. 346, 367
Kern, M.C. 224
Khashani, K. 209
Khermouch, G. 339
KickStart International 14
Kim, W.C. 179
Kitchen, P.J. 176
Kleinman, M. 213
Knight, G.A. 164
knowledge management 28, 430–1
Kotler, P. 268, 308, 346, 367
La, V.Q. 241
language 76–7
silent 78
spoken 77
Web marketing 77–8
Larreche, J.C. 197, 198
latent market 107
learning curve 389–90
learning organisation 178
leasing 411
Lee, J.A. 94, 356
legal environment 10–12, 75
domestic laws in home country 11
international law 11
local domestic laws 11
standardisation of products 274
legislation 440
Internet 440–2
Lego 22, 98–9
Leonidou, L.C. 152, 162, 239
less developed countries (LDCs) 14–15,
147–8
infrastructure weaknesses 148–9
protection of farmers’ interests 148
less developed economies 13
Levi Strauss 400
Levitt, T. 201
licensing 248–9
Lindgren, J.H.E. 433
Lindstrom, M. 444
Linton, R. 72
logistics or distribution
strategy 368
London, T. 214
low context cultures 85–6
low cost airlines 267
Lowe, R. 176
Ma, Jack 428
McDonald, M.H.B. 154
McGoldrick, P.J. 360
McKinsey 7S framework 167
shared values 168
skills 168
staff 168
style 167–8
Madsen, T.K. 159
Majaro, S. 216
Malhotra, N.K. 133
management
culture 225
levels 215–16
problems 223–4
style/shared values 226
management contracts 243
manufacturing benefits overseas
delivery 246
government contacts 245
government regulations 245
information 245
international culture 246
labour costs 246
market 245
product 245
services 245
tariff barriers/quotas 245
transport/warehousing 245
marginal cost pricing 394
marginal costing 387
market
access 106, 192
agreement 52
benefits of overseas manufacturing 245
characteristics 352
concentrators 162
emerging 213–14
existing 106–7
factors 171–2
fragmentation 367
incipient 107
458 INDEX
intermediaries 347
latent 107
management 212–13
penetration 394
pricing factors 383, 391, 396, 398
profitability 106
scanning 106–9
size 106
skimming 394
stabilisation 393
transfer pricing 403
market entry 232
cooperative strategies 253–8
direct exporting 239–45
direct investment 249–53
indirect exporting 234–8
Internet-based 436
risk/control 233–4
without direct investment 245–9
market expanders 162
market involvement 232
market portfolio risk 405
market profile analysis 117
market research 103
market segmentation 110–11
geographical criteria 111–12
infrastructure/marketing institution matrix
112–13
transnational 113–14
market-oriented pricing 411–12
marketing
implementation of plan 29
management 276–7
return on investment 221
strategies 28–9
marketing information system (MIS) 117
building 117–21
online databases 119–21
secondary data 121–2
sources 117–19
marketing mix 265
integration 321
people 265–6
physical aspects 266
process 266
marketing research
opportunity analysis/identification 104,
106–10
role 104–5
Maslow, A. 81
mass customisation 362
Masterson, B. 332
Mauborgne, R. 179
Meffet, H. 201
Mercosur 54, 61–2
mergers and acquisitions 211–12
mergers of equals 211
Messinger, D. 163
Microsoft 16
Mittal 226
Mittelstand 85
mobile phones 421
gaming market 134–6
Morgan, N.A. 239
Mort, G.S. 165
motivation 152
Motorola 297
Mr Men 248
multi-client studies 125, 126
multi-country study 127
multi-domestic strategy
customer demands 203
global management 204
industry standards 202
insiders 203
management myopia 204
multi-national pricing 395
coordination across markets 396, 398
multimedia technology 366
multinational enterprise (MNE) 25–6,
165–6, 214–15
Myers, M.B.S. 384
NAFTA see North American Free Trade
Area
Neelankavil, J.P. 315
negotiation
adaptation 94
concession and agreement 94
cultural bocks 94
cultural impact 93–5
interculture preparation 95
interpreters 94
non-task discussion 94
persuasion stage 94
stereotype 95
task-related exchange of information 94
network 124–5, 160
family 163
SMEs 163
new product development 292
business analysis 294
competitive advantage 294
idea generation 293
initial screening 293–4
launch 294
market testing 294
nature 292–3
process 293–4
product development 294
research and development strategies 295
success/failure 296–7
technology transfer/benefits for
marketing 294–5
timing 294
niche marketing 154, 367
domestically delivered services 155–7
international 154–5
Nicholls, A. 148
Nokia 271
non-payment
commercial banks 407
cooperation agreements 407
forfaiting 407
government-sponsored finance 406–7
non-tariff barriers 45, 46–8
non-verbal communication 78
North American Free Trade Area (NAFTA)
13, 59–61
Nueno, P. 163
Nykamp, M. 442
Ohmae, K. 8
Olympic Games 311
online auction 428
online communications 335
advantage 337
advertising 337
email 337
mobile communications 337
nature 335–8
privacy 338
promotion effectiveness 337
viral marketing 337
websites 337
online databases 119
online sales 439
Opal, C. 148
open market 372
opportunity analysis
risk evaluation 109–10
scanning international markets 106–9
Optcan 107
organisation structure 173, 215
SMEs 173–8
organisational structure
interglomerate 218
macropyramid 217–18
strategic business unites/management
levels 215–16
umbrella 218
outsource 165–6
Oxenham, W. 154
packaging 376
damage 376
loss 376
Pan, Y. 316
Pareto law 111
Parma ham 11
Parrish, E. 154
Patterson, P.G. 241
payments 395
Pepsi 317
perception of risk 82
perishability 265
Perlmutter, M.V. 21
personal selling 323–5
Peterson, M. 133
physical distribution management
(PDM) 367
customer service 368–9
documentation 375–6
export processing zones 374–5
export sales contract 377–8
information technology 369–70
logistics approach 368
packaging 37
restructuring operations 370
transportation 372–3
use of intermediaries 371–2
piggybacking 237
piracy 12, 98
planning process 22–3
annual business planning 24
budgeting stage 24
control process 29–30
corporate objectives 28
evolutionary stages 23–5
implementation 29
international 25–7
INDEX 459
planning process (continued)
marketing strategies 28–9
resources/capabilities 27–8
stakeholder expectations 25–7
strategic stage 24–5
systems 221
unplanned stage 24
political environment 15–16, 75
discriminatory restrictions 16
operational restrictions 16
physical actions 16
political union 52–5
polycentric 393
Prahalad, C.K. 213
Premji, Azin 168
price coordination 396, 401
centralisation 401
economic measures 401
formalisation 401
informal 401
price objectives 393
competition-led pricing 393
demand-led pricing 393
early cash recovery 394
market penetration 394
market skimming 394
market stabilisation 393
prevent new entry 394
product differentiation 393–4
rate of return 393
price setting 394
competition-oriented 394
cost-oriented 394
market-oriented 394
process 395
price standardisation 384
price transparency 398
pricing
company factors 383–4
coordination 396, 398, 401
cost structures 386–90
currency considerations 404
domestic vs international 382
environmental factors 383
exchange rate fluctuation 405–6
export costs 388–9
factors effecting 382–91
location of production facility 390
market factors 383, 391
objectives 393–4
positioning/value for money 385–6
problems 395–413
product/service factors 383, 384–5
setting 394–5
strategies 392–5
technology impact 437
transfer 401–2
primary data 123
primary research
centralisation vs decentralisation 126–7
collecting data 125–6
consortia 125
design 128
in-house vs agency 127–8
innovative approach 124
networking 124
organising study 126
problem definition/establishing objectives 123
qualitative 129
report preparation/presentation 133
survey methods 130–3
Pringle, L.G. 223
Pritzl, R. 256
product life cycle
international 279–82
short 367
shortening 276
product management 270
acceptability 274
across borders 279–82
adaptation 272–4
environmental issues 275
ethical considerations 274
policy 277
standardisation 270–2
technology impact 436–7
trends 276–7
product offer 268–9
attributes 268
benefits 268
marketing support services 268
product portfolio analysis 281
introduction/elimination activities 282
product and service differentiation 323
product strategies 278
dual adaptation 279
extension/promotion adaptation 279
invention 279
one product, one message
worldwide 278–9
production costs 396
production location of facility 390
products 264
adaptation 272–4
adoption 91
benefits of overseas manufacturing 245
branding 185–90
commodity-type 367
communicating 310
country of origin effects 283–5
degree of comparability 385
degree of fashion/status 385
degree of necessity 385
differentiation 393–4
fakes 291, 392
frequency of purchase 384
image 284–5
legal standards 274
liability 274
placement 332
positioning 290–1
pricing 383, 384–5
short life-cycle 367
strategies 278–9
unit price 385
usage factors 273–4
promotional mix 308
promotions 329–30
protectionism 47, 356
public relations 333–4
purchasing power parity (PPP) 12
push or pull strategy 318, 364–5
quantitative research 129
Rappa, R. 287
Rasmussen, E.S. 159
reciprocal shareholdings 257–8
reciprocal trading 157–8
regional strategy 204–5
relationship marketing 312
concept 338–9
CRM 340–1
database development 339–40
relationships, effective 178
religion 76–7
report preparation/presentation 133
research process 104
resources 27–8
retailing 358–9
advanced 362
category management 362
comparisons 361
data mining 362
effective consumer response 362
globalised 363–5
interactive customer marketing 362
intermediary 361–2
Internet 366–7
Irish environment 364
mass customisation 362
patterns 359–60
push/pull factors 364–5
structured 362
traditional 361
trends 358–67
Ringshaw, G. 273
risk 82
avoidance 405
competitive 405
evaluation 109–10
market entry 233–4
market portfolio 405
non-payment 406–11
transaction 405
risk and control 233
Ritter, T. 442
role 104–5
Ronkainen, I.A. 350
Rosenbloom, B. 355
Rothenberg, R. 326
Russow 382, 405
Sakano, T. 257
sales
personal/word of mouth 323–5
promotion 329–30
sales-force
developing company-owned 358
domestic-based 348
foreign-based 348
travelling representatives 348
Sarathy, R. 6, 121, 132, 174, 249, 382, 405
Saren, M. 296
Sawhney, M. 427
scanning markets 106–8
analogy estimation 108–9
demand pattern analysis 108
macrosurvey techniques 109
multiple factor indices 108
regression analysis 109
Schmitt, B.H. 316
460 INDEX
secondary data 121
segmentation 169
generic marketing strategies 169
geographical 111–12
hierarchical country/consumer 116–17
market 110–14
transnational 113–14
self-reference criterion (SRC) 84–5
SEM see Single European Market
SEPA see Single European Payments Area
Servais, P. 159
services 285
benefits of overseas manufacturing 245
commercial presence 268
communicating 310
consumption 268
cross-border 267
heterogeneity 265
inseparability 265
intangibility 265
invisible 268
movement of persons 268
perishability 265
pricing factors 384–5
technology impact 436–7
three Ps 265–6
Seybold, P. 442, 444
Sheth, J. 112
Shimp, T.A. 320, 325, 339
Siberia 122
Siegel, D. 438
silent language 77
Singh, S. 91
Single European Market (SEM) 52, 55–7
Single European Payments Area (SEPA)
398, 399
situation analysis 27
Siu, W. 316
Sjobolom, L. 189
Skoda 59
SLEPT (social/cultural, legal, economic,
political, technological) grouping 5,
6–13, 140
small and medium-sized enterprises
(SMEs) 145
born global 163–5
challenges from LDCs 147–9
company factors 172–3
country selection 173
domestic market redefined 162–3
domestically delivered/developed niche
services 151
e-business 159
economic regeneration 147
electronic commerce 151
exports 151, 152
failure 181
future 182
geographic development 161–2
government support 150–1
high growth 179–81
Internet benefits 159
market expansion/concentration 162
market factors 171–2
motivation 152–3
networking 163
organisation structure 173–8
relationships 166–7
role in global economy 146–7
shared values 180
strategies 151–9
strategy 167–78
supply chain 151
supply chain internationalisation 165–6
Smith, A. 212
Snyder, D.P. 433
social factors 9–10, 72
influences in B2B marketing 91–9
social networks 430, 435
social organisation 74
Sogo shosha 237, 238
Spence, M. 161
spoken language 77
sponsorship 331–2
staff 223–4
stages of internationalisation 175
stakeholders 334–5
communications 310–11, 330–1
expectations 25–7
standardisation 199, 200, 270–2
global strategy 201–4
international marketing
communications 314–17
Stephen, H.C.T. 113, 116
Stevenson, A. 442
Stone, A. 275
strategic alliances 256–8
strategic business units 215–16
strategy
best practice 31, 33
communications 317–20
distribution 346–7
factors affecting choice 170–3
global 196
pricing 392–5
SMEs 151–3
Styles, C. 241
subsidiaries, wholly-owned 246, 250–1
supply chain 165
internationalisation 165–6
management 427, 431
survey methods
field work 132–3
mail interviewing 130
online 130
questionnaire design 130–2
sample frame 132
telephone interviewing 130
Sweden 252
Tait, N. 250
Takenouchi, H. 257
tariff 45–6
tariff barriers 245
Tata International 227–8
tax
domestic 403
foreign 403
technological environment 17–18
dual technological/cultural paradox
19–20
Internet/World Wide Web 18–19
technology 74
convergent 422
disruptive 422
enabling 418–23
globalisation 195
impact on analysis 434–5
impact on strategy development 435–6
impact on strategy implementation/
control 436–42
innovation 419–22
telecommunications 20
television advertising 327–8
Terpstra, V. 382, 405
Tesco 353
Thailand 353
Theodosiou, M. 150
Tiger Balm 281
Timmers, P. 428
Toyota 194, 432
trade deficit 41
trade fairs 325
trade missions 325
Trade-Related Aspects of Intellectual Property
Rights (TRIPS) 99
trading blocks 52
trading companies 237–8
transactions 338–9
risk 405
transfer pricing 401
at arm’s length 402
at cost 402
at cost plus 402
avoid domestic tax liabilities 403
avoid foreign tax 403
create barriers to entry 403
manage level of involvement in
markets 403
transnational organisations
skills 222–3
structure 215
transnational segmentation 113–14, 138
behavioural 114
demographic 114
EuroMosaic 114, 116
psychographic 114
transnational strategies 206
transnationality 188
transport 372
costs 245
financial decision 373
ocean/inland waterways 372–3
ocean/inland waterways 372–3, air 373
rail 373
road 373
Tzokas, N. 296
Unilever 129
Usunier, J.C. 94, 356
value chain management 432
values 73, 75–6
Vankonacker, W. 256
virtual enterprise networks 432–3
Vollmer, C. 326
Voss Johnson, K.E. 257
Walter, A. 442
warehousing 45
Wasserman, T. 339
INDEX 461
Web marketing 77–8
websites
localising 79
purpose 424
Weerawardena, J. 165
Weichmann, U.E. 223
Welch, L.S. 244
Wentz, H. 316
Wheeler, C. 165
Whiteling, I. 325
wholly-owned subsidiary 246, 250–1
Williamson, P. 215
Wills, S. 224
Wilson, R. 318
word of mouth sales 323–5
World Bank 48–9
world trade 4
barriers 44–8
future prospects 40–1
institutions 48–52
patterns 38–9
reasons to trade 42–4
trading groups 52–64
World Trade Organisation (WTO) 16, 50–2
World Wide Web (WWW) 18–19, 196
WTO see World Trade Organisation
Zhang, Y. 315
Zou, S. 199
Zugelder, M.T. 441
462 INDEX

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