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The Scope of International Marketing. Chapter 1. CULTURAL IQ!  Japan is a high context culture, where small gestures convey great meaning. Which is an appropriate behavior in Japan? A. Covering your mouth when you laugh B. Winking to convey agreement

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The Scope of

International Marketing

Chapter 1


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  • CULTURAL IQ!

  •  Japan is a high context culture, where small gestures convey great meaning. Which is an appropriate behavior in Japan?

    • A. Covering your mouth when you laugh

    • B. Winking to convey agreement

    • C. Speaking in a loud, forceful voice

  •  True or false: Never keep your left hand in your pocket while shaking hands with your right in Germany.

  •  Spitting is grotesque in many places, but is actually against the law in which country?

    • A. St. Thomas

    • B. St. Martin

    • C. Singapore

  •  You are the sole passenger on a bus in Bahrain. A man enters, and chooses the seat next to you. True or false: He intends to start a conversation with you.


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  • You are greeting a new associate in France. As you firmly grasp his hand, heartily pumping it up and down, he looks a bit bemused. This is because:

    • A. He's relieved you didn't kiss him.

    • B. The French handshake is more of a handclasp, with no pumping action.

    • C. He wishes you had kissed him.

  •  True or false: Before female executives travel to Brazil, they should be certain their nails are well-manicured.

  •  You feel good after your big sales call in Stockholm, Sweden. It's a surprise to you, then, when they don't accept the deal. This could be because during the meeting, you:

    • A. Leaned backward in your chair and crossed your arms

    • B. Rested your ankle on your knee the whole time

    • C. Laughed loudly

    • D. All of the above


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Lecture Outline

  • The Internationalization of U.S. Business

  • International Marketing Defined

  • The International Marketing Task

    • Marketing Controllables

    • Domestic Uncontrollables

    • Foreign Uncontrollables

  • Self-Reference Criterion

  • Internationalization Process

    • Phases of international Involvement

      • Domestic Market Expansion

      • Multi-Domestic Market Concept

      • Global Marketing Concept


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John F. Welch, Jr.

"Our vision has been described to you for a decade. We believed that only businesses that were number-one or number-two in their markets could win in the increasingly competitive global arena. Those that could not were to be fixed, closed or sold."

Chairman and CEO, General Electric


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Globalization of Business and Markets

  • Until recently, competition for U.S. markets was only among U.S. businesses with the same relative cost of money, labor and product

    è U.S market now includes competitors from all over the world


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Why internationalization?

  • Saturation of U.S. markets


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Foreign Acquisitions of U.S. Companies

U.S. Company Foreign Owner

Keebler (Cookies and other foods) Britain

J. Walter Thompson (Advertising) Britain

Spiegal (Catalog retailing) Germany

Mack Trucks (Automotive) France

Giant Food Stores (Supermarkets) Netherlands

Pillsbury, Burger King, Pearle Vision Britain

CBS Records (Music and Entertainment) Japan

Carnation (Coffee-Mate, Friskies pet food) Switzerland

Chesebrough-Pond’s (Vaseline) Netherlands

SOURCE: Adapted from “The 100 Largest Foreign Investments

in the U.S.,” Forbes, July 18, 1994, pp. 266-270.


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Why internationalization?

  • Saturation of U.S. markets

  • Higher ROI in foreign markets


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Some Big U.S. Players in the Global Game*

Foreign Revenues

% of Total

Foreign Profits

% of Total

Foreign Assets

% of Total

Company

51.4

Ei du Pont de Nemours

99.8

37.3

52.1

Proctor & Gamble

65.1

40.7

67.0

Coca-Cola

67.8

48.6

48.8

Eastman Kodak

41.5

32.4

43.9

Motorola

84.8

34.6

49.1

Johnson & Johnson

54.6

43.9

35.5

Sara Lee

41.3

45.0

64.5

Colgate-Palmolive

67.0

46.9

67.5

Gillette

61.4

65.7

49.0

Compaq Computer

63.6

40.5

46.9

McDonald’s

45.1

46.9

32.0

Avon Products

59.9

48.3

*1993 data.

SOURCE: Adapted from “The 100 largest Multinationals: Getting the Welcome Carpet,”Forbes, July 18, 1994, pp. 276-279.


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Why internationalization?

  • Saturation of U.S. markets

  • Higher ROI in foreign markets

  • Establish early position in world markets


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Industry

U.S.

Japan

Europe

Energy Equipment & Services 93% 1% 6%

Aerospace & Military Technology 76 15 23

Data Processing & Reproduction 73 22 5

Electronic Components & instruments 62 36 2

Beverages & Tobacco 63 16 20

Health & Personal Care 49 20 31

Leisure & Tourism 46 16 38

Forest Products & Paper 51 17 32

Energy Source 46 13 41

Metals-Nonferrous 30 31 39

Recreation & other Consumer Goods 33 61 6

Food & hh Products 33 22 46

Electrical & Electronics 21 51 28

Chemicals 28 30 42

Industrial Components 24 45 31

Automobiles 37 35 28

Machinery & Engineering 19 46 35

Appliances & hh Durables 8 67 26

Metals-Steel 105733

ALL INDUSTRIES (SALES) 37% 32% 31%

ALL INDUSTRIES (PROFITS) 48% 16% 37%

Share of Global Sales (1987-92)


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Invented Here, Made Elsewhere

U.S. Invented Technology

9 0%

Phonographs

1%

9 0%

Color TVs

1 0%

1 9 7 0

4 0%

Audiotape Recorders

0%

N O W

1 0%

Videotape Recorders

1%

9 9%

Machine Tools

3 5%

Telephones

9 9%

2 5%

8 9%

Semiconductors

6 4%

9 8%

Computers

7 4%

0

20

40

60

80

100


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“Every American company is international, at least to the extent that its business performance is conditioned in part by events that occur abroad”


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Definition of International Marketing extent that its business performance is conditioned in part by events that occur abroad”

  • The performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than nation for profit.


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What’s the difference between international marketing and domestic marketing?

  • The environment in which marketing strategies have to be implemented


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The International Marketing Task domestic marketing?

7

Foreign environment

(uncontrollable)

1

Economic

forces

Political/legal

forces

Domestic environment

(uncontrollable)

2

7

Competitive

structure

Political/

legal

forces

Competitive

Forces

(controllable)

Cultural

forces

Environmental

uncontrollables

country market A

Price

Product

3

Channels of

distribution

Promotion

Environmental

uncontrollables

country

market B

6

Level of

Technology

Geography

and

Infrastructure

Economic climate

Environmental

uncontrollables

country

market C

4

5

Structure of

distribution


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Self-Reference Criterion (SRC) domestic marketing?

  • An unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions


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International Marketing Concepts domestic marketing?

Concept

EPRG Schema

Domestic Market Extension (Ethnocentric)

Multi-Domestic Market (Polycentric)

Global Marketing (Regio/Geocentric)


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Coca-Cola domestic marketing?Global Marketing Strategy

Think Globally

Act Locally


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Examples of Global Marketing domestic marketing?

Product Design

Canon photocopier/McDonalds/Toyota/Ford

Brand Name

Marlboro/Coke/Pepsi/Mercedes/Caterpillar

Product Positioning

Colgate toothpaste/Unilever fabric softener

Packaging

Gillette razors

Advertising Strategy

Coca-Cola/British Airways/Benetton

Sales Promotion

IBM

Distribution

Benetton/United Distillers

American Express/Hertz

Customer Service


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