INTERNATIONAL MARKETING

Chapter I - global marketplace versus local markets

Marketing operate, while also creating a new product for

It is defined as the activity, set of institutions, and that new market.
processes for creating, communicating, delivering, and Value Chain
exchanging offerings that have value for customers, Set of activities that a firm operating in a specific industry
clients, partners, and society at large performs in order to deliver a valuable product or service
for the market.
Marketing activities
It centers on an organization’s efforts to satisfy customer Market
wants and needs with products and services that offer People or organizations that are both able and willing to
competitive value. buy.

Competitive Advantage
Marketing mix (the four Ps of product, price, place,
It’s what makes you better than the competition in your
and promotion)
customers’ minds.
It comprises a contemporary marketer’s primary tools.

Globalization
Global marketing It’s a decision on whether to offer products and services
Organizations focus its resources and competencies on everywhere.
global market opportunities and threats. A company that
engages in global marketing conducts important Global Industry
business activities outside the home-country market. By integrating and leveraging operations on a worldwide
scale, global industry is one in which competitive
advantage can be achieved.
Market Development Strategy
This involves seeking new customers by introducing
Focus
existing products or services to a new market segment or
Concentration of attention on a core business or
to a new geographical market.
competence.
 Market segment – group of people who share
common interests.

Diversification strategy
A company creates new product or service offerings
targeting a new segment, a new country, or a new
region.

Four growth strategies:

1. Market Penetration (also known as market share)
Successful selling of a product or service in a
specific market, and it is measured by the
amount of sales volume of an existing good or
service compared to the total target market for
that product or service.

2. Market Development
Expand into untapped markets.

3. Product Development
Modification of an existing product or its
presentation that satisfies newly defined
customer want or market niche.
The overall process of creating a new product.

4. Diversification
A corporate strategy to enter into a new market
or industry in which the business doesn't currently
GLOBAL MARKETING 2. POLYCENTRIC ORIENTATION
Polycentric describes the management’s belief
or assumption that each country in which a
Global Marketing Strategy (GMS)
company does business is unique.
Enhances the firm’s performance on a worldwide basis.
It’s a strategy that encompasses countries from several
Multinational Company produces or sells goods
different regions in the world and aims at coordinating a
or services in various countries
company’s marketing efforts in markets in these
countries.
Localized/Adaptation Approach assumes
products must be adapted in response to
3 DIMENSIONS TO MARKETING MGMT:
different market conditions.
1. Concentration of marketing activities
Activities related to the marketing mix performed
3. REGIOCENTRIC ORIENTATION
in one or a few country locations
A region becomes the relevant geographic unit.
The management’s goal is to develop an
2. Coordination of marketing activities
integrated regional strategy.
Activities related to the marketing mix that are
planned and executed interdependently around
4. GEOCENTRIC ORIENTATION
the globe.
It views the entire world as a potential market
and strives to develop integrated global
3. Integration of competitive moves
strategies.
It is the extent where a firm’s competitive
marketing tactic in different parts of the world
Global/Transnational Company, a company
are interdependent.
whose management adopted a geocentric
orientation. They serve global markets and use
Global Market Participation
global supply chains.
Extent where a company has operations in a major world
market.
At global and transnational companies,
management uses a combination of
Standardization versus adaptation
standardized (extension) and localized
Extent where each marketing mix element is standardized
(adaptation) elements in the marketing program.
or adapted in various country markets.
A key factor that distinguishes global and
Global localization
transnational companies from international or
A successful marketer must have the ability to “think
multinational companies is mind-set: At global
globally and act locally”.
and transnational companies, decisions
regarding extension and adaptation are not
Global Marketing
based on assumptions. Rather, such decisions
It include a combination of standard and nonstandard
are made on the basis of ongoing research into
approaches. It requires marketers to think and act in a
market needs and wants.
way that is both global and local by responding to
similarities and differences in world markets.
QUALITY
MANAGEMENT ORIENTATIONS Strategies in support Design and manufacturing quality
generates greater revenue and greater operating
1. ETHNOCENTRIC ORIENTATION margins.
Assumes of having superiority of his/her own
country to the rest of the world. LEVERAGE
Some type of advantage a company enjoy by virtue of
Domestic Companies are opportunities outside the fact that is has experience in more than one
the home country are largely ignored. country.
It allows a company to conserve resources when
International Companies conducts business pursuing opportunities in new geographical markets.
outside the home country.

Standardized/extension approach means

products can be sold everywhere without
adaptation.
EXPERIENCE TRANSFERS
A global company can leverage its experience in any
market in the world. It can draw upon management
practices, strategies, products, advertising appeals, or
sales or promotional ideas that have been market
tested in one country or region and apply them in other
comparable markets.

SCALE ECONOMIES
The global company can take advantage of its greater
manufacturing volume to obtain traditional scale
advantages within a single factory.
Also, finished products can be manufactured by
combining components manufactured in scale-
efficient plants in different countries.

RESOURCE UTILIZATION
A major strength of the global company is its ability to
scan the entire world to identify people, money, and
raw materials that will enable it to compete most
effectively in world markets.
GLOBAL STRATEGY
It is built on an information system that scans the world
business environment to identify opportunities, trends,
threats, and resources. “The global strategy is a design
to create a winning offering on a global scale”

RESTRAINING FORCES

1. MANAGEMENT MYOPIA AND ORGANIZATIONAL

CULTURE
Management simply ignores opportunities to
pursue global marketing. A company that is
“nearsighted” and ethnocentric will not expand
geographically

2. NATIONAL CONTROLS
Every country protects the commercial interests of
local enterprises by maintaining control over
market access and entry into both low- and high-
tech industries

3. OPPOSITION TO GLOBALIZATION
Globaphobia is sometimes used to describe an
attitude of hostility toward trade agreements,
global brands, or company policies that appear to
result in hardship for some individuals or countries
while benefiting others.
CHAPTER 4 – SOCIAL AND CULTURAL SPOKEN OR VERBAL LANGUAGE
FOUR MAIN AREAS OF SPOKEN/VERBAL LANGUAGE
ENVIROMENT
1. Syntax (rule of sentence formation)
CULTURE 2. Semantic (system of meaning)
Ways of living, built up by a group of human beings that 3. Phonology (System of sound patterns)
are transmitted from one generation to another. 4. Morphology (word formation)

Geert Hofstede defines culture as the collective
programming of the mind that distinguishes the members
of one category of people from those of another.
CULTURE SHOCK
Human reaction to the new and unknown cultural
factors.
UNSPOKEN OR NON VERBAL LANGUAGE
It’s also called Silent Language that includes gestures,
touching, and other forms of body language that
supplement spoken communication.
LANGUAGE
A crucial tool for communicating with customers,
suppliers, channel intermediaries and others.

2 CATEGORIES OF CULTURAL ELEMENTS

SEQUENCING
Concerns to whether the discussion goes directly from
1. MATERIAL CULTURE
point A to point B or seems to go off on tangents
It is sometimes referred to as physical
components or physical culture that includes
PHASING
physical objects and artifacts created by
Pertains to whether certain important agenda items are
humans such as clothing and tools.
discussed immediately or after the parties have taken
some time to establish rapport.
2. NONMATERIAL CULTURE
Also known as subjective or abstract culture

ATTITUDE
A learned tendency to respond in a consistent way to a
given object or entity and also an interrelated beliefs.

BELIEF
An organized pattern of knowledge that an individual
holds to be true about the world.

Attitude and belief are closely related to values.

VALUE
It is defined as an enduring belief or feeling that a
specific mode of conduct is personally or socially
preferable to another mode of conduct.

SUBCULTURES
Smaller groups of people with their own shared subset of
attitudes, beliefs and values.

AESTHETICS
Overall sense of what is beautiful or not, what tastes good
or to tasteless.

Aesthetic elements that are attractive, appealing, and in

good taste in one country may perceived oppositely in
another country.
VISUAL AESTHETICS – embodied in the color, shape of a
product, label or package.
AESTHIC STYLES – various degrees of complexity.
HOFSTEDE’s CULTURAL TYPOLOGY
5 DIMENSIONS OF SOCIAL BEHAVIOR
1. INDIVIDUALISTIC & COLLECTIVISTIC CULTURES
INDIVIDUALISTIC – People look after their own
and family interests.
COLLECTIVISTIC – People expect the group to
look after and protect them.
2. POWER DISTANCE
The extent to which the less powerful members of
a society accept power to be distributed
unequally.
HIGH POWER DISTANCE – Accepts wide
differences in power; great deal of respect for
those in authority.
LOW POWER DISTANCE – Plays down inequalities;
employees are not afraid to approach nor are in
awe of the boss.
3. UNCERTAINTY AVOIDANCE
The extent to which members of the society are
uncomfortable with unclear, ambiguous, or
unstructured situations.
HIGH UNCERTAINTY AVOIDANCE – Threatened
with ambiguity and experience high levels of
anxiety.
LOW UNCERTAINTY AVOIDANCE – Comfortable
with risks; tolerant of different behavior and
opinions.
4. ACHIEVEMENT – Values such as assertiveness,
acquiring money and goods, and competition
prevail.
NURTURING – Values such as relationships and
concern for others prevail.
5. LONG-TERM ORIENTATION – People look to the
future and value thrift and persistence.
SHORT-TERM ORIENTATION – People value
tradition and the past.
Future Orientation
The extent to which a society encourages and rewards
future-oriented behaviors such as planning, investing in
the future, and delaying gratification.
Gender Differentiation
The extent to which a society maximizes gender role
differences.
Uncertainty Avoidance
The extent to which the members of a society are
accepting of ambiguous situations or comfortable with
unfamiliar situations.
Power Distance
The degree to which members of a society expect power
to be unequally shared.
Individualism/Collectivism
The degree to which societal institutions encourage
individuals to be integrated into groups within
organizations and society.
In-Group Collectivism and Institutional Collectivism
The extent to which members of a society take pride in
membership in small groups such as their families and
circle of close friends and the organizations in which they
are employed.
DIFFUSION THEORY
ADOPTION PROCESS
The mental stages through which an individual passes
from the time of his or her first knowledge of an
innovation to the time of product adoption or purchase.
1. AWARENESS
In the first stage, the customer becomes aware
for the first time of the product or innovation
2. INTEREST
During this stage, the customer is interested
enough to learn more.
3. EVALUATION
In this stage the individual mentally assesses the
product’s benefits in relation to present and
anticipated future needs and, based on this
judgment, decides whether to try it.
4. TRIAL
Most customers will not purchase expensive
products without the “hands-on” experience
marketer’s call a “trial.”
 CHARACTERISTICS OF INNOVATIONS
1. RELATIVE ADVANTAGE
How a new product compares with existing
products or methods in the eyes of
customers.

2. COMPATIBILITY
The extent to which a product is consistent
with existing values and past experiences of
adopters.

3. COMPLEXITY
The degree to which an innovation or new
product is difficult to understand and use.

4. DIVISIBILITY
The ability of a product to be tried and used
on a limited basis without great expense.

5. COMMUNICABILITY
The degree to which benefits of an
innovation or the value of a product may be
communicated to a potential market.

ADOPTER CATEGORIES
These classifications of individuals within a market on the
basis of the categories’ innovativeness.

INTERACTION EFFECT
The process through which individuals who have
adopted an innovation influence others.

ENVIRONMENTAL SENSITIVITY
Reflects the extent to which products must be adapted
to the culture-specific needs of different national
markets.
CHAPTER 5 – POLITICAL, LEGAL and REGULATORY
ENVIROMENT
POLITICAL CULTURE
Reflects the relative importance of the government and
legal system and provides a context within which
individuals and corporations understand their relationship
to the political system.
SOVEREIGNTY
It is defined as supreme and independent political
authority.
POLITICAL RISK
It is the possibility of a change in a country’s political
environment or government policy that would adversely
affect a company’s ability to operate effectively and
profitably.
EXPROPRIATION
Refers to governmental action to dispossess a foreign
company or investor.
CONFISCATION
If no compensation is provided, the action is called
confiscation.
NATIONALIZATION
It is generally broader in scope than expropriation; it
occurs when the government takes control of some or all
of the enterprises in a particular industry.
INTERNATIONAL LAW
Defined as the rules and principles that nation-states
consider binding upon themselves. It pertains to property,
trade, immigration, and other areas that have
traditionally been under the jurisdiction of individual
nations.
PRIVATE INTERNATIONAL LAW
The body of law that applies to disputes arising from
commercial transactions between companies of different
nations.
CIVIL-LAW COUNTRY
Its legal system reflects the structural concepts and
principles of the Roman Empire in the sixth century.
STARE DECISIS
Common-law legal system is based on the concept of
precedent.
PRECEDENT
The notion that past judicial decisions on a particular issue
are binding on a court when that same issue is presented
later.
ISLAMIC LAW
The sharia is a comprehensive code governing Muslim
conduct in all areas of life, including business.
2 SOURCES OF THE CODE:
1. KORAN
The Holy Book written in Arabic that is a record of
the revelations made to the Prophet Mohammed
by Allah.
2. HADITH
Which is based on the life, sayings, and practices
of Muhammad.
HARAM – forbidden
JURISDICTION
Pertains to global marketing insofar as it concerns a
court’s authority to rule on particular types of issues arising
outside of a nation’s borders or to exercise power over
individuals or entities from different countries.
PATENT
It is a formal legal document that gives an inventor the
exclusive right to make, use, and sell an invention for a
specified period of time.
TRADEMARK
It is defined as a distinctive mark, motto, device, or
emblem that a manufacturer affixes to a particular
product or package to distinguish it from goods
produced by other manufacturers.
COPYRIGHT
It establishes ownership of a written, recorded,
performed, or filmed creative work.
COUNTERFEITING
It is the unauthorized copying and production of a
product.
ASSOCIATIVE COUNTERFEIT/ IMITATION
Uses a product name that differs slightly from a well-
known brand but is close enough that consumers will
mistake it for the genuine product.
PIRACY
The unauthorized publication or reproduction of
copyrighted work.
1996 MADRID PROTOCOL
The system allows trademark owners to seek protection in
as many as 74 countries with a single application and
fee.
CARTEL
A group of individual companies that collectively set
prices, control output, or take other actions to maximize
profits.
LICENSING
A contractual agreement in which a licensor allows a
licensee to use patents, trademarks, trade secrets,
technology, or other intangible assets in return for royalty
payments or other forms of compensation.

TRADE SECRETS
These are confidential information or knowledge that has
commercial value and is not in the public domain and for
which steps have been taken to keep it secret.
It includes manufacturing processes, formulas, designs,
and customer lists.

BRIBERY
It is the corrupt business practice of demanding or
offering some type of consideration—typically a cash
payment—when negotiating a cross-border deal.

FOREIGN CORRUPT PRACTICES ACT (FCPA)

It is a legacy of the Watergate scandal during Richard
Nixon’s presidency.

ARBITRATION
A negotiation process that the two parties have, by prior
agreement, committed themselves to using.

REGULATORY ENVIRONMENT
Consists of a variety of governmental and
nongovernmental agencies that enforce laws or set
guidelines for conducting business.
CHAPTER 7 - SEGMENTATION, TARGETING, AND 80 percent of a company’s revenues or profits are
accounted for by 20 percent of a firm’s products or
POSITIONING
customers.
MARKET SEGMENTATION
GLOBAL BENEFIT SEGMENTATION
Represents an effort to identify and categorize groups of
It focuses on the numerator of the value equation—the B
customers and countries according to common
in V = B/P.
characteristics.

ETHNIC SEGMENTATION
Targeting
Which favored the former to the detriment of the latter.
The process of evaluating the segments and focusing
marketing efforts on a country, region, or group of people
POTENTIAL COMPETITION
that has significant potential to respond.
A market segment or country market characterized by
strong competition may be a segment to avoid.
POSITIONING
Differentiating the product or brand in the minds of target
FEASIBILITY AND COMPATIBILITY
customers.
If a market segment is judged to be large enough, and if
strong competitors are either absent or deemed to be
GLOBAL MARKET SEGMENTATION
vulnerable, then the final consideration is whether a
Defined as the process of identifying specific segments—
company can and should target that market.
whether they be country groups or individual consumer
groups—of potential customers with homogeneous
MARKETING MODEL DRIVERS
attributes who are likely to exhibit similar responses to a
These are key elements or factors required for a business
company’s marketing mix.
to take root and grow in a particular country market
environment.
Based on the premise that companies should attempt to
identify consumers in different countries who share similar
ENABLING CONDITIONS
needs and desires.
These are structural market characteristics whose
presence or absence can determine whether the
DEMOGRAPHIC SEGMENTATION
marketing model can succeed.
It is based on measurable characteristics of populations,
such as income, population, age distribution, gender,
STANDARDIZED GLOBAL MARKETING
education, and occupation.
It is analogous to mass marketing in a single country. It
involves creating the same marketing mix for a broad
AGE SEGMENTATION
mass market of potential buyers. Also known as
Age is another useful demographic variable in global
undifferentiated target marketing.
marketing. One global segment based on demographics
is global teens, young people between the ages of 12
NICHE
and 19. Teens, by virtue of their shared interests in fashion,
A single segment of the global market.
music, and a youthful lifestyle, exhibit consumption
behavior that is remarkably consistent across borders.
CONCENTRATED TARGETING
It is also the strategy employed by the hidden champions
Global Elite
of global marketing: companies unknown to most people
Another global segment. Affluent consumers who are
that have succeeded by serving a niche market that
well traveled and have the money to spend on
exists in many countries.
prestigious products with an image of exclusivity.

DIFFERENTIATED GLOBAL MARKETING

GENDER SEGMENTATION
It represents a more ambitious approach than
Segmenting markets by gender is an approach that
concentrated target marketing.
makes sense for many companies.
Also known as multisegment targeting.
PSYCHOGRAPHIC SEGMENTATION
LOCAL CONSUMER CULTURE POSITIONING (LCCP)
It involves grouping people in terms of their attitudes,
A strategy that associates the brand with local cultural
values, and lifestyles.
meanings, reflects the local culture’s norms, portrays the
brand as consumed by local people in the national
BEHAVIOR SEGMENTATION
culture, or depicts the product as locally produced for
It focuses on whether people buy and use a product, as
local consumers.
well as how often and how much they use or consume.

80/20 RULE (Law of disproportionality or Pareto’s Law)

CHAPTER 8 – IMPORTINC, EXPORTING, determine whether a company makes or buys the
products it markets as well as where it makes or buys
SOURCING
those products.
TRADE SHOW SPONSORED TRADE MISSION
One way to visit a potential market.

QUOTA
A government-imposed limit or restriction on the number
of units or the total value of a particular product or
product category that can be imported.

SUMMARY
A company’s first business dealings outside the home
country often take the form of exporting or importing.
Companies should recognize the difference between
export marketing and export selling.
By attending trade shows and participating in trade
missions, company personnel can learn a great deal
about new markets.

Governments use a variety of programs to support

exports, including tax incentives, subsidies, and export
assistance. Governments also discourage imports with a
combination of tariffs and nontariff barriers. A quota is
one example of a nontariff barrier.
Export-related policy issues include the status of foreign
sales corporations (FSCs) in the United States, Europe’s
Common Agricultural Policy (CAP), and subsidies.
Governments establish free trade zones and special
economic zones to encourage investment.

The Harmonized Tariff System (HTS) has been adopted by

most countries that are actively involved in export–import
trade.
Single-column tariffs are the simplest; two-column tariffs
include special rates such as those available to countries
with normal trade relations (NTR) status.
Governments can also impose special types of duties.
These include antidumping duties imposed on products
whose prices government officials deem too low and
countervailing duties (CVDs) to offset government
subsidies.

Key participants in the export–import process include

foreign purchasing agents, export brokers, export
merchants, export management companies,
manufacturer’s export agents, export distributors, export
commission representatives, cooperative exporters, and
freight forwarders. A number of export–import payment
methods are available. A transaction begins with the
issue of a pro forma invoice or some other formal
document. A basic payment instrument is the letter of
credit (L/C), which ensures payment from the buyer’s
bank. Sales may also be made using a bill of exchange
(draft), cash in advance, sales on open account, or a
consignment agreement. Exporting and importing are
directly related to management’s sourcing decisions.
Concern is mounting in developed countries about job
losses linked to outsourcing jobs, both skilled and
unskilled, to low-wage countries. A number of factors