International Marketing 4

1. International Marketing

2. Today We’ll be Covering:
• World Economy
• Stages of Market Development
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3. The World Economy
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4. The World Economy
• The world economy has changed profoundly since the end
of World War II. Perhaps the most fundamental change is
the emergence of global markets: Responding to new
opportunities, global competitors have steadily displaced
or absorbed local competitors in many markets.
• Concurrently, the integration of the world economy has
increased significantly. Economic integration stood at 10
percent at the beginning of the twentieth century; today, it
is approximately 50 percent.
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5. The World Economy
• Integration is particularly striking in the European Union
(EU) and the North American Free Trade Area (NAFTA).
• Just 75 years ago, the world was far less integrated than it
is today. As evidence of the changes that have taken
place, consider the automobile.
• Cars with European nameplates such as Renault, Citroën,
Peugeot, Morris, Volvo, and others were once radically
different from the American cars from Chevrolet, Ford, or
Plymouth or the Japanese models from Toyota or Nissan.
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6. The World Economy
• They were local cars built by local companies using local
supply chains, mostly destined for local or regional
markets. Even today, global and regional auto companies
make cars for their home-country car buyers that are not
marketed abroad.
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7. The World Economy
• For automakers BMW, Ford, Honda, Hyundai, Kia, and
Toyota, however, the global car has become a reality.
• For automakers BMW, Ford, Honda, Hyundai, Kia, and
Toyota, however, the global car has become a reality.
• The changes in their products reflect organizational
changes as well. The world’s largest automakers have, for
the most part, evolved into global companies.
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8. The World Economy
• Ford is a case in point: Ford had cars with the same
name, like Escort and Focus, but the products themselves
were very regional.
• In 2008, the company unveiled an updated version of the
Fiesta that is being marketed throughout the world.
• According to Ford, Fiesta has become a real shift point for
the company as it’s a real global car.
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9. • During the past two decades, the world economic
environment has become increasingly dynamic; change
has been dramatic and far-reaching. To achieve success,
executives and marketers must take into account the
following new realities:
• The world economy dominates the scene; individual
country economies play a subordinate role.
• The 100-year struggle between capitalism and socialism
that began in 1917 is largely over.
• The growth of e-commerce diminishes the importance of
national barriers and forces companies to reevaluate their
business models.
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10. Global Marketing
• Global marketing is defined as the process of
adjusting the marketing strategies of your company to
adapt to the conditions of other countries.
• Global marketing is more than selling your product or
service globally. It is the full process of planning,
creating, positioning, and promoting your products in a
global market.
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12. Stages of Market Development
• At any point in time, individual country markets are at
different stages of economic development.
• There is a four-category classification system that uses
per capita gross national income (GNI) as a basis for
categorizing countries. These stages provide a useful
basis for global market segmentation and target
marketing.
• The stages of economic development described serve as
a guide to marketers in evaluating product saturation
levels.
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13. Four-Category classification system
• Low Income Countries
• Lower Middle-Income Countries
• Upper Middle-Income Countries
• High Income Countries
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14. Low-Income Countries
• Low-income countries have a GNI per capita of $1,005 or
less. Countries at this income level share the following
general characteristics:
• Limited industrialization and a high percentage of the
population engaged in agriculture and subsistence farming
• High birth rates, short life expectancy
• Low literacy rates
• Heavy reliance on foreign aid
• Political instability and unrest
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15. Low-Income Countries
• Approximately 9 percent of the world’s population resides
in countries included in this economic category.
• Many low-income countries have such serious economic,
social, and political problems that they represent
extremely limited opportunities for investment and
operations.
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16. Lowe-Middle Income Countries
• Lower-middle-income countries have a GNI per capita
between $1,006 and $3,955. Consumer markets in these
countries are expanding rapidly.
• The developing countries in the lower-middle income
category have a major competitive advantage in mature,
standardized, labor-intensive light industry sectors such as
footwear, textiles, and toys.
• Vietnam and Indonesia are the top two countries in terms
of line employee head count in Nike’s worldwide network
of more than 500 contractor factories.
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17. Upper-Middle Income Countries
• Upper-middle-income countries, also known as
industrializing or developing countries, are those with GNI
per capita ranging from $3,956 to $12,235.
• In these countries, the percentage of the population
engaged in agriculture drops sharply as people move to
the industrial sector and the degree of urbanisation
increases.
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18. Upper-Middle Income Countries
• Chile, Malaysia, Mexico, Venezuela, and many other
countries in this stage are rapidly industrializing. They
have high literacy rates and strong education systems;
wages are rising, but they are still significantly lower than
in the advanced countries.
• Innovative local companies can become formidable
competitors and help contribute to their nations’ rapid,
export-driven economic growth.
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19. High-Income Countries
• High-income countries, also known as advanced,
developed, industrialized, or postindustrial countries, are
those with a GNI per capita of $12,236 or higher.
• With the exception, of a few oil rich nations, the countries
in this category reached their present income level
through a process of sustained economic growth.
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20. High-Income Countries
• Product and market opportunities in a postindustrial
society are heavily dependent upon new products and
innovations.
• Ownership levels for basic products are extremely high in
most households. As a consequence, organizations
seeking to grow often face a difficult task if they attempt to
expand their share of existing markets. Alternatively, they
can endeavor to create new markets.
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21. Internationalisation Motives
• Internationalisation occurs when the firm expands its R&D,
production, selling and other business activities into
international markets .
• In larger firms, internationalization occur in a relatively
continuous fashion, with the firm undertaking various
internationalization stages on various foreign expansion
projects simultaneously, in incremental steps, over a
period of time.
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22. Internationalisation Motives
• For SMEs, internationalization is often a relatively discrete
process; that is, one in which management regards each
internationalization venture as distinct and individual.
• In the pre-internationalization stages, SME managers use
information (market research) to achieve enough relevant
knowledge to initiate internationalization.
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23. Motives for Exporting – Why Would You Export
• The fundamental reason for exporting, in most firms, is to
make money. But, as in most business activities, one
factor alone rarely accounts for any given action. Usually,
a mixture of factors results in firms taking steps in a given
direction.
• These factors are differentiated into proactive and reactive
motives.
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24. Motives for Exporting – Why Would You Export
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Proactive Motives Reactive Motives
Profit & Growth Goals Competitive Pressures
Technological Competence Domestic Market
Unique Product Overproduction/Excess Capacity
Foreign Market Opportunities External Opportunity
Tax Benefits Extend Sales of Seasonal Products
Economies of Scale Proximity: Similar
Culture/Characteristics

25. Profit & Growth Goals:
• The desire for short-term profit is especially important to
SMEs that are at a stage of initial interest in exporting. The
motivation for growth may also be of particular importance
for the firm’s export start.
• The stronger the firm’s motivation to grow, the greater will
be the activities it generates, including search activity for
new possibilities, in order to find means of fulfilling growth
and profit ambitions.
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26. Netflix Expands to 190 Countries in 7 Years
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https://hbr.org/2018/10/how-netflix-expanded-to-190-countries-in-7-years

27. Barriers to Export Initiation:
Critical factors hindering internationalisation initiation include the
following (mainly internal) barriers:
• Insufficient finances
• Insufficient knowledge
• Lack of foreign market connections
• Lack of export commitment
• Lack of capital to finance expansion into foreign markets
• Lack of foreign channels of distribution
• Management emphasis on developing domestic markets
• Cost escalation due to high export manufacturing, distribution
and financing expenditures
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28. Barriers hindering the further process of
internationalisation:
Critical barriers in the process of internationalization may
generally be divided into three groups:
• General Market Risks
• Commercial risks
• Political risks
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29. General market risks
General market risks include the following:
• Comparative market distance
• Competition from other firms in foreign markets
• Differences in product usage in foreign markets
• Language and cultural differences
• Difficulties in finding the right distributor in the foreign market
• Differences in product specifications in foreign markets
• Complexity of shipping services to overseas buyers
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30. Commercial risks
The following fall into the commercial risks group:
• Exchange rate fluctuations when contracts are made in a
foreign currency
• Failure of export customers to pay due to contract dispute,
bankruptcy, refusal to accept the product or fraud
• Delays and/or damage in the export shipment and
distribution process
• Difficulties in obtaining export financing
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31. Political risks
Among the political risks resulting from intervention by
home and host country governments are the following:
• Foreign government restrictions
• National export policy
• Lack of governmental assistance in overcoming export
barriers
• Lack of tax incentives for companies that export
• High foreign tariffs on imported products
• Confusing foreign import regulations and procedures
• Complexity of trade documentation
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32. Risk Management Strategies
There are various risk management strategies are open to
exporters. These include the following:
• Avoid exporting to high-risk markets.
• Diversify overseas markets and ensure that the firm is not
overdependent on any single country.
• Insure risks when possible. Government schemes are
particularly attractive.
• Structure export business so that the buyer bears most of the
risk. E.g., price in a hard currency and demand cash in
advance
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33. Society, Culture, and Global Consumer Culture
Both differences and similarities characterise the world’s
cultures, meaning that the task of the global marketer is
twofold.
• First, marketers must study and understand the cultures of
the countries in which they will be doing business.
• Second, they must incorporate this understanding into the
marketing planning process.
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34. Society, Culture, and Global Consumer Culture
• In some instances, strategies and marketing programs will
have to be adapted to the local culture.
• However, marketers should also take advantage of shared
cultural characteristics and avoid unneeded and costly
adaptations of the marketing mix.
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35. Culture
• Culture can be understood as “ways of living, built up by a
group of human beings, that are transmitted from one
generation to another.”
• A culture acts out its ways of living in the context of social
institutions, including family, educational, religious,
governmental, and business institutions.
• Culture is the totality of our life-style & personality. At a
glance we can say, culture is that what we are i.e., our way of
dressings, eating, thinking, learning, attitude, believes,
values, norms, etc., all included in our culture.
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36. Culture
• Cultural information and imagery flow freely across
borders via satellite TV, the Internet, and other
communication channels, new global consumer cultures are
emerging.
• Some of these cultures are associated with specific product
categories; marketers speak of “coffee culture,” “credit-card
culture,” “fast-food culture,” “pub culture,” “soccer/football
culture,” and so on.
• This cosmopolitan culture, which is composed of various
segments, owes its existence in large part to a wired world in
which there is increasing interconnectedness of various local
cultures.
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37. Marketing’s Impact on Culture
• International marketing is the marketing activities of a
company outside their country of origin. A marketer must
have to study about the local culture in-depth before offering
a product to them.
• Culture has a great impact on international marketing.
• Universal aspects of the cultural environment represent
opportunities for global marketers to standardize some or all
elements of a marketing program.
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