International Marketing: Standardization, Adaptation, and Market Entry Strategies

What debate in the 1970s focused on standardization vs adaptation?

The global marketing debate over whether firms should standardize products or adapt them to local needs.

What trend today favors localization?

Efficiencies in customization enabled by the Internet and flexible manufacturing.

What criteria determine if standardization is possible?

Tractability, flexibility, and global regularity.

Why avoid segmenting only by country borders?

Because variables like climate, language, media habits, and income are more meaningful.

What are important segmentation variables?

Climate, language, media habits, income.

What is the objective of Phase 1 planning?

Preliminary analysis and screening to match company and country needs.

What is the objective of Phase 2 planning?

Define target markets and determine necessary marketing mix adaptation.

What is the objective of Phase 3 planning?

Develop the marketing plan including strategy, budgets, and entry mode.

What is the objective of Phase 4 planning?

Implement, evaluate, and control marketing programs.

What is corporate planning?

Long-term goals for the entire enterprise.

What is strategic planning?

Highest-level decisions on products, capital, research, long- and short-term goals.

What is tactical planning?

Local-level actions for marketing and advertising.

What determines international commitment?

Willingness to invest finances/personnel and stay in a market long-term.

What must first-time foreign marketers decide?

Which products to develop and resource commitment levels.

What must committed companies decide?

How to allocate effort and resources among countries and products.

What are the four foreign market-entry modes?

Exporting, contractual agreements, strategic alliances, direct foreign investment.

How do control and risk change across market-entry modes?

Control and risk both increase toward direct foreign investment.

What is direct exporting?

Selling directly to a foreign customer.

What is indirect exporting?

Selling to an importer or distributor in another country.

What is licensing?

Granting patent, trademark, or technology rights to a foreign company.

What is franchising?

A system where the franchisee uses the franchiser's products, systems, and management in exchange for fees.

What affects franchising success?

Monitoring costs, international expenses, brand equity.

What is a strategic alliance?

A cooperative relationship to achieve common goals without merging.

What is a joint venture?

A partnership where two firms create a new shared entity.

What is market-perceived quality?

The consumer's perception of quality.

What is performance quality?

The firm's internal standard of quality conformance.

What is product homologation?

Mandatory changes required by local product standards.

Why do adaptation requirements vary?

Differences in physical, mandatory, and cultural requirements.

What are the three product components?

Core component, packaging component, support services component.

What is the core component?

The physical product and design/functional features.

What is the packaging component?

Style, packaging, labeling, trademarks, brand name, price, quality.

What is the support services component?

Repair, maintenance, installation, warranties, delivery, spare parts.

What affects diffusion rate?

Perceived newness, perceived attributes, communication methods.

Why do some cultures resist new products?

Cultural norms require time and effort for acceptance.

Why do product acceptance rates vary?

Differences in infrastructure, price sensitivity, media access, cultural fit.

What makes services unique?

Intangibility, inseparability, heterogeneity, perishability.

What industries offer global service opportunities?

Tourism, transportation, financial services, education, telecom, entertainment, information, healthcare.

What are barriers to global services?

Protectionism, data flow restrictions, IP protection, cultural barriers.

What is the country-of-origin effect?

Consumer perceptions influenced by the product's country of manufacture.

What distinguishes B2B vs B2C?

B2B sells to businesses; B2C sells to end consumers.

What capital good does the U.S. export most?

Commercial aircraft.

What are major industrial supply exports?

Chemicals, fuel oil, petroleum products, plastics.

What service exports are major U.S. categories?

Travel, computer/business services, royalties, banking and finance.

Why is industrial demand volatile?

Few customers, coordinated buying, and derived demand.

What is derived demand?

Industrial demand created by consumer demand changes.

How can small consumer shifts create large industrial changes?

Minor consumer changes cause major fluctuations in equipment/material demand.

What strategies manage volatility?

Broad product lines, raising prices faster, reducing ads, ignoring market share, avoiding layoffs, focusing on stability.

How does demand vary across economic stages?

Natural resource extraction → infrastructure → manufacturing → mature mass consumption → service economies.

How does technology impact demand?

Higher tech creates greater demand for advanced products; education level influences ability to use tech.

How is quality defined by the buyer?

Meeting buyer expectations based on local needs and environment.

What is the price-quality relationship?

Provide only needed features so cost aligns with expectations.

What does ISO 9000 certify?

The production process meets international quality system standards.

Why is ISO 9000 important?

Used as a requirement in many purchasing agreements.

What three functions define the distribution process?

Physical handling, ownership/titles, and buying/selling negotiations.

What two channel systems must marketers manage?

Home-country channels and foreign-market channels.

Why do distribution patterns vary globally?

Retail types, market structure, economic development, cultural habits.

What is an import-oriented structure?

Importer controls limited supply sold at high prices; demand exceeds supply.

How does retail structure differ globally?

Countries vary in number of retailers and people per retailer.

What is an agent intermediary?

Does not take title; manufacturer retains risk.

What is a merchant intermediary?

Takes title and assumes trading risk.

What are home-country intermediaries?

Domestic-based firms handling export functions.

What are foreign-country intermediaries?

Local agents/wholesalers closer to the foreign market.

What are government-affiliated intermediaries?

Government purchasing offices handling procurement.

When is direct selling common?

In markets with underdeveloped distribution systems.

What are the Six Cs of channel strategy?

Cost, capital requirements, control, coverage, character, continuity.

What are the two types of channel cost?

Capital/investment cost and ongoing maintenance cost.

How does channel length affect control?

Longer channels reduce the manufacturer's control.

What criteria are used to locate intermediaries?

Productivity, financial strength, managerial stability, capability.

What steps are used to select intermediaries?

Exploratory letter, follow-up info, credit/reference checks, personal visits, contracts.

What elements make up IMC?

Advertising, sales promotions, PR, personal selling, trade shows, direct selling.

Why do communication channels vary globally?

Different countries have different available media and regulations.

How do media limits affect promotions?

Require higher budgets or substitution of promotion tools.

What laws impact promotions?

Restrictions on advertising to children, permits, bans on certain promotions.

What is the purpose of PR?

Build positive media relationships, manage rumors, gain sponsorships.

Why is global mass media advertising important?

Drives cultural influence and consumer decision-making globally.

Why are advertising budgets cyclical?

Firms cut or increase spending based on economic cycles and cultural risk preferences.

What cultural traits stabilize ad spending?

High uncertainty avoidance, low indulgence, long-term orientation.

What cultural factors affect ad response?

Style, values, emotions, beliefs, perceptions, argument preferences.

Why is advertising the most culturally sensitive mix element?

Messages must align with cultural norms and symbolism.

What are the seven components of communication?

Information source, encoding, message channel, decoding, receiver, feedback, noise.

What legal constraints affect advertising?

Comparative ad rules, pharma/toy/tobacco restrictions, media regulations.

What linguistic limitations complicate ads?

Differences in language, dialect, nuance, argument style, and translation issues.