Study Notes on International Marketing

International Marketing

Introduction

• Instructor: Dr. Arif Ashraf Ali

• Importance of global marketing: Need to distribute products globally for profitability.

• Discussion prompt about limited edition products.

Course Overview

Recommended Readings

• Textbook: Cateora, P.R., Gilly, M.C., & Graham, J.L. (2024). International Marketing (19th Edition, McGraw-Hill Education, Epub book).

• Additional Materials: HBR case studies and articles.

Assessment Techniques

• Grading structure:

  • Case/Article discussions & presentations: 5%

  • Mid Term exam: 30%

  • Term Report: 20%

  • Final exam: 40%

  • Quizzes: 5%

  • Total: 100%

Policies

• Attendance: 2 absences allowed; additional may be granted in emergencies.

• Communication: WhatsApp group and email only (arif.ashraf@iobm.edu.pk).

• Office Hours: Sunday: 11:45 AM - 12:45 PM; Tuesday: 10:00 AM - 11:00 AM.

Marketing Fundamentals

Definition of Marketing

• Marketing: Companies create value for customers and build relationships to capture value in return; meeting needs and wants profitably (Kotler et al., 2023).

Marketing Management

• Marketing Management: Art and science of selecting target markets and fostering profitable customer relationships.

Marketing Orientations

Key Concepts of Marketing Management

• Orientations include:

  • Production Concept: Focus on achieving high production efficiency and reducing costs to make products widely available and affordable.

  • Product Concept: Focus on offering the highest quality, performance, and innovative features, assuming customers will favor such products.

  • Selling Concept: Focus on aggressive selling and promotion efforts, typically for unsought goods, assuming consumers won't buy enough without a strong push.

  • Marketing Concept: Focus on understanding and satisfying target customers' needs and wants more effectively and efficiently than competitors.

  • Societal Concept: Focus on understanding and satisfying target customers' needs and wants while also considering the long-term well-being of society and the environment.

Customer-Driven Marketing Strategy

Basic Concepts of Marketing

• Concepts include:

  • Marketing Myopia: Focus on the product rather than customer needs, leading to short-sightedness and potential failure to adapt to market changes.

  • STP: Segmentation (dividing the market into distinct groups), Targeting (selecting which segments to serve), Positioning (creating a distinct image for the product/brand in the minds of target consumers).

  • SWOT analysis: Strengths (internal capabilities), Weaknesses (internal limitations), Opportunities (external favorable factors), Threats (external unfavorable factors).

  • PEST analysis: Political (government stability, trade policies), Economic (inflation, income levels), Social (cultural trends, demographics), Technological (innovation, R&D).

  • Product, Service, Brands, and Brand Equity.

  • Product Life Cycle (PLC): Introduction, Growth, Maturity, Decline.

  • New Product Development (NPD).

  • Marketing mix: Product (features, design, quality), Price (pricing strategy, discounts), Place (distribution channels, logistics), Promotion (advertising, sales promotion, PR).

International Marketing Defined

Definition

• International Marketing: Planning and execution of strategies for product, pricing, promotion, and distribution in multiple countries to achieve goals (Kotler et al., 2022).

Globalization and Internationalization

Definitions

• Internationalization: The process by which a firm increases its involvement in international markets, often through a gradual, incremental approach focusing on a few selected countries.

• Globalization: A more expansive process where a company operates in many countries simultaneously, integrating activities across borders and often standardizing strategies where possible, with more than $50\%$ of sales from abroad.

Motivations for Going Global

Factors Influencing Global Expansion

• Push Factors: Market saturation (lack of growth opportunities domestically), domestic competition, reactive drives (e.g., following a major customer abroad).

• Pull Factors: Proactive incentives for higher profitability and growth, economies of scale, access to new technologies or resources.

Advantages of International Marketing

Reasons for Expansion

• Enhanced market reach by tapping into larger customer bases, risk diversification across different markets, access to new customer bases and innovations, potential for higher profit margins, and extended product life cycles.

Country of Origin

• Definition: Effect of a product's origin on consumer purchasing behavior, which can be a source of competitive advantage or disadvantage.

• Purchase influences vary with product type: Convenience, Shopping, Specialty, Unsought goods.

Contrasting Domestic and International Marketing

Key Differences

• Marketing Environment: International marketing considers a broader range of uncontrollable elements (e.g., cultural, political, economic) that are often more complex and diverse than in domestic markets, requiring greater adaptation.

• Controllable Elements: Product, price, promotion, distribution, and research must adapt to diverse environments, often requiring significant modification to suit local preferences and conditions.

International Marketing Task

Elements Involved

• Uncontrollable External Factors:

  • Political/legal: Stability of governments, trade regulations, tariffs, intellectual property laws, political risk.

  • Economic: GDP, income distribution, purchasing power, inflation, currency stability, infrastructure development.

  • Cultural: Values, beliefs, customs, language, aesthetics, social norms, religion.

  • Competitive: Nature, intensity, and structure of local and global competition, competitive practices.

  • Technological: Levels of technology adoption, infrastructure for internet/mobile, R&D capabilities, technological readiness of the market.

  • Geographic: Climate, topography, natural resources, geographical distance, transportation infrastructure.

• Controllable Factors for Firms: Firm characteristics, product, price, place, promotion, research.

Environmental Adaptation

• Necessity of adapting business strategies and operations to fit various market environments, especially cultural adjustment, which is critical for avoiding misunderstandings and building trust.

Obstacles in International Marketing

Self-Reference Criterion (SRC) and Ethnocentrism

• SRC: Unconscious reliance on one’s own cultural values, experiences, and knowledge during decision-making. It can lead to misinterpretations of foreign business environments and a failure to understand local market needs.

• Ethnocentrism: Belief in the superiority of one's own culture or company practices. It can manifest as a belief that one's home country methods are always the best, potentially leading to a lack of adaptation or underestimation of local expertise.

Developing Global Awareness

• Importance of cultural intelligence (CQ) and commitment to diversity/inclusion for success, achieved through studying cultures, languages, history, understanding economic and political systems, and personal international experience.

Stages of International Marketing

Considerations for International Expansion

• Factors influencing internationalization include market size, competition, and resources. Born Global firms internationalize quickly by leveraging modern communication technologies from inception.

Five Stages of Internationalization

1. No Direct Foreign Investment: No commitment to foreign sales; typically through opportunistic sales or domestic agents/distributors.

2. In-frequent Foreign Marketing: Sales occur as goods become available, often due to temporary surpluses, with no continuous representation or dedicated international strategy.

3. Regular Foreign Marketing: Permanent capacity focused on foreign goods/services; may use intermediaries or establish sales branches in target markets.

4. International Marketing: Commitment to international marketing, with planned activities developed specifically for multiple countries, adapting the marketing mix to local conditions.

5. Global Marketing: Integration of local and international markets; seeing the world as one market or interconnected markets with no geographic segmentation; strategies are developed for global optimization rather than individual country focus.

The Importance of Studying International Marketing

Case Studies and Examples

• Exhibit 1.1: Foreign acquisitions of U.S. companies.

• Exhibit 1.2: Selected U.S. companies and their international sales.

Case Study Questions

• Discussion questions centered on Coke, Pepsi, strategy challenges, and public relations in international markets.