Book Title
International Business: The Challenge of Global Competition 13th Edition

978-0077606121 Chapter 15 Lecture

April 7, 2019
1 Marketing Internationally
2Learning Objectives
3LO15-1 explain why there are differences between domestic and international marketing
4LO15-2 discuss why international marketing managers may wish to standardize the marketing mix
5LO15-3 explain why it is often impossible to standardize the marketing mix worldwide
6LO15-4 discuss the importance of distinguishing among the total product, the physical product, and
the brand name
7LO15-5 explain why consumer products generally require greater modification for international
sales than do industrial products or services
8LO15-6 discuss the product strategies that can be formed from three product alternatives and three
kinds of promotional messages
9LO15-7 explain “glocal” advertising strategies
10 LO15-8 discuss some of the effects the Internet may have on international marketing
11 LO15-9 discuss the distribution strategies of international marketers.
12 Overview
Although the marketing functions are the same for marketing domestically and internationally, the
markets served vary greatly because of the differences among the environmental forces. There are
advantages in the worldwide standardization of the marketing mix but frequently environmental
differences necessitate a modification of the domestic mix or the development of a new one. The extent of
the change will depend on the type of product, the forces, and the degree of market penetration desired by
management. Product, price, distribution and promotional strategies are discussed in this context.
13 Suggestions and Comments
1. “Why do marketing managers want to standardize the marketing mix worldwide?” serves as a good
opening question for this chapter.
2. You probably will want to spend a few minutes on formulating six product strategies from three
product and message alternatives.
3. Robert F. Hartley’s Marketing Mistakes and Successes provides some interesting examples of
marketing errors, as well as David Ricks’ Blunders in International Business, although this last
resource, although useful, is dated.
Student Involvement Exercises
1. If you have foreign students, you can ask them to compare the way the same product is promoted in
their country and in the United States. This helps to reinforce the six-product strategies discussion.
Other students can research foreign magazines in the library to compare ads for the same product in
different countries. You might consider asking students to do this research using websites as well.
2. Comparisons across international borders is also a good way to get student involvement. What
differences have they observed among cultures and what might these differences evidence about
product strategies?
14 Guest Lecturers
1. A member of the advertising staff of a multinational can provide some insight as to how the firm
plans and controls its overseas advertising campaigns. If your institution markets abroad, you might
consider the admissions person who has those responsibilities.
2. A member of a headquarters marketing staff can discuss the company policy with respect to
international standardization of the marketing mix. He or she will have some good “war stories”
about campaigns that made it and those that failed because of environmental differences.
15 Lecture Outline
I. Opening Section
The opening section describes the evolution Mongolia's consumer market.
II. Added Complexities of International Marketing
The basic marketing functions are the same everywhere but marketing internationally differs from
marketing domestically because of the great variations in the uncontrollable environmental forces.
Moreover, even the controllable forces vary greatly.
III. The Marketing Mix (What and How to Sell)
The international marketing manager must decide if (1) the firm can standardize worldwide, (2) it
must make some changes, or (3) it must formulate a completely different marketing mix.
A. Standardization, Adaptation or Completely Different?
1. Management would prefer standardization for the following reasons: (1) lower costs, (2)
easier control and coordination from headquarters, (3) reduction in the time and effort
needed to prepare marketing plans.
2. In spite of these advantages, often it is necessary to modify the present mix or develop a
new one. The extent of the changes depends on the type of product (consumer or
industrial), environmental forces, and the degree of market penetration.
B. Product Strategies
1. When formulating product strategies, managers must consider the total product because a
new product may be created without changing the physical product. This will reduce
manufacturing costs and permit international standardization of the production process, a
goal of most managers.
a. Total and physical product – much of the confusion about whether a firm can have
global products is due to the fact that discussants fail to clarify whether they are
referring to the total product, the physical product, or the brand name.
b. Type of product
(1) Industrial goods can often be sold worldwide with either easy-to-make changes,
or none at all.
a. Some industrial products need to be modified, however, for use in developing
countries because of tendencies to overload equipment and slight
(2) Consumer products often require more modification than do industrial products.
However, they can be sold unchanged to certain market segments such as the
foreign-educated and well traveled (the “jet set”), and expatriates.
a. Note that certain other products (French perfume, American hamburgers)
must be sold virtually unchanged since their “foreignness” is a critical part of
their consumer appeal.
b. Generally, the lower the economic and social strata, the greater the
dissimilarities between countries/markets with respect to cultural and social
(3) Services are generally easier to market globally than consumer products.
Consulting firms such as Accenture (formerly Andersen Consulting) find that
they can offer similar services worldwide. The credit card industry is also largely
global. On the other hand, employment agencies may not be able to operate in
some countries because they are illegal.
(Are hotels and higher education are standardized global industries as well?)
c. Foreign environmental forces
(1) Sociocultural forces–Dissimilar cultural patterns generally necessitate changes in
foods and consumer goods. At times, a brand name, label, or the standard colors
of the package are unsuitable for cultural reasons. However, marketers must
investigate the truthfulness of the stories about these problems, because some of
them have no basis. An example is the extensively circulated Nova story. See the
photo of the Pemex Nova gas pump.
(2) Legal forces–Firms must adhere to a nation’s laws which may be a formidable
constraint in the design of product strategies. Also, brand piracy can be a
(3) Economic forces–Another obstacle to worldwide product standardization.
Products from industrialized nations may be too expensive for developing
countries or they may not withstand more difficult operating conditions. Smaller
markets may not permit as extensive a product mix as in the home country.
(4) Physical forces–Climate and difficult terrain may require product adaptations or
even different products.
C. Promotional Strategies
1. Promotion both influences and is influenced by the other marketing variables. It is
possible to formulate 9 distinct strategies by combining the three alternatives of (1)
marketing the same physical product everywhere, (2) adapting the physical product for
foreign markets, and (3) designing a different physical product with (a) the same, (b)
adapted, or (c) different promotional messages.
a. Although 9 strategies are possible, 6 are most commonly used.
b. (1) same product same message, (2) same product different message, (3) adapted
product same message, (4) adapted product adapted message, (5) different
product – same message, (6) different product – different message for the same use.
2. Advertising
Advertising is the promotional mix element with the greatest worldwide similarities.
Advertising everywhere is based on American techniques.
a. Global or regional brands – Manufacturers are increasingly using global or regional
brands because:
(1) Cost is most often cited. Producing one commercial for use across a region can
result in a saving of up to 50% of the production costs.
(2) There is a better chance of obtaining one regional source to do high-quality work
than of finding multiple sources in several countries.
(3) Some marketing managers feel their companies must have a single image
through a region.
(4) Companies are establishing regionalized organizations where many functions,
such as marketing, are centralized.
(5) Global and regional satellite, cable television and the Internet are becoming
widely available.
b. Global or national brands – National brands still retain appeal. Management has to
be careful about eliminating them simply to achieve scale economies.
c. Private brands – these also compete (often successfully) with global or national
brands. Examples include the Wal-Mart brand, and SPAR, the world’s largest food
d. Availability of media – Many media are available.
(1) TV – Satellite and cable (Star TV, MTV, etc.) offer choices and an audience that
is increasing rapidly.
(2) International print media – again, the choices seem to continue to increase.
(3) Cinema and videocassette advertising – these reach audiences in novel ways.
Videotape ads are popular in the Middle East where other media choices may be
e. Internet advertising – The Internet offers several attractive elements as a promotional
(1) An affluent, reachable audience.
(2) Interactive contacts with potential customers.
(3) Consumers may help shape the messages they receive, that is, messages can be
(4) It may reach some groups such as teenagers for which good media alternatives
aren’t available.
f. Type of product – Buyers of industrial goods and luxury consumer goods usually act
on same motives the world over.
g. Foreign environmental forces – Basic cultural decision is whether to position product
as local or foreign. For international market segments, advertisers can formulate
global advertising campaigns. Legal forces affect product claims. Strong tendency for
governments to control advertising.
h. Globalization versus localization – one school of thought looks for similarities across
countries in order to capitalize on them by providing promotional themes with
worldwide appeal. Another school of thought believes it is preferable to develop
separate appeals to take advantage of differences among customers in different
cultures and countries.
i. Neither purely global nor purely local – for most firms, neither purely global nor
purely local is best way to handle international advertising. One ad agency head said
that 15% had a global approach, another 15% had a local approach, and the rest are
“glocal.” They develop a strategy for large regions, but not for the world.
j. Gillette’s panregional approach – Gillette has organized its advertising in regional
and cultural clusters: pan-Latin America, pan-Middle East, pan-Africa and
pan-Atlantic. Is based on the belief that the firm can identify the same needs and
buying motives in regions or countries linked by culture, consumers’ habits, and level
of market development.
k. Programmed-management approach – a middle-ground advertising strategy between
globally standardized and entirely local programs. This approach gives the home
office a chance to standardize those parts of the campaign that may be standardized
but still permits flexibility in responding to different marketing conditions.
3. Personal Selling
The importance of personal selling in the promotional mix depends on relative costs,
funds available, media availability, and type of product sold.
a. Personal Selling and the Internet. The Internet won’t eliminate the need for personal
selling. Personal selling depends on trust. The Internet makes communication easier,
but trust-building harder. Computer-mediated communication transmits much less
nonverbal information, including emotions, expressions of cooperation and
trustworthiness. Also, feedback during message delivery is lost. However, Ebay’s
“reputation system” may offer a method that can increase trust over the Internet.
b. International standardization
(1) Sales force organization, sales presentations and training methods similar to those
in home country.
(2) Because of the high costs of sales calls, many firms in Europe are using
telemarketing and direct mail to qualify prospects. Since 1992, Dell Computers
has been employing both methods to sell computers in Japan and Europe.
c. Recruitment of sales force difficult in some markets because of social stigma attached
to selling.
4. Sales Promotion: Sociocultural and economic constraints
(1) The premium must be meaningful to the consumer
(2) Contests and raffles are often successful
5. Public Relations
a. Many international firms fail to inform the public of their activities.
b. Overseas subsidiaries of American firms support public-service activities locally; in
Japan, Coke spends $5 million on programs for children and the handicapped, IBM
Japan puts 1% of its profits into good works. Warner-Lambert pharmaceuticals began
a program, Tropicare, to train local health care providers in preventive medicine. This
has been successful in Africa and Latin America.
c. McDonald’s sued two people who were distributing leaflets in London accusing the
company of destroying rain forests, exploiting children in its advertising, starving the
third world, and cruelty to animals.
D. Pricing Strategies
1. Pricing, a Controllable Variable
a. Effective price setting is more than a mechanical markup, price is a controllable
b. Price setting is complex because of its interaction with other elements of marketing
2. International Standardization
Managements must be concerned with (1) foreign national pricing and (2) international
pricing for exports.
a. Foreign national pricing–Government price controls, cost differentials of different
markets, diverse competition, product in different stage of product life cycle.
b. International pricing (transfer pricing)–special kind of exporting (intracorporate
sales). Management may order an affiliate to sell another affiliate at less or more than
market price for tax reasons.
E. Distribution Strategies
1. Marketers must concern themselves with getting the goods to foreign markets and
distributing the goods within each market.
2. Interdependence of Distributive Decisions–Care must be taken when making distribution
decisions to analyze their interdependence with other marketing mix variables.
3. International standardization–Two constraints to international standardization–variations
in the availability of channel members and inconsistent influence of environmental
a. Availability of channel members.
b. Foreign environmental forces–legal, economic and sociocultural—make
standardization of distribution channels difficult. French and Japanese laws have
slowed the growth of large retailers althugh the Japanese law has been scrapped.
4. Disintermediation. This refers to unraveling of traditional distribution structures.
Primary reasons for the change are the combination of the Internet for ordering combined
with fast delivery services – FedEx, UPS. Increasingly can offer rapid delivery without
specialized or dedicated distribution channels.
F. Channel Selection
1. Direct or Indirect Marketing
Will management use middlemen or sell directly?
2. Factors influencing channel selection
a. Market characteristics
b. Product characteristics
c. Company characteristics
d. Middlemen’s characteristics
G. Foreign Environmental Forces and Marketing Mix. See Table 15.3, Environmental
Constraints to International Standardization of Marketing Mix
16 Worldview
WORLDview: Integrating Functions for New Product Development
This Worldview explores the changes globalization is bringing to new product development. As the pace
of innovation continues to expand, the R&D function of the firm needs to expand in two directions. One
is within the firm, by cooperating more closely both with production, which is where R&D meets the
“rest of the firm” in terms of translating their ideas into products, and with marketing, which is the firm’s
transition point with the outside environment, especially customers. The other direction of expansion is
into new markets.
Global Debate
Lady Gaga Reaches India
This Global Debate explores India as a market for Lady Gaga and whether she will localize to
tap into the massive potential of Indian film and music fans.