Notes & Exercises: DPM 50133 International Marketing (1st series_Chapter 1 - 4)

NOTES &
EXERCISES:

DPM 50133
INTERNATIONAL MARKETING

1ST SERIES:
CHAPTER 1 - 4

LADVIA ANAK AJIU

NOTES &
EXERCISES:

DPM 50133
INTERNATIONAL MARKETING

1st Series:
Chapter 1 - 4

LADVIA ANAK AJIU

Copyright

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PREFACE

NOTES & EXERCISES: DPM 50133

INTERNATIONAL MARKETING (1st Series) is an e-book
designed for Semester 5 students of Diploma In

Marketing from Polytechnic Malaysia who are taking the
International Marketing course. This e-book serve as a
guidelines for better understanding and preparation

before the class being conduct. Each subtopic in this book
contains structured exercises to test students'

understanding after a topic has been taught. I hope that
this eBook will be beneficial for the students and readers.

Any suggestions and recommendations are highly
appreciated for future edition improvement.

TABLE OF CONTENT PAGE

Chapter 1: Overview of International Marketing 1 - 34

1.1 Provide information on international marketing 4
1.1.1 Define international marketing 7

1.1.2 Discuss the importance of international marketing 16
20
1.2 Examine the development of international marketing
concept 25
26
1.2.1 Discuss the development of international 28
30
marketing concept 32

a. Ethnocentric 35-64
35
b. Polycentric
40
1.3 Expose international marketing issues 44
1.3.1 Expose international marketing issues 52
56
a. Money laundering 60

b. Market-driven technology

c. Diversities

d. Currencies

e. Marketing

Chapter 2: International Marketing
Environment

2.1 Explain international marketing environment

Provide the factors that influence firms in the
2.2 international marketing environment.

2.2.1 Provide the factors in the international marketing
environment.

a. Political/ Legal

b. Economics

c. Social culture

d. Technological

e. Competitive

TABLE OF CONTENT PAGE

Chapter 3: International Distribution Strategies 65-90

3.1 Organize the types of international distribution strategies 69
3.1.1 Identify the types of international distribution strategies 72
a. Direct distribution
b. Indirect distribution 77
81
3.2 Organize the strategies of entry modes 84
3.2.1 Organize the strategies of entry modes 87
a. Contract manufacturing 91-124
b. Licensing 91
c. Franchising
d. Management Contracting 97
103
Chapter 4: Product for The International Market

4.1 Organize the consumer product for the international market
4.1.1 Recognize an international brand

4.2 Complete the identification of the barriers of international brand

4.2.1 Complete the identification of the barriers of international
brand

a. Brand piracy
b. Counterfeiting

CHAPTER 1:
OVERVIEW OF
INTERNATIONAL
MARKETING

CHAPTER 1:
OVERVIEW OF INTERNATIONAL

MARKETING

1.1 Provide information on international marketing
1.1.1 Define international marketing
1.1.2 Discuss the importance of international
marketing

1.2 Examine the development of international marketing
concept
1.2.1 Discuss the development of international
marketing concept
a. Ethnocentric
b. Polycentric

1.3 Expose international marketing issues
1.3.1 Expose international marketing issues
a. Money laundering
b. Market-driven technology
c. Diversities
d. Currencies
e. Marketing

INTRODUCTION

EVOLUTION OF MARKETING

1. MARKETING:

The activity, set of institutions and
processes of creating,
communicating, delivering and
exchanging offerings that have
value for customers, clients, partners
and society at large

2. DOMESTIC MARKETING:

Marketers developed their
marketing strategy based on
information about domestic
customer needs and wants, industry
trends, economic, technological and
political environment at local basis

1

EVOLUTION OF MARKETING
(CONTINUE)

3. EXPORT MARKETING:

When a company receives an
unexpected order from abroad, initially
it may fill it reluctantly, but it gradually
learns the benefit of marketing
overseas. At this point, the company will
focus on changing it’s company and
environment conditions

4. INTERNATIONAL MARKETING:

Once export marketing becomes an
important part of the company’s
marketing activity, it will begin to seek a
new direction of growth and expansion.
marketers focus on polycentric
orientation with emphasis on product
and promotion adaptation in foreign
market when necessary

2

EVOLUTION OF MARKETING
(CONTINUE)

5. MULTINATIONAL MARKETING:
Product development, manufacturing
and marketing are all executed by
each subsidiary for its own local
market without any measurable
headquarters control

6. GLOBAL MARKETING:
Global marketing refers to
marketing activities by companies
that emphasize the following:
standardization efforts, coordination
across markets and global integration

3

1.1.1DEFINE INTERNATIONAL
MARKETING

International marketing is the performance of
business activities designed to plan, price,
promote, and direct the flow of a company’s
goods and services to consumers or users in more
than one nation for a profit

The uniqueness of foreign marketing comes from
the range of unfamiliar problems and the
variety of strategies necessary to cope with
different levels of uncertainty encountered in
foreign markets

4

A unique feature of international marketing is its
polycentric orientation with emphasis on product
and promotion adaptation in foreign market
when necessary

Competition, legal restraints, government
controls, weather, fickle consumers, natural
disasters, and any number of other
uncontrollable elements can, and frequently do,
affect the profitable outcome of good, sound
marketing plans

5

the marketer cannot control or
influence these uncontrollable
elements but instead must adjust
or adapt to them in a manner
consistent with a successful outcome

6

1.1.2 DISCUSS THE IMPORTANCE OF
INTERNATIONAL MARKETING

1. New streams
of income

7

1. IT GIVES BUSINESSES NEW
OPPORTUNITIES TO CREATE
NEW STREAMS OF INCOME

International marketing provides
an opportunity for doing business
in a broader market. it helps in
connecting to a large number of
customers worldwide.
Companies are able to sell their
products to huge peoples and earn
large profits

8

2. RAISES BRAND
FAMILIARITY AND
REPUTATION

If your business not only has ads
on social media platforms but
also commercials that air all
around the world (tailored from
country to country) there is an
increased chance of gaining an
international customer base

9

3. ITS GIVES BUSINESSES THE
OPPORTUNITY TO GAIN NEW
KNOWLEDGE ABOUT THEIR

PRODUCTS IN ORDER TO ADJUST
FOR BETTER QUALITY SERVICE

When a business expands into a
new market, they gain more
knowledge. With analytical tools,
they acquire knowledge at a faster
pace, which leads to a higher
quality of service or products that
are available for customers

10

4. EARN FOREIGN EXCHANGE

It serves as a medium for earning
foreign exchange by nations.
Companies by selling their
products in several nations abroad
bring foreign currency in their
home country

11

5. SPREAD BUSINESS RISK

It enables in spreading
business risk by conducting
business operations in several
nations. Business loss occurring
in one country can be easily
adjusted with high profits
earned from other countries

12

6. ENSURES OPTIMUM
UTILIZATION OF RESOURCES

It aims at the efficient allocation
of resources by promoting free
trade at the global level.
International marketing enables
the nation in supplying their
surplus materials to different
nations where they can be used
properly for manufacturing
goods and services

13

7. FACILITATES CULTURAL
EXCHANGE

International marketing serves
as a medium for exchanging
culture and traditions among
several countries.
By free movement of goods,
nations are able to exchange
their social and cultural ideas.
It aims at attaining cultural
integration at world level

14

THEINDTEEVRENLAOTPIOMNENATL OF
MARKETING CONCEPTS

INTERNATIONAL
MARKETING
CONCEPTS

ETHNOCENTRIC POLYCENTRIC

15

ETHNOCENTRIC

A person who assumes that his or her
home country is superior to the rest of
the world and associated with attitude
of national arrogance or assumption of
national superiority
See only similarities in market and
assume that product and practices that
succeed in the home country will be
successful anywhere
believe that the products that succeed
in the home country are superior

16

They ignored the opportunities outside
their home – country
Ethnocentric companies doing business
can be described as international
companies (sometimes called domestic
companies)
A standardized or extension approach
to marketing based on the premise that
products can be sold everywhere without
adaption
Foreign companies or markets are
typically viewed as being secondary or
subordinate to domestic ones

17

Ethnocentrism may mean foreign markets
are viewed as a dumping ground for
surplus domestic production
Little or no systematic marketing research
is conducted outside the home country and
no major modifications are made to
products
Even if customer needs or wants differ
from those in the home country, those
differences are ignored at headquarters

18

EXAMPLE OF COMPANIES PRACTICED
ETHNOCENTRIC ORIENTATION

Nissan’s earliest exports were cars
and trucks that has been designed
for mild Japanese winters; the
vehicles were difficult to start in
many parts of the united states
during the cold winter months. in
Northern Japan, many car owners
would put blankets over the hoods
of their cars. Nissan's assumption
was that Americans would do the
same thing, as a Nissan spokesman
said, “we tried for a long time to
design cars in Japan and shove them
down the American consumer’s
throat. that didn’t work very well”

19

POLYCENTRIC

Is the opposite of ethnocentric
The term polycentric describes
management’s belief or assumption
that each country in which a
company does business is unique
Each subsidiary to develop its own
unique business and marketing
strategies in order to succeed, the
term multinational company is often
used to describe such as structure

20

This lead to a localized or
adaptation approach that assumes
products must be adapted in
response to different market
conditions

Each country is treated as a
separate entity and individual
strategies are worked out
accordingly

Polycentric orientation could be
most suitable for firms seriously
committed to international
marketing and have its resources
for investing abroad for fuller and
long-term penetration into chosen
markets

21

Polycentric approach works better

among countries which have

significant economic, political and

cultural differences and

performance of these tasks are

free from the problems created

primarily by the environmental

factors

22

EXAMPLE OF COMPANIES PRACTICED
POLYCENTRIC ORIENTATION

UNILEVER, THE ANGLO DUTCH
CONSUMER-PRODUCT COMPANY
• Rexona deodorant brand has 30

different package design and 48
different formulation. Advertising was
also executed on a local basis. Top
Management has spent the last
decade changing Unilever’s strategic
orientation by implementing a
reorganization plan that centralizes
authority and reduces the power of
local country managers.

23

1. Money 2. Market-
Laundering driven

technology

5. Marketing INTERNATIONAL
MARKETING ISSUES

3. Diversities

4. Currencies

24

MONEY LAUNDERING

Money laundering is the process by which
large amount of illegally obtained money,
from drug trafficking, terrorist activity or
other serious crimes, is given the
appearance of having originated from the
legitimate source

Money laundering activities damage the
financial-sector institutions that are
critical to economic growth, reduces
productivity in the economy’s real sector by
diverting resources & encouraging crime
& corruption, which slow economic growth,
& can distort the economy’s external sector
international trade & capital flows to the
detriment of long-term economic
development

25

MARKET-DRIVEN TECHNOLOGY

Trade has always been shaped by
technology but the rapid development of
digital technologies in recent times has the
potential to transform international trade
profoundly in the years to come

The world trade report 2018 examines

how digital technologies – & in particular

the internet of things, artificial

intelligence, 3d printing & blockchain –

affect trade costs, the nature of what is

traded & the composition of trade. it

estimates how international trade may be

affected by these technologies over the

next 15 years 26

MARKET-DRIVEN TECHNOLOGY

For example: digital technologies will
affect the composition of trade by
increasing the services component,
fostering trade in certain goods such as
time-sensitive products, changing patterns
of comparative advantage & affecting
the complexity & length of global value
chains

27

DIVERSITIES

Different countries have their own
unique civilization & culture. they pose
special problems for international
marketers
International customers exhibit
considerable cultural & social diversities
in term of needs, preferences, habits,
languages, expectations, buying
capacities, buying & consumption
patterns, & so forth

28

DIVERSITIES

Social & personal characteristics of
customers of different nationalities are
real challenges to understand and
incorporate
Compared to local and domestic
markets, it is more difficult to understand
behaviour of customers of other countries

29

CURRENCIES

Every nation has its currency that is
to be exchanged with currencies of
other nations
The value of a dollar in your country
won’t always equal the same amount
in other countries’ currency, nor will
the value of currency consistently be
worth the same amount of goods and
services
Currencies are traded every day
and rates are subject to change

30

CURRENCIES

For example; Indian Rupee,
European Dollar, Us Dollar,
Japanese Yen, etc., are
appreciated or discounted at
national and international markets
against other currencies
in case of extraordinary and
unexpected moves (ups and downs)
in currency/exchange rates
between two courtiers create
serious settlement problems

31

MARKETING

To design and modify marketing
mix over time for international
markets seem more difficult
Market segmentation, product
design, pricing, and distribution
need more information and efforts

32

MARKETING

Promoting products in international
markets is a formidable task. Message
preparation and execution in suitable
media in international markets is not
easy game to play
Language & religious diversities are the
real challenge for international business
players

33

TUTORIAL EXERCISES

1. DEFINE INTERNATIONAL MARKETING (3 MARKS)

2. EXPLAIN INTERNATIONAL MARKETING (5 MARKS)

3. DISCUSS FIVE (5) IMPORTANCE OF INTERNATIONAL MARKETING
(10 MARKS)

4. DISCUSS TWO (2) DEVELOPMENT OF INTERNATIONAL MARKETING

CONCEPT (10 MARKS)

5. EXPOSE FIVE (5) INTERNATIONAL MARKETING ISSUES
(15 MARKS)

6. WHEN ABC CORPORATION STARTED TO SELL THEIR
PRODUCT IN THAILAND, THE COMPANY FACED A LOT
OF DIFFICULTIES DUE TO LACK OF AWARENESS ABOUT
THE INTERNATIONAL MARKETING ISSUES IN THAT
COUNTRY. AS AN EXPERT IN THE INTERNATIONAL
MARKETING FIELD, DERIVE FIVE (5) INTERNATIONAL
ISSUES THAT NEED TO BE CONSIDERED WHEN
ENTERING THAILAND MARKET.
(15 MARKS)

34

CHAPTER 2:
INTERNATIONAL

MARKETING
ENVIRONMENT

CHAPTER 2:
INTERNATIONAL MARKETING

ENVIRONMENT

2.1 Examine international marketing
environment
2.1.1 Explain international marketing
environment

2.2 Provide the factors that influence firms in
the international marketing environment.
2.2.1 Provide the factors in the
international marketing environment.
a. Political/ Legal
b. Economics
c. Social culture
d. Technological
e. Competitive

INTERNATIONAL MARKETING
ENVIRONMENT

Environment consists of forces.
Environment is made of such
controllable and uncontrollable

forces.

It is the environment that determines
favourable or unfavourable
conditions, and hence, provides
either opportunities or threats and
challenges

Degree of one’s success, to a large
extent, depends on effect of
marketing environment and ability of
the firm to respond effectively

35

INTERNATIONAL MARKETING
ENVIRONMENT

DEFINITION : international marketing
environment refers to the controllable
(internal) and uncontrollable
(external) forces that influence upon
the marketing decision making of a
firm globally
international marketing environment is
comprised of those components which
shape policies, programmes &
strategies of an international marketer

36

INTERNATIONAL MARKETING
ENVIRONMENT

INTERNAL FACTOR INTERNATIONAL
MARKETING ENVIRONMENT CONSIST OF
PRODUCT, PLACE, PROMOTION, PRICE
AND RESEARCH
EXTERNAL FACTOR INTERNATIONAL
MARKETING ENVIRONMENT CONSIST OF
POLITICAL/LEGAL, SOCIO CULTURE,
ECONOMIC, TECHNOLOGICAL AND
COMPETITIVE

37

Foreign environment
(uncontrollable)

Domestic environment Economic
(uncontrollable) forces

Political/legal Firm characteristics Competitive
Forces forces
(controllable)
Political/ Competitive
legal • PPrroicdDeucot m forces
Forces •
• Place
• Promotion
• Research

Economic Level of
forces technology

Social culture
forces

38

Political/ Economics
Legal

THE FACTORS IN THE
INTERNATIONAL
MARKETING
ENVIRONMENT

Competitive Social
culture

Technological

39

POLITICAL/ LEGAL

International marketing activities take
place within the political environment of
governmental institutions, political parties
and organizations through which a country’s
people and rulers exercises power
Each nation also has a political culture,
which reflects the relative importance of
the government and legal system and
provides a context within which individuals
and corporation understand their
relationship to the political system

Any company doing business outside its
home country should carefully study the
political environment

40