International Marketing, 5th Edition

Domestic marketing is the marketing practices within a marketer's home country. Foreign marketing is the domestic operations within a foreign country (i.e., marketing methods used outside the home market). Comparative marketing analytically compares two or more countries' marketing systems to identify similarities and differences.

International marketing studies the ‘how’ and ‘why’ a product succeeds or fails abroad and how marketing efforts affect the outcome. It provides a micro view of the market at the company level.

Multinational, global, and world marketing are all the same thing. Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications.

It is erroneous to state that domestic marketing and international marketing are similar in nature but not in scope. This is not unlike stating that national marketing and local marketing, except for the scope, are similar. International marketing is not domestic marketing on a larger scale. Whereas domestic marketing involves one set of uncontrollable variables, international marketing has at least two sets which interact with each other. Furthermore, the variables in each set are not identical in terms of number, degree, or kind.

1. size — The term MNC implies bigness, and it is not unusual for corporate size in terms of sales to be used as a primary requirement for judging whether or not a company is multinational. Although most multinational corporations are large, corporate sales should not be used as the sole criterion for multinationalism. Many large U.S. companies are very local in nature.
2. structure — Structural requirements for the definition of MNC include the number of countries in which the firm does business and the citizenship of corporate owners and top managers. Examples: Tambrands does business in 135 foreign countries, and Benetton operates 5,000 stores in 79 countries. In the case of NEC, it ships its products to 145 countries. Among NEC's 25 factories outside Japan are 7 factories in the United States which employ more than 7,000 workers.
3. performance — Definition of MNC by performance depends on such characteristics as earnings, sales, and assets. These performance characteristics indicate the extent of the commitment of corporate resources to foreign operations and the amount of rewards from that commitment. The greater the commitment and reward, the greater the degree of internationalization. One good example is Matsushita Electric Industrial which has 56 overseas manufacturing subsidiaries in 27 countries. Matsushita's overseas factories are responsible for almost a third of the firm's international sales. The company has regional headquarters in Singapore for Asia, London for Europe, and New Jersey for the United States, each with its own manufacturing, marketing, and R&D capability. Furthermore, the top executives at all three headquarters are important board members, and most local decisions are made locally. In South America, Matsushita's air conditioners are 100 percent locally sourced.
4. behavior — The behavior requirement as a measure of multinationalism concerns the behavioral characteristics of top management. Thus, a company becomes more multinational as its management thinks more internationally. Apple Computer Inc. has begun to exhibit international orientation, and it views the United States as simply one of the marketplaces. According to Michael H. Spindler, the company's former chief executive officer, “a global company does not have a … nationality. Global leaders do not think in the color of their passport. They think in terms of where the opportunity is.” One of the ways Apple has become a global company involves the view that all R&D wisdom does not reside in Silicon Valley. As a result, Apple has built a product development laboratory in Paris and has carried out product research work in Tokyo. Apple also makes an effort to achieve similar expense ratios across the three geographic areas.

Ethnocentricity is a strong orientation toward the home country. Markets and consumers abroad are viewed as unfamiliar and even inferior in taste, sophistication, and opportunity.

Polycentricity is the opposite of ethnocentricity. It is a strong orientation to the host country. The attitude places emphasis on differences between markets that are caused by variations within, such as in income, culture, laws, and politics. The assumption is that each market is unique and consequently difficult for outsiders to understand.

Geocentricity considers the whole world rather than any particular country as the target market. Corporate resources are allocated without regard to national frontiers, and there is no hesitation in making direct investment abroad when warranted. Geocentric firms take the view that while countries may differ, differences can be understood and managed. The company thus adapts its marketing program to meet local needs within the broader framework of its total strategy. The approach combines phpects of centralization and decentralization in a synthesis that allows some degree of efficiency and flexibility.

Although Japanese firms have done remarkably well in marketing their products internationally, it is debatable whether they are ethnocentric or geocentric. Being proud of their racial purity while viewing ethnic diversity as a weakness, Japanese politicians have from time to time made outrageous comments about women, other Asians, and Americans in general and certain minority groups in the United States in particular. Nevertheless, they have been quick and skillful enough to repair the damage. Apparently, being ethnocentric does not seem to adversely affect Japan’s trade performance.

The benefits of international marketing are many. First, it can help a nation survive by trading its resources for what it lacks. Second, it provides a means for growth as many overseas markets often grow at a faster rate. Third, those foreign markets can provide more sales and profits. Fourth, international marketing is a reasonable route for risk diversification. Fifth, international marketing keeps prices relatively stable and moderates the inflation rate. Sixth, it generates more employment. Seventh, it promotes the higher standards of living. Finally, international marketing provides insights for the understanding of the marketing process.

One example of growth opportunity is Whirlpool's international efforts. Only 14 percent of European households have clothes dryers, and 19 percent own dishwashers. The ownership rate is practically zero in Eastern Europe. The next 10 years should witness an increase in appliance sales of 4 percent annually in Europe but only 2 percent in the United States.