chapter 1_the rationale of international marketing

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Chapter 1Chapter 1

The rationale for international marketing

The rationale for international marketing

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) –97814425277201/Fletcher/International Marketing/5th edition2

What is international marketing?

“International marketing is the process of planning and undertaking transactions across national boundaries that involve exchange”

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) –97814425277201/Fletcher/International Marketing/5th edition

Why undertake international marketing?

• Reasons for undertaking international marketing can be proactive or reactive, internal or external

• Leads to four possible reason combinations:• Proactive internal• Reactive internal• Proactive external• Reactive external

3


Internal rationalesProactive - internal

• Management desire• Unique offering• Utilise excess capacity• Size of domestic

market• Stagnant or declining

domestic market

Reactive - internal• Diversification risk• Reduce problems of

seasonality

4


External rationales

Proactive - external

• Opportunities in foreign markets

• Other sources of stimulus e.g. government grants

Reactive - external

• Unsolicited order or approach

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Stakeholders of the international firm


Universal stakeholder model• Generalised model of stakeholder

orientation used across different economies

• Leads to concept of holistic marketing

7


Driving forces in international marketing

• Market needs

• Technology

• Cost

• Government

• Communications

• Monetary framework

• World trading system


Restraining forces in international marketing

• Political systems

• Legal requirements

• Cultural norms

• Economic development


Drivers of growth in the international economy

• Management orientations • Ethnocentric orientation: home country

approach should be applied in every country

• Polycentric orientation: each country is different and develops its own unique approach

• Regiocentric orientation: the region is the market and region based strategies are developed

• Geocentric orientation: the world is the market with the flexibility to respond to local needs and wants


Risks in international marketing

11


• From domestic to transnational

• Domestic orientation - export to overseas agent

• Move to international marketing - commit resources to overseas market

• Take multinational stance - adapt for the market

• Move to global marketing - provide competitive global offering

Approaches to international marketing


• From indirect exporting to FDI

• Use Australian agent

• Export to overseas intermediary

• Set up a sales office overseas

• Arrange for an overseas firm to manufacture under license

• FDI in overseas market to avoid import restrictions

Approaches to international marketing (cont. 1)


International trade cycle


Wheel of international marketing


Australia’s trading environment: Export activity

• 2008 exports worth A$555 billion

• Main export partners: Japan, China, Republic of Korea, India, USA, New Zealand, UK, NZ, Taiwan, Singapore and Thailand

• Main exports: minerals, energy products, growth in knowledge intensive products (biotech, software)


Australia’s top 10 exports 2009

A$ b

illion

s

Australian Bureau of Statistics, 2010

0

10

20

30

40

50

60

70

80

90

Coal Iron Edu Gold Travel Gas Oil Alum Wheat Beef

2008 A$b 2009 A$b

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) –97814425277201/Fletcher/International Marketing/5th editionAustralian Bureau of Statistics, 2010

2008A$b

2009 A$b

% change

Coal 46.6 39.2 -16

Iron ore and concentrates 30.1 29.9 -0.7

Education-related personal travel services 15.1 17.7 17.1

Gold 14.7 15.6 6.1

Personal travel (excl education) services 11.7 12.1 4

Natural gas 9.2 7.7 -17.1

Crude petroleum 10.3 7.2 -30.7

Aluminium ores 6.5 4.8 -25.7

Wheat 3.8 4.8 25.4

Beef 5 4.3 -13.2

Australia’s top 10 exports (% change) 2009


Australia’s trading environment: Import activity

• 2008 imports worth A$279 billion

• Major suppliers: China, USA, Japan, Singapore, Germany, Thailand, UK, and Malaysia

• Main imports – manufactured goods


Australia’s trading environment: Service sector

• 2008 service exports valued at $107 billion

• Increasing in relative importance

• Main service exports: tourism, international education, computer software


Australia’s trading environment: Australia-Asia trade

• Historical affinity with for Europe and USA decreasing in importance relative to Asia

• Need to expand and strengthen links with Asian countries

chapter 1_the rationale of international marketing

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