Instructor Resource Guide

Instructor Resource Guide to accompany International Marketing 4th Edition by Kotabe et al Vinh Lu 1 / 4

© John Wiley & Sons Australia, Ltd 2014 2 Chapter 1 – Introduction to international marketing Review Questions 1.Discuss the reasons why international business is much more complex today than it was 20 years ago.Among the commonly cited reasons for increasingly complex international business

environments are:

•Saturation of domestic markets and more sophisticated consumers.•More consumers and markets to analyse.•Increasing global competition that impacts the international as well as the domestic environment.•Need for global cooperation and expanding international opportunities.•Political and governmental barriers.•Ethical and moral concerns.•Cultural barriers.•Shifting multinational environments.•Role of the internet and electronic commerce, especially in B2B commerce.

2.Why is it important for students to understand international marketing?

Factors that make understanding international marketing important are:

•the saturation of markets in developed countries forcing companies to look at international markets for opportunities.•the change in how competition is viewed around the world in terms of market share, country source and global reach.•international competition bringing about global pressure.•because of the proliferation of the internet and e-business.Today’s business environment is characterised not only by more competition from other parts of the world but also by more fluid and international market conditions than in the past.

3.Is there any justification for calling this the ‘Asian century’? Why/why not?Despite setbacks such as the 2004 tsunami, economic development and growth in the Asian region has been extraordinary. It has been suggested that global economic power has been shifting to the Asian region. In 2006, the region (ESCAP countries) posted real GDP growth of 7.8% compared to 2.8% by the world’s industrialised nations. China, India and Japan are the powerhouses in the region, contributing 62% of its GDP and 44% of imports. In the coming decades, the greatest opportunities are expected to come from ‘big emerging markets’ such as China, and India but also ASEAN countries such as Indonesia, Malaysia and Thailand. While this provides support for calling the twenty-first century the ‘Asian century’, whether the growth will continue and the region’s potential be realised will depend on, amongst others, development of required infrastructure and availability of sufficient energy resources. 2 / 4

Chapter 1: Introduction to International Marketing

© John Wiley & Sons Australia, Ltd 2014 3

• Does international trade accurately reflect the nature of global competition? Justify

your answer.

If the marketer only thinks in terms of exports and imports, the answer is no. If the marketer does not consider the amount of business that is being done between the subsidiaries of the same multinational or global firm, then the answer is no. If the global competitor truly is designing strategy and policy to fit the current international trade environment, the competitor uses international trade as a component of the firm’s strategy formulation process.

• How is global marketing different from international marketing?

Global marketing is a more advanced phase of international marketing. Once export marketing becomes an integral part of a company’s marketing activity, it begins to seek growth and expansion through international marketing. The emphasis is polycentric (emphasis on product and promotional adaptation in foreign markets - wherever necessary). In global marketing, fragmentation caused by international marketing is overcome.

Global marketing refers to marketing activities by companies that emphasise:

• Standardisation efforts — standardising marketing programs across different countries.• Coordination across markets — reducing cost inefficiencies and duplication of efforts at the national and regional levels.• Global integration — participating in many major world markets to gain competitive advantage.

• How is the internet reshaping global marketing?

The internet is one of the most useful inventions of the twentieth century. In the global marketplace, the internet and its web-related activities have brought a multitude of benefits to consumers and producers. The internet’s future prospects and fundamentals seem very strong especially in the area of B2B e-commerce. There is still a ‘digital divide’ between developed and developing countries regarding the availability of internet marketing and its web-related activities. In the coming years, many companies will be using this medium to reach far flung places on the earth. In short, the internet will help connect buyers and suppliers in more efficient and effective ways.

Discussion Questions

INSTRUCTOR’S NOTE: Discussion Questions are found at the end of each chapter in the text. These questions (in many cases) are too lengthy to repeat in this manual. Suggestions for answering and discussing the questions are presented in this section. Many of the questions require student opinion and judgment.

• The United States and Japan, the two largest economies in the world, are also the

largest importers and exporters of goods and services. Do you think the impact of online businesses and e-marketing practices in the global context has had a positive or negative impact on their national economies? Why?

Electronic commerce has had a profound impact on international trade activities. Students might point out the various benefits of the internet such as the ability to sell products and 3 / 4

Instructor Resource Guide to accompany International Marketing 4e by Kotabe et al © John Wiley & Sons Australia, Ltd 2014 4 services across national borders without the need for relocation, the expansion of market reach to a wider customer base, the ease of conducting market research online, the opportunity to promote and advertise product and service offerings across various online channels, the ability to receive/ settle payments through the internet, and the various platforms to communicate, interact, and build relationships with international customers (responding to inquiries, handling complaints and feedback). Research has also found that firms taking advantage of the benefits offered by the Internet might achieve a competitive advantage.However, students might also point out the potential issues of relying on online practices such as consumer privacy, security, and ethics.

• Consider this hypothetical situation: a major dairy manufacturer produces and

markets standardised breakfast yoghurts to countries around the world. Minor modifications in attributes such as sweetness and flavours are made to cater to local needs. However, the core products and brands are standardised. The organisation entered the Chinese market a few years ago and was extremely satisfied with the results. The organisation’s sales continue to grow at a rate of approximately 50 per cent a year in China. Encouraged by its marketing success in China and other Asian countries, and based on the market reforms taking place, the organisation started operations in India by manufacturing and marketing its products.Initial response to the product was extremely encouraging, and within a year, the organisation was thinking of rapidly expanding its production capacity. However, after a year, sales tapered off and started to fall. The product was targeted at the upper-middle social class, especially families where both spouses were working.Detailed consumer research seemed to suggest that, while the target market adopted flavoured breakfast yoghurt as an alternative meal (i.e. breakfast) for a short time, they eventually returned to the traditional Indian breakfast. The CEOs of some other organisations in the food industry in India are quoted as saying that non- Indian snack products and restaurant business are the areas in which MNCs can hope for success. Trying to replace a full meal with a non-Indian product has less of a chance of succeeding.You are a senior executive in the international division of this food MNC, with experience operating in various countries in a product management function. The CEO plans to send you to India on a fact-finding mission to answer to these specific questions. What, in your opinion, would be the answers to the following questions: (a) Was entering the market with a standardised product a mistake?(b) If so, was it a problem because of the product or because of the way it was positioned?(c) Given the advantages to be gained through leveraging brand equity and product knowledge on a global basis, and the disadvantages of differing local tastes, what would be your strategy for entering new markets?

This question assumes the format of a small case. After reading the material contained in the question, the student is asked to formulate an opinion on three basic questions with respect to market entry into the Indian market. These questions deal with the questions of standardisation versus adaptation, positioning with respect to culture and lifestyle habits, and choices made in encouraging the development of brand equity. To answer each of these questions the student should assume the role of a brand manager. First, the student should re- read the section of the chapter that discusses standardisation versus adaptation. Second, the student should review the material found in the Appendix to Chapter 1. By reviewing this material the student should be better prepared to analyse positioning strategy and the concept of brand equity. Lastly, the student should be encouraged to consider whether policies that are

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