Core Concepts of Marketing

REASONSFORENTERINGINTERNATIONALMARKETS 129

Adopting thisglobalstrategyprovidesa competitiveadvantageincostandeffectiveness.

In co ntrasttomultinationalcompanies,standardized(global)corporationsviewtheworld

orits majorregionsas oneentityinsteadofa collectionofnationalmarkets.Theseworld

marketers competeona basisofappropriatevalue:i.e., anoptimalcombinationofprice,

quality, reliability,and deliveryofproductsthatare identicalindesignandfunction.Ulti-

mately, consumerstendtoprefera goodprice/qualityratiotoa highlycustomizedbutless

cost-effectiveitem.

Levittdi stinguishedbetwee'lproductsandbrands. Whiletheglobalproductitselfis

standardizedorsoldwith onlyminormodifications,ihebranding,positioning,andpromotion

mayhavetoreflectlocalconditions.

CriticsofLevitt's perspectivesuggestthathisargumentforglobalstandardizationis

incorrect andthateach marketstrategyshouldbecustomizedforeachcountry.Kotlernotes

that onestudyfoundthat 80 %ofU.S.exportsrequiredoneormoreadaptations.FUlther-

more, theaverageproductrequiresatleast fourtofiveadaptationsoutofa setofeleven

marketingel ements: labeling,packaging,materials,colors,name,productfeatures,adver-

tisingthemes,media,execution, price,andsalespromotion.^3 Kotlersuggeststhatalleleven

factorsshouldbeevaluatedbeforestan dardizationi"considered.

Todate, noonehasempiricallyvalidatedeitherperspective.WhilecriticsofLevitt

canofferthousandsofanecdotescontradictingthevalidityofstandardization,a morecare-

ful readofLevitt'sideas indicatethatheoffers standardizationasa strategicoption,nota

fart.Althoughglobal marketinghas itspitfalls,it canalsoyieldimpressiveadvantages.Stan-

dardizedproductscanloweroperatingcosts. Evenmoreimportant,effectivecoordination

canexploita company'sbestproductandmarketingideas.

Too often,executives viewglobalmarketingasaneither/orproposition---eitherfull

standardizationor local control.Butwhena global approachcanfall anywhereona

spectrum-fromtightworldwidecoordinationonprogramm:ngdetailstolooseagreements

ona productideas-thereisnoreasonforthis extremeview.Inapplyingtheglobalmar-

ketingconceptandmakingit work, flexibilityisessential.Thebigissuetodayisnotwhether

togoglobal,but howtotailortheglobalmarketingconcept to fiteachbusinessandhow

to make it work.

Reasons forEnteringInternationalMarkets

Manymarketers havefoundtheinternatiol"almark~tplacetobeextremelyhostile.A study

byBakerandKynak, 4 for example, foundthatlessthan20%offirmsinTexaswithexport

potential actuallycarried outbusinessininternationalmarkets.Butalthoughmanyfirms

viewin~ernationalmarketswithtrepidation, othersstillmakethedecisiontogointerna-

tional. Why?

Inonestudy, thefollowingmo~iv::ltingfactorsweregivenforinitiatingoverseasmar-

ketinginvolvement(inorderofimportance): 5

1. Largemarketsize


2. Stability throughdiversification


3. Profit potential


4. Unsolicitedorders


5. Proximityofmarket


6. Exc~sscapacity