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International Marketing

tions, however, are made to meet local conditions or pref- The second alternative is called adaptive/polycentric.
erence in package sizes or colors. Manufacturers of com- Under this policy, local management establishes whatever
puters, copiers, cars, and calculators have been successful in price it deems appropriate at any particular time. This
using this strategy. Companies may develop a country-spe- policy is sensitive to local conditions; nevertheless, it may
cific product. If this strategy is employed, the product is favor product arbitrage where differences in price between
substantially altered or new products are produced across markets exceed the freight and duty cost separating the
countries. For example, hand-powered washing machines markets.
have been successfully marketed in Latin America. The last alternative is called invention/geocentric
pricing. This policy is an intermediary position. It neither
Communication Adaptation. It is extremely difficult to sets a single worldwide price nor relinquishes total control
standardize advertising across countries because of varia- over prices to local management. This policy recognizes
tions in economic, social, and political environments. both the importance of local factors (including costs) and
Companies, however, can use one message everywhere, the firm’s market objectives.
varying only the language or color. Marlboro and Camel
cigarettes, for example, essentially use the same message in
CHANNELS OF DISTRIBUTION
their international promotion programs. Transferability of
Two major types of international alternatives are available
an advertising message is still a difficult problem even to a domestic producer. The first is the use of domestic
when the primary benefits of the product remain intact middlemen who provide marketing services from their
across national boundaries. Some promotional blunders domestic base. If this arrangement is chosen, there are sev-
are well known to marketing students. Coors’s slogan eral domestic middlemen available from which the com-
“Turn it loose” in Spanish was read by some as “suffer panies may choose. Export management companies,
from diarrhea”; in Spain, Chevrolet’s Nova translated as
manufacturers’ export agents, trading companies, and
“it doesn’t go”; and a laundry soap ad claiming to wash
complementary marketers are possible alternatives.
“really dirty parts” was translated in French-speaking
Quebec to read “a soap for washing private parts.” If a company is unwilling to deal with domestic mid-
dlemen, it may decide to deal directly with middlemen in
foreign countries. This alternative shortens the channel of
Dual Adaptation. The fourth strategy, dual adaptation,
distribution, thereby bringing the manufacturer closer to
involves altering both the product and the communica-
the market. The main drawback of this alternative is that
tions. The classic example comes from National Cash
Register, which manufactured a crank-operated cash reg- foreign middlemen are some distance away and, therefore,
ister and promoted it to businesses in less-developed more difficult to control than domestic ones.
countries.
SUMMARY
Product Invention. When products cannot be sold as they International marketing has become increasingly impor-
are, product invention strategy may be used. Ford and tant to U.S. firms. At the same time, global markets are
other automakers have sold completely different makes of becoming riskier because of fluctuating exchange rates,
cars in Europe than the ones they sell in the United States. unstable governments, high product-communication
Brewing companies have sold alcohol-free beer in coun- adaptation costs, and several other factors. Therefore, the
tries where sales of alcoholic beverages are prohibited. first step in considering expanding to the overseas markets
is to understand the international marketing environ-
ment. Second, the firm should clearly define its objective
PRICE
for international operations. Third, in considering which
Multinational companies find it difficult to adopt a stan- foreign markets to target, a firm must analyze each coun-
dardized pricing strategy across countries because they try’s physical, legal, economic, political, cultural, and
have to deal with fluctuating exchange rates, differences competitive environments. Once the target market or
among countries in transportation costs, governmental tax markets are selected, the firm has to decide how to enter
policies, and controls (such as dumping and price call- the target market. Companies must next decide on the
ings). Keegan proposed three global pricing alternatives. extent to which their product, price, promotion, and dis-
The first policy is called extension/ethnocentric. Under
tribution should be adapted to each country. Finally, the
this policy, the firm sets the same price throughout the
firm must develop an effective organization for pursuing
world and the customers absorb all freight and import
international marketing.
duties. The main advantage of this policy is its simplicity,
but its weakness is its failure to take into account local SEE ALSO International Business; International Trade;
markets’ demand and competitive conditions. Marketing

418 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION