International marketing and export management 7th edition pdf

InternatIonal MarketIng and export ManageMent Gerald Albaum Edwin Duerr

Seventh Edition

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InternatIonal M arketIng

and export M anageM

ent

Albaum Duerr

Seventh EditionInternatIonal MarketIng and export ManageMent

Gerald Albaum Edwin Duerr

Seventh Edition

International Marketing and Export Management offers an accessible and authoritative perspective on international marketing with a strong export management orientation, comprehensively describing the evolving competitive landscape as created by technological advances and international trade patterns. The seventh edition retains its clear and informed coverage of the opportunities for companies of all sizes and in all industries in the export of goods, services, intellectual property and business models.

Written in a no-nonsense style, the book has been updated to offer the most current discussion of the literature in the area, as well as new and engaging cases and examples in every chapter.

Key features include:

• Updated to take account of the global economic crisis

• New case studies including BP’s problems in the Gulf of Mexico and Toyota’s worldwide recalls, along with more practical examples and vignettes throughout the text

• Increased coverage of the service sector

• New material on the increased importance of the BRIC countries (Brazil, Russia, India and China) and their rapid export-led growth

• Greater emphasis on corporate social responsibility and ethics

About the authors

Gerald Albaum is Research Professor at the Robert O. Anderson Schools of Management, University of New Mexico, and Professor Emeritus of Marketing at the University of Oregon, USA. He is also Senior Research Fellow at the IC2 Institute, University of Texas, Austin, USA. He has been a visiting professor and scholar at universities in Canada, Denmark, New Zealand, Australia, Turkey, France, Finland and Hong Kong.

Edwin Duerr is Professor Emeritus of International Business at San Francisco State University, USA. He has been a visiting professor at universities in Japan, Brazil, Germany, Denmark, Sweden and the Netherlands, and has extensive consulting business around the globe. He is also Senior Editor of The Journal of International Business and Economy.

The book is ideal for undergraduate and postgraduate students taking modules in International Marketing and Export Marketing/International Trade. It will also be used as a supplementary text on International Business courses.

CVR_ALBA3880_07_SE_CVR.indd 1 20/04/2011 15:09

International Marketing

and Export Management

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Gerald Albaum University of New Mexico, USA

Edwin Duerr San Francisco State University, USA

International Marketing and Export Management Seventh Edition

Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England

and Associated Companies throughout the world

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First published 1989 Second edition published 1994 Third edition published 1998 Fourth edition published 2002 Fifth edition published 2005 Sixth edition published 2008 Seventh edition published 2011

© Addison-Wesley Publishers Limited 1989, 1994 © Gerald Albaum, Edwin Duerr and Jesper Strandskov 1998, 2008, 2011

The rights of Gerald Albaum, Edwin Duerr and Jesper Strandskov to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.

ISBN: 978-0-273-74388-0

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data Albaum, Gerald S.

International marketing and export management / Gerald Albaum, Edwin Duerr. — 7th ed.

p. cm. Includes bibliographical references and index. ISBN 978-0-273-74388-0 (pbk.)

1. Export marketing—Management. I. Duerr, Edwin. II. Title. HF1416.I617 2011 658.8'4—dc22

2011001761

10 9 8 7 6 5 4 3 2 1 16 15 14 13 12 11

Typeset in Book Antiqua 10/12.5 by 73 Printed and bound in Great Britain by Ashford Colour Press Ltd, Gosport, Hampshire

The publisher’s policy is to use paper manufactured from sustainable forests.

Dedication To my wife, Carol, whose support and encouragement have sustained me in my continuing research and through seven editions of International Marketing and Export Management.

Gerald Albaum

To Mitsuko Saito Duerr, my wife and companion in life in teaching, consulting, writing and international adventures.

Edwin Duerr

Preface xvii

About the authors xxii

List of abbreviations xxiii

Publisher’s acknowledgements xxviii

1 International marketing and exporting 1

2 Bases of international marketing 102

3 The international environment: culture; economic forces; and competition 174

4 The international environment: government, political and legal forces 217

5 Market selection: definition and strategies 262

6 Information for international market(ing) decisions 322

7 Market entry strategies 391

8 Export entry modes 442

9 Nonexport entry modes 512

10 Product decisions 580

11 Pricing decisions 670

12 Financing and methods of payment 730

13 Promotion and marketing communication 774

14 Supply chain management/logistics and handling export orders 854

15 Organization of international marketing activities 921

Glossary 959

Index 974

Brief contents

vii

Preface xvii

About the authors xxii

List of abbreviations xxiii

Publisher’s acknowledgements xxviii

1 International marketing and exporting 1

Introduction 2

Reasons why rapid growth in international business will resume 7

Increasing competitive demands on business world wide 14

Problems and needs 17

Being effective: the nature and practice of international marketing 21

Export marketing planning and strategy 33

The Internet, the World Wide Web, and e-business 42

The impact of technology 48

Entrepreneurial approaches to international marketing 51

The growth of non-traditional exports 54

Purpose and approach of the book 60

Appendix The worldwide recession of 2007–2010 61

Questions for discussion 63

References 64

Further reading 68

Case study 1.1 Voice4u 68

Case study 1.2 New United Motors Manufacturing Inc. 70

Case study 1.3 Export of art goods from Hungary 87

Contents

ix

x Contents

Case study 1.4 eBay, Inc. 88

Case study 1.5 Dell, Inc. 93

2 Bases of international marketing 102

Introduction 103

Potential benefits from export marketing 103

International trade theories 107

Export behavior theories and motives 116

The development of export in the firm: internationalization stages 126

Exporting and the network model 128

Ethical/moral issues 132

Social responsibility and the business environment 137

Summary 148

Questions for discussion 148

References 150

Further reading 152

Case study 2.1 BP 152

Case study 2.2 Toyota Motor Corporation 161

Case study 2.3 GlaxoSmithKline PLC 166

3 The international environment: culture; economic forces; and competition 174

Introduction 174

Culture and the socio-cultural environment 175

Economic forces 194

Competition 200

Summary 204

Questions for discussion 205

References 205

Further reading 207

Case study 3.1 Supreme Canning Company 208

Case study 3.2 Ford Motor Company 211

4 The international environment: government, political and legal forces 217

Introduction 217

Role of government 218

Economic integration 242

Summary 247

Questions for discussion 248

Contents xi

References 248

Further reading 250

Case study 4.1 Avon Products, Inc. (A) 250

Case study 4.2 Woberg Company 260

5 Market selection: definition and strategies 262

Introduction 263

Market definition and segmentation 268

Market expansion/selection process, procedure, and strategy 277

Foreign market portfolios: technique and analysis 297

Summary 302

Questions for discussion 303

References 304

Further reading 306

Case study 5.1 IKEA 307

Case study 5.2 Seven-Eleven Japan 312

Case study 5.3 Better Way Company Limited 318

6 Information for international market(ing) decisions 322

Introduction 323

Sources of information 327

Assessing market potential 335

Export marketing research 339

Using the Internet and e-mail for data collection 359

Summary 360

Questions for discussion 361

References 361

Further reading 364

Appendix: Selected publications and websites providing secondary data 364

Case study 6.1 SAN A/S 370

Case study 6.2 Aquabear AB 374

Case study 6.3 Ford Motor Company Latin America 377

Case study 6.4 United Parcel Service, Inc. 388

7 Market entry strategies 391

Introduction 392

Entry as a channel decision 392

Importance of the entry decision 393

Entry as a strategy 398

xii Contents

Factors influencing choice of entry mode 406

Managing the channel 417

Selecting the entry mode 419

Using free areas 421

Summary 421

Questions for discussion 422

References 423

Further reading 425

Case study 7.1 Yang Toyland Pte, Limited 425

Case study 7.2 Avon Products, Inc. (B) 434

Case study 7.3 Klako Group 438

Case study 7.4 Li and Fung Ltd 440

8 Export entry modes 442

Introduction 443

Indirect export 446

Direct export 462

Foreign sales branch 466

The Internet and e-commerce 480

Gray market exporting 486

Measuring performance 489

Summary 491

Questions for discussion 492

References 492

Further reading 495

Appendix: Developing an export plan 496

Case study 8.1 Sinova Management Consultancy Ltd. 498

Case study 8.2 Quint Winery 500

Case study 8.3 Nestlé 504

Case study 8.4 Urban Outfitters 509

9 Nonexport entry modes 512

Introduction 513

Alternative modes of entry 515

Manufacturing facilities 517

Assembly operations 532

Strategic alliances 535

Choosing between alternatives 554

Summary 555

Questions for discussion 555

Contents xiii

References 557

Further reading 560

Case study 9.1 Imagination Entertainment 561

Case study 9.2 GG Farm Machinery Company 565

Case study 9.3 VW in China 566

Case study 9.4 Gloria Jean’s Coffees 573

Case study 9.5 Sonya Madden 576

Case study 9.6 Wah Shing Toys 577

10 Product decisions 580

Introduction 581

Product policy 581

Product planning and development 583

Product mix decisions 605

Standardization vs adaptation 616

Packaging 625

Branding issues 630

Summary 639

Questions for discussion 640

References 641

Further reading 644

Case study 10.1 Daewoo Corporation 645

Case study 10.2 Tata Motors and Tata Daewoo 649

Case study 10.3 General Motors, GM Daewoo, and Hyundai 651

Case study 10.4 The Pampered Chef 653

Case study 10.5 The internationalization of Chinese brands 658

Case study 10.6 Royal Philips Electronics 663

Case study 10.7 The Boeing Company 665

11 Pricing decisions 670

Introduction 671

Determinants of an export price 673

Fundamental export pricing strategy 688

Relation of export to domestic price policies 695

Exchange rate changes, currency issues, and hedging 702

The price quotation 707

Transfer pricing 713

Summary 718

Questions for discussion 719

xiv Contents

References 719

Further reading 721

Case study 11.1 RAP Engineering and Equipment Company 722

Case study 11.2 The Capitool Company 723

Case study 11.3 Strato Designs 728

12 Financing and methods of payment 730

Introduction 731

Export financing methods/terms of payment 732

Payment/financing procedures 739

Export credit insurance 759

Countertrade 760

Summary 767

Questions for discussion 769

References 769

Further reading 770

Case study 12.1 Tainan Glass Manufacturing Company 771

Case study 12.2 Arion Exports 772

13 Promotion and marketing communication 774

Introduction 775

Export marketing promotion and communication decisions 778

Alternative techniques of promotion 786

Promotional programs and strategy 814

Standardization or adaptation? 818

Advertising transference 827

Management issues 829

Summary 830

Questions for discussion 831

References 832

Further reading 834

Case study 13.1 Christa Clothing International 835

Case study 13.2 Nove Ltd 841

Case study 13.3 Eli’s Cheesecake Company 846

Case study 13.4 Kraft Foods 852

14 Supply chain management/logistics and handling export orders 854

Introduction 855

Contents xv

Handling the export order 859

Physical distribution 863

Logistics and the systems concept 868

Structure of international physical distribution 876

A concluding comment 906

Questions for discussion 906

References 907

Further reading 908

Case study 14.1 Jaguar Electronics, Inc. 908

Case study 14.2 Primex Marketing, Inc. 912

Case study 14.3 EFI Logistics 918

15 Organization of international marketing activities 921

Introduction 922

Main considerations of being organized internationally 923

Organizational structures 929

Summary 940

Questions for discussion 940

References 941

Case study 15.1 Hewlett-Packard (HP) 941

Case study 15.2 Unilever (A) 945

Case study 15.3 Unilever (B) 956

Glossary 959

Index 974

Supporting resources

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For instructors: ● Complete, downloadable Instructor’s Manual. ● PowerPoint slides that can be downloaded and used for presentations. ● Links to articles and resources on the web.

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For more information please contact your local Pearson Education sales representative or visit www.pearsoned.co.uk/albaum

Meeting the changing challenges in international marketing

Three changes in international business have made international marketing and export management of even greater importance – and a new edition of this book necessary. The first is the economic recession beginning in 2007–08, and its aftermath. The second is the exceptionally strong growth and economic power of China and India. The third is the continuing development of the factors that had led to economic growth and the importance of international business in previous decades.

1. The recession that began in 2007–08 had dramatic effects, reducing GDP and demand in most nations, and causing the first drop in the volume and value of international trade in 50 years. Paradoxically, as we shall see, it made inter- national business and export marketing of even greater importance to both countries and businesses. We will discuss the many problems businesses faced, the strategies taken to meet the challenges, and the effects these changes can be expected to have on long-term operations. However, in order to place the effects of the recession in perspective, we will first briefly discuss five aspects of the situation: (1) the recession and expected renewed growth; (2) increasing international interdependence; (3) exports as an engine of growth; (4) importance of innovation and entrepreneurship; and (5) the rea- sons why rapid growth in international business and trade will resume.

2. China’s economic development has made it one of the world’s largest exporters and importers, and the second largest economy in the world. It is exporting manufactured goods with increasing levels of technology, and importing more luxury goods. This has resulted in continually changing world trade patterns and greater threats to and opportunities for companies throughout the world. India has become the world’s leader in the provision of services of knowledge-industry workers, and also an important IT provider.

3. The other major advances that have occurred during past decades will con- tinue to drive increasing globalization, and the ever-greater importance of international marketing and export management. These include:

Preface

xvii

xviii Preface

● The information revolution with the technological advances and lowered costs in communications, the development of the Internet and e-commerce, and the development of increasingly sophisticated and diverse software to support a wide variety of business functions. New companies and industries have emerged while a number of existing companies have undertaker major changes or failed. Blogs and other new communications networks, some of which were initially developed as social network sites, have enabled easier gathering of information by individuals as well as providing new opportuni- ties for businesses. They have provided means for companies to more effec- tively interact with key stakeholders: obtaining information on consumer preferences, demands and suggestions as well as advertising to the cus- tomers; obtaining suggestions from and providing information to company personnel as well as other stakeholders and the public.