International marketing and export management

689 Pages·2005·8.676 MB·English

by  Gerald S Albaum, Edwin Duerr, Jesper Strandskov, Dawson Books

international marketing
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n “Albaum, Duerr and Strandskov offer a unique focus on export management. The comprehensive xr
coverage provides a wealth of examples and cases with a good spread of academic and non-academic
sources. The balance between theory and practice is just right. I highly recommend this text." pn
Geraldine Cohen, Lecturer, School of Business and Marketing, Brunel University oa
Looking to learn about marketing decisions and management processes needed to develop export rt
operations, either in a small to medium size business or in a global corporation? With changing
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opportunities and challenges in the global environment, International Marketing and Export t
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Management,fifth edition, provides the most comprehensive and up-to-date coverage on the topic.

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"In my opinion, Albaum, Duerr and Strandskov have written an excellent textbook on the subject of
International Marketing and students will find it both readable and extremely informative." a
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David Demick, Senior Lecturer, School of Marketing,
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Entrepreneurship and Strategy, University of Ulster n

Geared to both undergraduate and postgraduate courses on International Marketing or Export am
Marketing/International Trade, this book can also be used as a supplementary text on International
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Business courses and as a useful source of reference to even the most experienced of practitioners. a
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New to this edition! m
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In response to recent global developments, the authors have increased emphasis on the e
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following:
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• the impact of the Internet, World Wide Web, and e-commerce t
• the increasing use of specialized software to assist in managing marketing functions,
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increasing efficiency in logistics, and coordinating and controlling enterprises i
• the impact of technological advances on international marketing n
• the changes resulting from China’s rapid, export-led growth and from its entry into the
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World Trade Organization
• the growing concerns with respect to social responsibility, and the costs of failure to meet fi
societal expectations. f
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Visit www.pearsoned.co.uk/albaumto access valuable teaching tools, including an Instructor’s

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Manual and PowerPoint slides.
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Gerald Albaum Edwin Duerr Jesper Strandskov i
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is Research Professor at the is a Professor Emeritus of is a Professor of International n
Robert O. Anderson Schools of International Business at San Business at Aarhus School of
Management, University of New Francisco State University, USA. Business, Denmark. He has
Mexico and Professor Emeritus He has been a visiting professor been visiting professor at
of Marketing at the University of at universities in Japan, Brazil, universities in the USA and
Oregon, USA. He is also Senior Germany, Denmark, Sweden Australia. He also acts as an
Research Fellow at the IC2 and The Netherlands and has international business
Institute, University of Texas, extensive consulting business consultant to several business albaum
Austin, USA. He has been a around the globe. Duerr is also companies and public
visiting professor and scholar at Senior Editor of The Journal of institutions. duerr
universities in Canada, International Business and
strandskov
Denmark, New Zealand, Economy.
Australia, Turkey, France,
Finland and Hong Kong.
An imprint of
www.pearson-books.com
INTM_A01 20/10/04 9:06 am Page i
Gerald Albaum
University of New Mexico, USA
Edwin Duerr
San Francisco State University, USA
Jesper Strandskov
Aarhus School of Business, Denmark
International
Marketing
Export
and
Management
fifth edition
INTM_A01 20/10/04 9:06 am Page ii
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearsoned.co.uk
First published 1989
Second edition published 1994
Third edition published 1998
Fourth edition published 2002
Fifth edition published 2005
© Addison-Wesley Publishers Limited 1989, 1994
© Gerald Albaum, Edwin Duerr and Jesper Strandskov 1998, 2005
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, 90
Tottenham Court Road, London W1T 4LP.
All trademarks used herein are the property of their respective owners. The use of any trade-
mark 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 endorse-
ment of this book by such owners.
ISBN 0 273 686348
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 and Jesper
Strandskov, -- 5th ed.
p. cm.
Includes bibliographical references and index.
ISBN 0-273-68634-8 (pbk)
1. Export marketing--Management. I. Duerr, Edwin. II. Strandskov, Jesper. III. Title.
HF1416.I617 2004
658.8'4--dc22
2004053302
10 9 8 7 6 5 4 3 2 1
09 08 07 06 05
Typeset in 91"111Sabon Reg Justified by 25
2 2
Printed and bound by Ashford Colour Press., Gosport
The publisher's policy is to use paper manufactured from sustainable forests.
INTM_A01 20/10/04 9:07 am Page iii
Contents
Preface viii
About the authors xii
List of abbreviations xiii
Guided tour xviii
Publisher’s acknowledgements xxi
1 International marketing and exporting 1
1.1 Introduction 1
1.2 The nature of international marketing 5
1.3 Export marketing planning and strategy 15
1.4 The Internet, the World Wide Web, and e-business 22
1.5 The impact of technology 25
1.6 Entrepreneurial approaches to international marketing 28
1.7 The growth of nontraditional exports 31
1.8 Overview of the book 35
Questions for discussion 35
References 36
Further reading 38
Case Study 1.1 Export of art goods from Hungary 39

Case Study 1.2 Murphy Company Limited 39
Case Study 1.3 eBay, Inc. 40
Case Study 1.4 DaimlerChrylser AG 43
2 Bases of international marketing 51
2.1 Introduction 51
2.2 Potential benefits from export marketing 52
2.3 International trade theories 55
2.4 Export behaviour theories and motives 61
2.5 The development of export in the firm; internationalization stages 70
2.6 Exporting and the network model 73
INTM_A01 20/10/04 9:07 am Page iv
iv CONTENTS
2.7 Ethical/moral issues 76
2.8 Social responsibility and the business environment 80
Summary 87
Questions for discussion 87
References 88
Further reading 90
Case Study 2.1 Bridgestone Corporation 91
Case Study 2.2 GlaxoSmithKline PLC 94
3 The international environment 99
3.1 Introduction 99
3.2 Economic forces 100
3.3 Socio-cultural environment 106
3.4 Political/legal environment 118
3.5 Economic integration 136
3.6 Competition 141
Summary 144
Questions for discussion 144
References 145
Further reading 147
Case Study 3.1 Supreme Canning Company 148
Case Study 3.2 Ford Motor Company 149
Case Study 3.3 Avon Products, Inc. (A) 153
4 Export market selection: definition and strategies 159
4.1 Introduction 159
4.2 Market definition and segmentation 161
4.3 Market expansion/selection process, procedure and strategy 170
4.4 Foreign market portfolios: technique and analysis 187
Summary 191
Questions for discussion 191
References 192
Further reading 193
Case Study 4.1 IKEA 194
Case Study 4.2 Seven-Eleven Japan 196

5 Information for international market(ing) decisions 199
5.1 Introduction 199
5.2 Sources of information 202
5.3 Assessing market potential 208
5.4 Export marketing research 213
5.5 Using the Internet and e-mail for data collection 226
Summary 228
Questions for discussion 228
References 228
Further reading 230
Appendix: Selected publications and web sites providing secondary data 231
Case Study 5.1 Mariani Packing Company, Inc. 235
INTM_A01 20/10/04 9:07 am Page v
CONTENTS v
Case Study 5.2 Aquabear AB 237
Case Study 5.3 Ford Motor Company Latin America 239
6 Market entry strategies 246
6.1 Introduction 246
6.2 Entry as a channel decision 246
6.3 Entry as a strategy 251
6.4 Factors influencing choice of entry mode 257
6.5 Managing the channel 264
6.6 Selecting the entry mode 265
6.7 Using free areas 267
Summary 267
Questions for discussion 267
References 268
Further reading 269
Case Study 6.1 Alcas Corporation 270
Case Study 6.2 Yang Toyland Pte, Limited 272
Case Study 6.3 Avon Products, Inc. (B) 277
7 Export entry modes 280
7.1 Introduction 280
7.2 Indirect export 282
7.3 Direct export 295
7.4 The Internet and e-commerce 309
7.5 Gray market exporting 313
Summary 315
Questions for discussion 316
References 317
Further reading 318
Case Study 7.1 HV Industri A/S 319
Case Study 7.2 Quint Winery 321
Case Study 7.3 Nestlé 323
8 Nonexport entry modes 326
8.1 Introduction 326
8.2 Alternative modes of entry 329
8.3 Manufacturing facilities 331
8.4 Assembly operations 341
8.5 Strategic alliances 344
8.6 Choosing between alternatives 357
Summary 358
Questions for discussion 358
References 359
Further reading 361
Case Study 8.1 Terralumen S.A. 362
Case Study 8.2 GG Farm Machinery Company 367
Case Study 8.3 VW in China 368
Case Study 8.4 Nu Skin Enterprises, Inc. 372
INTM_A01 20/10/04 9:07 am Page vi
vi CONTENTS
9 Product decisions 374
9.1 Introduction 374
9.2 Product policy 375
9.3 Product planning and development 377
9.4 Product mix decisions 391
9.5 Standardization vs adaptation 400
9.6 Packaging 407
9.7 Branding issues 410
Summary 415
Questions for discussion 416
References 417
Further reading 419
Case Study 9.1 Daewoo Corporation 420
Case Study 9.2 Supreme Foods of France 422
Case Study 9.3 BRL Hardy 426
10 Pricing decisions 431
10.1 Introduction 431
10.2 Determinants of an export price 433
10.3 Fundamental export pricing strategy 442
10.4 Relation of export to domestic price policies 447
10.5 Currency issues 453
10.6 The price quotation 454
10.7 Transfer pricing 460
Summary 464
Questions for discussion 464
References 465
Further reading 466
Case Study 10.1 RAP Engineering and Equipment Company 467
Case Study 10.2 The Capitool Company 467
Case Study 10.3 Strato Designs 470
11 Financing and methods of payment 472
11.1 Introduction 472
11.2 Export financing methods/terms of payment 473
11.3 Payment/financing procedures 479
11.4 Export credit insurance 497
11.5 Countertrade 498
Summary 502
Questions for discussion 504
References 504
Further reading 505
Case Study 11.1 Tainan Glass Manufacturing Company 506
Case Study 11.2 Arion Exports 507
INTM_A01 20/10/04 9:07 am Page vii
CONTENTS vii
12 Promotion and marketing communication 508
12.1 Introduction 508
12.2 Export marketing promotion and communication decisions 510
12.3 Alternative techniques of promotion 519
12.4 Promotional programs and strategy 538
12.5 Standardization or adaptation? 542
12.6 Advertising transference 549
12.7 Management issues 551
Summary 552
Questions for discussion 553
References 553
Further reading 555
Case Study 12.1 Adidas AG 556
Case Study 12.2 LEGO A/S 558
Case Study 12.3 Christa Clothing International 559
Case Study 12.4 Nove Ltd 563
Case Study 12.5 Eli’s Cheesecake Company 565
13 The export order and physical distribution 570
13.1 Introduction 570
13.2 Handling the export order 574
13.3 Physical distribution 577
13.4 Structure of international physical distribution 584
13.5 A concluding comment 608
Questions for discussion 609
References 609
Further reading 610
Case Study 13.1 Jaguar Electronics, Inc. 611
Case Study 13.2 Megabox, Inc. 613
Case Study 13.3 Primex Marketing, Inc. 616
14 Organization of international
marketing activities 619
14.1 Introduction 619
14.2 Main considerations of being organized internationally 620
14.3 Organizational structures 625
Summary 636
Questions for discussion 636
References 637
Further reading 637
Case Study 14.1 Asea Brown Boveri Limited 638
Case Study 14.2 639
Glossary 647
Index 658
INTM_A01 20/10/04 9:07 am Page viii
preface
Changing opportunities and challenges in
international marketing
This major revision of International Marketing and Export Management has been
made necessary by the continuing rapid changes in international marketing, and the
increasing importance of international markets to companies of all sizes. While
most of the factors that have driven change over the past decade are continuing,
new opportunities and problems are emerging. There continue to be technological
advances and lowered costs in communications, growth in e-commerce,
improvements in transportation and logistics, lowering of barriers to trade and
investment, growth of international strategic alliances, and increasing globalization
of business. Now the internationalization of retail and other service-sector
companies is escalating. The pace of innovation in products and services is increas-
ing. The advances in communications are enabling people in some knowledge-based
industries to remain in their home countries while performing their work for
companies in other countries.
New challenges are arising. Marketing in deflationary economies is a new
concern. The growth of China as an economic power and major exporter and its

membership in the World Trade Organization is causing substantial changes in trade
patterns. There are disruptions in trade flows, patterns and volumes being caused by
concerns over terrorism, military action, and health hazards. There is increasing
scrutiny of business behavior by customers, the public, and governmental agencies.
This makes ethics, social responsibility, public policy, and company responses an
essential concern.
Although many of these changes have created new problems that firms must
address, all of these changes have opened new opportunities for businesses ranging
from one-person operations to corporate giants. E-commerce has had a particularly
strong impact in furthering the globalization of business, especially for smaller and
medium-sized businesses. With a viable product or service, the smallest business can
now find potential customers and means of distribution across the globe. The increased
ease of entry has also resulted in new entrants creating increased competition in all
marketplaces.
INTM_A01 20/10/04 9:07 am Page ix
PREFACE ix
New to the fifth edition
The changing opportunities and challenges in international marketing have led to
increased emphasis on several topics in this fifth edition, including the following:
(cid:1)the impact of the Internet, the World Wide Web, and e-commerce on the way the
world does business and the way marketing is conducted;
(cid:1)the increasing use of specialized software to assist in managing marketing
functions, increasing efficiency in logistics, and coordinating and controlling
enterprises;
(cid:1)the impact of technological advances on international marketing;
(cid:1)the growth of nontraditional exports;
(cid:1)the changes resulting from China’s rapid, export-led growth and from its entry
into the World Trade Organization;
(cid:1)the growing concerns with respect to social responsibility, and the costs of failure
to meet societal expectations.
All of these factors are integrated through discussions in the text, exhibits, and cases.
Aims and objectives
The basic aims and objectives of this fifth edition remain the same as those of the
previous editions:
1. to provide a text in international marketing that will be as applicable and
valuable for small and medium-sized enterprises as it is for large international cor-
porations;
2. to provide an emphasis on exporting that is appropriate given its position as the
major international activity of most small and medium-size businesses and its
extensive use by virtually all global companies; and
3. to provide coverage of the nonexport modes of market penetration used by both
expanding, smaller companies and corporate giants as a part of their overall inter-
national marketing strategy and channel management.
These emphases are a reflection of both the international marketing environment and
the authors’ view of exporting. In terms of the numbers of companies doing some type
of international business, small and medium-sized companies are most prevalent. Most

of these companies never diversify and grow to the size where being a multinational
(or global) company is desirable or even feasible. The major activity of most small and
medium-size companies is exporting. It is in this area that the transition from domes-
tic to international marketing usually occurs, and in which knowledge of internation-
al dimensions of marketing is of critical importance. For the increasing number of
enterprises that do expand into other methods of market entry, exporting typically
remains a major activity. Even the largest multinational firms with global operations
are involved in extensive exporting.
This book is focused primarily on the marketing decisions and management
processes involved in developing export operations. The key procedural aspects and
activities required in exporting, which the manager must know, are covered.
Necessarily, a certain amount of descriptive material must be included. This is not,
however, a ‘how-to’ treatment of technical details. As in previous editions, the empha-
sis remains on exporting as a marketing activity.