International marketing strategies and frameworks

International and Domestic Marketing: Are They the Same?

Although the definitions of international marketing and domestic marketing suggest they are fundamentally different, the same forces that have been driving globalization in recent years have introduced some new twists and challenges for marketing executives seeking to remain competitive in this increasingly globalized marketplace that have clouded the differences between these two distinct marketing functions. In many ways, the research will show that both domestic and international marketing involve many of the same considerations, but there are some important differences that must be taken into account as well. This paper provides a review of the relevant peer-reviewed and scholarly literature to show that while the international and domestic marketing are different in some ways, the share some commonalities that suggest they are more alike than different. A summary of the research and salient findings are presented in the conclusion.

Review and Discussion

The trends are clear and more and more companies are expanding their domestic marketing efforts into the international marketing sphere. According to Whigham-Desir (1997), "Big corporations have long been invested in the $1.3 trillion two-way trading between the United States and foreign countries. But a new era of global commerce is dawning as more American entrepreneurs venture into the import/export business. Now smaller traders -- from one-person shopkeepers to mid-sized wholesalers joint venturing with other businesses -- are launching out overseas" (p. 62). In reality, it would seem that based on their respective definitions, domestic marketing and international marketing are two completely separate functions, but recent studies of marketing initiatives indicate that they share some similarities as well that have eroded their historic divisions.

In this regard, Beckman and Davidson (1967) define the marketing function as "a major economic activity which is inherent in the marketing process, pervades it, and which, through a continuous division of labor, tends to become specialized. In this sense a marketing function is not a technique, a tool, or a special activity that may be properly considered as but a part or phase of some more basic function" (p. 40). Moreover, given the explosive growth of many multinational corporations in recent years, it is little wonder that these success stories have attracted a great deal of attention of business researchers. For instance, according to Sirgy and Samli (1995), "Having to overcome cross-cultural communication barriers has made those international marketing successes all the more noteworthy" (p. 281).

One useful approach to researching international and domestic marketing functions has been the use of case studies to investigate the international experience of various companies. A number of researchers have used this approach in formulating their models that concentrate on exporting from a home base. Citing a case study by Cavusgil and Nevin (1980), Stone and Mccall (2004) report that this model describes a company competing in a domestic market before it can progress onto international marketing efforts. Other researchers have emphasized the preliminary stages that some companies experience before moving from domestic to international marketing. According to Stone and Mccall (2004), these models typically identify three states of international expansion through which most companies proceed:

Stage 1: Stimuli for international experimentation. State 1 occurs when a firm operating in the domestic market experiences external and/or internal stimuli which encourage it to begin exporting. External stimuli can take the form of unsolicited orders from buyers, of having distributors abroad, and/or of using domestic export agents. Firms that start exporting through external enquiries exemplify a passive approach to international marketing. This involvement is fortuitous, marginal and intermittent with short-term profits.

Stage 2: Active international involvement. As the firm becomes more involved, it moves to State 2, becoming active internationally. It undertakes systematic exploration of marketing opportunities that often impose considerable physical, financial and managerial demands on the firm's resources. At this stage the firm can still retract from its international interests, but it may choose to proceed to State 3, as a committed participant in international marketing.

Stage 3: Committed international involvement. This stage involves a long-term commitment to international marketing (Stone & Mccall, 2004). This component of international marketing is comprised of two factors: (a) the amount of resources committed and (b) the degree of commitment. According to Anderson (1993), "The amount of resources could be operationalized as the size of investment in the market (marketing, organization, personal, etc.), while the degree of commitment refers to the difficulty of finding an alternative use for the resources and transferring them to the alternative use" (p. 209).

The past 30 years have created some profound challenges and opportunities for companies seeking to refine their domestic marketing efforts or expand the marketing function into the international sphere. For instance, during the early 1980s, the expansion of domestic marketing to the international marketing phase was largely regarded as being one of incremental growth, based on the studies to date that had viewed international marketing expansion from the perspective of exporting from the domestic base. In this regard, Stone and Mccall explain such international expansion using a model showing the export planning process that proceeds through three stages as follows:

Identifying and measuring market opportunities;

Developing the export marketing strategy; and,

Implementing the strategy.

Thereafter, the concept of international marketing was further extended beyond mere exporting (e.g., selling domestic goods to a buyer in another country) to define marketing practices with the marketing mix embracing an international component as well; this new model involved a measure of overseas investments and strategic cooperation with an overseas business alliance (Stone & Mccall, 2004). This model emphasized the importance of the marketing research contribution to successful international expansion (Stone & Mccall, 2004). Likewise, Anderson (1993) differentiates between four different modes of entering an international market, where the successive stages represent higher degrees of international involvement and resource commitment:

Stage 1: No regular export activities;

Stage 2: Export via independent representatives (agents);

Stage 3: Establishment of an overseas sales subsidiary; and Stage 4: Overseas production/manufacturing units.

The assumption that the companies extend their domestic marketing efforts to international marketing was initially reinforced by evidence from a case study of four Swedish companies; however, in this analysis, the sequence of stages was restricted to a specific country market and more recent studies have further expanded the concept to include international supply methods, including licensing and joint venture arrangements (Anderson, 1993). Likewise, the preponderance of the research dealing with the question of the expansion of domestic marketing to international marketing indicates that many companies grow into international operations through an organic, incremental basis (Hills, 1994). According to this author, "In practice, this means that exporting begins to a country perceived as culturally close. As experience is gained, the firm expands from cultural neighbors to culturally more distant lands" (emphasis added) (p. 262).

The type of country involved also serves to dictate whether domestic marketing and international marketing initiatives will be required to be different or similar. Domestic marketing in highly multicultural countries with large geographic regions, such as the United States, will likely require the same market segmentation approaches that international marketing efforts will require, while largely homogeneous populations in smaller countries may assume a "one-size-fits-all" approach to the marketing function. According to Michman (1991), market segmentation is the "process of dividing a diverse market into groups of consumers with relatively similar characteristics, wants, needs, buying habits, or reactions to marketing efforts. Consumers are grouped according to some variable or variables such as demographic, geographic, or psychological factors" (p. 4).

Market segmentation, Michman, Mazze and Greco (2003) advise, can also result in strategies that are aimed at the differences among consumers who comprise potential target markets. Therefore, "Effective market segmentation requires a sufficient number of customers, resources to meet the needs of the segment, and the ability to reach these customers" (p. 2). Therefore, this component of the marketing function could be said to be identical for both international and domestic marketing initiatives. According to Michman and his colleagues (2003), there are a number of approaches to market segmentation that can be readily applied to either domestic or international markets, but stress that any type of segmentation should not be restricted to a single variable but should rather be based on multiple dimensions as follows:

Behavioristic segmentation divides buyers on the basis of need satisfying benefits (referred to as benefit segmentation) derived from product use, the rate of product usage, the degree of brand loyalty, and an understanding of consumer readiness to purchase the product.

Psychological segmentation is composed of personality, motivation, and lifestyle variables -- a psychographic variable can be used alone to segment a market, or it can be combined with other market segmentation variables such as demographic measures or geographic markets.

There is also occasion-based segmentation where a situation will drive product preference and selection such as a special family event or a holiday.

Lifestyle analysis involves identifying consumers' activities, interests, and opinions. Activities are classified as sports, work, entertainment, and hobbies. Interests include job, house, family, fashion, and food.

Demographic factors such as age, occupation, income, education level, geography, and stage in the family life cycle are also used along with activities, interests, and opinions for identifying market segments (Michman et al., 2003).

Notwithstanding these similarities in the marketing function, there are some important differences that must also be considered. For example, even enormous countries in geographic and population terms that have relatively homogeneous populations may require more straightforward domestic marketing techniques and small city-states will require more elaborate international marketing techniques. For example, as Rao (2000) points out, "Given its strong tourism base and an open economy, Singapore has modern international retailing and other marketing institutions, making this country a truly global or international city, while India represents primarily a traditional, domestic marketing environment with considerable isolation from international markets" (p. 188).

According to Hills (1994), the ecological model shown in Figure 1 below indicates that there is no single, successful ongoing or steady-state strategy for small companies involved in international marketing initiatives. This author emphasizes that, "Standardization vs. local differentiation is the single most important issue in ongoing international marketing strategy. One may hypothesize that a maker of high-technology equipment and products for industrial customers has the best chance of pursuing a standardized strategy across a variety of cultures" (p. 256).

Figure 1. Ecological Model of Entrepreneurial Firms with International Marketing Component.

Source: Hills, 1994 at p. 257.

In addition, identifying appropriate countries for international marketing efforts is particularly important because of the difficulties inherent in attempting entry into all 192 nation states of the world today (Alon, 2004). In this regard, Reynolds, Simintiras and Diamantopoulos (2003) note that, "There are at least two levels of sampling in an international context: sampling of countries (and/or cultures) and sampling of the individual respondents from within each country or culture" (p. 80).

Based on the findings of these investigations, in many cases, companies may find that it is possible to identify other countries with sufficiently comparable demographic and congruent cultural compositions that existing domestic marketing efforts can be used in a wholesale fashion. According to Reynolds et al. (2003), "Between-country comparability can be achieved by matching the samples or by statistical control. Matching involves making the samples from different national/cultural groups as similar as possible in terms of their sociodemographic characteristics (such as age, education, income), and is generally achieved by nonprobability approaches (such as quota or judgmental sampling)" (p. 81). It should be pointed out, though, that it would make little sense for companies to attempt any type of aggressive international marketing efforts in those countries where the market potential simply does not exist, even if the between-country similarities are highly congruent. In this regard, Alon (2004) emphases that, "Companies, therefore, need to carefully choose where to expend their efforts and limited resources" (p. 25).

In their study, "The Internationalization Process of Small and Medium-Sized Enterprises: An Evaluation of Stage Theory," Gankema, Snuif and Zwart (2000) also conceptualize the extension of a company's marketing function from a domestic market to the international sphere as existing along a continuum that comprises five separate stages: (a) a domestic marketing stage, (b) a pre-export stage, - an experimental involvement stage, (d) an active involvement stage, and (e) a committed involvement stage. This model would suggest that rather than being completely different or separate marketing functions, international marketing represents an extension or expansion of a company's existing domestic marketing techniques.

Certainly, there are some profound challenges involved in international marketing efforts that may not be encountered in a domestic marketing setting that must be taken into account. For example, as Andrews, Chompusri, and Obe (2003) point out, significant cultural differences between a company's home country and the international arena may introduce some obstacles that are not easily overcome without careful preparation. In this regard, Andrews and his colleagues note that this "evident lack of understanding is well illustrated by the failure of expatriate marketing personnel to appreciate the strength and ability of indigenous competitors. Local firms are often the most dangerous competitors owing to their speed, knowledge and comprehension of their native environments" (p. 199).

Companies seeking to expand their domestic marketing function into the international sphere must therefore compete with companies that possess intimate knowledge concerning what customers want and need. According to Andrews et al., "Their inbred familiarity and experience with the local environment equips them with information which would otherwise prove both elusive and extremely costly to a foreign entrant, especially in a region where the indigenous traditions and practices are so different from those in the West" (2003 p. 199). This point is also made by Hou, Ichimura, Naya, Werin and Young (1995) who report that barriers to the international marketing function range from economic subsystems (e.g., Japan's keiretsu and domestic marketing system) to significant cultural and ethnic differences. These authors add that, "In some cases -- e.g. In China -property rights are not well defined and the 'rules of the games' are vague. In these circumstances, regionally attuned traders and investors have an advantage in minimizing the transactions costs necessary for business success" (p. 15).

As Hart and Tzokas (1999) emphasize, though, the majority of the research to date concerning the nature of marketing information and its relationship to business performance has been directed at the relationship between domestic markets and domestic marketing. These authors point out that, "In international marketing, it has been argued that the increased uncertainty posed by extending business to an unfamiliar market with unfamiliar environmental conditions intensifies the need for marketing information" (p. 63). Likewise, as Birley and Macmillan (1997) point out, some companies attempt to compete in domestic marketplaces that are highly controlled while also attempting to compete in international markets that are highly competitive, with some predictably mixed results.