International vs. Domestic Marketing: Similarities and Differences

Introduction

Although the definitions of international marketing and domestic marketing suggest they are fundamentally different, the same forces driving globalization in recent years have introduced new twists and challenges for marketing executives seeking to remain competitive in an increasingly globalized marketplace — challenges that have blurred the distinctions between these two marketing functions. In many ways, both domestic and international marketing involve many of the same considerations, but there are also important differences that must be taken into account. This paper reviews the relevant peer-reviewed and scholarly literature to show that while international and domestic marketing differ in some respects, they share enough commonalities to suggest they are more alike than different. A summary of the research and salient findings is presented in the conclusion.

The trends are clear: more and more companies are expanding their domestic marketing efforts into the international 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). Based on their respective definitions, domestic marketing and international marketing appear to be two completely separate functions, but recent studies of marketing initiatives indicate that they share similarities 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 from business researchers. 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).

From Domestic to International Marketing: Stage Models

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 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 to 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 stages of international expansion through which most companies proceed:

Stage 1: Stimuli for international experimentation. Stage 1 occurs when a firm operating in the domestic market experiences external and/or internal stimuli that encourage it to begin exporting. External stimuli can take the form of unsolicited orders from buyers, having distributors abroad, and/or using domestic export agents. Firms that start exporting through external inquiries 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 Stage 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 Stage 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 several decades have created profound challenges and opportunities for companies seeking to refine their domestic marketing efforts or expand the marketing function into the international sphere. During the early 1980s, the expansion of domestic marketing to the international phase was largely regarded as one of incremental growth, based on studies that had viewed international marketing expansion from the perspective of exporting from the domestic base. Stone and McCall explain such international expansion using a model showing the export planning process that proceeds through three stages:

1. Identifying and measuring market opportunities;
2. Developing the export marketing strategy; and
3. Implementing the strategy.

Thereafter, the concept of international marketing was further extended beyond mere exporting — that is, selling domestic goods to a buyer in another country — to define marketing practices in which the marketing mix embraces an international component as well. This new model involved a measure of overseas investments and strategic cooperation with overseas business alliances (Stone & McCall, 2004). It emphasized the importance of marketing research to successful international expansion. Similarly, Anderson (1993) differentiates between four modes of entering an international market, where 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 companies extend their domestic marketing efforts to international marketing was initially reinforced by evidence from a case study of four Swedish companies. However, in that 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 such as licensing and joint venture arrangements (Anderson, 1993). The preponderance of research on the expansion of domestic marketing to international marketing indicates that many companies grow into international operations on an organic, incremental basis (Hills, 1994). As Hills notes, "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" (p. 262).

The type of country involved also serves to determine whether domestic and international marketing initiatives will need to differ or can remain 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 demands, while largely homogeneous populations in smaller countries may permit a "one-size-fits-all" approach. 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 in Domestic and International Contexts

Market segmentation, Michman, Mazze, and Greco (2003) advise, can also produce strategies aimed at the differences among consumers who comprise potential target markets. "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). This component of the marketing function could therefore be said to be identical for both international and domestic marketing initiatives. According to Michman and colleagues (2003), there are a number of segmentation approaches that can be readily applied to either domestic or international markets, though they stress that any type of segmentation should not be restricted to a single variable but should be based on multiple dimensions:

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 segmentation variables such as demographic measures or geographic markets.

Occasion-based segmentation recognizes that a situation will drive product preference and selection — for example, 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 important differences that must also be considered. Even enormous countries in geographic and population terms that have relatively homogeneous populations may require more straightforward domestic marketing techniques, while small city-states may require more elaborate international marketing techniques. 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), an ecological model of entrepreneurial firms with an international marketing component indicates that there is no single, successful ongoing or steady-state strategy for small companies involved in international marketing. Hills 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).

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). 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 these findings, companies may in many cases find it possible to identify other countries with sufficiently comparable demographic and cultural compositions such that existing domestic marketing efforts can be applied wholesale. 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, however, that it would make little sense for companies to pursue aggressive international marketing efforts in countries where market potential simply does not exist, even if between-country similarities are highly congruent. As Alon (2004) emphasizes, "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) conceptualize the extension of a company's marketing function from a domestic market to the international sphere as existing along a continuum comprising five separate stages: (a) a domestic marketing stage, (b) a pre-export stage, (c) an experimental involvement stage, (d) an active involvement stage, and (e) a committed involvement stage. This model suggests 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.

Conclusion

The research showed that domestic marketing is generally defined as marketing in a company's home country, while international marketing refers to marketing beyond a company's home borders. Notwithstanding this fundamental difference, the research also showed that domestic marketing in a large, multicultural country involves many of the same techniques as international marketing in many cases, while some international marketing techniques can be applied wholesale to countries with sufficiently comparable demographic and cultural compositions.

The key element in any of these marketing approaches was a basic recognition that marketing involves far more than advertising alone; segmenting a market according to what customers want and need, and how and when they go about purchasing products, remains an important ingredient in developing a successful marketing initiative in any environment. In the final analysis, it appears reasonable to posit that domestic and international marketing are comparable, but require significantly different approaches in those cases where cultural diversity, governmental regulations, and the competitive environment introduce new requirements for information and marketing techniques that are likely to differ from those used in the domestic market.

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