International Trade – A Marketing Perspective
Guest Lecture for Masaryk University
Dr Yang Liu
Queen’s Management School
y.liu@qub.ac.uk
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Agenda
•The marketing perspective in the international context.
•Understanding the marketing environment.
•The product standardization-adaptation strategy.
•Serving emerging markets.
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Marketing Perspective
•Marketing is a process by which companies create value for customers and build strong customer
relationships to capture value from customers in return (Kotler et al., 2017).
•A marketing process:
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Marketing Perspective
•4P marketing mix:
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In the international context, a key issue is marketing standardization-adaptation (Katsikeas et
al., 2006).

Market Requirements Across Countries
•Market requirements can be different across countries, depending on the industry.
•There are different aspects:
–Customer taste/habits
–Local environmental conditions
–Regulations
–(Purchasing power)
•
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Market Requirements Across Countries
•Customer tastes/habits (e.g. refrigerator types).
–In some industries, they are gradually converging, but differences still remain.
•
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Europe
North America
South America
Asia

Market Requirements Across Countries
•Local environmental conditions include local weather (e.g. temperature and humidity) and local
infrastructure (e.g. road and energy).
–They are not converging significantly.
•
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Octane Ratings of Petroleum in North America

Market Requirements Across Countries
•Regulations/standards are compulsory for firms to meet in a country (e.g. car crashing tests and
light configurations).
–They have greatly converged at the regional level, but not so at the global level.
•
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Side Marker: American vs. European Standards

Product Standardization-adaptation
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•Global standardization: The product design is similar globally. Low costs due to economies of
scale.
•Local adaptation: Products are customized for different requirements locally. More appealing to
local customers.
It is a continuum. MNEs make choices somewhere between the two.
High
standardization
High
adaptation
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Local adaptation is also called local customization.

Group Discussion
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•Choose one or two products/services you know. Discuss the following issues:
–Is the product/service globally standardized or locally customized?
–Why?
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Product Standardization-adaptation
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•The strategic fit theory (Katsikeas et al., 2006; Schmid and Kotulla, 2011): MNEs’ strategic
choices between product global standardization and local adaptation depend on situational factors
including:
–Market demand homogeneity across countries.
–Cost of product modification.
–Price elasticity of demand.
–Potential for economies of scale.
•Each factor is positively related to standardization (e.g. high demand homogeneity -> high
standardization).
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However, one important factor is missing here!

The Effect of Brands on Product S-A
•General Motors – The biggest automaker in the U.S.
•It has many brands with distinct brand images.
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The Effect of Brands on Product S-A
•Car bodies are customized in different regions to fit with brand images.
•For example, Opel (Vauxhall) Astra in Europe and Chevrolet Cruze in the U.S. have same chassis,
but different car bodies.
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Liu\Desktop\280px-Opel_Astra_Design_Edition_(J)_–_Frontansicht_(1),_14__August_2011,_Heiligenhaus.j
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Managing Dual Pressures in NPD
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•In new product development, engineers face dual pressures – standardization and adaptation of
products. They adopt certain practices to handle the pressures:
–Compromise
–Overdesign
–Modularity
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Managing Dual Pressures in NPD
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•Compromise: A requirement is abandoned or compromised to deliver an “acceptable” rather than
“ideal” product.
•
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Managing Dual Pressures in NPD
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•Overdesign: Product features (required by one country) are offered globally even if they are not
required by others.
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Managing Dual Pressures in NPD
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•Modularity: Some components are designed to be modular in order to be shared even if other
components are changed.
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Brand Standardization-adaptation
•Should a company adopt a single-brand strategy or multiple brand strategy for different countries.
–Brand standardization: More advertising needed in foreign countries; easy to be identified when
customers are travelling across countries; less complexity.
–Brand adaptation (different brands locally via acquisitions): Easy to be recognized by local
customers; difficult to identify when customers are travelling; more complexity.
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Brand Standardization-adaptation
•Unilever’s laundry detergent business has different brands in different countries due to local
acquisitions.
–Acquiring local brands helped Unilever to capture local markets easily and quickly.
–However, it also caused complexity and confusion for customers.
–In around 2002, it conducted unification of brands.
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Brand Standardization-adaptation
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Emerging Markets
•Emerging markets: Developing countries that are more affluent, e.g. BRICs countries.
•Characteristics:
–There are a large number of lower class people. Middle class is rising. There are big business
opportunities there.
–A lot of people with low purchasing power, calling for special strategies/innovations.
•A case study – Microsoft in India (Hill, 2012)
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Here the content is more general, not specific to the case study.
There is a related concept, base of the pyramid.

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Case Study – Microsoft in India
•How is the Indian market different from western countries like the US?
–More people with low income. They cannot afford Microsoft software.
–Pirated software and free software (Linux) used by many people.
–Some small companies use mobile phones instead of computers.
–
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Case Study – Microsoft in India
•What steps did Microsoft take for the Indian market?
–It developed Windows XP Starter (a simplified version) which is sold at less than half of the
original price.
–It offered online monthly subscription of Office software at low price.
–It developed Multipoint computers (with multiple mice), allowing multiple people to use one
computer simultaneously.
–It offered text-messaging services for firms using mobile phones. With the services, firms can
check order status and inventories.
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Serving Emerging Markets
•Product simplification: Complex functions of products sold in developed countries are removed for
lower costs in developing countries.
–High-cost premium products are still sold in developing countries. Thus developing countries can
have more products variants.
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Serving Emerging Markets
•Product retaining: Products phased-out in developed countries can still be sold in developing
countries with lower prices.
–It means longer product life cycles in developing countries, but new products can also be sold.
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Serving Emerging Markets
•Reverse innovation (Immelt et al., 2009): Low cost innovations are made specifically for
developing countries (designed from scratch).
–It can be popular in developed countries as well. The (low-cost) environment of developing
countries facilitates such innovations.
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Traditional Ultrasound Device
$ 100K
Portable Ultrasound Device
$ 15K
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The Portable Ultrasound Device need to be connected to a computer. It uses the computing capability
of a computer, so the price can be significantly reduced.

Learning Points
•Marketing is about serving customers.
•In the international context, market requirements are different in four aspects.
•There are situational factors affecting product standardization-adaptation in a firm.
•Emerging market requirements need to be handled through special strategies.
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References
•Katsikeas, C. S., Samiee, S. & Theodosiou, M. (2006). Strategy fit and performance consequences of
international marketing standardization. Strategic Management Journal, 27(9): pp. 867-890.
•Kotler, P., Armstrong, G., Harris, L. and Piercy, N. (2017). Principles of marketing. 7th European
edition. Harlow: Pearson.
•Hill, C. W. L. (2012). International business: Competing in the global marketplace. 9th Global
edition. NY: McGraw-Hill.
•Immelt, J. R., Govindarajan, V., & Trimble, C. (2009). How GE is disrupting itself. Harvard
Business Review, 87(10): pp. 56-65.
•Schmid, S. & Kotulla, T. (2011). 50 years of research on international standardization and
adaptation—From a systematic literature analysis to a theoretical framework”. International
Business Review, 20(5): pp. 491-507.
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