What is an EPRG Framework in International Marketing?
EPRG Framework or Orientations Of International Marketing.
The form and substance of a company’s response to global market opportunities depend greatly on management’s belief or assumption about the nature of the international marketing. The management of a company has to decide the type of orientation that a firm should give to its overseas marketing operations. There are four types of orientations or framework towards international marketing:
- Ethnocentric orientation.
- Polycentric orientation.
- Regiocentric orientation.
- Geocentric orientation.
A person who assumes his or her home country is superior compared to the rest of the world is said to have an ethnocentric orientation. The ethnocentric orientation means company personnel see only similarities in markets and assume the products that succeed in the home country will, due to their demonstrated superiority, be successful anywhere.
At some companies, the ethnocentric orientation means that opportunities outside the home country are ignored. Such companies are sometimes called domestic companies. Ethnocentric companies that do conduct business outside the home country can be described as international companies, they adhere to the notion that the products that succeed in the home country are superior and, therefore, can be sold everywhere without adaptation.
In the ethnocentric international company, foreign operations are viewed as being secondary or subordinate to domestic ones. An ethnocentric company operates under the assumption that “tried and true” headquarters knowledge and organizational, capabilities can be applied in other parts of the world.
Although this can sometimes work to a company’s advantage, valuable managerial knowledge and experience in local markets may go unnoticed. For a manufacturing firm, ethnocentrism means foreign markets are viewed as a means of disposing of surplus domestic production. Plans for overseas markets are developed utilizing policies and procedures identical to those employed at home. No systematic marketing research is conducted outside the home country, and no major modifications are made to products.
Even if consumer needs or wants in international markets differ from those in the home country, those differences are ignored at headquarters.
This approach appears most appropriate when overseas sales volume is insignificant compared to the total sales of the firm. It entails minimum risk on the part of the firm. It does not require much investment. Ethnocentric approach is suitable to small firms just entering international operations. However, this approach is not suitable for companies which are planning to extend their international operations in a big way. Today in the era of globalization, this approach is not popular.
The polycentric orientation is the opposite of ethnocentrism. The term polycentric describes management’s often unconscious belief or assumption that each country in which a company does business is unique. This assumption lays the groundwork for each subsidiary to develop its own unique business and marketing strategies in order to succeed, the term multinational company is often used to describe such a structure.
Local personnel and techniques are best suited to deal with local market conditions. Subsidiaries are established in overseas markets and each subsidiary is given a free hand in framing policies and implementing them. Each subsidiary operates independently of others and establishes its own marketing objectives and plans. The environment of each market is considered while formulating the marketing strategy.
According to James H, Taggart and Micheal C. McDermett, “emphasis is put on local laws, custom and culture and great care is taken to understand the local way of doing business. This usually results in the maximum degree of geographic decentralization as local managers are recognized as being psychologically close to markets, environments and customers.” Polycentric orientation is ideal for firms seriously committed to international marketing and have the capacity to invest to the desired extent towards achieving their objectives.
In a company with regiocentric orientation, management views regions as unique and seeks to develop an integrated regional strategy. For example, an Indian company that focuses on the countries in the North America Free Trade Agreement (NAFTA) the United States, Canada and Mexico has a regiocentric orientation.
Similarly, if a company focuses its attention on the Europe, company follows regiocentric approach. A regiocentric orientation views different regions as different markets. A particular region with certain important common marketing characteristics is regarded as a single market, ignoring national boundaries.
Marketing personnel are recruited from that region, regional channels of distribution are developed and policies in respect of other areas such as product, price and promotion have a regional orientation. It is generally viewed as economical and manageable.
A company with a geocentric orientation views the entire world as a potential market. The basic assumption of this approach is that all human beings are alike. A geocentric company develops standardized marketing mix, projecting a uniform image of the company and its products for the global market.
The business of the geocentric company is characterized by sufficiently distinctive national markets that the ethnocentric approach is unworkable, and where the importance of learning curve effects in marketing, production technology and management makes the polycentric philosophy substantially sub-optimal.
Pricing is established on a worldwide basis. Global channels of distribution are established and promotional policy is developed to project a uniform image of the firm, and its products. Since this orientation implies global attitude to the development of marketing policies, it provides for improved coordination and control. This approach is more successful in areas such as production and research than in marketing.
In general, the desirability of a particular international orientation EPRG tends to depend on several factors which are as follows:
- Size of the firm.
- Experience gained in the given market.
- Size of the potential market.
- Type of the product and its cultural dependency.
The EPRG framework provides guidelines for the type of orientation a firm may have towards external marketing. The suitability of EPRG orientation may differ not only from company to company but also from-j one marketing decision area to another within the same firm.