Introduction to

International Marketing

Block--1
Block
 Unit--1
Unit

International
Marketing
 Marketing

It is a management process
whereby the resources of the
whole organization are utilized to
satisfy the needs of selected
customer groups in order to
achieve the objectives of both
parties.
 The Exchange Process

Giving something of value in

return for something of value.

A product is anything customers
will exchange something of value
for, because it satisfies their need
or want.
 Conditions for successful exchange

At least two parties must be

involved.

Each party must have something
that interests the other party.

Each party must be able to
communicate and deliver.

Each party must be free to accept
or reject any offer from the other
party.
 Marketing Philosophies

There are 5 marketing
philosophies:

1.Production concept

2. Product concept

3. Selling concept

4. Marketing concept

5. Societal concept
 Production concept

This is an approach in which a
company believes that customers are
interested only in low priced, easily
available goods and finer points of the
product are not very important to
them.

In this approach a company
concentrates on achieving high
production efficiency and wide
distribution coverage.
 Product Concept

This is an approach in which a
company believes that customers
favors those products that offer
the most quality performance and
features.

Customers appreciate quality
features and are willing to pay
higher price for extra quality.
 Selling concept

In this approach producers believe
that aggressive persuasion and
selling is the crux of the business
success.

Attention is paid to find ways and
means to sell.

Considerable promotional effort is
justified.
 Marketing Concept

Under Marketing concept, the
organization considers the needs and
wants of customers and produce
according to that.

Under this concept, the task of
marketing begins with finding what the
customer wants and produce a product
which will meet that want and provide
maximum satisfaction.
 Societal Concept

The societal concept holds that a
company must take into account the
needs and wants of consumers and
deliver the goods and services
efficiently so as to enhance customers
satisfaction as well as the societies well
being.

Marketing must be a socially
responsible or accountable activity.
 Difference between Selling and
Marketing

In selling Emphasis is on the
product whereas in Marketing
Emphasis is on customer wants.

In selling company first makes the
product then figures out how to
sell it whereas in Marketing
company first determines
customers wants then figures out
how to deliver it.
 Marketing Mix

The marketing activities are
divided into four basic elements:

Product

Price

Promotion

distribution
 Product

Products are integral to the

exchange process, without them,
there is no marketing.

Product stands for the goods and
services offered by the
organization.
 Price

It is the value, usually in

monetary terms, that sellers ask
for in exchange for the products
they are offering.
 Place / Distribution

It is the process of moving

products from the producer to the
consumer.
 Promotion

It includes a variety of techniques,

including advertising, sales
promotion, public relations and
personal selling, that are used to
communicate with customers.
 Functions of Marketing

Functions of marketing are

divided into three categories.

1. Merchandising functions.

2. Physical distribution functions

3. Auxiliary functions
 Merchandising functions

Product planning and

development.

Standardization and grading.

Purchases and collection.
 Physical distribution functions

Storage

transportation
 Auxiliary functions

Arrangement of finance

Risk--bearing
Risk

Collection of market information
 International Marketing

International marketing refers to
marketing carried out by
companies overseas or across
national borderlines.

This strategy uses an extension of
the techniques used in the home
country of a firm

International marketing is simply
the application of marketing
principles to more than one
country. the process of
globalization also provide a
country to have a hidden attack to
another

International marketing is often
not as simple as marketing your
product to more than one nation.
Companies must consider
language barriers, ideals, and
customs in the market they are
approaching.
 International Marketing concepts

Domestic Marketing:
Marketing:Marketing
that is targeted exclusively at the
home--country market.
home

A purely domestic company
operates only domestically.When it
reaches growth limits, it diversifies
into new markets, products and
technologies within the country
instead of entering foreign
markets.

Export marketing:This
marketing:This is the first
stage when the firm steps out of
the domestic market and explore
market opportunities outside the
country.

In export marketing, the main aim
of the firm is to expand the market
size.

Firm produces all its goods in the
home country and exports the
surplus production to other
countries.

International Marketing:

In International marketing, focus
changes from just exporting to
marketing in foreign countries.

Company establishes subsidiaries
in the foreign countries to
undertake marketing operations.

Multinational Marketing:

Multinational marketing is the
adaptation of the domestic
marketing mix suitable to the
marketing differences in market
environment of each country.

Global Marketing:

Under this strategy the world as a
whole is viewed as the market and the
firm attempts to standardize as much of
the company effort as is practical on
worldwide basis.

Thus the global marketing views an
entire set of country market as a unit,
identifying groups of prospective buyers
with similar needs as a global market
segment and developing a marketing
plan that strives for standardization.
 Reasons for Entering International
Markets

Domestic market constraints

Government policies and regulations

Growth of overseas markets

Increased productivity

Relative profitability

Diversification to reduce business risk

Control inflation and price rise

Counter competition

Strategic vision
 Domestic market constraints

If the size of domestic market is very
small.

Due to recession in domestic market,
companies may not be able to utilize
the full production capacity.

Market of a number of products tend to
saturate or decline in the advanced
countries.

Growth in international markets
causes the growth in demand for some
products, attracting the manufactures
of these products to internationalize.
 Government policies and
regulations

Government policies and
regulations also motivate the firms
to internationalize.Government
may impose certain restrictions on
further growth and capacity
expansion of some firms within
the domestic market in order to
achieve certain social objectives.
 Growth of overseas markets

The enormous growth potential of

many foreign markets is a very
strong attraction for companies to
enter into foreign markets.
 Relative profitability

International business could be

more than domestic markets.The
price realized in export markets
may be relatively higher then that
realized in the home market.
 Strategic Vision

The systematic and growing

internationalization of many
companies is essentially part of
their business policy or strategic
management.
 Unit--2
Unit

Internationalmarketing
orientation and
innovation
 International Marketing
Management process

International marketing
management can be defined as
the analysis, planning,
implementation and control of
programmes designed to create,
build and maintain beneficial
exchanges with the target buyers
in overseas market for the
purpose of achieving
organizational objectives.
 Steps involved in the
international marketing

decision
Deciding making process
to internationalize(SWOT
Analysis)

Market selection(Target market)

Product selection

Selection of entry mode

Marketing strategy selection

1.Product strategy

2.Pricing strategy

3.Distribution strategy

4.Promotion strategy

International organization
decision
The firm may organize the
international marketing
operations in three ways:

1. Creation of export department

2. Setting up of international
division.

3. Development of global
organization
 International marketing orientation

EPRG orientation

It identifies four types of
orientation towards
internationalization of business
operations

1. Ethnocentrism

2. Polycentrism

3. Reginocentrism

4. Geocentrism
 Implications of EPRG orientations

Ethnocentric orientation:
orientation: In this
phase of the firms operations
overseas operations are
considered secondary to domestic
operations and as a means to
dispose of domestic surplus
production.

International marketing activities
will be controlled from home
country.
 Polycentric orientation

Firms with this orientation are known

to organize their international
marketing activities on a country by
country basis. Each country is treated
as a separate entity.Subsidiaries are
established overseas.

This orientation will prove ideal for
firms seriously committed to
international marketing and have
capacity to invest.
 Regiocentric orientation

In this phase, the firm recognizing
the common features of a region,
views that region as one market
and organizes activities for that
region as a whole.
 Geocentric Orientation

Basic philosophy of this
orientation is that all humans are
alike.The entire world is treated as
one market.
 EPRG depends on

Size of the firm

Experience in overseas market

Extent of heterogeneity of the
potential market

Nature of the product
 Response of Indian corporate
sector

Global approach

Flexibility

Enchasing opportunities

Creativity

Proactive approach

Responding to environmental changes

Working for long term prospectus

Advance action

Value addition
 Unit--3
Unit

Analyzing
International
Marketing
Environment
 Environment

It can be defined as various external
factors that surround the firm and
influence its decisions and operations .

Two major characteristics of
environment:

1. These factors and forces are external
to the firm.

2. These are essentially uncontrollable.
 Elements of international business
environment

Internal environment

Micro environment

Domestic environment

Foreign environment

Global environment
 Internal environment

It can be defined as the factors in
the internal environment.

It comprises the firms business
strategy and decisions with
respect to production, finance,
marketing, HR etc.

These are controllable factors.
 Micro Environment

It can be defined as the factors in the
firm’s immediate environment which
directly influence the firms decisions
and operations.

These include suppliers, market
intermediaries and service
organizations such as middleman,
transporters, warehouses advertising
etc.
 Domestic Environment

It consists of factors such as

competitive structure, economic
climate and political and legal
forces which are essentially
uncontrollable by the firm.
 Foreign environment

It consists factors like geographic

and economic conditions, socio-
socio-
cultural traits, political and legal
forces and technological factors
etc.
 Global environment

Global environment exerts
influence over domestic as well as
foreign countries and comprises
forces like world economic
conditions, international financial
system, international agreements
and treaties.
 Components of international
marketing environment

Geographic environment

Demographic market

Economic environment

Technological environment

Social and cultural environment

Political and legal environment

Physical environment

Ecological environment
 Block--2
Block
International Market
Selection and Entry
 Unit -4

International Market
Segmentation
 Market Segmentation

A market segment is a subgroup
of people or organizations sharing
one or more characteristics that
cause them to have similar
product and/or service needs. A
true market segment meets all of
the following criteria: it is distinct
from other segments (different
segments have different needs), it
is homogeneous within the
segment.
 International Market Segmentation

International market
segmentation is the process of
dividing the total market into one
or more parts each of which tend
to be homogeneous in all aspects.
 Market Linkages

Communication linkages

Travel linkages

Organizational linkages
 Basis of International Market
Segmentation

Geographic segmentation

Demographic segmentation

Psycho graphic segmentation

Behavior segmentation

Benefit segmentation
 Essentials of Effective
Segmentation

Measurability.

Substantial or profitable

Accessible

Differentiable

Actionable
 Advantages of Segmentation

Understand potential customers better

Pay attention to specific areas of
marketing strategy

Formulate marketing programmes more
effectively

Understand competition better

Deploy marketing resources efficiently

Promote the products more effectively
 International Market Targeting

Targeting is the act of evaluating and

comparing the identified groups and
then selecting one or more of them with
the highest potential.

This is the next step after segmentation
in which a company study each of the
segment carefully and identify one or
more segments where company can
focus its marketing efforts.
 Criteria For Targeting

Current size of the market

segment and growth potential

Potential competition

Compatibility and feasibility
 Targeting Strategies

Undifferentiated international
market targeting

Differentiated international
market targeting

Concentrated international
market targeting
 Positioning

Positioning has come to mean
the process by which marketers
try to create an image or identity
in the minds of their target market
for its product
product,, brand
brand,, or
organization. It is the 'relative
competitive comparison' their
product occupies in a given
market as perceived by the target
market.

Re
Re--positioning involves changing
the identity of a product, relative
to the identity of competing
products, in the collective minds
of the target market

De
De--positioning involves
attempting to change the identity
of competing products, relative to
the identity of your own product,
in the collective minds of the
target market.
 Two approaches of positioning

Head to head
positioning:Involves
positioning :Involves competing
directly with competitors on
similar product attributes in the
same target market.

Differentiation positioning:
positioning:
Involves seeking a less
competitive, smaller market in
which a brand is located.
 High Tech Positioning

Personal computers, video and
stereo equipment and automobiles
are examples of high tech
positioning.

Technical products

Special interest products

Products that demonstrate well
 High Touch Products

Marketing of High touch products
requires less emphasis on
specialized information and more
emphasis on image.

Products that solve the common
problems

Global village products

Products that use universal
themes
 UNIT--5
UNIT

FOREIGNMARKET
SELECTION
 Model for selecting Foreign Markets

1. Macro level research:

Economic Status

The political Environment

Social structure

Geographic features
2. General Marketing relating to
the product:
product:
Growth trends for similar products
Cultural Acceptance of such
products
Market size
State of development
Taxes and duties

3. Micro level research:

Existing & potential competition

Ease of entry

Reliability information

Sales projections

Cost of entry

Profit potential

4. Target Markets:

Corporate factors

Influencing implementation
 Criteria For Selecting Target
Countries

Market size

Potential environment

Legal environment

Social and cultural environment
 Market size & Growth

The larger the potential demand

for a product in a country , the
more attractive it will be for a
company.
 Macro indicators for market growth

Geographic factors

Demographic factors

Economic conditions
 Political environment

Political instability

Restrictions on capital movement

Government intervention

Limits of foreign ownership

Number of riots or assassinations
 Legal conditions

In different countries there are

different rules & regulations for
business.
 Social & cultural conditions

Material culture

Language

Esthetics

Education

religion
 Process of Market selection

Market definition

Market segmentation

Determining the markets
 Market Definition

A company can define market in

terms of country characteristics or
in terms of product
characteristics.
 Market segmentation

Market segmentation is dividing

the market into sub units.
 Determining the Market

In this, we determine which

market to build, which to
divest(deprive) and which to
abandon(dispose off) in order to
optimize the company’s return on
investment.
 Competitive strength matrix

For determining the markets most

companies use country
attractiveness/ competitive
strength matrix.
 Countries would fall any of the
heads

1. Invest / grow countries:

Such countries call for a high level
marketing commitment. They
represent a large market size
which can be tapped through
investment in people and capital.
 Harvest / divest / license / combine
countries

They represent the direct opposite

of grow countries.Country
attractiveness is low and
competitive strength is also low,
such a country must be
harvested.
 Dominant / Divest Countries

Such countries rank high on

country Attractiveness but low on
competitive strengths.

There are two choices in this
strategy:

1. To sell out

2. To develop competitive strength
to reap the opportunities offered
by such market.
 Selective countries

Such countries fall in the center of
the matrix representing the fact
that they are neither highly
attractive countries nor highly
unattractive.

In such situation a company can
either unite the market or build
the market by introducing new
product features through
technological up gradations.
 Unit--6
Unit

International
Marketing
Entry Decisions
 Entry Modes

1. Exporting

Under this strategy, the company
exports the product from its home
base, without any marketing or
production or organization
overseas.

Exporting may be appropriate under the
following circumstances:

The volume of foreign market is not large
enough to justify production in the foreign
market.

Cost of production is higher in the foreign
market.

Foreign investment is not encouraged by
concerned foreign market.

Attractive incentives are available in the
foreign market.

Indirect Exporting:

When the firm delegates the task
of selling goods abroad to an
outside agency, it is called indirect
exporting.

Direct Exporting:

When the manufacturing firm
itself performs the task of selling
goods abroad rather than
entrusting it to any outside agency
it is called exporting.

2. Licensing:

Under licensing a company
assigns the right to undertake
production locally using its patent
or a trademark to a local company
for a fee or royalty.

A manufacturer should consider
licensing when

Capital is scarce

Import restrictions discourage
direct entry.

The country is sensitive to foreign
ownership

3. Franchising:

It is a special form of licensing in which
a parent company grants another
independent company the right to do
business in a prescribed manner.

The franchiser grants the independent
operator the right to distribute its
products, techniques, and trademarks
for a percentage of gross monthly sales
and a royalty fee.

4. Contract Manufacturing:

Under contract manufacturing, a
company arranges to have its
products manufactured by an
independent local company on a
contractual basis.

A company doing international
marketing enters into contract
with local firm in the foreign
country to manufacture the
product, while retaining the
responsibility of marketing.

5. Assembly :

In assembly operation, the
international firm locates a portion of
the manufacturing process in foreign
country.

This is the last step of manufacturing
and depends on the ready supply of
components or manufactured parts to
be shipped from another country.

6. Joint ventures:

A joint venture (often abbreviated
JV) is an entity formed between
two or more parties to undertake
economic activity together. The
parties agree to create a new entity
by both contributing equity
equity,, and
they then share in the revenues
revenues,,
expenses,, and control of the
expenses
enterprise.
 Advantages of joint venture

1. Build on company's strengths

2. Spreading costs and risks
3. Improving access to financial
resources
4. Economies of scale and advantages of
size
5. Access to new technologies and
customers
6. Access to innovative managerial
practices

7. Strategic Alliances:
Alliances:

A Strategic Alliance is a formal
relationship between two or more
parties to pursue a set of agreed upon
goals or to meet a critical business need
while remaining independent
organizations

This strategy seeks to enhance the long
term competitive advantage of the firm
by forming alliance with its competitors
instead of competing with each other.
 Stages of alliances

Strategy Development:
Development:

Strategy development involves
studying the alliance’s feasibility,
objectives and rationale, focusing
on the major issues and
challenges and development of
resource strategies for production,
technology, and people.
 Partner assessment

Partner Assessment:
Assessment: Partner
assessment involves analyzing a
potential partner’s strengths and
weaknesses, creating strategies for
accommodating all partners’
management styles, preparing
appropriate partner selection criteria,
understanding a partner’s motives for
joining the alliance and addressing
resource capability gaps that may exist
for a partner.
 Contract Negotiation

Contract Negotiation:
Negotiation:

Contract negotiations involves
determining whether all parties have
realistic objectives, defining each
partner’s contributions and rewards,
addressing termination clauses,
penalties for poor performance, and
highlighting the degree to which
arbitration procedures are clearly
stated and understood.
 Alliance Operation

Alliance Operation:
Operation: Alliance
operations involves addressing
senior management’s
commitment, finding the calibre of
resources devoted to the alliance,
linking of budgets and resources
with strategic priorities,
measuring and rewarding alliance
performance, and assessing the
performance and results of the
alliance
 Alliance Termination

Alliance Termination:
Termination: Alliance
termination involves winding
down the alliance, for instance
when its objectives have been met
or cannot be met, or when a
partner adjusts priorities or re-
re-
allocated resources elsewhere.
 Types of alliances

Technology based alliances

Production based alliance

Distribution based alliance

8. Merger and acquisition:

A Merger is a combination of two
companies into one larger
company. Such actions are
commonly voluntary and involve
stock swap or cash payment to the
target. Stock swap is often used as
it allows the shareholders of the
two companies to share the risk
involved in the deal.
 Classifications of mergers

Horizontal Merger:

Take place where the two merging companies
produce similar product in the same industry
industry..

Vertical Merger:

occur when two firms, each working at different
stages in the production of the same good,
combine.

Concentric Merger:

occur where two merging firms are in the same
general industry, but they have no mutual
buyer/customer or supplier relationship, such
as a merger between a bank and a leasing
company

Acquisition:

An acquisition, also known as a
takeover, is the buying of one
company (the ‘target’) by another.
An acquisition may be friendly or
hostile.. In the former case, the
hostile
companies cooperate in
negotiations; in the latter case, the
takeover target is unwilling to be
bought or the target's board has
no prior knowledge of the offer.
 Entry Strategy Analysis

Expected sales

Costs

Assets

Profitability

Risk factors
 Block--3
Block

Internationalproduct and
pricing decisions
 Unit--7
Unit

International Product
Planning
 Product Decisions

What is a product:
product:

Product is a good which effectively
meets customer requirements.

OR

it may be defined as bundle of
utilities or satisfaction

Product Perception in overseas
market:

Firm faces a challenging
environment in international
market than in domestic market.

Product perception differs from
country to country.The perception
of a product by overseas customer
is likely to be at variance from that
of domestic customer.

Standardization versus
adaptation::
adaptation

Standardization refers to offering a
common product on a world wide
basis.(Economies of scale)
 Factors influencing product
adaptation

Customer orientation

Stage of market development

Legal considerations

Climate conditions

Mere adaptation is needed in
consumer non-
non-durable goods for
the reason of varying tastes and
preferences of consumer than in
durable and industrial goods.
 Product Life Cycle Concept

1. Market introduction stage

 cost high
 sales volume low
 no/little competition - competitive
manufacturers watch for
acceptance/segment growth losses
 demand has to be created
 customers have to be prompted
2. Growth stage
 costs reduced due to economies of
scale and
 sales volume increases significantly
 profitability
 public awareness
 competition begins to increase with
a few new players in establishing
market
 prices to maximize market share
3. Mature stage
 Costs are very low as you are well
established in market & no need for
publicity.
 sales volume peaks
 increase in competitive offerings
 prices tend to drop due to the proliferation
of competing products
 brand differentiation, feature
diversification, as each player seeks to
differentiate from competition with "how
much product" is offered
 Industrial profits go down
4. Saturation and decline stage
 costs become counter-
counter-optimal
 sales volume decline or stabilize
 prices, profitability diminish
 profit becomes more a challenge of
production/distribution efficiency
than increased sales