The Concept of International Marketing

Chapter 1
The Concept of
International Marketing
International Marketing All rights reserved

©Oxford University Press,
Globalization
• Globalization of production
• Globalization of markets

Globalization index
• economic integration: trade, portfolio, foreign direct
investment, and investment income
• personal integration: telephone, travel, remittances,
and personal transfers
• technology integration: internet users, internet hosts,
and secure internet services
• political integration: international organization, UN
peacekeeping, treaties, and government transfers

Globalization index (contd)
Rank Country
1 Ireland
2 Singapore
3 Switzerland
4 Netherlands
5 Finland
6 Canada
7 United States
8 New Zealand
9 Austria
10 Denmark
61 India

Domestic marketing and international marketing decisions
Overseas Environmental
Challenges (Uncontrollables)
Domestic Environmental Political

Challenges
Marketing (Uncontrollables)
Challenges
Economic Legal
in country Y Competition
Economic (Controllables)
Product
Marketing
Challenges
in country X
Place Consumer Price
Political Socio
Cultural
Political
Marketing Promotion Legal
Challenges
in country Z Competition Infrastructure
Logistics
Geography

Reasons for entering international markets
• growth
• profitability
• achieving economies of scale
• risk spread
• access to imported inputs
• uniqueness of product or servies
• marketing opportunities due to life cycle
• spreading R&D cost

Evolutionary process of global marketing
Domestic marketing :
Marketing Focus domestic
Orientation ethnocentric
Marketing Mix Decisions focussed on domestic
customers

Evolutionary process (contd)
Export marketing:
Marketing Focus overseas (targeting and entering

foreign markets)
Orientation ethnocentric
Marketing Mix Decisions focussed mainly on domestic

customers
overseas marketing-generally an
extension of domestic marketing
decisions made at headquarters

Evolutionary process (contd)
Multinational marketing:
Marketing Focus consolidation of operations on

regional basis
gains from economies of scale
Orientation regiocentric
Marketing Mix Decisions product standardization within

regions but not across the region

Adaptation
Strategy to isolate self-reference criteria
Step 1: define the business problem or goal in terms of
the home-country traits, habits or norms
Step 2: define the business problem or goal in terms of
the foreign country cultural traits, habits, or
norms
Step 3: isolate the SRC influence in the problem and
examine it carefully to see how it complicates the
problem
Step 4: redefine the problem without the SRC influence
and solve for the optimum business goal situation

EPRG concept
• ethnocentric orientation
• polycentric orientation
• regiocentric orientation
• geocentric orientation

Theories of international trade
• theory of mercantilism
• theory of absolute advantage
• theory of comparative advantage
• factor endowment theory
• theory of international product life cycle
• theory of competitive advantage

Chapter 2
Emerging Opportunities
in
International Markets

Trends in world trade
700
600
Value (Billion US$)
500
400
300
200
100
0
India
Netherlands
China
Japan
Canada
United
States
Exporting Country

Trends in world trade (contd)
1400
Value (Billion US$) 1200

1000
800
600
400
200
0
Italy
Japan
Canada
India
Germany
China
France
Netherlands
United States
United Kingdom
Hong Kong, China

Im porting C ountry

Leading exporters in world trade in commercial Services
2002
300
250
Value (Billion US$)
200
150
100
50

Leading importers in world trade in commercial
services 2002
250
200
Value (Billion US$)
150
100
50
Netherlands
India
United
France
Japan
States
Canada
Importing Country
Source : World Trade Organization.

Composition of world merchandise exports
100%
Percentag
80%
60%
e
40%
20%
0%
1965 1970 1980 1995 2000 2001
Years
Food Agricultural raw materials
Ores and metals Fuels
Manufactured goods

Direction of world exports
5000000
(F.O.B. US$
4000000
Million)
3000000
2000000
1000000
0
1980 1990 1995 2000 2001 2002
Years
Developed M arket Economy Countries
Developing Countries & Territories
Countries in Central and Eastern Europe

World
World Economic
Trade Outlook
Outlook Projections
2002 2004 2005
A World Output 4.6 4.4
Other emerging market and developing 3.0 6.0 5.9
economies
4.6
5.2
Commonwealth of Independent States 6.0
(CIS) 5.1
B World Trade Volume (goods and services) 3.1 6.8 6.6
C World Trade Prices (in US$ terms)

Manufactures 2.4 7.7 1.4
Oil 2.5 3.8 -10.0
Non-fuel primary commodities 0.5 7.6 -0.8
D Emerging Market and Developing 162.9 100.9

countries; Private capital flows (net) in 47.0
US$ billion)

An overview of India’s foreign trade
India's Foreign Trade
80000
US$ (Million)
60000
40000
20000
0
1999-
1951-52
1959-60
1963-64
1967-68
1971-72
1975-76
1979-80
1983-84
1987-88
1991-92
1995-96
2003-04
1955-56
Years
Exports Imports

Composition of India’s trade
Composition of India's Trade : Export
100%
90%
Percentage
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000-01
2002-03
2001-02
2003-04
1999-
(Apr.-
2000
Jan.)
Years
Agriculture & allied Ores and minerals

Manufactured goods Crude & petroleumproducts
Others & unclassified items

Composition (contd)
Composition of India's Trade : Import
100%
80%
Percent
60%
age
40%
20%
0%
(Apr.-Jan.)
1999-2000
2000-01
2001-02
2002-03
2003-04
Years
Food and allied products Fertilizers
Paper board, manufactures & newsprint Capital goods
Others Unclassified items

Direction of India’s trade : exports
100%
90%
80%
Percentage
70%
60%
50%
40%
30%
20%
10%
0%
1970-71
1980-81
1990-91
1998-99
1999-00
2001-02
2002-03
1960-61
1995-96
2000-01
Years
OECD OPEC Eastern Europe Others LDCs** Others

Direction imports (contd)
100%
90%
80%
70%
Percentage
60%
50%
40%
30%
20%
10%
0%
1960-61
1970-71
1980-81
1990-91
1995-96
1998-99
1999-00
2000-01
2001-02
2002-03
Years
OECD OPEC Eastern Europe Others LDCs** Others

Balance of trade
2000
0
1956-57
1965-66
1968-69
1974-75
1950-51
1953-54
1959-60
1962-63
1971-72
1977-78
1980-81
1983-84
1986-87
1989-90
1992-93
1995-96
1998-99
2001-02
-2000
-4000
US$ (Million)
-6000
-8000
-10000
-12000
-14000
-16000
Years
Trade Balance
Source : Based on
International
DGCI&S data Marketing All rights reserved
Gains from international markets
• to measure the benefits derived by a nation from
exports, “terms of trade” is a widely used instrument
• terms of trade : a measure of relative changes in import
and export prices of a nation expressed as the ratio of
price index of its exports to price index of its imports

Terms of Trade
Net Terms of Trade : Unit value index of exports
expressed as a percentage of unit value index of
imports
Gross Terms of Trade: Volume index of imports
expressed as a percentage of volume index of exports
Income Terms of Trade: Product of net terms of trade
and volume index of exports expressed as a
percentage

Terms of Trade (base year 1995= 100)
160
140
120
1995=100
100
80
60
40
20
0
1980 1990 1998 1999 2000 2001
Years
Developed Countries Developing Countries

India’s Terms of Trade (base year 1978-79= 100)
900
(Base 1978-79=100)
800
700
600
500
400
300
200
100
0
1970-71 1980-81 1990-91 2000-01 2001-02 2002-03
Years
Gross Net Income
Source : DGCI&S
Key issues in India’s export growth
• Developing a proactive approach to international
trade
• Promoting Foreign Direct Investments
• Promoting Competitiveness
• Simplification of procedures
• Encouraging large-scale manufacturers
• Reducing transaction costs
• Infrastructure development

Key issues (contd)
• Entrepreneurship facilitation
• Strengthening SEZs
• Encouraging SMEs
• Devolution of power to states
• Abolition of indirect taxes for certain sectors
• Strategy for promoting services’ export

Identifying opportunities in international
markets
• Extreme focus product strategy
• Products-country matrix strategy
• Growth-share matrix of exports
• Market focus strategies

Chapter 3
World Trade Organization:

international marketing implications

Major implications of WTO’s multilateral
trade regime
• Security of access of international markets
• Stability of access to international markets
• Implications for importers of raw materials and

other inputs

From GATT to WTO
Year Round/Name Countries Average Tariff
Cut (%)
1947 Geneva 23 35
1949 Annecy 13 NA
1951 Torquay 38 25
1956 Geneva 26 NA
1960-61 Dillon 26 NA
1964-67 Kennedy 62 35
1973-79 Tokyo 102 33
1986-94 Uruguay 123 36

Functions of WTO
• Facilitates the implementation, administration, and

operation of the trade agreements
• Provides a forum for further negotiations among
member countries on matters covered by the
agreements as well as on new issues falling within its
mandate
• Responsible for the settlement of differences and
disputes among its member countries

Functions (contd)
• Responsible for carrying out periodic review of the
trade policies of its member countries
• Assists developing countries in trade policy issues
through technical assistance and training programmes
• Encourages cooperation within the international
organization

Principles of multilateral trading system
under WTO
• Trade without discrimination
• Most-Favoured Nation (MFN) treatment
• National treatment
• Gradual move towards freer markets through
negotiations
• Increased predictability of international
marketing environment
• Promoting fair competition in international
markets

WTO agreements
• An umbrella agreement (the agreement establishing
WTO)
• Agreements for each of the broad areas of trade
covered by WTO
• goods
• services
• intellectual Property
• Dispute settlement
• Review of governments’ trade policies

General Agreement on Tariffs and Trade
(GATT)
• Increasing opportunities for goods in international markets
• Creating marketing opportunities in the industrial section
• Reduction in Tariffs
• Tariffs Bindings
• Creating fairer markets in agriculture sector
• Elimination of non-tariff measures through the ratifications
process
• Binding against further increase of tariffs
• Domestic support
• Export subsidies
• Opening up marketing opportunities in textiles

Standards and safety measures for
international markets
• Agreement on Sanitary and Phytosanitary (SPS)
Measure sets out the basic rules on food safety and
plant health standards
• Agreement on Technical Barriers to Trade (TBT)
ensures that regulations, standards, testing, and
certification procedures do not create unnecessary
obstacles to trade

General elements of GATS
• General Agreement on Trade in Services (GATS) are first
and only set of multilateral rules governing international
trade in services
• The main text containing general obligations and
disciplines
• Annexes dealing with rules for specific sectors
• Individual countries’ specific commitments to provide
access to their markets and also indicting sectors where
countries are temporarily not applying the ‘Most-
Favoured-Nation’ principle of non-discrimination

Complexity of international trade in services
Trade in services is much more diverse compared to

trade in goods and GATS address this diversity through
rules governing:
• movement of natural persons
• financial services
• telecommunications
• air transport services

Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS)
Lays down minimum standards for the protection of

intellectual property rights as well as the procedures
and remedies for their enforcement. It establishes a
mechanism for consultations and surveillance at the
international level to ensure compliance with these
standards by member countries at the national level.

Curbing unfair marketing practices
• Agreement on anti-dumping practices (ADP) allows

governments to act against dumping where there is
genuine injury to the competing domestic industry
• Procedure to initiate dumping:
- governments should be able to show that
dumping has taken place
- calculate the extent of dumping
- demonstrate that dumping is causing injury or
threatening the local industry

Top ten users of anti-dumping measures 1995-2003
2500 2416
2000
1500
1000
500 379 329 274

180 166 163 122 109 73 72
0
Canada
Africa
European
India
Mexico
countries
South
Union
All
Country

Emergency protection from imports
• A WTO member may restrict imports of a product

temporarily (take ‘safeguard’ actions) if its domestic
industry is seriously injured or threatened with injury
caused by a surge in imports
• The WTO agreements on safeguards prohibit ‘grey-
area’ measures, and it sets time limits ( a sunset clause)
on all safeguard actions

Procedure of settlement of international trade
disputes
• Consultation
• Panel established
• Terms of reference composition
• Panel examination
• Interim review stage

Time frame for settlement of international
trade disputes
60 days Consultations, mediation, etc.
45 days Panel set up and panelists appointed
6 months Final panel report to parties
3 weeks Final panel report to WTO members
60 days Dispute settlement body adopts
report (if no appeal)
Total One Year (without appeal)
60-90 days Appeal resort
30 days Dispute settlement body adopts
appeals report
Total 15 months (with appeal)

The implications of WTO on international
marketing
• Binding of concessions and commitments
• Valuation of goods for customs purposes (Agreement
on Customs Valuation)
• Use of pre-shipment inspection services (Agreement
on Pre-shipment Inspection)
• Import licensing precedures (Agreement on Improt
Licensing Procedures)
• Rules applicable to exports
• Anti-dumping and countervailing action

Chapter 4
Scanning the International Economic
Environment

International economic institutions
• World Bank Group
• International Bank for Reconstruction and
Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment
Disputes (ICSID)
• International Monetary Fund (IMF)
Special Drawing Right (SDR)
An international reserve asset introduced by the IMF in

1969 SDR are allocated to members countries (as
book-keeping entries) as a percentage of their quotas

The United Nations Conference on Trade and
Development (UNCTAD)
Established in 1964 UNCTAD aimed at integrating
developing countries into the world economy
Basic functions includes:
• serve as the focal point within the United Nations for
the integrated treatment of trade and development
issues
• undertake research, policy analysis, and data collection
in order to provide substantive inputs to experts
• facilitate cooperation with other organisations and
donor countries and provide technical assistance
to member countries

Common Fund for Commodities (CFC)
Established in 1989 with the following objectives:

• To serve as a key instrument in attaining the agreed
objectives for the integrated programme for
commodities adopted by UNCTAD
• To facilitate the conclusion and functioning of ICAs
(international commodity agreements), particularly
concerning commodities of special interests to
developing countries

Generalized System of Preferences (GSP)
GSP is a non-contractual instrument by which

industrialized countries unilaterally and on the basis of
non-reciprocity extend tariff concessions to developing
countries
EU GSP Scheme:
• Special Incentive Scheme
• US GSP Scheme

World Intellectual Property Organization
(WIPO)
Established in 1970 as an international organisation to
protect the rights of creators and owners of intellectual
property the worldover
Main functions:
• Advice and expertise in the drafting and revision of
national legislation important for whose WIPO
member states with obligations under TRIPS
agreement
• Comprehensive education and training programmes
at national and regional levels

International Trade Centre (ITC)
Created by GATT in 1964 ITC works in six areas:

• Product and market development
• Development of trade support services
• Trade information
• Human resource development
• International purchasing and supply management
• Needs assessment and programme design for trade
promotion

International economic integration
Major reasons for economic integration are:
• Neighbouring countries generally have a common
history and interest and they are more willing to
cooperate in each other’s policies
• Consumer tastes are likely t o be similar and
distribution channels can easily be established in
adjacent countries
• The distances that goods need to travel between
such countries are shortened

Types
Preferential Trading Agreement (PTA)
Member countries reduce import tariffs on identified
products from one another
Free Trade Area (FTA)
Member countries remove all tariffs and non-tariff barriers
among themselves but are free to maintain their own tariffs
and non-tariff barriers with non-member countries.
Customs Union
In addition to eliminating trade barriers among member
countries, a common external trade policy is adopted for
non-members

Types (contd)
Common Market
All restrictions on cross-border investment, movement of
labour, technology transfer, management, and sharing of
capital resources are eliminated to form a common market
Economic Union
The member countries in an economic union maintain a
fiscal discipline, stability in exchange rates, and stability
in interest rates by way of unified monetary and fiscal
policy

Major regional trade blocks (RTA’s)
High-income and low and middle-income
economies
• Asia-Pacific Economic Cooperation (APEC)
• European Union (EU)
• North American Free Trade Area (NAFTA)
Latin America and the Caribbean

• Association of Caribbean States (ACS)
• Andean Group
• Group of Three
• Latin American Integration Association (LAIA)
• Southern Cone Common Market (MERCOSUR)

Major RTA’s
(contd)
Africa
• Common Market for Eastern and Southern Africa (COMESA)
• Economic Community of West African States (ECOWAS)
• Southern African Development Community (SADC
Middle East and Asia

• Association of south-East Asian Nations (ASEAN)
• Bangkok Agreement
• East Asian Economic Caucus (EAEC)
• Gulf Cooperation Council (GCC)
• South Asian Association for Regional Cooperation (SAARC)

India’s participation in RTAs
• Framework Agreement on comprehensive economic

cooperation between ASEAN and India
• Bangladesh-India-Myanmar-Sri Lanka-Thailand
economic cooperation (BIMST-EC)
• Indo-Sri Lanka Free Trade Agreement
• Bangkok Agreement
• Framework Agreement for establishing free trade
between India and Thailand
• SAARC preferential trading agreement (SAPTA)
South Asian Free Trade Agreement (SAFTA)

Chapter 5
International Marketing Research

International marketing research
• a study conducted to assist decision-making in more

than one country
• research that crosses national borders and involves

respondents and researchers from different countries
and cultures

Challenges
• overlooking cross-cultural market behaviour

• employing standardized research methodologies
across the international markets
• using English as a standard language for market
communication
• inappropriate sample selection
• misinterpretation of cross-country data
• failure to use locals to conduct field surveys

Cross-cultural marketing behaviour and
research
The collective programming of the mind which

distinguishes the members of one group or category
from the other

Comparison of cross-cultural behaviour
Power distance
• the degree of inequality among the people that are viewed
equitably
Individualism vs. collectivism
• the tendency of people to look after themselves and their
immediate family’s interests alone
Masculinity vs. femininity
• masculine societies, the dominant values emphasize work
goals such as earnings, advancement, and success
• feminine society are achievement of personal goals such as
quality of life, care for others, and friendly atmosphere
Uncertainty avoidance
• lack of tolerance of ambiguity and the need for formal rules
Comparison of cross-cultural behaviour
Cultural context
The context of a culture has crucial implications in
communicating and interpreting verbal and non-verbal
messages
Cultural homogeneity
• homophilous culture: countries where people share the
same beliefs, language, and religion

• heterophilous culture: countries that have a fair amount
of differentiation in language, beliefs, and religion

Process
Problem dentification
Decide Research
Methodology
Workout Information
Requirement
Identify Sources of Information

(Both Primary and Secondary)
Prepare Research
Design
Collect Primary Information
Analyse Information
Evaluation and Interpretation

International marketing research and
marketing decisions
Marketing mix decision
• product policy
Type of research
• focus groups and qualitative research to generate ideas
for new product
• survey research to evaluate new product ideas
• concept tasting, test marketing
• product benefit and attitude research
• product formulation and feature testing

International marketing research (contd)
Pricing distribution
Type of research
• pricing sensitivity studies
Distribution
Type of research
• survey of shopping patterns and behaviour
• consumer attitudes toward different store types
• survey of distributor attitudes and policies


Advertising
Type of research
• advertising pre-testing

Advertising post-testing, recall scores
Type of research
• surveys of media habits


• Sales Promotion
Type of research
• surveys of response to alternative types of promotion

Sales force
Type of research
• tests of alternative sales presentations

Emic vs. Etic dilemma
EMIC
Holds that attitudes, interests, and behaviour are
unique to a culture and best understood in their own
terms, and emphasizes studying the research problem
in each country’s specific context
ETIC
Emphasizes identifying and assessing universal
attitudinal and behavioural concepts and developing
‘pan-cultural’ measures

Chapter 6
Decision-making Process for


Segmentation of international markets
• division of the market of potential customers into
homogeneous sub-groups
• a small firm can compete more effectively in specific
market segments as it concentrates its resources on
the target segment
• for a market segment to be effective, it must be:
- measurable
- substantial
- accessible
- differentiable
- actionable

Types
• geographic segmentation: dividing markets into
geographical subsets
• demographic segmentation: dividing markets on the
basis of demographic characteristics (age, gender,
family size, education, etc.)

Country segmentation on the basis of income
World Bank’s classification on the basis of 2002 per capita

gross national income (GNI)
• Low-income countries : US$ 735 or less
• Lower middle-income countries: US$ 736-2935
• Upper middle-income countries : US$ 2936-9075
• High-income countries : US$ 9076 or more

Segmentation of Indian market on the basis
of household income
Group Annual
Income
• Rich : Above Rs. 2,15,000
• Consuming : Rs.45,000 – 2,15,000
• Climbers : Rs. 22,000 – 45,000
• Aspirants : Rs. 16,000 – 22,000
• Destitutes : Less than Rs. 16,000

Segmentation of international markets on the
basis of core values
Strivers (12%): place higher emphasis on material and
professional goals
Devouts (22%): place more value on traditions and duty
Altruists (18%): more interested in social issues and social
welfare
Intimates (15%): place more value on close personal
relationships and family above all
Fun Seekers (12%): pays more emphasis on fun and
enjoyment in life
Creatives (10%): this market segment has strong interest in
education, knowledge, and technology

Segmentation on the basis of international
marketing opportunity
• Existing markets
• Latent markets
• Incipient markets

Segmentation on the basis of market
attractiveness
• Platform countries
• Emerging markets
• Growth markets
• Maturing markets
• Established markets

Selection of international markets
• preliminary screening of international markets
- market size
- accessibility to international markets
• tariff barriers
- on the basis direction of trade
• tariff
- on the basis of purpose: protective vs. revenue tariffs
- on the basis of time length: tariff surcharge vs.
countervailing duty

Selection (contd)
-on the basis of tariff rates : specific, ad valorem,
and combined
- on the basis of production and distribution points:
(i) single stage sales tax
(ii) value added tax (VAT)
(iv) cascade tax
(v) excise tax
(vi) turnover tax

Selection (contd)
• Non-tariff marketing barriers
- government participation in trade
- customs and entry procedure
- product requirements
• Quotas
- absolute quota
- tariff quota
- voluntary quota

Selection and targeting international
markets
• Trade analysis method
• Analogy method

Tools for international market analysis
• Growth-share (Boston Consulting Group) matrix
• Market attractiveness / company strength matrix

Chapter 7
Entering International Markets

Concept of international market entry
• mode of entry: an institutional mechanism by which a
firm makes its products or services available
consumers in international markets.
• mode of entry determined by:
- the ability and willingness of the firm to commit
resources
- the firms’ desire to have a level of control over
international operations
- the level of risk the firm is willing to take
Modes of international market entry
Production in home country
exports: production is carried out in home country and
finished goods are shipped to the overseas markets for
sale
indirect exports: process of selling products to an
export intermediary in the company’s home country who
in turn sells the products in the overseas markets
direct exports: process of selling the firm’s products
directly to an importer in the overseas market

Modes (contd)
complementary exporting: use of distribution channels

of an overseas firm to make the product available in the
overseas market
provide offshore services: to overseas clients with the

help of information and communication technology

Modes (contd)
Production in a foreign country
• contractual entry modes
international licensing: process by which a domestic

company allows a foreign company to use its intellectual
property and specific business skills for a compensation
(royalty)
international franchising: transfer of intellectual property

and other assistance over an extended period of time with
greater control compared to licensing

Modes (contd)
overseas turnkey projects: conceptualize, design, install,
construct, and carry out primary testing of manufacturing
facilities or engineering structures for an overseas client
organisation
types : built and transfer (BT), built, operate, and transfer
(BOT), built, operate, own (BOO)
international management contracts: a company
provides its technical and managerial expertise for a
specific duration to an overseas firm

Modes (contd)
international strategic alliance: the relationship between

two or more firms that cooperate with each other t o
achieve common strategic goals but do not form a
separate company
international contract manufacturing: a contractual

arrangement under which a firm’s manufacturing
operations are carried out in a foreign countries

Modes (contd)
Investment entry modes
assembly in overseas markets: refers to exporting various

components of the product in completely knocked down
(CKD) condition and assembles them overseas
international joint ventures: equity participation of two or

more firms resulting into formation of a new entity

Factors for selecting partners for
cooperation
• the alliance partner should have some strength which
can be translated into business values for the alliance
• the alliance partners should be committed to
cooperative goals
• it is preferable that the alliance partner should have
multi-cultural business environment

Factors (contd)
Wholly owned foreign subsidiaries

• to have complete control and ownership of
international operations a firm opts for foreign
direct investment through:
1. acquiring a foreign company and all its resources in
a foreign market (acquistion)
2. the establishment of production and marketing
facilities by a firm on its own from scratch (green field)

Factors affecting the selection of entry
mode
External factors
• Market size
• Market growth
• Government regulations
• Level of competition
• Level of risk
• political
• economic
• operational
• Production and shipping costs

Factors affecting the selection of entry
mode (contd)
Internal factors
• ompany objectives
• availability of company resources
• level of commitment
• international experience
• flexibility

Chapter 8
Product Strategy for International

Markets

Identification of products for
• a firm has to carry out preliminary screening for
markets and products by conducting market research
poorly conceived product often leads to marketing
failures

Developing products for international
markets
• ethnocentric approach
• polycentric approach
• regiocentric approach
• geocentric approach

Product standardization
• product standardization : the process of marketing a
product in overseas markets with little change
except for some cosmetic changes such as modified
packaging and labelling
• benefits
- projecting a global product image
- catering to customers globally
- cost savings in terms of economies of scale in
production
- designing and monitoring various components of
marketing mix economically
- facilitating the development of a product as a global
brand
Factors favouring product standardisation
in international markets
• high level of technology intensity
• formidable adaptation costs
• convergence of customer needs worldwide
• country of origin impact

Product adaptation
• product adaptation: making changes in a product in
response to the needs of the target market is termed
product adaptation or customization
• benefits
• enables a firm to tap markets, which are not
accessible due to mandatory requirements
• fulfills the needs and expectations of customers in
varied cultures and environments
• helps in gaining market share
• increases sales leading to economies of scale

Factors influencing product
adaptation in international markets
Mandatory factors
• government regulations
• standards for electric current
• operating systems
• measurement systems
• packaging and labelling regulations

Factors (contd)
Voluntary
• consumer demographics
• culture
• local customs and traditions
• condition of use
• price

New product launch
waterfall approach: the launch of a new product in

international markets in a phased manner
sprinkler approach: simultaneous product launch in

various international markets

International product strategy
International competitive posture matrix

• kings
• barons
• crusaders
• commoners

International product strategies
Product
Do not Adapt Develop
change product new product
product
Product
Promotion
Do not Straight
change adaptation
adaptation
promotion Product
Invention
Communication Dual
Adapt adaptation adaptation
promotion

Chapter 9
Building Brands in

Benefits of branding
• provides a marketing edge to the brands so as to
maintain their prices at relatively higher levels than the
competitors’
• secure better margins
• facilitate coping with market competition
• increase the life of a product
• serve as an important tool in international marketing as
the image of the brand crosses national boundaries
• facilitates the forging of an emotional relationship
between consumers and products

Brands in international marketing
• it is important to understand the cultural traits of the
target markets
• the failure to recognize the repercussions of the
brand name in international markets proved
detrimental to brand image.
• a firm should carefully research the linguistic and
cultural repercussions while taking a decision on ext
ending its brand name in international markets

Strategies for building brands
• brand based on a tangible product component
• brand based on an intangible product component

- feature based
- user imagery based
• balance brand based on tangible-intangible

product component

Strategy for building global brands
• dominates the domestic market, which generates
cash flow to enter new markets
• meets a universal consumer need
• demonstrates balanced country-market coverage
• reflects a consistent positioning worldwide
• benefits from positive country of origin effect
• focus is on the product category

The World's 10 Most Valuable
Brands (2004)
70.0 67.4
61.4
60.0
53.8
50.0
44.1
US$ (Billions)
40.0
33.5
30.0 27.1
25.0 24.0
22.7 22.1
20.0
10.0
0.0
GE
IBM
Nokia
Intel
McDonald's
Disney
Marlboro
Coca-Cola
Microsoft
Toyota
Brands
pP. Chase & Co. of the Morgan Stanley Group

International brand building strategy
h
g
iH
Build Maintain
Category leadership
dnar B
xe dnI
t ne mpol eve D
Secure trial Build market

Low share
Low h
g
iH
Category Development Index
Chapter 10
Pricing Decision for


Pricing in developing countries
• lower production and technology base
• relatively low share in international markets makes
them marginal suppliers in most product categories
with little bargaining power
• majority of products sold as commodities with
marginal value addition

Factors influencing pricing decisions in
• cost
• competition
• irregular or unaccounted payments in exports-
imports
• purchasing power of customers
• buyers’ behaviour
• foreign exchange fluctuations

Terms of payment in international
transactions
• advance payment
• open account
• consignment
• documentary credit
• documentary credit without letter of credit
- sight draft (documents against payment)
- usance or time draft (documents against
acceptance)
Terms of payment (contd)
• documentary credit with letter of credit

- revocable
- confirmed
- unconfirmed

Types of credit
• sight
• term credits
- acceptance credit
- deferred payment credit
• revolving
• back to back

Important terms of delivery
• EXW (Ex Works) named place
• FCA (Free Carriers) named place
• FAS (Free Alongside Ship) named port of shipment
• FOB (Free on Board) named port of shipment
• CFR (Cost and Freight) named port of destination
• CIF (cost, Insurance, and Freight) named port of
destination
• CIP (Carriage and Insurance Paid to) named place of
destination

Terms of delivery (contd)
• CPT (carriage Paid To) named place of destination

• DAF (Delivered at Frontier) named place
• DES (Delivered Ex Ship) named port of destination
• DEQ (Delivered Quay) named port of destination
• DDU (Delivered Duty Unpaid) named place of
destination
• DDP (Delivered Duty Paid) named place of
destination

Dumping
• selling a product or commodity below the cost of
production or at a lower price in overseas markets as
compared to its price in domestic markets.
• types of dumping
- sporadic dumping
- predatory dumping
- persistent dumping

Counter trade
• price setting and trade financing are tied together in
one transaction involving reciprocal commitments
other than cash payments
• importing country’s inability to pay in hard currency
• importing country’s regulations to conserve hard
currency
• importing country’s concern about balance of trade
• exploring opportunities in new markets
• gaining access to capital goods markets in countries
with shortage of hard currency

Types of counter trade
• barter
• simple Barter
• clearing Arrangement
• switch Trading
• counter Purchased
• buy-back (compensation)
• offset

Transfer pricing
• price of an international transaction between related

parties
• market based (Arm’s Length) transfer pricing
• non-market pricing
• pricing at direct manufacturing cost

Grey marketing
• import or export of goods and marketing them
through
unauthorized channels
• parallel importing
• re-importing
• lateral re-importing

Chapter 11
International Logistics and

Distribution

International logistics
• conceptulization, design, and implementation of a

system to direct flow of goods and services across
national border
• components
- materials management
- physical distribution

Channels of international distribution
• a set of interdependent organisations networked

together to make the products or services available to
the end consumers in international markets

International marketing channels
• agents
- broker/commission agent
- importer’s buying agent
- country controlled buying agent
- buying office
• merchant intermediaries
- merchant exporter
- international trading companies
- export / trading house

Criteria for selection of international
distribution channels
• international marketing objectives of the firm
• financial resources
• organisational structure
• experience in international Markets
• firm’s marketing image
• existing marketing channels of the firm
• channel availability in the target market
• speed of market entry required
• legal implications

International retailing
Top 200 retailers : by country of origin
0.07
0.125
0.425
0.035
0.055
0.065
0.095
0.13

Retail outlets in international markets
• department stores
• supermarkets
• convenience stores
• specialty stores
• discount stores
• superstores
• hypermarkets

Cross-country comparison of organized retail
sector
Country Size Traditional Modern channel
(US$ channel (In percentage)
Billion) (In percentage)
US 2325 15 85
Taiwan 115 19 81
Malaysia 20 45 55
Thailand 22 60 40
Brazil 100 64 36
Indonesia 75 70 30
Poland 55 80 20
China 325 80 20
India 180 98 2

Managing international logistics
• managing logistics in international markets is

complex due to:
- physical distance
- differences in logistics systems
- compatibility of logistics systems
- differences in legal systems
- number of intermediaries involved

Constituents of physical distribution
• warehousing
• inventory
• packing and unitisation
• information and communication technology
• transportation

Transportation
• modes of transport
- air transportation
- road transportation
- rail transportation
- ocean transportation

Ocean transportation
• types of ocean cargo
- bulk
- break bulk
- neo-bulk
- containerized

Types of commercial vessels
• on the basis of decks
- single deck vessel
- tween-deck vessel
- shelter deck vessels
- container vessels
• on the basis of vessel size

- handy-size
- handy-max
- panamax
- cape-size

Types of commercial vessels (contd)
• on the basis of type of cargo

- tankers
- bulk carriers
- neo-bulk carriers
- general cargo vessels
- barges
- combination carriers

Charter shipping
• charter vessels do not have any fixed itinerary or fixed

sailing schedule
• these can be hired or engaged to ship a firm’s cargo on
charter basis as per the terms and conditions of the

charter party
• the contract made between the charterer and the ship
owner is known as charter party that contains details of
the ship, routes, met hods of cargo handling, port of

call
Forms of chartering
• voyage charter
• time charter
• bare boat charter
• back-to-back charter
• trip time charter
• contract of affreightment

Contract terms used in vessel chartering
• gross terms: the ship owner is responsible for the cost of
loading, stowing, trimming, and unloading of the vessel
• net terms: The ship owner is not responsible for cost of
loading and discharge
• free in and out: the charterer has to arrange the
stevedores and to load/discharge the cargo on his own
account
• liner shipping: regular scheduled vessel services between
two ports
• container: transport equipment to facilitate handling and
carriage of goods by one or more modes of transport

Containerisation and multimodal
transportation
• benefits of transporting the cargo by containers

- facilitates door-to-door delivery
- reduces cost of packing as the container acts
as a strong protective cover
- reduces the documentation work
- lowers warehousing and inventory costs
- prevents pilferage and theft
- reduces susceptibility to cargo damage

Chapter 12
Communication Decision for


Marketing communication
• effective communication is crucial to a firm’s success

in international markets
• marketing communication mix involves advertising,
sales promotion, public relation, personal selling, and
direct and interactive marketing

Factors influencing international marketing
communication mix
• market size
• cost of promotional activity
• resource availability
• media availability
• type of product and its price sensitivity
• mode of entry into international market
• market characteristics

Consumer response hierarchy models
AIDA model
Attention
Interest
Desire
Action
Adoption model
Awareness
Interest
Evaluation
Trial
Adoption
Standardized advertising
• using the same advertising strategy across the
country
• advertisement with no change
• advertisement with changes in illustration
• benefits
• economies of scale
• projection of uniform image in international markets

Communication adaptation
• modification in the advertisement message,
copy or content
• helps to reduce difference in cultural values
among the countries
• difficulties in language translation
• variations in the level of education of the target
groups
• media availability
• social attitudes towards advertising
• regulatory framework of the target market

Tools of international marketing
communication
• direct marketing: selling products and services to the
customers without using any market intermediary
• direct mailing: sending letters, brochures or catalogues, e-
mails, faxes, or even product samples directly to the
consumers, who may, in turn, purchase the product
through mail
• door-to-door marketing: selling door to door
• multi-level marketing: involves a revolutionary
distribution system with little spending on advertising and
infrastructure
• personal selling: involves personal meeting of a firm’s
representatives with the customer

Tools (contd)
• international trade fairs are organized gatherings where
the buyers and the sellers meet and establish
communication
• types
- general trade fairs
- specialized trade fairs
- consumer fairs
- minor trade fairs
- solo exhibitions

Tools (contd)
• catalogue shows: display of catalogues generally
accompanied by trade samples often organised by
government organisations or industry association
• trade missions: groups of business people travelling
abroad to promote their business by meeting foreign
companies or foreign government officials
• sales promotion: tools used as short-term incentives
to induce a purchase decision such as trade and
consumer promotion
• public relations: aim at building corporate image and
influencing media and other target groups to have a
favourable publicity

Factors influencing
international communication decisions
• culture
• language
• education
• media Infrastructure
• government regulations

Framework for international product-
promotion strategies
• provides a good insight into marketing

decisions
• offers adapation alternatives:
- straight adaptation
- product extension-promotion
adaptation
- product adaptation-promotion
extension
- dual adaptation

Chapter 13
Framework of Export-import Policy

India’s Export-Import (EXIM) Policy
• formulated and implemented by the Ministry of
Commerce and Industry,Government of India

• other concerned ministries include Finance,
Agriculture, and Textiles, and Reserve Bank of
India

Principal objectives of India’s Exim policy
• to facilitate sustained growth in exports in order to

attain a share of at least 1% of global merchandise
trade
• to stimulate sustained economic growth by providing
firms an access to essential raw materials,
intermediates, components, consumables, and capital
goods required for augmenting production and
providing services

Principal objectives (contd)
• to enhance the technological strength and efficiency of

the Indian agriculture sector, industry, and services, to
improve their competitive strength while generating
new employment opportunities, and to encourage the
attainment of internationally accepted standards of
quality
• to provide consumers with good quality products and
services at internationally competitive prices while at
the same time create a level playing field for the
domestic producers

Items prohibited for imports
• tallow, fat, and / or oils, rendered or unrendered of any
animal origin
• animal rennet
• wild animals, including their body parts and products
and ivory
• beef and products containing beef in any form

Items prohibited for exports
• wild animals
• birds
• tallow
• wood products
• beef
• sandalwood products
• certain species of sea shells
• peacock feathers including handicrafts and other
articles made from the feathers
• manufactured articles
• shavings of shed antlers of deer
• human skeleton

Export promotion schemes and incentives
• schemes for concessional imports are aimed at
removing the anti-export bias inherent in the system
of indirect taxation and to encourage exports
• several schemes have been established which allow
importers to benefit from tariff exemptions,
especially on inputs

Export promotion schemes
• duty drawback is an export incentive to refund customs
duty paid on imports of inputs used in manufacture of
goods subsequently exported
• drawback comprises:
- customs allocation
- central excise allocation

• export promotion capital goods (EPCG) scheme allows
for the import of capital goods at concessional rate of
duty subject to an appropriate export obligation accepted
by the exporter

Types
• all industry rate: average industry drawback rates
fixed by Ministry of Finance from time to time
• brand rates: drawback incentive for exporters of
manufactured goods determined on case to case
basis for individual exporters on particular brands

Duty remission schemes
• duty exemption passbook scheme (DEPB) grant
credit on post-export basis as specified percentage
of freight on board value of exports made in freely
convertible currency
• duty-free replenishment certificate (DFRC) provides
post-export remission of duty (basic and special
additional duty, which is equal to excise duty) on
imported inputs used for the manufacture of export
products

Schemes to promote export production and
related infrastructure
• assistance to states for infrastructure development for
exports and other allied activities (ASIDE)
• export promotion industrial park (EPIP) scheme
gives assistance to the states to create infrastructure
facilities for export-oriented production (export
promotion industrial park)
• critical infrastructure balance (CIB) scheme
provides assistance to states to facilitate balancing of
capital investments for relieving bottlenecks in
infrastructure for export production and conveyance

Creation of enclaves for export production
and promotion
• Free Trade Zones (FTZ) and Export Processing Zones
(EPZs develop infrastructure for export production at
internationally competitive prices and environment
• EPZs are set up at Kandla, Santacruz, Falta, Noida, Cochin,
Chennai, Vishakhapatnam

Creation of enclaves for export production
and promotion (contd)
• special economic zones (SEZs)are duty-free enclaves to
be treated as foreign territory for trade operation duties and
tariffs so as to provide an internationally competitive and
hassle-free environment for export production.
• agri-export zones (AEZ) scheme involves comprehensive
package of services in an identified zone by all related state
and Central Government agencies, state agricultural
universities, and related organisations so as to facilitate
production and exports of agro products

EOU, STP, EHTP
• Export-Oriented Units (EOU) are complimentary to
EPZ scheme for units located in domestic tariff area
• Software Technology Parks (STPs)/electronic
Hardware Technology Parks (EHTPs) facilitate export-
oriented production of computer software, hardware, and
electronic hardware

Export Houses/Trading Houses/Star Trading
Houses
• give recognition to the established exporters and
large export houses to build up the marketing
infrastructure and expertise required for export
promotion
• benefits
- license/certificate/permission and customs
clearances for both imports and exports on self-

declaration basis
- fixation of input / output norms on a priority bias
- priority finance or medium and long-term capital
requirement as per conditions notified by the RBI
- enhancement in normal repatriation period from
180-360 days
Other export schemes
• market development assistance (MDA)isassistance
given to exporters and export promotion organizations for
market exploration and export promotion on cost –sharing
basis
• market access initiative (MAI) scheme to support
market promotion efforts to exporters and export
promotion organisations based on focus product-focus
country approach
• India brand equity fund (IBEF Trust) offers financial
assistance by way of medium-term loans for promotion of
generic products and Indian brands

Chapter 14
International Trade Finance and

Risk Management

Need for trade finance
• international markets are becoming increasingly
competitive and overseas buyers often demand
credits from the exporters
• exporting firms require finance right from the time of
procuring inputs or raw materials for export
production to the time they receive the final payment
from the overseas buyers

• countries around the world offer export credit at
concessional terms

Types of export credit
• pre-shipment credit is a loan or advance granted by

a bank for financing the purchase, processing,
manufacturing, or packing of goods prior to
shipment

Export credit in foreign currency
• in order to make the credit available to the exporters
at internationally competitive rates, banks

(authorized dealers) also extend credit in foreign
currency at LIBOR/ EURO Libor / EURIBOR related
rates of interest

Pre-shipment credit in foreign currency
(PCFC) scheme
• exporters procure export finance as pre-shipment

credit in rupees and post-shipment credit either in
rupees or discounting/rediscounting of export bills
under Export Bills Abroad (EBR) scheme
• pre-shipment credit in foreign currency and
discounting or rediscounting of the export bills in
foreign currency under the EBR scheme

Post-shipment export credit in foreign
currency
• exporters have the option to avail of post-shipment export
credit in either foreign currency or domestic currency
• post-shipment credit has to be in foreign currency if the
pre-shipment credit has already been availed of in foreign
currency in order to liquidate the pre-shipment credit
• the scheme covers bills with usance period upto 180 days
from the date of shipment

Factoring
• purchase of receivables by the factor at a discounted
price
• benefits
- facilitates expansion of sales in international
markets by offering prospective customers the
same terms and conditions as local competitors
- facilitates immediate payment against receivables
and increases working capital
- credit investigations, collection of account
receivables from the importer, and other
bookkeeping services are carried out by the factors
- in the event of buyer’s default or refusal to pay,
factors assume credit risk

Forfaiting
• a mechanism for financing exports forfaiting discounts
receivables by negotiating bills drawn under a letter of
credit or co-accepted bills of exchange
• benefits
- by discounting export receivables evidenced
by bills of exchange or promissory notes
- on a fixed rate basis (discount)
- without recourse to the exporter
- carrying medium to long-term maturities
(usually over 120 days)
- up to 100% of the contract value

Financing to overseas importers
• buyer’s credit is extended by a bank in India to an
overseas buyer enabling him to pay for machinery or
equipment that he may be importing from India for a
specific project
• line of credit is extended by a bank in India to an
overseas organization for facilitating imports from
India

Risks in international transactions
• an international transaction involves a number of

risks that adversely affect a firm’s smooth operation
• managers operating in international markets
need to develop a thorough understanding of these
risks and the various options available to minimize
them

Types of risks in international transactions
• commercial risks
- non-payment by the importer at the end
of credit period or after some specified period
after the expiry of credit term
- non-acceptance of goods by the importer
despite its compliance with the export contract
- insolvency of the purchaser
• economic risks
- import restrictions
- local content requirements
- exchange controls
- foreign exchange risk

Types of risks (contd)
• political risk
- confiscation
- expropriation
- nationalization
- domestication
• transit risks
- maritime
- extraneous
- war
- strike

Types of cargo losses
• total loss
- actual total loss occurs when goods are
completely damaged or destroyed or undergo
such a marked change that they no longer
remain marketable
- constructive total loss (CTL) the cost of saving,
repairing, or reconditioning of insured goods is
greater than the value of goods
• partial loss
- general average (GA) is a loss specific to
marine cargo insurance
- particular average is partial losses or damage
that is not covered by general average and
particular charges

International business risks
• measuring international business risk

- Business Environment Risk Intelligence
(BERI) Index
- EIUs Business Environment Ranking
• managing international business risk
- Credit Risk Insurance

- Marine Cargo Insurance

Chapter 15
Export Procedure and Documentation

Export procedures and documetation
• export procedures and documentation are crucial to

international marketing, as both exporters and
importers are situated in two different countries and
are governed by different legislative frameworks
• export documentation facilitates international
transactions and protects the interest of the
exporters and importers

Types of export documents
• commercial documents are used by ‘custom of trade’

in international commerce by exporters and importers
in discharge of their respective legal and other
incidental responsibilities under sales contract.
• regulatory documents are prescribed by different
government departments / bodies for compliance of
formalities under relevant laws

Commercial documents
• commercial invoice is a document of content that
provides:
- identification of shipment
- detailed description of goods
- description of quantity
• a packing list provides details of how the goods are
packed, the contents of different boxes, cartons, or
bales, and details of the weights and measurement of
each package in the consignment
• transport documents documents that evidence
shipment of goods, such as bill of lading, combined
transport document, waybill, or consignment note
Bill of lading
• marine bill of lading (B/L)
- a transport document issued by the shipping
company to the shipper for accepting the goods for
the carriage of merchandise
• airway bill (AWB)
- issued by the carrier as an evidence of contract of
carriage
• a bill of lading serves three purposes:

- it is the receipt of cargo by the shipping company
- a contract of carriage (or transport)
- a document of title

Types of bill of lading
• on board or shipped bill of lading

• received for shipment bill of lading
• clean bill of lading
• dirty (clause) bill of lading
• stale bill of lading
• through bill of lading
• trans-shipment bill of lading

Certificate of
origin
• used as an evidence of the origin of goods in the
importing country
• includes the details of the goods covered and the
country where the goods are grown, produced or
manufactured

Types of certificates of origin
• inspection certificate is related to quality of goods
• insurance certificate provides protection to the
cargo-owner, an insurance cover is necessary while
the cargo is in transit from the consignor to the
consignee
• mate’s receipt is a cargo receipt issued by the master
of the vessel for every shipment taken on board
• bill of exchange is an unconditional order in
writing prepared and signed by the exporter addressed
to the importer requiring the importer to pay a certain
sum of money to the exporter or his / her nominee
• shipment advice advice is sent to the importer
informing of the details of the shipment

Regulatory documents
• shipping bill / bill of export is the principal

document required by customs authority
mentioning details of shipment for exports
• bill of entry is a document needed for customs
clearance of imported cargo

Procedure for export-import
• compliance with legal framework
• obtaining import-export code number
• registration with export promotion council
• registration with sales tax and central excise authorities
• concluding an export deal
• arranging export finance
• appointing C& F Agent
• procuring manufacturing of goods
•arranging cargo insurance
• port procedures and customs clearance
• presentation of documents at the negotiating bank
• claiming export incentives
• receiving payment and export incentives
Electronic processing of export documents
• use information technology in the field of international

business has facilitated computerized generation and
processing of export documents
• for electronic filing and processing of documents,
Indian customs and central excise electronic commerce
/ electronic data interchange (EC /EDI) gateway has been
created, popularly known as ICEGATE

Systems components of ICEGATE
• Indian Customs EDI system (ICES)

• The Message Exchange Servers (MES)
• ICEGATE and ICENET (Indian Customs and Central
Excise Gateway and Indian Customs and Central
Excise Network)

Chapter 16
Institutional Infrastructure for

Export Promotion

Export promotion
• public policy measures which actually on potentially

enhance exporting activity at the company, industry,
or national level

Functions of export promotion programmes
• to create awareness about exporting as an instrument of
growth and market expansion
• to reduce and remove barriers to exporting
• to create promotional incentives
• to provide various forms of assistance to potential and
actual exporters

Institutional framework for export promotion in India
Tier level Bodies Responsibilities
Tier I Department of Commerce frames trade policy
Tier II Advisory Bodies coordinating discussion

between industry & govt.
for bringing in required
changes
Tier III Commodity Organisations assist the export effort of a
specific product group
Tier IV Service Organisations facilitate and assist
exporters to expand
markets
Tier V Government Trading handle export import of
Organisations specific commodity
Tier VI State Export Promotion facilitate export promotion
Agencies from the states

Department of Commerce
• the primary government agency responsible for evolving
and directing foreign trade policy and programmes,
maintaining commercial relations with other countries, and
developing and regulating export-oriented industries
• functional divisions
• economic division
• trade policy division
• foreign trade territorial division
• export product division
• export industries division
• export service division
• directorate general of foreign trade (DGFT)
• directorate general of commercial intelligence and statistics

Advisory bodies
• provide an effective mechanism for continued
interaction with trade and industry and increased
coordination among various departments and
ministries concerned with export promotion
• Board of trade
• Export promotion board

Commodity organizations
• these organisations look at sector-specific

exports and perform a wide range of functions
right from product development to export
marketing

Export Promotion Councils
• engineering
• project
• electronics and computer software
• plastics and linoleums
• basic chemicals, pharmaceuticals, and cosmetics
• chemicals and allied products
• gems and jewellery
• leather
• sports goods
• cashew
Export Promotion Councils (contd)
• shellac
• apparel
• synthetic and rayon
• Indian silk
• carpet
• handicrafts
• wool and woollens
• cotton textiles
• handloom
• powerloom
• export oriented units (EOUs) and special economic
zones (SEZs)

Export Promotion Councils (contd)
• major functions
- provide commercially useful information and
assistance to the members in developing and
increasing their exports
- offer professional advice to the members in
areas such as technology upgradation, quality
and design improvement, standards and
specifications, product development, innovation,
etc.
- organize visits of delegations of its members
abroad to explore overseas market
opportunities
- organize participation in trade fairs, exhibitions,
and buyer-seller meets in Indian and abroad

Commodity boards
• Tea Board
• Coffee Board
• Coir Board
• Central Silk Board
• All-India Handlooms and Handicraft Board
• Rubber Board
• Cardamom Board
• Tobacco Board
• Spices Board

Autonomous bodies
• Agriculture and Processed Food Products Export
Development Authority (APEDA)

• Marine Products Export Development Authority
(MPEDA)

Service institutions
• Indian Institute of Foreign Trade
• Indian Council of Arbitration
• India Trade Promotion Organization
• National Centre for Trade Information
• Export Credit Guarantee Corporation
• Export-Import Bank of India
• Indian Institute of Packaging
• Federation of Indian Export Organizations (FIEO)

Government participation in foreign trade
• the Government of India has set up a number of

corporations to supplements the efforts of the
private sector in the field of foreign trade:
- State Trading Corporation (STC)
- Minerals and Metals trading Corporation (MMTC)
- Spices Trading Corporation Limited
- Meal Scrap Trading Corporation (MSTC)

States’ involvement in promoting exports
• States’ cell in the Ministry of Commerce
• institutional infrastructure for export promotion by
state governments
• apex-level organisations under the chairmanship of chief
ministers /chief secretaries to consider and sort out the
problems faced by the exporters/importers in their
respective states
• most state governments nominate a sernior officer at the
level of Commissioner of Industries/Secretary of
Industries as its ‘Niryat Bandhu’

Chapter 17
Emerging Issues

Emerging issues in international marketing
• accelerated growth of global markets
• breaking down of marketing boundaries
- economic liberalization
- path to free markets
- death of distance
• emerging new marketing barriers
• emergence of global customer segment
• product proliferation and shortening product life cycles
• growing strength of retailers
• emergence of knowledge economy
• increasing customer sophistication
• market beyond the urban middle class

Global e-marketing
• physical marketplace to virtual market space
- problem recognition
- information search
- evaluation of alternatives
- purchase decision
- post purchase behaviour
• reverse marketing
- reverse promotion
- reverse advertising
- reverse pricing
- reverse product design
- reverse segmentation

Cross-country comparison of e-readiness (2004)
8 .2 88 .0 47.8 3
10 6 .8 6
5 .7 9 5 .56
8
6 4 .4 53 .9 6
3 .7 4
Score
4 2 .6 1
2
0
India
South
Africa
Russia
Germany
Denmark
C o u n try

Types of e-marketing models
• Business to Business (B2B)

• Business to Consumers (B2C)
• Consumers to Business (C2B)
• Consumers to Consumers (C2C)

m-marketing
• the conduct of marketing activities through the use of

mobile technology such as mobile phones, personal
digital assistant (PDA), and telematics
• facilitates customers’ interaction with location-

specific context and worldwide web
• enables marketing communication through mobile

devices and text applications such as SMS

Customer relationship marketing (CRM)
• process of creating and maintaining business
relationship by a firm with its customers
• identifies key customers in terms of long-term potential
profits
• analyzes the expectations of customers and the sellers
• finds out strategies to work more closely with the
customers
• identifies the changes required in the operating
procedures
• customizes the marketing mix
• establishes an institutional mechanism for regular
interactions with the customers

A glance at India’s strengths
• India produces 3 million graduates and 700,000 post-
graduates
• India has the second best developed entrepreneurial culture
in the world
• 10% of researchers and 15% of scientists engaged in the
pharma/biotech R&D in the US are of Indian origin
• one third of the start-ups in silicon valley are by Indians
• India is among the select group of six nations with satellite
launch capabilities
• 3500 firms operating in 39 software parks export over US$ 8
billion worth of IT products and services
• over 70 MNCs have set up R&D facilities in India in the past
five years

Services
• India’s strategic strength in offering services to
international markets lies both in individual and
corporate services
• major potential for remote servicing to individual
customers lies in telemedicine, e-learning, record
keeping, and tax advisory services
• tourism, education, and health and nursing are the
services targeted mainly at individual customers

India’s strengths in international markets
• Indian firms have about 440 investments in the UK
making India the 8th largest investor in the UK.
• 1,441 Indian companies have operations in Singapore
• 92 Indian-American owned companies in the USA
• generated business of US$ 2.2 billion and provided
employment to about 19,000 people in 2002
• seven Indian companies are listed on the NYSE and
three on the NSDAQ, while over 15 companies are
traded on the London Stock Exchange

Foreign direct investment (FDI)
• India offers talent and low cost that fits well
with the perspective of global corporations

• increase profits and ensure business
continuity through multi-country strategies
• India is fast emerging as one of the largest
consumer markets in the world

FDI Confidence Index
China 2.03
United States 1.45
India 1.40
United Kingdom 1.25
Germany 1.17
0 0.5 1 1.5 2 2.5

Country

Short vs. medium-term attractiveness of emerging
markets
(percentage of total respondents)
90% 85%
80% 82%
80%
68%
70%
60% 55% 55%
48% 46%
50%
41%
40% 35%
30%
20%
10%
0%
China India Poland Brazil Mexico
Country
1-3 Years 10 Years

India’s competitiveness and information
and communication technology
• skilled manpower
• cost competitiveness
• mature destination for IT outsourcing


The Concept of International Marketing

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Chapter 1

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

Domestic Environmental Political

International Marketing All rights reserved

International Marketing All rights reserved

Marketing Focus domestic

Marketing Mix Decisions focussed on domestic

International Marketing All rights reserved

Marketing Focus overseas (targeting and entering

Marketing Mix Decisions focussed mainly on domestic

decisions made at headquarters

International Marketing All rights reserved

Marketing Focus consolidation of operations on

gains from economies of scale

Marketing Mix Decisions product standardization within

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

Value (Billion US$) 1200

Hong Kong, China

International Marketing All rights reserved

International Marketing All rights reserved

Source : World Trade Organization.

International Marketing All rights reserved

International Marketing All rights reserved

B World Trade Volume (goods and services) 3.1 6.8 6.6

C World Trade Prices (in US$ terms)

D Emerging Market and Developing 162.9 100.9

International Marketing All rights reserved

International Marketing All rights reserved

Agriculture & allied Ores and minerals

International Marketing All rights reserved

International Marketing All rights reserved

OECD OPEC Eastern Europe Others LDCs** Others

International Marketing All rights reserved

OECD OPEC Eastern Europe Others LDCs** Others

International Marketing All rights reserved

International Marketing All rights reserved

International Marketing All rights reserved

Developed Countries Developing Countries

International Marketing All rights reserved

Gross Net Income

International Marketing All rights reserved

• Devolution of power to states

• Abolition of indirect taxes for certain sectors

• Strategy for promoting services’ export

International Marketing All rights reserved

• Extreme focus product strategy

• Products-country matrix strategy

• Growth-share matrix of exports

• Market focus strategies

International Marketing All rights reserved

World Trade Organization:

International Marketing All rights reserved

• Security of access of international markets

• Stability of access to international markets

• Implications for importers of raw materials and