Professional Documents
Culture Documents
MARKETING
The Concept of
International Marketing
Globalization
• Globalization of production
• Globalization of markets
International marketing
• Selling goods in international markets as old as 3000BC in India. Indian goods
reached markets in Persia, Mesopotamia, Egypt and other markets of South East
Asia.
• Breakthrough in ICE around the world witnessed a unprecedented change in
international marketing
• Growth in income has also triggered choice of foreign goods and wider choices.
• Lower trade barriers .
• Active role of WTO has also triggered the internationalization of companies .
• Globalization-process defined as the process of economic integration of the entire
world through the removal of barriers to free trade and capital mobility as well as
diffusion of knowledge and information
• World output during 1986-95 grew 3.3% while trade grew at 6.2% during the
period. In the years to come the figure is expected to be 3.9% and 6.1%.
• Emerging of BEMs even in Asia (like China, India, Philippines, Singapore, Taiwan
etc.
• Globalization of processes, production, and markets.
International marketing
• Cateora defines International Marketing as the performance of businesses
activities designed to plan, price, promote and direct the flow of company’s
goods and service to consumers or users in more than one nation for profit.
• Consequent to economic liberation a firm operating in domestic markets can no
longer rely on domestic only IT IS RISKY.
• International marketing involves-identifying needs and wants of the customers
in international markets, taking decisions of marketing mix keeping view of the
diverse consumer behaviour across different countries/
• Decisions keeping in view of international marketing environment Penetrating
the international markets using various different modes of entry.
Domestic marketing and
International marketing
Domestic International
• Political • Political Stability-Pakistan and
India, CIS countries unpredictable
• Economic
• Economic-currency issues,
• Legal payment issues (Argentina, Brazil)
• Socio-Cultural hyperinflation in CIS countries-
payment modes, manage foreign
• Legal risks
• Technology • Legal
• • Cultural and Social
Marketing
• Technology
• Marketing Channels
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)
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
Evolution of Global marketing
Types of mkting Market Focus Orientation M.Mix
International Glocal
t e kr a M
xel p moc
yti
Exporting Global
Domestic
Time
Some more international marketing
concepts…
Domestic marketing :
Orientation ethnocentric
customers
Evolutionary process (contd)
Export marketing:
Orientation ethnocentric
overseas marketing-generally an
extension of domestic marketing
Multinational marketing:
Orientation regiocentric
• 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
Emerging Opportunities
in
International Markets
Trends in world trade
Trends in world trade (contd)
Leading exporters in world trade in commercial Services
2002
Leading importers in world trade in commercial
services 2002
Composition of world merchandise exports
Direction of world exports
World Economic Outlook
World Trade Outlook
2002 2004 2005
A World Output 3.0 4.6 4.4
Other emerging market and developing
economies 4.6 6.0 5.9
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
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
• Consultation
• Panel established
• Panel examination
Disputes (ICSID)
• International Monetary Fund (IMF)
Special Drawing Right (SDR)
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)
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)
Africa
• Common Market for Eastern and Southern Africa (COMESA)
• Economic Community of West African States (ECOWAS)
• Southern African Development Community (SADC
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
Decide Research
Methodology
Workout Information
Requirement
Prepare Research
Design
Analyse Information
Type of research
• focus groups and qualitative research to generate ideas
Type of research
• advertising pre-testing
Type of research
• surveys of media habits
International marketing research (contd)
Type of research
• surveys of response to alternative types of promotion
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
Decision-making Process for
International Markets
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
geographical subsets
• 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
• Analogy method
Tools for international market analysis
cooperative goals
Internal factors
• ompany objectives
• level of commitment
• international experience
• flexibility
Product Strategy for International
Markets
Product
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
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
The International Product Life
Introduction
Cycle Early Late Decline
and Growth Maturity: Maturity
Stages:
MNC Manufactures MNC Moves Developing Developing Country
Product in Developed Production to Country Markets Remain Viable
Countries; Exports to Developing Competitor Target Markets for
Developing Countries Country; Begins Exports Product MNC; MNC Home
Importing to To MNC Home Country Market Is
Home Country Country; Diminishing
Competes
with MNC
Imports
Sales
Time
International Product Life Cycle,
continued
• The Product Introduction Stage
Products are developed and marketed in developed countries
International Product Life Cycle,
continued
• The Growth Stage
Increasing competition and rapid product adoption
Marketed primarily in developed countries
Product is exported to developing countries
International Product Life Cycle,
continued
• The Maturity Stage
Product is adopted by most target consumers
Sales are leveling off
Profits decline due to intense competition
Manufacturing operations move to developing countries to take
advantage of cheap labor
New competitors: firms from developing countries
International Product Life Cycle,
continued
• The Decline Stage
Products are rapidly losing ground to new technologies and
product alternatives
Decrease in sales and profits
Product lifecycle is extended through sales to consumers in
developing countries
Dimensions of the International
Product Mix
• Product length
Total number of brands
• Product width
Total number of product lines
• Product depth
Total number of different offerings for a product category
New Product Development
• Substantial risk and costs
• Complex in international markets
Competition can appropriate the product/service idea and deliver
final product or service to the market more swiftly than the
initial developer
International consumers might not respond as anticipated
Local and/or home-country government might impose
restrictions on product testing
Technological infrastructure of individual markets may be
substandard and unable to support the product
Generating New Product Ideas
• Most product and service firms are
driven by the marketing concept
Product development decisions are based on identifying the
needs, wants, and desires of consumers
• Early adopters
Consumers who purchase the product early in the lifecycle stage
and who tend to be opinion leaders in their community
(13.5% of the total market)
Primarily consumers in developed countries
Adopters, continued
• Early majority
Consumers who enjoy status of being among the first to purchase a
popular product (34% of the total market)
Consumers are primarily from developed countries
• Late majority
Consumers who adopt popular products when the risk associated with
them is minimal (34% of the total market)
Consumers are from both developed and developing countries
• Laggards
The last consumers to adopt a product; they are risk averse and
conservative in their spending (16% of the total population)
Consumers are primarily from developing countries
New product launch
Do not Straight
change adaptation
adaptation
promotion Product
Invention
Communication Dual
Adapt adaptation adaptation
promotion
Building Brands in
International Markets
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
h
g
iH
Build Maintain
Category leadership
dnar B
xe dnI
t ne mpol eve D
Low h
g
iH
Category Development Index
David Aaker’s Model of Brand Equity
Brand equity
Brand Packaging
International Brand Equity-Kapferer
External facet
Relationship
F Physique c
Reflection u
i
r s
m t
o
m
e
Personality Self Image r
Culture
Internal facet
International Logistics and
Distribution
International logistics
national border
• components
- materials management
- physical distribution
Channels of international distribution
• 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
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
• warehousing
• inventory
• transportation
Transportation
• modes of transport
- air transportation
- road transportation
- rail transportation
- ocean transportation
Ocean transportation
- 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
• voyage charter
• time charter
• back-to-back 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
• competition
imports
• buyers’ behaviour
• open account
• consignment
• documentary credit
acceptance)
Terms of payment (contd)
- 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)
• 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
• non-market pricing
through
unauthorized channels
• parallel importing
• re-importing
• lateral re-importing
Communication Decision for
International Markets
Marketing communication
• resource availability
• media availability
• market characteristics
Consumer response hierarchy models
AIDA model
Attention
Interest
Desire
Action
Adoption model
Awareness
Interest
Evaluation
Trial
Adoption
Standardized advertising
country
• 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
India’s competitiveness and information
and communication technology
• skilled manpower
• cost competitiveness
• culture
• language
• education
• media Infrastructure
• government regulations
Framework for international product-
promotion strategies
animal origin
• animal rennet
and ivory
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
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
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
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
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
• the scheme covers bills with usance period upto 180 days
• 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
Excise Network)
Institutional Infrastructure for
Export Promotion
Export promotion
actual exporters
Institutional framework for export promotion in India
Tier level Bodies Responsibilities
Tier I Department of Commerce frames trade policy
animal origin
• animal rennet
and ivory
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
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
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
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
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
• the scheme covers bills with usance period upto 180 days
• 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
Excise Network)
Institutional Infrastructure for
Export Promotion
Export promotion
actual exporters
Institutional framework for export promotion in India
Tier level Bodies Responsibilities
Tier I Department of Commerce frames trade policy