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INTERNATIONAL MARKETING MANAGEMENT
MBA (G) CLASS OF 2010. FACULTY INCHARGE:MR. VIVEK KUMAR
LECTURER, DEPT. OF MARKETING MGMT.
Amity Business School
• AIMS AND OBJECTIVES OF IMM. – A clear understanding of the basic concepts of international business/global business management, in the light of the business scenario in this 21st century globalized business environment. Why global business is studied as a different field, yet encompassing itself into the body of marketing management. – Understanding of the complex and a dynamic definitions related to international marketing/ trade etc.
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– Understanding the concept of globalization & why it is important and its definition. – Why globalization is referred in the context of international business. – A brief historical background from modern times to assess the role of globalization being not new in this 21st century global business scenario. – Overall competitive scenario, when markets and business worldwide are facing a paradigm shift from monopoly to oligopoly.
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– Corporate examples from India and other world markets towards understanding of the global business/ international marketing management. – Important mergers and acquisitions by Indian companies abroad. – Exposure of the students to the global business activities. – Focus on managing international business, operational as well as strategic. – Understanding the macro international business environment, strategies to enter foreign market. – Understanding of the global business policy and regulatory measures in the light of emerging markets. – Understanding the concept of international trade, balance of trade and balance of payments. Definitions and importance on the terms.
Keegan . J.Continued… IMPORTANT Books Amity Business School Global Marketing Management by Warren.
Heilbrowner • History of Economic Thought. • The Worldly Philosophers. H.Eric Roll • Economic Theory.Amity Business School Other Important References: • Global Marketing Management-Kotabe Makadi • International Marketing Management.Eric Roll .Varshney and Bhattacharya.Robert.
Tasks. Scope. The EPRG Concept of Management Orientation. . Domestic vs. Importance of International Marketing.Amity Business School Syllabus . International Trade Theories. International Marketing.MODULE-1 • Need.
IMF– Regional Economic Groups– EU. OPEC etc. SAFTA. income and purchasing power parity. licensing and trade services. international trade alliances– GATT and WTO. Social and Cultural Environment. stages of market and economic development. Trade patterns. G8. international law. cultural impact on industrial and consumer products. Political. analytical approaches to cultural factors. Economic risk analysis. Balance of Payments concept.Amity Business School MODULE-2 • International Marketing Environment– Economic Environment.Culture. World Bank. Legal and regulatory environment– political risk. Embargoes and Sanctions . NAFTA.World Economy. dispute settlement and litigation.
International. Investment in developing countries. ownership and control. transnational. sourcing. joint-ventures. Stages of development models– Domestic. multinational.MODULE-3 Amity Business School • International Entry and Expansion Strategies– Decision criteria for entry. global. . Merger‟s and Acquisitions. ownership investment. licencing. International market entry strategies– Exporting. Market expansion strategies.
international marketing opportunities – regional market characteristics. international market segmentation. segmenting. targeting and positioning. targeting and positioning. marketing in less developed economies. Perspective on international consumer behavior.MODULE-4 Amity Business School • Analyzing. .
product design consideration. of the same brand I different countries.MODULE-5 Amity Business School • Developing product for international market – Products. . Geographic expansion. global branding. new product development and testing in national market. local. and different positioning. Role of services in global economy. The international product and life-cycle. product positioning. national. Dumping. international and global.
pricing policies. Trade fairs. personal selling.6 Amity Business School Promotion and pricing strategy for International market – Channel development and innovation. role of international advertising and branding. sales promotion. Export payment methods– L/C. FIBC. Exhibitions. Counter trade. PR. Advance. DA/DP. internet marketing.Module. . transfer price. Sponsorship promotions. Global pricing– objectives and methods.
EXIM policy. services export from India. Foreign exchange market and rate. FEMA. . Role of Indian banks and financial institutions.7 Amity Business School India‟s international policy and impact on economy--. ECGC services. FDI.Government measures and export incentives.Module.
8 Amity Business School Emerging Trends– Integrating the concepts with other functions of management. .Module .
goods. the thrust of globalization has been to increase the domestic and external competition through extensive application of market mechanism and facilitating forging of dynamic relationships with the foreign investors and suppliers of technology. services. labor and resources move freely from one nation to another. . capital.Amity Business School Definition of Globalization • Globalization means integrating the economy of the country with the world economy. Under this process. Further. further implying one single market in a global village.
• Role of globalization and its effect in the business environment. .Amity Business School Contd..
. strategy and management of multinational enterprises in the global context of complex and dynamic business environments. Actually the complete gamut of the whole context and interest in international business lies in multinational enterprises. • International business is the field of study that concerns itself with the development. culture and communications-as also the special skills that are required to operate in global business environment.Amity Business School DEFINITION OF INTERNATIONAL BUSINESS • International business is the activity of engaging in business operations across national boundaries/borders.
• Important critical comment on multinationals and its gravity in the light of marketing products in the ‘Third World’ market.g.securing supplies of raw materials. .:.Toyota having manufacturing facility in India as also other parts of the world. (e.) for various reasons such as.Amity Business School DEFINITION OF MULTINATIONAL ENTERPRISES • A corporation that has production operations in more than one country. servicing local markets and bypassing protectionist barriers. utilizing cheap labor sources.
Amity Business School DEFINITION OF FOREIGN INVESTMENT • Investment in the domestic economy by foreign individuals or companies is called foreign investment in generic terms. • Foreign investment takes the form of:– Direct investment in productive enterprises – Investment in financial instrument such as portfolio of shares. • Foreign investment is increasingly important in the economy of the modern business world-explanation as to how? . • Important critical comment on foreign investment in the light of ‘societal marketing concept’ under the principles of marketing management concepts.
Amity Business School FOREIGN DIRECT INVESTMENT(FDI) • The acquisition abroad of physical assets such as plant and equipment. . with operating control residing in the parent co-operation.
Amity Business School DOMESTIC MARKET • Part of a nation‟s internal market representing the mechanism for issuing and trading securities of entities domiciled within that nations. .
. Amity Business School • Brief Historical Background of International Business/Trade relations-.required for the standard of living.The country is not self-sufficient in developing all the products/ commodities etc.International business and trade has been there from times immemorial. -..Man is a social animal– wants different kinds of goods/ commodities. -. business is between companies.Thus international business and trade existsInternational trade is between nations.Continued. -.Hence dependent on other country-.
What resources to deploy? . Amity Business School Fundamental Questions that companies tackle: -. -.What strategies to be adopted? -. -.Globally presence – yes/ no -.What market presence should be achieved in own country/ continent.Continued..Knowledge of Competitors.
Lower trade barriers -.Search for new markets/new avenues/new segments .Desire for new products. Amity Business School • Factors that reinforces to take interest in International Marketing in Modern Times -. around the world -.Income growth of the consumers -..Continued.
Demand for new styled goods/ services– innovative goods. Amity Business School -. -. -.. technology.Move towards reduction of international marketing barriers.Continued.Integration of telecommunication facilities/communication -.Faster means of travel. transport. .
..Continued. where the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions. Amity Business School Definition of Global Industry: A global industry is an industry.
logistical.They rely on technological innovation. -.Enhance their capabilities through technology.Continued. marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors. production.captures research and development.. -. Amity Business School Definition of Global Firm: A global firm is one that is operating in more than one country. .
.Continued. Competitive Factors . Business Factors 2. Amity Business School Need/Factors for International Marketing: 1.
Spreading R and D cost .Continued..Marketing due to life-cycle -.Growth Factors -.Profitability -.Achieving Economies of Scale -.Access to imported inputs -. Amity Business School BUSINESS FACTORS: -.Uniqueness of Product / Services -.
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In Continuance: Competitive Factors/ Other Factors: -- The company‟s domestic market might be attacked by global firm‟s offering better products or at lower prices. -- Counterattack by the domestic firm in the competitors home market. -- Company discovering, some markets presenting higher profit opportunities than the domestic market. -- Company wanting larger customer base in order to achieve economies of scale.
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-- Company wanting to reduce dependence on anyone market. -- Reducing risk
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Major decisions in International Marketing: The Major decisions are encircled as a step by step calibrated process: 1. Deciding whether to go abroad? 2. Deciding which market to enter? 3. Deciding how to enter? 4. Deciding on the marketing program? 5. Deciding on the marketing organization?
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Major Concerns while Entering Foreign Market: 1. Unstable Government, if any. 2. Foreign Exchange problems. 3. Foreign government entry requirements/ entry barriers. 4. Trade / Tariff barriers. 5. Corruption in the respective country government, if any.
Continued. High cost of product manufacturing and communication adaptation. (Explanation: A company locating its plant abroad worries about foreign managers learning how to make its product and breaking away to compete openly or clandestinely..for example in the diverse area such as machinery. chemicals.) 7. pharmaceuticals etc. electronics. Technological pirating. Amity Business School 6. .
Religion 4.Language 2. Family structure and size . Physical Environment (temperature/ humidity etc) 5. Power sources 6. Security arrangements 7. Tastes and Fashions 3.Continued. Amity Business School Environmental Differences when marketing overseas: 1..
Literacy levels 12.. Distribution facilities 14. What is polite and impolite 10. Methods of transaction .Continued. Amity Business School In Continuance: 8. Social priorities 11. Communication infrastructure 13. Times at which business is done 9.
Amity Business School In Continuance: 15. Legal differences 17. Political differences 16.Continued. Economic complications/situations – at a particular time . Different taxation policy 20. Regulatory differences 18. Different technical standards (may be operating in the country) 19..
Continued. Adapt that country‟s products and communication to foreign tastes . Know about the politics of that country 4. Study each foreign market carefully 2. Study about the economic laws of targeted countries 3. Know about the culture 5. Amity Business School What to study finally – when company’s going abroad: 1..
Continued….Definition of International Marketing NB: Basic tenets of marketing concepts is applied whether it is domestic or international marketing.Definition of Domestic Marketing -. Amity Business School Domestic VS International Marketing -. .Continued. It revolves around the controllable and uncontrollable factors that governs the pragmatic marketing scenario..
Competition -.Economic -.. In Continuance: Uncontrollable Factors: 1.Geography .Legal Affairs -.Uncontrollable Factors are: -.Socio-cultural -.Logistics (controllable to a certain extent only. especially in the domestic market ) -.Political -. Amity Business School Macro Environment.Continued.
Continued.. In Continuance: Amity Business School Micro Environment-the Controllable Factors: -.Promotion .Place -. taking competitors offer prices into consideration) -.Price (subject to certain limitations.Product -.
Geocentric Amity Business School .EPRG Concept: E---.Ethnocentric P---.Management‟s Orientation Management’s orientation towards international marketing.Regiocentric G--.Polycentric R---.
.Continued.Maximum growth potential opportunities to be tapped. Amity Business School Importance of Global Marketing and the EPRG Concept: The importance of global marketing can be gauged from the fact that: -. . -.Companies should go global/ motivation required to go global.
how it views the culture. as to how it views the new market opportunity.the EPRG concept revolves around the grand fact that any company‟s response to global market opportunities depend greatly on the management‟s assumptions and beliefs.Continued. Amity Business School Management‟s orientation. . how it plans to enter the foreign market.. preferences of consumers in a foreign market etc…..
It is a belief which considers.one‟s own country/ culture.. anywhere.Adaptation of the product is not required.It views similarities in all markets/ foreign country market. Amity Business School In Continuance: The Ethnocentric Orientation: -. -. -. -.Continued.Product‟s/ services/ management practices/ methods that is being offered/ followed in one‟s own country/ successful in one‟s own country will be acceptable in other world markets. products as superior -.Shades of egoism encircled herewith .
Amity Business School In Continuation: Criticism of Ethnocentrism -.Continued..the product of the ethnocentric oriented company might be of a very high quality. . but will the marketing methods/ practices that is being followed in the home country does not need any adaptation in any form? For example if a. A critical examination is required.Ethnocentric oriented companies ignore foreign market and therefore loose great opportunities.(this is accepted in the first instance. -.Benz Car or a Lincoln or a Ferrari or a BMW is to be marketed in a „Third World‟ country. subject to certain limitation). and might be accepted in other world markets.
. -. .It views each country as unique.Continued. -.Each subsidiary is to develop its own unique business.Each subsidiary to develop its own marketing strategies to succeed in its own right. -.Opposite of Ethnocentrism . Amity Business School In Continuation: The Polycentric Orientation: -.
preferences.Management views regions as unique. -. consumers having one taste. one regional identity etc. to market product/services.Management seeks to develop an integrated regional strategy..in the particular identified region. choices.e.Regions are considered to be one. -.i. SAARC etc are examples.NAFTA. . Amity Business School In Continuation: The Regiocentric Orientation: -.Continued. EU. -.
The Company views the entire world as a potential market..It views similarities and differences in markets and countries. -.Continued. . Amity Business School In Continuation: The Geocentric Orientation: -. -.responsive to local needs and wants. -.Company strives to develop integrated world market strategies.It seeks to create a global strategy.
Amity Business School Definition of Global Localization: The concept of global localization refers to the explicit fact that – a successful global marketer should have the ability to think „globally‟ and act „locally‟.. .Continued.
Amity Business School Drivers for Global Integration (in the light of Globalization) -.Management‟s vision -.Strategic Intent -.Economic Integration -..Free Markets -.Continued.Cost -.Technology -.Market Needs -.Global Strategy and Action .Culture -.
– Adam Smith .International Trade Amity Business School “Of all sorts of luggage man is the most difficult to be transported”.
Continued.meaning trade between different regions within the same country. It is always compared with inter-regional trade.. NB: Here little attention is given to the company level marketing methods and strategies . Amity Business School In Continuation: International trade defined: Simply explained international trade refers to trade between countries/nations/state‟s.
International trade contd. .West Bengal in India for the production of Jute. Factor endowments are unevenly distributed among the countries of the world. In continuation: Amity Business School The Fundamental basis of International Trade: It lies on the fact that different countries of the world are endowed by nature with different elements of productive powers.. For example. Arab countries for oil resources etc.
climate. soil etc. natural vegetation. natural resources..Continued. In continuation: Amity Business School Is International Trade Inevitable? International trade is inevitable when there are marked differences in the countries regarding materials. .
Finance regulations 7. Foreign investments by a nation 4.etc. Trade 6. Amity Business School In Continuation: Other Factors affecting International Trade: 1. Stage of economic development 2. Accumulation of capital by a nation 3.Continued. Political affiliations.. Technological progress 5. .
Theory of International Product life-cycle F. Theory of „Mercantilism B. Theory of Absolute advantage (of Adam Smith) C. Theory of Comparative advantage/ comparative cost (of David Ricardo) D.International Trade Theories Amity Business School The Theories are: A. Theory of Competitive Advantage . Modern theory of international trade or Factor Endowment theory E.
GIST: Nations should accumulate financial wealth in the form of gold by encouraging exports and discouraging imports. Theory of Mercantilism: Amity Business School -. A.An economic doctrine that flourished in the 17th and 18th centuries.To this end tariff‟s were applied to imports in the hope of creating a „balance of trade‟ surplus. -.in the form of nation‟s bullion reserves .especially in gold.It sought to maximize national wealth.Continued. and adding to bullion reserves. -. .Exports were viewed favorably so long as they brought in gold for the country.. -.
.Advocated that the real wealth of a nation is measured by the level of improvement in the quality of living of a nation‟s people. -.Advocated the theory of Free Trade.Repudiated the mercantile notions of international trade. -. -. Theory of Absolute Advantage: -.Forwarded by the great classical economist.. Amity Business School B.Continued. Adam Smith.
then both countries would gain by trading.. Acquired Advantage . Natural Advantage B. Amity Business School Gist of the Absolute advantage theory: If one country has an absolute advantage over another in one line of production and the other country has an absolute advantage over the first country in another line of production.Continued. NB: A country‟s advantage can be:A.
/ -. skill of its people. capital equipment etc. natural resources.Extension of the theory of Absolute advantage -. .Forwarded by David Ricardo.a country tends to specialize in the production of those commodities in which it possesses a comparative advantage by virtue of its climate.The theory forwards that.Continued.Also known as the theory of comparative cost. Theory of Comparative Advantage -. Amity Business School C. -..
Continued. provided the extent of absolute advantage is different in the two commodities in question.. Amity Business School Gist of the comparative advantage theory Any two countries can very well gain by trading even if one of the countries is having an absolute advantage in both the goods over another. .
Also called Factor Endowment Theory or factor proportions theory. -. . -.Thus goods are purchased from outside because it is cheaper to buy them outside. -. Modern theory of International Trade -. which in turn is due to the differences in factor prices.Forwarded by Heckscher and Bertil Ohlin. Amity Business School D.The immediate cause of International trade is the difference in commodity prices..Continued.
Continued.. Amity Business School Gist of the Modern theory of International trade: A nation will export that commodity whose production requires intensive use of the nation‟s abundant and cheap factors. . and import the commodity whose production requires intensive use of the nation‟s scarce and expensive factors.
Two paradigms on which the theory is based:-A..Revolves around the concept of international marketing of product/services -.Continued. . Amity Business School E. Theory of International Product Life Cycle -. Shifting of market in the light of the size of the market B. Reaching the economies of scale by location of production facilities.
Continued.. Theory of Competitive Advantage: -.Forwarded the famous „Diamond Model‟ .Concentrates on a firm‟s home country environment as the main source of competencies and innovations. Amity Business School F. -.Forwarded by „Michael Porter‟ -.
Demand Conditions C. Government. structure and rivalry E. . Factor / Input conditions B.Continued.. Firm‟s Strategy.e. Firm‟s supporting industries D. Chance i. occurrences that are beyond the control of firm F.its policies regarding trade etc. Amity Business School The Diamond Model Attributes of the Diamond model revolves around: A.
has a strategic effect from the angle of international business scenario. if we look it critically from the economic paradigm‟s point of view. b. World Economic scenario has undergone a drastic change.Brief Historical background of the World Economy a. Finally we reach the year– 1945 (End of the second World War) . The development of economies of the different regions/ countries of the world.Module --2 Amity Business School The World Economy – An Overview . c.
meaning silent war -. led by USA and erstwhile USSR. -. Amity Business School Year – 1945 and after (till late 1991) --Signaled the end of „The Second World War‟. -.Continued.Start of the Cold War. -.The World divided into bi-polar world..Cold war was but a silent war among the two economic systems – Capitalism and Socialism.Mixed Economic System .Fall of Socialism by 1991 -.
.Continued.Globalization effects in the macro environment of business.Emergence of global markets -. Amity Business School Changes found in the World Economy -.New players in the product line -.Global Competitors in the market place -.Increased volume of capital movements .New opportunities for the marketer‟s -. -.Integration of the world economy -.Heavy Competitive environment -.
Technological Environment NB:Most important of all.Social Environment -. .Amity Business School The World Economy– The Macro Dimensions of the Environment -. And opportunity is business. Business is for profit.Political Environment -.Economic Environment -. is the Economic Environment from a global marketer’s point of view.Cultural Environment -.Legal Environment -. and profit is successful marketing. The Economic environment has the shades of opportunity.
and the role of „Mixed Economic‟ system has a role to play in the current business scenario/ trade relations..Relationship between productivity and employment -.The greatest economic change is the end of the Cold War NB: The success of the capitalist market system has caused the overthrow of communism as an economic and political system.Continued. . Amity Business School -.
Continued.. Socialist pattern of command allocation economic system C. B. . Amity Business School The Economic Systems The economic systems criteria has been divided into three forces: A. The Capitalist market allocation economic system. Mixed economic system.
Continued. believed in the fundamental fact of free market allocation system.Basically the whole concept of „Capitalism‟ is designed around the concept of ‘Laissez Faire’. Brief Explanations of the economic systems: Amity Business School The Capitalist Economic system: --The capitalist economic system.. where the role of the state in a market economy is to promote competition and ensure consumer protection.It is the capitalist who will decide – What to produce? How to produce? and For whom to produce? NB:-.meaning ‘Leave us alone’ . -.
if it so suits them. all farms.In a capitalist economy everyone is free to take up any line of production he likes and is free to enter into any contract with other fellow citizens for his profit.Continued. with a view to making profit or not to use them. -. -. They are free to use them. .. factories and other means of production are the property of private individuals and firms.Desire for profit is the main motive behind the capitalist economy system. Amity Business School Capitalism continued: --Under capitalism.
so that the economy is run for social benefit rather than private profit.Continued. socialism is an alternative to capitalism. Amity Business School Socialism Defined: Based on the command allocation system or the so called Central Plan allocation system.. it implies social ownership of means of production. Here the major instruments of production is under the state control. In a nutshell. Continued----- .
How to make these required products . Amity Business School Under Socialism as an economic system it is the State that decides: -.Which products are required -.Continued..Which products are not required -.
The private enterprise is not permitted to function freely and uncontrolled through price mechanism’s– the government intervens to regulate and control private enterprise in several ways. -. Amity Business School Mixed Economic System: It is neither pure capitalism nor pure socialism. but a mixture of the previous two economic systems.The characteristics of both capitalism and socialism is found in this economic system..It is operated both by private enterprise as well as public enterprise. -. -.Continued. .
Import control d. Price Control b. . Amity Business School How Mixed Economy? -. Exchange control e.. Control over capital issues. -.The government institutes: a.Continued. Licensing System c.Control and regulation of the government over the private enterprise through its monetary and fiscal policies.
Continued. . Amity Business School Stages of Economic Development/ Market development: In brief. rests on the fact that it provides a useful basis for global market segmentation and target marketing. the importance of the stages of economic and subsequent market development. It is a first hand knowledge for a global marketer towards meeting the desired goals..
High Income Countries. Upper – Middle Income Countries or the Industrializing Countries.Continued.. . -.Stage 4.Stage 3. Low Income Countries -.Stage 2. Lower Middle Income Countries or Lesser Developed Countries.Stage 1. -. Amity Business School FOUR STAGES of Economic/Market Development: -.
. Heavy reliance on foreign aids 3. as also the probable growth in the market place.INCOME countries : 1. Very limited markets for products NB: Importance of chief characteristics from purchasing power point of view. Low literacy levels 7. High birth rates 4.Continued… Amity Business School Characteristics of LOW. High population growth 6. Limited industrialization 5. Political instability 2.
Amity Business School The BEM Concept : BEM refers to “big emerging markets”. in his famous treatise.. The BEM‟S are well positioned to move towards the next stage of development – economic as well as market. from the current stage where it is at present. And here the marketers sees a wonderful opportunity for growth in their profitability and related issues. . Carten. BEM‟s are those markets that are growing at a faster rate than the world average market growth.Continued.an international marketing concept forwarded by Jeffrey E.‘The Big Ten’.
Explanation of the concept . -.Continued… Amity Business School Income and purchasing power parity -.The chief role of the income from consumerism/ consumer buying behavior.
is a comprehensive record of economic transactions of the residents of a country with the rest of the world during a given period of time.Keeping System’ .Continued. Amity Business School Balance of Payments : -. -.The system generally adopted for recording transactions is the ‘Double Entry Book.Balance of Payment or BOP..
Continued.To know its receipts from and payment obligations to the rest of the world..To know/taking stock of its assets and liabilities. . Amity Business School Importance of BOP: Every nation carrying out economic transactions with foreign countries prepare its BOP accounts periodically : -. -.
. and capital received by residents of a country – and goods imported. Amity Business School Main Purpose of BOP: The main purpose of BOP is to present an account of all receipts and payments on account of goods exported.. services received and capitals transferred by the residents of the country. services rendered.Continued.
CURRENT ACCOUNT B.Continued. Amity Business School Division of BOP :-.. CAPITAL ACCOUNT .Into two categories: A.
Continued.Exports .Imports .Transportation .Investment income NB: All these are related to current transactions .Expenses on travel .Insurance . Amity Business School CURRENT ACCOUNT : (what is recorded) ..
while imports adds to the payments.Sale and purchase of securities and other assets to and from foreigners – individuals and governments NB: Export of commodities to foreign countries adds to the foreign receipts.Repayment of capital ..Borrowing and lending of capital . . that a resident have to make to the foreigners. Amity Business School CAPITAL ACCOUNT: (What is recorded) .Continued.
. Amity Business School IF. .Continued. IMPORT> EXPORT it is unfavorable balance of trade. Balance of Trade : The difference between the value of commodity exports and imports is known as the Balance of Trade. EXPORT > IMPORT it is favorable balance of trade IF.
e.e. i. i.. is an invisible trade. Amity Business School TRADE PATTERNS : • Merchandise trade.Continued.a visible trade • Services trade. intangible items for example human resources skills etc. trade in commodities. .
. . Amity Business School DEGREE OF ECONOMIC COOPERATION: (Four degrees) a. Customs Union. meaning eliminating the barriers to the flow of factors of production such as labor and capital within the market. c.Continued.(Free Trade Association) meaning to remove all internal barriers to trade among the member nations b. FTA. meaning establishing a common external barriers. Economic Union. d. meaning fulfilling the all the chief characteristics of an economic union. Common Market.
Social services and welfare. Single currency 8. Construction and building infrastructure. 6. Common policies on agriculture. 5. 7. 4. . Transport services requirement. Political unity requirements. 9. 2.Continued… Amity Business School Chief Characteristics of an ECONOMIC UNION 1. Regional development. Taxation policy. 3. Unified central bank.
. -.The stage of economic development of a particular country is directly related to the stage of market development in that country.in designing a marketing plan and strategy.For a global marketer or a multinational company. the stage in which that targeted region/country is matters most. -. when interested to enter a new foreign market. Amity Business School Importance of Stages of Economic Development : -. . context – revolving round the international marketing opportunities.Continued.The reference is towards the Income and the purchasing power parity.
EU (The European Union) -.GATT and WTO -.G8 -. General Agreement to Borrow -.Continued.OPEC .e.IBRD (The World Bank) and IMF -.SAFTA -..NAFTA -.G10 and GAB i. Amity Business School International Trade Alliances : -.
.Continued….Continued. remittances. …. imports. next slide.. Amity Business School The Autonomous and Accommodating items in Balance of Payment : --The autonomous items include all visible or invisible items such as exports. reparations etc which enter the balance of payments regardless of its position or with motives quite other than to put balance of payments into positive balance. .
. They include movement of monetary gold from the central bank or sale of foreign currency or increase in foreign liabilities to meet import bill or taking foreign loan to finance deficit etc.Continued… Amity Business School They are in both current and capital accounts.Accommodating items are meant to offset balance of payments deficit or surplus.. NB:-. Continued………….
Continued… Amity Business School -. . unplanned or unforeseen. they take place only when other items in the Balance of Payments are such as to leave a gap to be filled. However.Accommodating movements may be made by private or public authorities and may be automatic.
and have an automatic right to draw them from the IMF. Continued…. -.SDR and Its Importance Amity Business School SDR Defined :---Special Drawing Right’s or SDR‟s were created as a new and additional form of international reserves/liquidity in 1970. under the International Monetary Fund.over and above other drawing facilities..Countries receive SDR’s as per their share in reserve assets. .
A deficit country uses SDR‟s for settling deficit by exchanging SDR‟s for whatever currency it requires..Continued.Other countries accept SDR‟s as gold or convertible currencies. . Amity Business School -. -. Its value is based on the values of a „Standard Basket‟ of five major currencies.
SDR Continued. French Franc and Pound Sterlingincluded proportionally on the basis of Country’s size of exports of goods and services during the previous five years. It is used by IMF to determine the vale of SDR’s. Amity Business School Basket Value of SDR— A group of five currencies namely – US Dollar. Japanese Yen. . Deutsche Mark..
rather than an organization. when it was replaced by World Trade Organization (WTO). Amity Business School GATT.Secretariat at Geneva..GATT was technically an agreement. -.------Continued… . among various countries called contracting parties.Continued. -.A trade treaty that operated from 1948 until 1995.General Agreement on Tariff‟s and Trade -.
D. Settling trade disputes and encouraging mutual consultation between nations.. B. C. .Continued. Meeting the above through a series of multilateral negotiations and rounds. Discouraging non-tariff barriers and sponsoring tariff reductions. Amity Business School Objectives of GATT: A. Establishing Standards for the nondiscriminatory commercial policies of the contracting parties.
-.Set up in 1995. following the conclusion of the long-running URUGUAY round of trade negotiations and talk. -- .A body of organizing framework for the smooth application of free trade rules among the interested member nations.THE WTO Amity Business School -.
Handling trade disputes between member nations. Providing technical assistance and training for developing member countries. Administering WTO agreements. To act in coordination with other international organizations. C. . D. B.Continued… Amity Business School Primary functions of WTO:-A. F. Act as a forum for trade negotiations. E. Monitoring the national trade policies of its members.
countries may complain to the WTO about the behavior of another member.Continued… Amity Business School Of Particular Importance-. .WTO --.As far as the dispute settlement process of WTO is concerned . and a disputes panel will then adjudicate. A country that does not abide by the findings of the panel can be subject to countermeasures.
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IMPORTANT It should never be forgotten that companies/firms/corporations/business enterprises are not allowed to make complaints to the WTO. They must persuade a government to do so, for it falls under the world trade laws of WTO, to be accepted by one and all, and the international economic protocol so desires, to be respected in toto. NB: WTO is also charged with advancing the agenda of free-trade with new trade rounds.
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IBRD-International Bank for reconstruction and Development -- A specialized agency of the United Nations, known as the World Bank, with headquarters in Washington DC, its function is to finance development in member countries by making loans to governments or under government guarantee. -- Set up in 1944 under Bretton Woods agreement to facilitate reconstruction after world war II. -- All members of World Bank should belong to the IMF.
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IMF- The International Monetary Fund -- Established in 1945, to promote international monetary harmony, monitor exchange rates and monetary policies and to provide credit for countries experiencing problems in terms of deficits in their „balance of payments‟. -- The members of IMF have a quota, known as the SDR or the special drawing rights. -- IMF is funded through quotas paid by members.
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GAB and G-10 Refers to ‘General Agreement to Borrow‟ . Members of GAB are: 1. Belgium 2. Canada 3. France 4. Germany 5. Italy 6. Japan 7. The Netherlands 8. Sweden 9. Switzerland 10. The United Kingdom and the US
Sri Lanka. culminated in the formation of the South Asian Association for Regional Cooperation.South Asian Association for Regional Cooperation. The first South Asian summit held in Dhaka.SAARC Amity Business School SAARC: --. . Bangladesh. Bangladesh in December 1985. Bhutan.Members of SAARC are: India. -. Nepal and Maldives. Pakistan.
The charter of SAARC provides for annual meetings of the Heads of State and of Governments. of Ministers. and a six monthly meeting of a Council. which is the organizations highest policy making body.A permanent secretariat of the state has been set up at Kathmandu in Nepal.Continued… Amity Business School -. -.The chairmanship of the organization remains with the country which had hosted the last summit and is transferred to the new host at the time of the next summit. -. .
EEC is currently a bloc of 15 west European industrial nations. while retaining their separate national identities. -. …. 1957– it became effective from January 1.The EEC Amity Business School EEC or the European Economic Community : --Created under separate treaties signed on March 25. Continued…. which through a network of agreements are seeking to pool their economies. 1958. .
France. Belgium. Luxembourg.among all members. service and labor.Headquarters of EEC is located in Brussels. Germany. Italy. . Ireland. Denmark.The ultimate goal is a complete customs union. with free flow of goods. Greece. -.Continued… Amity Business School -. Netherlands. Portugal -.Members of EEC currently areBelgium. United Kingdom.
-.Currently under ASEAN. the Philippines. scientific and development fields.to promote active collaboration and mutual assistance in matters of common interest in the economic. technical.ASEAN Amity Business School ASEAN Association of South East Asian Nations : The ASEAN was formed on August 8. Malaysia and Singapore. social. there are 10 members. 1967 by Indonesia. . cultural. Thailand.
OPEC Amity Business School OPEC Organization of Petroleum Exporting Countries : --OPEC was formed on November14. It has been successful in determining world oil prices and in advancing member’s interest in trade and development dealings with industrialized oil consuming nations. ….. to control production and pricing of crude oil. Continued. 1960. .
-. Iraq.Members are– Algeria. Saudi Arabia. Indonesia. Venezuela.Continued… Amity Business School -. Nigeria.Membership of OPEC is open to any country having a substantial net exports of crude petroleum. Qatar. which has fundamentally similar interests to those of member countries. Kuwait. . Iran. United Arab Emirates (UAE). Austria. Libya.Headquarters located at Vienna. -.
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OAPEC- Organization of Arab Petroleum Exporting Countries -- The OAPEC was established in 1968, to safeguard the interests of its members and encourage co-operation in economic activity within the petroleum industry. Its members are -- Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria and the UAE. -- Headquarters at Kuwait.
Group of Eight/G-8
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G-8- Group of Eight originally consisted of the seven wealthiest nations of the world- The USA, UK, Japan, Germany, France, Italy and Canada. However with the admission of Russia at G-7 summit at (DENVER – June 21, 1997) the group was renamed as G-8 in May, 1998. -- The heads of governments of G-8 countries meet annually at different venues to discuss economic matters and world problems.
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NAFTA- North American Free Trade Agreement : -- A trade agreement between US, Canada and Mexico. The objectives of NAFTA is to promote economic growth and expand trade and investment among member nations. -- To meet economic challenges in the decades to come. -- Gradual elimination of trade barriers. -- Protection of the Intellectual Property Rights.
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Social and Cultural Environment: --Culture has a major influence, in international marketing/ global business environment. -- In global marketing scenario the concept of consumer buying behavior has a definite role to play. -- Society and culture affects the consumers decision making process -- Trend conscious consumers, dictates global marketing of products and services.
Eating breakfast or sand-witch while moving in a train.Continued… Amity Business School Examples of affects of culture in global marketing: (The American Culture) -. . Reference is here to Stage 1 to Stage 4.Drinking coffee in public places etc. where the targeted market falls. NB: Marketing industrial or consumer goods in targeted foreign markets is looked from the angle of the stage of economic development the targeted county is in. -.
MODULE - 3
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International Entry and Expansion Strategies
Decision Criteria for entry :
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-- Major decisions in International Marketing -- Decision criteria for international business
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Major Decisions in International Marketing 1. Deciding whether to go abroad or not? 2. Deciding which market to enter? 3. Deciding how to enter the market? 4. Deciding on the marketing program. 5. Deciding on the marketing organization.
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Decision Criteria for International Business This rests on the following specific questions: -- Importance of the international macro environment. The importance and scope. -- Advantages and Disadvantages that have to gained/lost, opportunities to be tapped.
Factor Cost and Conditions 4. Country Infrastructure 6. Shipping Consideration 5.Continued. Political Risk 2. Amity Business School The Decision criteria’s are as follows : 1. Foreign Exchange 7.. Market Access 3. Market Selection Criteria . Creating a Product Market Profile (The Nine W‟s) 8.
Who does not buy our product? 3.Continued. What are customer‟s currently buying to satisfy the need/problem? 6. What need or function does our product serve? 4. Why is our product purchased? . Amity Business School The NINE W’s of creating a Product Market Profile : 1. What price are they paying? 7. When is our product purchased? 8. Who buys our Product? 2. What problem does our product solve? 5.. Where is our product purchased? 9.
The Modes of Entry OR -.Continued.Stages of Foreign Market entry . Amity Business School Strategies for Entering foreign market: -.It refers to the different routes that is undertaken to enter a foreign market OR -..
Amity Business School Different routes to enter a foreign market are the following: 1.B. EXPORTING – A.B.Continued. Indirect Exporting -. FOREIGN PRODUCTION -. Contract Manufacturing/Management Contract -. Licensing -. Local Assembly/Investment . Direct Exporting 2..A.C.
-. shipping and selling of an organization‟s goods abroad.Continued… Amity Business School Indirect Exporting is one when a third party arranges the documentation.Refers to the lowest level of commitment to international marketing (The third party refers to independent middlemen – of four types ) .
Domestic-based export merchant– here the middlemen buys the manufacturers products and sells them abroad on its own account. 2.Continued… Amity Business School Indirect Export through four routes: 1. Agents can be in the form of individuals or a group of people involved or trading companies . Domestic-based export agent– here the agent seeks and negotiates foreign purchases for a commission.
4. Export Management Company– manages export for its client for a fee. .Continued… Amity Business School 3. Co-operative Organization– exporting on behalf of several producers and is partly under administrative controls.
through the middlemen 7. No foreign/overseas sales force required 4. No spending on export department 3. No foreign contacts required 5. Less risk 6. First hand knowledge of the foreign market. . Involves less investment 2. Fewer mistake by the seller.Continued… Amity Business School Advantages of Indirect Export : 1.
an organization often begins to make a limited commitment. .Continued… Direct Export: Amity Business School As foreign sales grow. frequently documenting itself/ deciding to handle their own exports.
Setting up an overseas sales branch office/depot/subsidiary. 3. 2.Continued… Amity Business School Methods of Direct Export : 1. 4. Appointing and utilizing the service of export sales representatives. Foreign brand distributors or agent . Domestic based export department.
patent. or other item of value for a fee or royalty. . Licensing represents a simple way for a manufacturer to become involved in international marketing.Continued… Amity Business School Foreign Production: A.The licensor gains entry into the foreign market at little risk. trade secret. Here the licensor licenses a foreign company to use a manufacturing process. the licensee gains production expertise or a well-known product or name without having to start from scratch. trademark.
A company can enter a particular foreign market through the management contract route. Here a company can sell a management contract to a party to manage a foreign business such as hotel. Management Contract -. since it yields income from the beginning. hospital etc for a fee. .Continued… Amity Business School B. It is a low-risk method of getting into a foreign market.
Contract Manufacturing : An entry method. . Contract manufacturing’s disadvantage is that there is less control over the manufacturing process. Finally it offers the company a chance to start faster. with less risk.Continued… Amity Business School C. where the firm engages local manufacturers to produce the product. and with the opportunity to form a partnership or buy out the local manufacturer later.
Joint Ventures: Joint ventures are a part of foreign investment. The foreign firm might lack the financial. Here foreign investors may join with local investors to create a joint venture in which they share ownership and control. or managerial resources to undertake the venture alone or the particular foreign government might require joint ownership as a condition for entry. It represents an extensive form of participation and commitment towards international marketing.Continued… Amity Business School D. physical. . Forming a joint venture might be necessary or desirable for economic or political reasons.
and if the foreign market appears large enough. Foreign investments are undertaken in the light of long term strategic goals and ambitions of the company. foreign production facilities offer distinct advantages.by securing cost economies. developing deeper relationship with the government. . local suppliers etc. gaining a better image in the host country. customers. As a company gains experience in export.The foreign company can buy part or full interest in a local company or build its own facilities.Continued… Amity Business School E. Direct Investment --(Ownership and Control /Manufacturing Facilities) The foreign investment is another route through ownership or through a manufacturing facilities presence.
-. provides opportunities for the foreign companies to enter a new market. through equity stakes in another company. Expanding purchasing power and Expanding markets etc of the developing countries.Foreign investments in the developing country can be through joint ventures. .Continued… Investment in Developing Countries: Amity Business School --Rapidly growing economies. mergers and acquisitions etc. It is linked with the basic tenets of the need of international marketing and the opportunities that any developing country offers.
Continued… Market Expansion Strategies Amity Business School 1. Country concentration and segment diversification. Country and segment diversification. Targeting few segments in few countries. Country Diversification and market segmentation concentration. 4. . 3. 2.
.Continued… Amity Business School Stages of Development Models It refers to the stages in the evolution of the global corporation from a domestic player to international player to multinational player to a global player to transnational player.
Module.5 Amity Business School Developing product for International Market .
A product is often considered in a marketing sense that can be offered to a market for attention. acquisition.Continued… BASIC CONCEPTS Amity Business School Product Defined : -. Continued…… . use or consumption – that may satisfy a want or need.
-. such as shape of the product. hotel services etc. for example. restaurant services. . which cannot be touched and felt. only experienced of its benefits. important components in making of the product. dimensions of the given product.Continued … Amity Business School -.engineering services.A product is also intangible.A product is something tangible that can be described in terms of physical attributes. form color and so on.
Persons such as Amitabh Bacchan. Aishwarya Rai. Sachin Tendulkar etc. books etc.Services such as engineering services. . Escort Heart Research Institute. NGO‟s etc. Jodhpur etc. marketing services.Organizations such as AIIMS.Physical Goods such as automobiles.Continued… Amity Business School Marketing of Products Products that are marketed include: -. -.Places such as Delhi. Agra. -. -. -.
in the case with highly niche product category -.Benefits– whether it is any generic product or any niche product .Continued… Amity Business School The best way to define a product is to describe it as a bundle of UTILITIES or SATISFACTION A PRODUCT OFFER GIVES -.Status Symbol.
Core Benefits– The fundamental benefit or service that the consumer is actually buying. a solution for easy transportation.Continued … FIVE LEVELS OF A PRODUCT Amity Business School 1. 2. and from different manufacturers and of different brand names. . For example a „car‟. A car can be of many designs and models. Generic Product– The basic version of the product.
5. . in terms of a set of attributes and conditions. It is distinguishing the market offer. Potential Product– meaning all the changes and transformations that the product may undergo in future.Expected Product– what the buyers expect from a product offer. 4.Continued … Amity Business School 3. that distinguishes a company‟s offer from the competitors product. Augmented Products– Expectation of additional services and benefits by the consumer. It is nothing but a possible evolution of the product.
-.Product is the most crucial element of the marketing program. --Research and Development . -.A company‟s product defines its business. quality. promotion.Continued … Amity Business School -.Focus is the Product offer.Firm‟s competitors and customers are determined by the products it offers. -.Pricing. communication and distribution policies has importance in product offering. -.
we are actually looking for a solution. we as a consumer buy any product. .Continued… Amity Business School Important: Whenever. This is a generic fundamental fact enshrined with any particular product being marketed or sold in any part of the world. We thus end up buying a solution and return with a brand. Brand is always associated with any product offering – tangible and intangible. to satisfy our need or want.
Continued… Amity Business School Brand Defined: A particular product. offered for sale by a single producer or manufacturer and made easily distinguishable from other similar products by a unique identifying name and or a symbol or term. or a line of products. .
g.Continued… Amity Business School Brand Image : The perception of a product formed in the mind of the consumer which is the result of the symbols and meanings associated with a particular brand. automobile advertising on television commonly sells a lifestyle rather than a mode of transportation. . Advertising is often employed to create brand image: e.
.Continued… Brand Marketing : Amity Business School A strategy in which each of a firm‟s product‟s is marketed independently. generally under the direction of a brand manager.
Continued… Brand Name : Amity Business School That part of a brand consisting of the actual letters or words. and designs incorporated into the overall design. i. that part which can actually be vocalized.e. . symbols. which comprises the name of the product or service as distinct from other identifying signs.
Continued… Brand Position : Amity Business School A products niche in the marketplace. . The term ‘position’ refers to the products relationship to competing brands and is generally measured in terms of how the consumer perceives the various attributes attached with the brand.
where the strategy usually includes those promotional strategies which differentiate the product from competitors and which vividly establish the products image in the minds of the potential customers. Brand positioning is also referred to as market positioning. Also known as Positioning. .Continued… Amity Business School Brand Positioning / Positioning : Efforts aimed at establishing a product or service in a particular niche or segment of the market place. product positioning or target positioning.
whether it is a national product of one country for use in the same country– can it be marketed into another foreign market? Can it be modified into as per the requirements of the now target country or for….Continued … Amity Business School Products – Local. when taken from an international marketing perspective rests on the fact that any product. . International and Global The concept of products. Continued…. National.
Should the company focus on the production of products for each particular market ? . at the particular period of time. as also the stage of economic development / market development the particular targeted country is in. -.Continued … Amity Business School any other world market? These enigmatic questions revolves around the EPRG concept of global marketing management.
Local products are products exclusively distributed in a particular region.Products available in the portion of the national market --Sometimes hailed under the category of regional products -. -.These products may be new products that the company is introducing. .Continued… LOCAL PRODUCTS : Amity Business School -.
Products that are not sold outside the home country.Product specially developed for a particular country. -.Continued … Amity Business School National products -.Product that is offered in a single national market -. .
Continued … Amity Business School International Products : -.A multiregional product can become an international product. and can also be a player and thus marketed into other targeted world markets. -.] . and having the quality to become an international player. it can come out of the regional market.Offered in multinational and regional markets. [The Gist is that initially a product can be a great player in a regional market.through the route of acquisition or joint venture or any other specific route.
Continued … Amity Business School Global Products and Global Brands -.Some products are specially designed to target all the world market.Some products specially made for a particular national market. can also be marketed in other country market.The global products are offered in global markets and in every part of the world – and in every economic development stage country. . -. -.
Continued… Amity Business School Important: The concept of Global Products revolves around the concept of Global Brands. . Please Note: A product is not a brand. Any Global brand like the generic concept of brand has a general perception and image.
Continued… Examples of Global Brand: VOLVO MERCEDES BENZ AUDI BMW VOLKSWAGEN TOYOTA HONDA MARLBORO COKE Amity Business School .
GUIDED BY THE SAME STRATEGIC PRINCIPLES -.SIMILAR POSITIONING -.SIMILAR IMAGE -.Continued… Amity Business School A Global brand has : -.MARKETING MIX MAY VARY FROM COUNTRY TO COUNTRY .
Continued… Amity Business School Only Difference between a global product and global brand is that --.it does not carry the same name and image from country to country. . -.A great global product can be sold in the home country by a different name and the similar product can be sold in other world market by a different name.
Name should be standardized -. later .Image should be standardized Please Note: The definition of standardized product follows in the slides concerning „IPLC‟ segment.Continued… Amity Business School Should a global product be turned into a global brand? For this: -.
Continued … Amity Business School International Product Life cycle .
.Continued… IPLC Theory Amity Business School The international product life cycle theory (IPLC) describes the „diffusion process of an innovation‟ across national boundaries.
has the following characteristics: --The International product life cycle begins when a developed country.Continued… Amity Business School The Whole game of IPLC. wants to exploit its technological breakthrough by selling abroad. having a new product to satisfy consumer needs.Other advanced nations soon start up their own production facilities. and before long less developed countries do the same. -. .
Finally. no longer cost effective. thus shifts from developed countries to developing nations. import products from their former customers.Efficiency/comparative advantage.Continued… Amity Business School Continued from last slide… -. advanced nations. . -.
and marketing implications for both innovators and initiators are taken from the paradoxical angle of marketing only.Continued… Amity Business School The understanding The entire result of the great game of the stages encircled with its particular characteristics. NB: The IPLC is examined from the marketing perspective.is governed by the fact that in the end the initiating country and the advanced nations become a victim of its own creation. .
Reversal .Local Innovation STAGE 1 --.Maturity STAGE 3 --.Continued… Amity Business School Stages of IPLC The stages of international product life cycle begins from Stage 0 to Stage 4. STAGE 0 --.Worldwide Imitation STAGE 4 --.Overseas Innovation STAGE 2 --.
and one for the Less developed countries. . and when the curve is under the horizontal line.Continued… Amity Business School The generic diagram concerning the IPLC may be referred. net import results from that country. NB: The curves in the IPLC shows curves for the same innovation: one for the initiating country. one for other advanced nations. -. net export results when the curve is above the horizontal line.For each curve.
after identifying the need and demands of a particular product a company in a particular country. initiates that product in its home market initially. it has been universally accepted that a developed nation having all the technical knowhow.Continued… Amity Business School Why USA as a initiating country? As far as the curves related to the international product life cycle is concerned. expertise etc that is required to develop a product--. Continued…………… . This is the beginning of the diffusion of the innovation process concerning the international product life-cycle.
the largest consumer nation in the world. regardless of whether a product is intended for later export or not. an innovation is initially designed with an eye to capture the US market. before being introduced and refined in other countries and in most instances.? Since many of the products found in the world‟s markets were originally created in the USA.Continued… Amity Business School Why USA……. .
Continued… Amity Business School Stages of International Product Life Cycle (IPLC) and their Characteristics .
Innovations are most likely to occur in a highly developed countries because consumers in such countries are affluent and have relatively unlimited wants. thereby beginning the story of the familiar life-cycle stage.Represents a life cycle stage when any initiating country takes the first leap in manufacturing the product for the first time in the world.Continued… Stage 0 – Local Innovation Amity Business School -. . -. in operation within its original market.
-.At this stage firms in advanced nations have both the technical know-how as well as abundant capital to develop new products. .Continued… Amity Business School Stage 0 …………….
-.there will be demand for the all new offering. -.Many prospective consumers/user of the product will come to learn about the utilities and satisfaction to be derived from the product. . -.Original market will get well cultivated.Local demands of the product will be adequately supplied.Continued… Amity Business School Stage 1 : Overseas Innovation As soon as the new product is developed and initiated by the initiating country following syndromes will happen: -.
-.Stage 1 is also called as the ‘Pioneering Stage’ or ‘International introduction’ stage.Continued… Amity Business School Important: It is at this stage only that. the innovating firm will look to overseas market in order to expand its sales and profit. .
(Concept of the Stages of Economic Development runs here) . the technological gap is first noticed in other Advanced nations due to their similar needs and high income levels.Continued… Amity Business School In the Stage 1.
because by this time the innovating firm will normally have improved the production process. -.Continued… Amity Business School Competition in Stage 1 --Competition at this stage usually comes from US firms. since firms in other countries may not have much knowledge about the innovation.Production costs tend to decrease at this stage for the competitive firms. .
-. in addition to the recovering of the price incurred in marketing efforts. costs need to be recovered.Aggressive overseas sales also help decline the production costs. since because of the technological breakthrough.Continued… Amity Business School -. .The scenario gives the intangible feeling of the ‘Economies of Scale’. -.the price of the product at this stage is high.
.Continued… Amity Business School The final word for Stage 1 is that– there will be more exports from the USA. and increase in imports by other developed nations.
Local production will start in advanced nations . will lead firms to conceptualize the product.Growing demand in advanced nations.Continued… Amity Business School Stage 2 – Maturity -. -. and learn to make it in their home country.
-. -. -. -.More players in the market place..Introduction of the product in LDC‟s helps offset any reduction in export sales to advanced nations. but still the export level remains stable. -. .Continued… Amity Business School Stage 2 …… continued.Competition grows more at this stage.Innovating firm‟s sales see the light of the start of suffering.The LDC‟s now enter the imitation field. at the cost of advanced nations products.
-.This stage is generally considered as the beginning of heavy competition among the advanced nations firms. me-too products.Continued… Amity Business School Stage 3 – World Wide imitation -. having the same USP‟s. differentiation is tried at every angle of the product make…… .This is the stage where copy cats work. in the form of re-engineering. made in different forms and styles.
to products from other advanced nations and LDC’s.No more new demand anywhere for the initiating country to cultivate.Tough times for the initiating nation. -. .Loss of market share for the initiating firm. -.Continued… Amity Business School -. -.Effect on the economies of scale for the initiating nation.
Worldwide imitation is faster at this stage.Firms in other advanced nations use their lower prices.Now the production cost for the initiating nation rises.Continued… Amity Business School -. coupled with product differentiation techniques in place. -. on account of the new players using the comparative advantage philosophy. . -.
Continued… Amity Business School -. The Final word for Stage 3--.At this stage US production or the initiating nation production still remaining. now only a small player in its national market – facing competition from products from other advanced nations. is basically cornered from the world market.and is left for the local consumption only. A great paradox of the business macro environmental scenario.The initiating country’s export declines very fastly and rapidly reaching nil. Once an initiating country. .
Japan. South Korea.A. with several more on the rise.. The greatest Example for stage 3: Among the 30 different companies selling cars in the U.Continued… Amity Business School A great paradox of the business macro environmental scenario. The rest are from Western Europe.S. of these only two players – General Motors and Ford are US firms. and others/ .
Continued… Amity Business School Stage 4– Reversal -. Comparative Disadvantage . Product Standardization B.In this stage two functional characteristics makes appearance A.
The above becomes a comparative advantage for LDC’s. -. married to the ‘Economies of Scale’.The product is no longer capital –intensive or technology – intensive. .The innovating country’s comparative advantage becomes country’s disadvantage. -.Continued… Amity Business School -. for they possess those advantage – looking from all point of scale in the development of international business.
And also targeting other advanced nations market. Finally targeting world market. USA.Continued… Amity Business School The final word for Stage 4: The Less Developed countries are the last IMITATORS. . They establish sufficient productive facilities to satisfy their own domestic needs as well as to produce for the biggest market in the world.
Continued… Amity Business School STANDARDIZED PRODUCT Defined A product developed for one national market and then exported with no change to international markets. .
Continued… Amity Business School The Moral of the Whole Game of International Product Life Cycle The initiating nation becomes a victim of its own creation .
Continued… Amity Business School PRODUCT POSITIONING .
.Continued… Positioning defined Amity Business School A marketing strategy that will position a company‟s products and services against those of its competitors in the mind of the consumers.
. three generic competitive strategies are employed which a particular company can follow.Continued… Achieving Positioning Success Amity Business School To achieve positioning success.the company tries to achieve lowest costs of production and distribution. The three winning strategies are: 1. Cost Leadership-.
paying attention to a few market segments. Differentiation--.Continued… Amity Business School 2. Focus--. 3. . Differentiation defined.Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offer from competitor’s offer.making use of specific marketing mixes.
Product delivers a highly valued benefit to a sufficient number of buyers. 3. Superior: The difference is superior in other ways to obtain the same benefit. Important. 2. . Distinctive: The difference is either isn‟t offered by others or is offered in more distinctive way by the company.Continued… Amity Business School Criteria for different positioning 1.
Pre-emptive: The difference cannot be easily copied by competitors. Profitable : The product is profitable for the company. . 7. 6. Affordable: The buyer can afford to pay the price for the difference.Continued… Amity Business School 4. Communicable: The difference is communicable and visible to buyers. 5.
Continued… Amity Business School International Market positioning The above criteria for differential positioning is summed up in the context of international marketing management also. . Thus the general strategies for product positioning in international marketing / global business are: Continued….
2 and 3 are considered to be general product positioning tenets. . HIGH-TECH POSITIONING 5. HIGH-TOUCH POSITIONING NB: 1. QUALITY / PRICE 3. whereas 4 and 5 are two special positioning that is considered for international product.Continued… Amity Business School 1. USE / USER 4. ATTRIBUTE OR BENEFIT 2.
Reparability f. Reliability e.Continued… Attributes in the form of a. Features b. Design. Amity Business School . Performance c. Durability d. Style g.
Technical Financial products requiring special. 1.Continued… Amity Business School Importance of high-tech positioning High tech positioning can be applied under two categories of product offers. . Special Interest Products such as bicycles. care and expertise while selling. etc. Technical Products such as Computers. Chemical. 2. Adidas Shoes etc.
Continued… Amity Business School High-Touch Positioning Here more emphasis is given on IMAGE. a birthday cake. such as thirst problem solved by a cola drink. Products solving a common problem. etc. Examples: A. coffee drink. This category actually uses „products important‟ from day to day particular important moments / special moments of life. a birthday card etc. .
Ferrari. Marlboro . NB: Global Village products are mostly those products that has a cosmopolitan touch. in its essence.e. and the users have mostly cosmopolitan nature/culture outlook. Examples can be: Levis Jeans or other Jeans brands. HarleyDavidson etc. Mc Donald. those products that enhance the consumers all over the world.Continued… Amity Business School B. Global Village Products – i. .
those product category that have a universal acceptance such as: --. Canon. Panasonic --.Electronic Gadgets etc – Casio Calculating instruments. Products with a universal theme. defence related electronic gadgets. Sony.Yashika.Photographic Cameras. .Continued… Amity Business School C.
Continued… Amity Business School Product Design Considerations: Product design is a key factor in determining success in global marketing. Should a company offer a single design for the global market? . Questions that arise concerning product design decisions: 1. Should there be an adaptation of the product for various national markets? 2.
PREFERENCES and TASTES / CHOICES.e. understanding the products compatibility with the environment) . 2. LAWS and REGULATIONS – (i. where the product is to be made) 4. COMPATABILITY – (i. COST – (talking about the economies of scale) 3. compliance with laws and regulations in different countries.Continued… Amity Business School Important factors to be considered in product design: 1.e.
Continued… Amity Business School Geographic Expansion in International Marketing (THE STARTEGIES) .
INVENTION STRATEGY i. ADAPTATION STRATEGY i.Continued… Amity Business School Introduction Companies can pursue three generic basic global strategies to penetrate foreign markets: 1.e. 2. .e. adapting as per the market situation. products are designed from scratch for the global market place. adapting the same product or communication policy used in their home market. This enables the firm to cater to the needs and wants of its foreign customers.e. STRAIGHT EXTENSION i. 3.
Strategy 1– Product and Communication ExtensionDual Extension. Strategy 3– Product Adaptation. C.The three basic strategies above are further clubbed into five distinguished strategic options: A. D.Continued… Amity Business School Please Note--. Strategy 4 – Product Adaptation and Communication Adaptation (Dual Adaptation) E.Communication Extension. Strategy 5 – Product Invention . B. Strategy 2 – Product Extension and Communications Adaptation.
companies pursuing this strategy sell exactly the same product with the same advertising and promotional appeals as used in the home country. Continued…… .i. Product and Communication Extension – Chief Characteristics A.e. Marketing a standardized product using a uniform communications strategy.Continued… Amity Business School Strategy 1.
. Dual Extension also works when company targets a „global segment‟ with similar needs. C. a standardized product policy coupled with a uniform communication strategy offers substantial savings coming from economies of scale.Continued… Amity Business School B. NB: This strategy is basically product driven rather than market driven. D. Best strategy for the small companies with limited / few resources. Important: Generally speaking. Best strategy for the new entrants in the global arena.
Product Extension and Communications adaptation Chief Characteristics: Due to differences in the cultural or competitive environment: A. B. Same product is often used to offer benefits or functions.Continued… Amity Business School Strategy 2. that dramatically differ from those in the home market. . Gaps between the foreign and home market drive companies to market the same product using customized advertising campaigns.
E.Continued… Amity Business School D. Potential savings of the firm is spent on advertising front. . This strategy entails „the economies of scale‟ on the manufacturing side. F. Customized advertising campaigns is adopted for this strategy for different country market.
. C. Company‟s expansion strategy is also the reason for strategy 3.. but market it using a standardized communications strategy.Communications Extension Chief Characteristics: A.Continued… Amity Business School Strategy 3 – Product Adaptation. Firms adapt their product. B. Local market circumstances favour the case of product adaptation. Continued……….
Differences in physical environments .Product adaptation and communications adaptation (Dual Adaptation) Important: Demand for a dual adaptation strategy. Difference in cultural environment 2. Why? Because of: 1.Continued… Amity Business School Strategy 4.
reintroducing earlier product offers that are well adapted to a foreign country‟s need.Continued… Amity Business School Strategy 5– Product Invention Product invention means creating something new. Backward Invention. It can take two forms: 1. 2. creating new products to meet a need in another country. . Forward Invention.
.Continued… Amity Business School Standardization versus Customization A recurrent theme in global marketing is whether companies should aim for a standardized product offer or customized or country tailored product strategy.
--. .Offering a uniform product on a regional or world wide basis.A standardized / uniform product capitalizes on the common platform requirements across countries.Minor alternations are usually made to meet local regulations or market conditions -.Continued… Amity Business School • Standardization means: --.
Continued… Amity Business School Customization means Under customization process management focuses on cross-border differences in the needs and wants of the firms target customers. . appropriate changes are made to match local market conditions. Under customization.
-.an original invention. . -. A new product can be: -.a modification of an existing item.the firm‟s own version of a product already supplied by a competitor or -.Continued… Amity Business School New Product Development Definition of New Product– Any product offer that consumers regard as an addition to their available choice can be regarded as a „new product‟.merely a change in how an item is packaged and presented.
What it will do? b. .Continued… Amity Business School Process of product development The process begins with the ‘Idea Generation’ --. The benefits it will provide to customers c. d. Its market position.In considering the feasibility of an idea it is necessary to define the concept of the intended new item such as : a. How will it differ from current or possible future products offered by competing businesses.
. a company will usually select a number of areas in different parts of the world where it can test its entire marketing program.Continued… Amity Business School International Test Marketing/Testing in national market Introduction: Prior to committing itself to marketing a new consumer product on a global scale.
3. Establishes or refutes the validity of the basic concept of the new product. Testing lowers the risk of subsequent failures. 2. Provides a basis for forecasting future sales.Continued… Amity Business School Factors calling for testing new product 1. .
Continued… Amity Business School Most important: Each group of companies in which the item is to be sold. cities. or rural locations that possess characteristics as near as possible to the averages for the region as a whole. the company needs to identify towns. .
. the dumping company can exploit its position by raising the prices of its product.DUMPING Amity Business School Dumping takes place when a firm or an industry sells products in the world market at prices below the cost of production. After the lower prices of the dumped goods have succeeded in driving out all the competition. REASONS Generally a company dumps when it wants to dominate a world market.
Continued… Amity Business School Important: Whatever the motivation for dumping may be – A. . Hence the governments of affected countries are allowed to impose special import taxes on offending products. Penetration of markets etc. Dumping is basically an unfair trading practice under WTO regulations. Disposal of surplus stock or B.
wholesalers and retailers in a foreign market obtain the exporters product from other business entity. -.From the importers side it is known as „Parallel Imports‟.Gray market channels refer to the legal export / import transactions involving genuine products into a country by intermediaries other than the authorized distributors.Distributors.Gray Market Amity Business School Important characteristics -. . Thus the exporters legitimate distributors and dealers face competition from others who sell the product at reduced prices in that foreign market. -.
Products must be available in other markets.Continued… Amity Business School Conditions necessary for Gray Market: Three Conditions are required: 1. 2. transportation costs and legal restrictions must be low enough for parallel importers to move the products from one market to another. . 3. Trade barriers such as tariff. Price differentials among various markets must be great enough to provide the basic motivation for gray markets.
Its production may or may not be tied to a physical products Examples: Restaurant / Hotel services. . services required for manufacturing a product etc. Engineering services.Continued… Amity Business School Role of Services in global economy SERVICE DEFINED– A service is an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
-.Because the production and consumption of some services do not need to take place at the same location or at the same time. global sourcing of services is a viable strategy. .Continued… Amity Business School Outsourcing of Service activities: It refers to service procurement activities on a global basis in the same way they procure components and finished products.
Sharing risk in an increasingly uncertain business environment.Improving access to expertise not available inhouse. -.Improving customer service. -.Reducing costs and improving the corporate focus. -. .Continued… Amity Business School Outsourcing of service activities relates to: -. that is concentrating on the core activities of the firm.Reducing time to implement internal processes. -.
Hence there is a strong incentive for firms to develop current product offerings. and the risk of failure is high. diversify product lines and duplicate competitors best selling items rather than invest in basic technical research leading to completely new product concepts. For it has been seen that the majority of new inventions with a commercial application are financially unsuccessful. introduce complimentary products. .APPENDIX--a Amity Business School Important Comment on ‘New’ Product Inventing and bringing to the market a completely new product can be enormously expensive.
increase customer satisfaction by adapting the product to local needs.b Amity Business School Standardization versus Customization While the standardization has a product driven orientation– lower your costs via mass production.APPENDIX-. .customization is inspired by a market driven orientation.
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