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INTERNATIONAL MARKETING DEFINITION NEED AND TASK

International marketing is the performance, in more than one nation, of business


activities that direct the flow of a company's goods and services to consumers or
users for a profit.
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It is the human activity directed at satisfying consumer needs
and wants through an exchange process across national boundaries. This
definition differs from domestic marketing in that international marketing
involves marketing in more than one country. The marketing processes and
concepts are universally accepted when marketing in a domestic or foreign
country.

What makes international marketing so uniquely different from domestic
marketing lies within the environment in which the marketer is
concerned. Most American firms prefer domestic to foreign
marketing.
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Domestic marketing is simpler and safer. Foreign marketing
involves a range of unfamiliar problems, as well as strategies to deal
with uncertainties found in a foreign market. International marketing involves
many cultural differences that affect the success or failure of a marketing plan
in a foreign country.

There are many uncontrollable elements that can affect the outcome of
marketing plans. Such elements as competition, culture, legal, and government
controls can determine the outcome of the plan. Marketers cannot control the
uncontrollable elements, but must learn to adapt to them or, in other words,must
manage them. International marketers find the challenge in dealing with these
uncontrollable elements by learning to mold the controllable elements - price,
product, promotion and place (distribution) - within the framework of the
uncontrollable elements.
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More about the controllable and uncontrollable
elements will be discussed later on. Even though the marketing concepts are the
same in marketing domestically or internationally, the environment is extremely
important because it is changing within each country, as well as from country to
country.

The international marketer's main task or concern is to understand and deal with
the problems created by these changing environments. There are many similar
uncontrollable elements common to many countries, as well as unique
uncontrollable pertaining to each foreign country. It is the marketer's job to be
able to recognize these uncontrollable and implement an appropriate plan in
relation to them.

International marketing
International marketing involves recognising that people all over the
world have different needs. Companies like Gillette, Coca-Cola, BIC,
and Cadbury Schweppes have brands that are recognised across the
globe. While many of the products that these businesses sell are
targeted at a global audience using a consistent marketing mix, it is also
necessary to understand regional differences, hence the importance of
international marketing. Organisations must accept that differences in
values, customs, languages and currencies will mean that some
products will only suit certain countries and that as well as there being
global markets e.g. for BIC and Gillette razors, and for Coca-Cola drinks,
there are important regional differences - for example advertising in
China and India need to focus on local languages. Just as the marketing
environment has to be assessed at home, the overseas potential of
markets has to be carefully scrutinised. Finding relevant information
takes longer because of the unfamiliarity of some locations. The
potential market size, degree and type of competition, price, promotional
differences, product differences as well as barriers to trade have to be
analysed alongside the cost-effectiveness of various types of transport.
The organisation then has to assess the scale of the investment and
consider both short- and long-term targets for an adequate return.
Before becoming involved in exporting, an organisation must find the
answers to two questions:
1. Is there a market for the product?
2. How far will it need to be adapted for overseas markets?
The product must possess characteristics that make it acceptable for the
market - these may be features like size, shape, design, performance
and even colour. For example, red is a popular colour in Chinese-
speaking areas. Organisations also have to consider different
languages, customs and health and safety regulations.
Standardisation
If a company offers a product, which is undifferentiated between any of
the markets to which it is offered, then standardisation is taking place.
The great benefit of standardisation is the ability to compete with low
costs over a large output.
The diagram below illustrates the use of a standardised products and
marketing mix:

In most markets, however, there are many barriers to standardisation. It
is not difficult to think about the standard marketing mix for a product
and how this might vary from one country to another. For example:
product - tastes and habits differ between markets
price - consumers have different incomes
place - systems of distribution vary widely
promotion - Consumers' media habits vary, as do language skills and
levels of literacy.
With differentiated marketing, on the other hand, an organisation will
segment its overseas markets, and offer a marketing mix to meet the
needs of each of its markets.
The great benefit of standardisation is that costs are lowered, profitability
is increased and the task of supplying different markets becomes
substantially easier.
The diagram illustrates the process of adapting the marketing mix to
meet the needs of different geographical markets:

However, it could also be argued that the success of many products in
international markets has come about because marketers have
successfully adapted their marketing mix to meet local needs.
To a large extent the standardisation/adaptation dilemma depends upon
an organisation's view of its overseas markets and the degree to which it
is prepared to commit itself to meeting the needs of overseas customers.
There are three main approaches, which can be applied:
1. Polycentrism - with this marketing approach, a business will
establish subsidiaries, each with their own marketing objectives and
policies, which are decentralised from the parent company. Adaptation
takes place in every market using different mixes to satisfy customer
requirements.
2. Ethnocentrism - overseas operations are considered to be of little
importance. Plans for overseas markets are developed at home. There
is little research, the marketing mix is standardised and there is no real
attention to different customer needs and requirements in each market.
3. Geocentrism - standardisation takes place wherever possible and
adaptation takes place where necessary. This is a pragmatic approach.
A confectionery and soft drinks manufacturer like Cadbury Schweppes
typically produces a range of standard items that are sold throughout the
globe using similar marketing mix. However, differences may occur in
such aspects as distribution channels and pricing as well as advertising
in languages that are relevant to particular cultures. In addition such a
company would produce some products which cater for particular tastes,
and which are relevant to particular cultures. New products might then
be tested in a regional area, before consideration of which other areas of
the globe to roll out that product to.
Standardisation - refers to manufacturing, marketing or employing other
processes in a standard way.
Differentiation - is the process of making products or aspects of the
marketing mix different so as to appeal to different markets.


CONCLUSION
International marketing is very important for organisations, they must
use the right tools such as the four P's, Place, Product, Price and
Promotion to create global marketing programmes. Marketing, research
and development, manufacturing and other activities make up a
company's value chain which firms use to create superior customer
value. International companies must persist in pursuing a competitive
advantage over their competitors. Although all companies must use the
marketing mix, value chain and competitive advantage whether they
operate domestically or internationally, the global companies must not
fail to pursue global opportunities or they face being pushed aside by
bigger, stronger global competitors.
International marketing does not necessarily mean offering products all
over the world but maybe in a few select countries. International
marketing strategies can be based on different elements such as
brands, product design, product positioning, distribution or advertising.
The importance of international marketing can be seen in rankings
published in magazines such as the Wall Street Journal for their profits,
revenues or other measurable categories. It does not necessarily matter
the size of an opportunity depending on the product and more business
people are learning that increasing profit and revenues indicate hunt0ing
for new markets outside their own home land.
Therefore I have to agree that international marketing should be such an
important aspect of any business if they wish to compete against global
giants that seek to operate within other domestic markets and threaten
to devour existing local firms.


Four Phase OF IM
There are 4 phases of international marketing involvement; which are
no direct foreign marketing,
infrequent foreign marketing,
regular foreign market and
international marketing.
Stages of International Marketing Involvement
by SREE RAMA RAO on OCTOBER 18, 2009
Once a company has decided to go international, it has to decide the
degree of marketing involvement and commitment it is prepared to
make. These decisions should reflect considerable study and analysis of
market potential and company capabilities a process not always
followed. Many companies begin tentatively in international marketing,
growing as they again experience and gradually changing strategy and
tactics as they become more committed. Others enter international
marketing after much research and with fully developed long range
plans, prepared to make investments to acquire a market position and
often evincing bursts of international activities.
Regardless of the means employed to gain entry into foreign market, a
company may make little or no actual; market investment that is, its
marketing involvement may be limited to selling a product with little or no
thought given to development of market control. Alternatively, a
company may become totally involved and invest large sums of money
and effort to capture and maintain a permanent, specific position in the
market. In general, one of five (sometimes overlapping) stages can
describe the international marketing involvement of a company.
Although the stages of international are presented here in a linear order,
the reader should not infer that a firm progresses from one stage to
another; quite to the contrary, a firm may begin its international
involvement at any one stage or be in more than one stage
simultaneously. For example, because of a short product life cycle and a
thin but widespread market for many technology products, many high
tech companies large and small see the entire world, including their
home market, as a single market and strive to reach all possible
customers as rapidly as possible.
No direct foreign marketing:
A company in this stage does not actively cultivate customers outside
national boundaries; however this companys products may reach
foreign markets. Sales may be made to trading companies as well as
foreign customers who come directly to the firm. Or products may reach
foreign markets via domestic wholesalers or distributors who sell abroad
without explicit encouragement or even knowledge of the producer. As
companies develop web sites on the internet, many receive orders from
international Web surfers. Often an unsolicited order from a foreign is
what piques the interest of a company to seek additional international
sales.
Infrequent Foreign marketing:
Temporary surpluses caused by variations in production levels or
demand may result in infrequent marketing overseas. The surpluses are
characterized by their temporary nature; therefore sales to foreign
markets are made as goods are available, with little or no intention of
maintaining continuous market representation. As domestic demand
increases and absorbs surpluses, foreign sales activity is withdrawn. In
this stage, little or no change is seen in company organization or product
lines. However, few companies today fit this model because customers
around the world increasingly seek long term commercial relationships.
Further, evidence exists that financial returns from initial international
expansions are limited.
Benetton, one of the largest clothing manufacturers in Italy has a global
presence across 120 countries and more than 5,000 stores.
While it is initial few years of operation witnessed expansion within Italy,
the company ventured outside Italy for the first time in 1969 when it
opened its store in Paris.
Benetton entered India in 1991-92 as a joint venture with DCM Group,
now a 100 per cent subsidiary. Brand United Colors of Benetton is
present across 106 stores in 45 cities and brand Sisley was launched in
India in 2006.
Regular Foreign marketing:
At this level, the firm has permanent productive capacity devoted to the
production of goods to be marketed in foreign markets. A firm may
employ foreign or domestic overseas intermediaries or it may have its
own sales force or sales subsidiaries in important markets. The primary
focus of operations and production is to service domestic market needs.
However, as overseas demand grows, production is allocated for foreign
markets, and products may be adapted to meet the needs of individual
foreign markets. Profit expectations from foreign markets move from
being seen as a bonus to regular domestic profits to a position in which
the company becomes dependent on foreign sales and profits to meet
its goals.
Meter Man, a small company (25 employees) in southern Minnesota that
manufactures agricultural measuring devices, is a good example of a
company in this stage. In 1989, the 35 year old company began
exploring the idea of exporting; by 1992 the company was shipping
product to Europe. Today, a third of Meter Mans sales are in 365
countries, and soon the company expects international sales to account
for about half of its business. When you start exporting you say to
yourself this will be icing on the cake, says the director of sales and
marketing. But now going international has become critical to existence.

Theories
The Principle of Comparative and Absolute Advantage
Next theory - Trade Creation and Trade Diversion >>
In order to understand how international trade increases the welfare of its citizens we need to consider why
trade takes place. To do this the principles of absolute and comparative advantage should be considered.
The Principle of Absolute Advantage
A country has an absolute advantage over it trading partners if it is able to produce more of a good or service
with the same amount of resources or the same amount of a good or service with fewer resources. In the case
of Zambia, the country has an absolute advantage over many countries in the production of copper. This
occurs because of the existence of reserves of copper ore or bauxite. We can see that in terms of the
production of goods, there are obvious gains from specialisation and trade, if Zambia produces copper and
exports it to those countries that specialise in the production of other goods or services.
The Principle of Comparative Advantage
David Ricardo (1772-1823), in his theory of comparative costs suggested that countries will specialise and
trade in goods and services in which they have a comparative advantage. It is easy to see that if countries
have an absolute advantage there are advantages to trade. However, what happens if one country has an
absolute advantage over its trading partners in the production of a number of goods. Specialisation and trade
can still result in there being welfare gains made from trade.
A country has a comparative advantage in the production of a good or service that it produces at a lower
opportunity cost than its trading partners. Some countries have an absolute advantage in the production of
many goods relative to their trading partners. Some have an absolute disadvantage. They are inefficient in
producing anything, relative to their trading partners. The theory of comparative costs argues that, put simply,
it is better for a country that is inefficient at producing a good or service to specialise in the production of that
good it is least inefficient at, compared with producing other goods.
The Production Possibility Curve can be used to illustrate the principles of absolute and comparative advantage.

Country A has an absolute advantage in the production of both maize and wheat. At all points its production
possibility curve lies to the right of that of Country B. Country B has an absolute disadvantage. Due to
abundance of raw materials or more productively efficient production techniques, Country A is able to produce
more wheat and more maize that Country B. Perhaps common sense tells us that Country A should produce
both goods and export surpluses and Country B neither. However, when comparative advantage is considered
a different story emerges.
Consider the opportunity cost of Country A producing one more unit of maize. Half a unit of wheat has been
foregone. When country B produces one more unit of maize two units of wheat are foregone. Economics is
concerned with the allocation of scarce resources. Fewer resources are foregone if Country A concentrates its
resources in the production of maize.
Now consider the opportunity cost of Country B producing one more unit of wheat. Two units of maize have
been foregone. When Country B produces one more unit of wheat only half a unit of maize is foregone. Fewer
resources are foregone if Country B specialises in the production of wheat.
In the above case Country A should produce maize and Country B wheat. The surpluses produce should then
be traded.
Absolute advantage refers to a countrys ability to produce a certain good moreefficiently than
another country.
Specialization refers to a countrys decision to specialize in the production of a certain good or
list of goods because of the advantages it possesses in their production.
Opportunity cost refers to what you sacrifice in making an economic choice. In this instance, it
refers to the value of the goods you sacrifice in deciding to produce one good instead of another.
Comparative advantage refers to a countrys ability to produce a particular good with a lower
opportunity cost than another country.
EPRG Concepts

International Marketing Orientations

Different attitudes towards companys involvement with international marketing process are called international
marketing orientations. Justin Paul and Ramneek Kapoor (2008) underline that the managements thinking,
philosophy and guiding principles towards the internalization of the companys operations will divide the level of
involvement of the firms resources, including its marketing activities and talents. In this statement Paul and
Kapoor talk about the EPRG framework introduced by Wind, Douglas and Perlmutter, who stress that the key
assumption underlying the EPRG framework is that the degree of internalization to which management is
committed affects the specific international strategies and decision rules of the firm. The Perlmutters EPRG
framework consists of 4 stages in the international operations evolution. The EPRG framework includes:

1. Ethnocentric approach;

2. Polycentric approach;

3. Regiocentric approach;

4. Geocentric approach;

Ethnocentric Approach

Ethnocentric approach underlines host countries superiority. In other words, it is associated with orientation
directed first of all at the home country management, the home country knows best culture is applied (Bowie
and Buttle, 2004). Overseas operations are considered only as an additional
extension of the local market. Paul pinpoints that in this approach management philosophy, domestic
technology, strategies and even personnel are far more superior to foreign operations and are a perfect fit for
foreign operations as well. Companies oriented on ethnocentric approach are distinct with their complex
structure in home country, while structure in other countries stays very simple. Such companies do not adapt
their products to the needs and wants of other countries where they have operations. Ranchhod and Marandi
(2006) come up with a good summary of ethnocentric approach, saying that this international marketing
orientation tends to ignore much of the opportunities outside the domestic market while those that venture
outside tend to operate on the basis of standardized or extension approach marketing and do not engage in
adaptation of any noticeable degree. On one hand this approach sometimes can work as advantage for the
company when it views foreign markets as a means of disposing of surplus domestic production (Vasudeva,
2006). On the other hand, the company may experience a lot of difficulties to survive in foreign markets as its
brands will not be accepted by consumers of that country due to cultural differences as they are completely
ignored by the headquarters. In this case the company still will have two choices: to continue its operations only
in its domestic market; or change its international marketing orientation to a more appropriate one according to
nowadays requirements of the international brands consumers. The example of such change is NISSAN which in
the first years of its existence on international arena was following ethnocentric approach by selling its cars
abroad exactly as they were sold in their domestic market in Japan, after several years of its international
trading the company realized that ethnocentric international marketing orientation is no longer relevant for some
industries including automobile industry in which they were operating and changed its approach to polycentric
(see 2:1:5:2). Vasudeva (2006) concludes that in todays international business world ethnocentric approach
appears to be one of the biggest threats for international organizations.

Polycentric Approach

A company following this orientation gives an equal importance to every countrys domestic market, as there is a
belief in uniqueness of every market and its need to be addressed in an individual way. The plans are devised to
operate through individually established businesses, i.e. either by wholly owned subsidiaries or through
marketing subsidiaries, separately in each country, allowing complete autonomy to units to operate as separate
profit centres independent of head office (Paul, 2008).When following this approach a company has to be a
leader in technological leadership, produce high quality products or its production costs should be very low. It
can also concentrate its attention on foreign markets which have similar consumer needs and conditions similar
to domestic market. Among disadvantages of this orientation is low possibility of the economies of scale, high
prices of products due to high investments in the research of foreign markets and adaptation of products to the
needs and wants of particular countries. Examples of companies marketing their brands according to this
approach are: Ford Motors, Suzuki, Toyota, General Motors, Nissan, etc. all these companies adapt their
brands to specific needs of each countrys consumer.

Regiocentric Approach

In this approach segmentation of the markets is fulfilled on the basis of similarities in terms of regions. A
company finds economic, cultural or political similarities among regions in order to cover the similar needs of
potential consumers. For example, countries of former USSR can form one group as needs and tastes of
consumers of these countries are very similar as they were representatives of one nation not so long ago. The
same products and strategies can be used in such set of countries like Denmark, Norway, Finland and Sweden
or Pakistan, Bangladesh and India as they possess a strong regional identity and belong to the same cultural
dimensions. Pepsi and Coca-Cola are examples of international companies which are successfully using this
international marketing orientation.

Geocentric Approach

This orientation favours neither home country nor foreign countries where the company operates. It is also called
a global approach the main idea of which is to target global consumers who have similar tastes. The main idea
of this orientation is to borrow from every country what is best. The limitation is that it fully depends on constant
global market research, which requires a lot of investment and time. This approach is for companies with an
impressive capital that want to become world leaders... , in this quest ...manufacturers offer homogeneous,
identifiable and often interchangeable services and products in order to integrate them for worldwide operational
efficiency (Paul, 2008). The European Silicon Structures is a pure example of geocentric international marketing
orientation: the company is incorporated in Luxembourg, its headquarter was established in Munich, research
facilities are in


Or

Explain the concept of EPRG model in the evolution of global marketing
with the help of suitable examples?

Dr. Howard V. Perlmutter is a world authority on globalisation and pioneer on the internationalisation
of firms, cities and other institutions. Trained as a mechanical engineer and as a social psychologist,
Perlmutter joined Wharton's faculty in 1969. He specialised in the evolution of multinational
corporations (MNCs) making predictions to how their viability and legitimacy would change.

Perlmutter is the first academic who identified distinctive managerial orientations of international
companies. "The more one penetrates into the living reality of an international firm, the more one
finds it necessary to give serious weight to the way executives think about doing business around the
world". These organisational world views are shaped by a number or factors such as the
circumstances during which the company was formed, the CEO's leadership style, its administrative
processes, the organisational myths and traditions. Perlmutter stated that these cultural orientations
determine the way strategic decisions are made and how the relationship between headquarters and its
subsidiaries is shaped. In 1969 he bundled his insights by publishing the EPG model.

Perlmutter's EPG model states that senior management at an international organisation holds one of
three primary orientations when building and expanding its multinational capabilities:

1. ETHOCENTRIC (home country orientation)
The general attitude of a firm's senior management team is that nationals from the organisation's home
country are more capable to drive international activities forward than non-native employees working
at its headquarters or subsidiaries. The practices and policies of headquarters and of the operating
company in the home country become the default standard to which all subsidiaries need to comply.
This mind set has as advantages that it overcomes a potential shortage of qualified managers in host
nations by expatriating managers from the home country, creates a unified corporate culture and helps
transfer core competences more easily by deploying nationals throughout the organisation. The main
disadvantages are that an ethnocentric mindset can lead to cultural short-sightedness and to not
promoting the best and brightest in a firm.

2. POLYCENTRIC (host country orientation)
This world view has as dominant assumption that host country cultures are different making a
centralised, one-size-fits-all approach unfeasible. Local people know what is best for their operation
and should b given maximum freedom to run their affairs as they see fit. This view alleviates the
chance of cultural myopia and is often less expensive to implement than ethnocentricity because it
needs less expatriate managers to be send out and centralised policies to be maintained. The
drawbacks of this attitude are that it can limit career mobility for both local and foreign nationals,
isolate headquarters from foreign subsidiaries and reduces opportunities to achieve synergy.

3. GEOCENTRIC (world orientation)
This orientation does not equate superiority with nationality. Within legal and political limits,
executives try to seek the best men, regardless of nationality, to solve the company's problems
wherever in the world they occur. This attitude uses human resources efficiently and furthermore
helps to build a strong culture and informal management networks. Drawbacks are that national
immigration policies may put limits to its implementation and it might be a bit expensive compared to
polycentrism. It attempts to balance both global integration and local responsiveness.

Perlmutter's observation was that most MNCs start out with an ethnocentric view, slowly evolve to
polycentrism and finally adopt geocentrism as the organisation familiarises itself more and more with
conducting business on a global playing field.

In 1979 Perlmutter and his collague David A. Heenan added a fourth orientation to create the EPRG
model: the R stands for a regiocentric approach falling in between a polycentric and geocentric
orientation. Regiocentric or regional orientation is defined as a functional rationalization on a more-
than-one country basis. Subsidiaries get grouped into larger regional entities. Regions are consistent
with some natural boundaries, such as the Europe, America and Asia-Pacific. Both polycentric and
regiocentric approaches allow for more local responsiveness, with less corporate integration.


DIFFERENCE
* International companies are importers and exporters, they have no investment outside of their home country. *
Multinational companies have investment in other countries, but do not have coordinated product offerings in
each country. More focused on adapting their products and service to each individual local market. * Global
companies have invested and are present in many countries. They market their products through the use of the
same coordinated image/brand in all markets. Generally one corporate office that is responsible for global
strategy. Emphasis on volume, cost management and efficiency. * Transnational companies are much more
complex organizations. They have invested in foreign operations, have a central corporate facility but give
decision-making, R&D and marketing powers to each individual foreign market

Each term is distinct and has a specific meaning which define the scope and degree of interaction with their
operations outside of their home country.
International companies are importers and exporters, they have no investment outside of their home country.
Multinational companies have investment in other countries, but do not have coordinated product offerings in each
country. More focused on adapting their products and service to each individual local market.
Global companies have invested and are present in many countries. They market their products through the use of
the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global
strategy. Emphasis on volume, cost management and efficiency.
Transnational companies are much more complex organizations. They have invested in foreign operations, have a
central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market.
Andrewss advice is if in doubt about the right term to use, try the generic terminternational business.