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Discuss the international marketing strategies.

How is it different from domestic


marketing strategies?
Ans:- International marketing can be defined as marketing of goods and services
outside the firms home country. International marketing has the following two
forms of marketing:
? Multinational marketing.
? Global marketing.
Multinational marketing is very complex as a firm engages in marketing operations
in many countries. In multinational marketing, a firm visualises different countries
as one market and build their brand or service according to the business
environment of the foreign countries. Global marketing indicates the integrated and
coordinated marketing activities across many different markets. Taking into account
the various conditions on which markets vary and depend, appropriate marketing
strategies should be devised and adopted. Like, some countries prevent foreign
firms from entering into its market space through protective legislation.
Protectionism on the long run results in inefficiency of local firms as it is inept
towards competition from foreign firms and other technological advancements. It
also increases the living costs and protects inefficient domestic firms. The decision
of a firm to compete internationally is strategic; it will have an effect on the firm,
including its management and operations locally. The decision of a firm to compete
in foreign markets has many reasons. Some firms go abroad as the result of
potential opportunities to exploit the market and to grow globally. And for some it is
a policy driven decision to globalise and to take advantage by pressurising
competitors.
ADVANTAGES:
Segmentation
Firms that serve global markets can be segregated into several clusters
based on their similarities. Each such cluster is termed as a segment.
Segmentation helps the firms to serve the markets in an improved way.
Markets can be segmented into nine categories, but the most common
method of segmentation is on the basis of individual characteristics, which
include the behavioral, psychographic, and demographic segmentations. The
basis of behavioral segmentation is the general behavioral aspects of the
customers. Demographic segmentation considers the factors like age,
culture, income, education and gender. Psychographic segmentation takes
into account: beliefs, values, attitudes, personalities, opinions, lifestyles and
so on.
2. Market positioning
The next step in the marketing process is, the firms should position their
product in the global market. Product positioning is the process of creating a
favorable image of the product against the competitors products. In global

markets product positioning is categorised as high-tech or hightouch


positioning. The classification of high-tech and high-touch products. One
challenge that firms face is to make a trade-off between adjusting their
products to the specific demands of a country and gaining advantage of
standardization such as the maintenance of a consistent global brand image
and cost savings.
3. International product policy
Some thinkers of the industry tend to draw a distinction between
conventional products and services, stressing on service characteristics such
as heterogeneity, inseparability from consumption, intangibility, and
perishability. Typically, products are composed of some service component
like, documentation, a warranty, and distribution. These service components
are an integral part of the product and its positioning. Thus, it is important to
consider the findings of marketing research and determine customers
desires, motives, and expectations in buying a product. Firms have a choice
in marketing their products across markets. Many a times, firms opt for a
strategy which involves customisation, through which the firm introduces a
unique product in each country, believing that tastes differ so much between
countries that it is necessary to create a new product for each market.
Standardization proposes the marketing of one global product, with the belief
that the same product can be sold in different countries without significant
changes. Finally, in most cases firms will go for some kind of adaptation.
Here, when moving a product between markets minor modifications are made
to the product.
4. International pricing decisions
Pricing is the process of ascertaining the value for the product or service that
will be offered for sale. In international markets, making pricing decisions is
entangled in difficulties as it involves trade barriers, multiple currencies,
additional cost considerations, and longer distribution channels. Before
establishing the prices, the firm must know its target market well because
when the firm is clear about the market it is serving, then it can determine
the price appropriately. The pricing policy must be consistent with the firms
overall objectives. Some common pricing objectives are: profit, return on
investment, survival, market share, status quo, and product quality. The
strategies for international pricing can be classified into the following three
types:
Market penetration:
It is the technique of selling a new product at a lower price than the current
market price.
Market holding:
It is a strategy to maintain buy orders in order to maintain stability in a

downward trend.
Market skimming:
It is a pricing strategy where price of the goods are set high initially to skim
the revenue from the market layer by layer. The factors that influence pricing
decisions are inflation, devaluation and revaluation, nature of product or
industry and competitive behaviour, market demand, and transfer pricing.
5. International advertising
International advertising is usually associated with using the same brand
name all over the world. However, a firm can use different brand names for
historic reasons. The acquisition of local firms by global players has resulted
in a number of local brands. A firm may find it unfavorable to change those
names as these local brands have their own distinctive market. Therefore, the
company may want to come-up with a certain advertising approach or theme
that has been developed as a result of extensive global customer research.
Global advertising themes are advisable for marketing across the world with
customers having similar tastes. The purpose of international advertising is to
reach and communicate to target audiences in more than one country. The
target audience differs from country to country in terms of the response
towards humour or emotional appeals, perception or interpretation of
symbols and stimuli and level of literacy. Standardization is required for
products by some firms. Standardization helps to achieve economies of scale
and a consistent image can be established across markets.Standardisation
also assists in utilising creative talent across markets, and facilitates good
ideas to be transplanted from one market to other. International advertising
can be thought of as communication process that transpires in multiple
cultures that vary in terms of communication styles, values, and consumption
patterns. International advertising is a business activity and not just a
communication process. It involves advertisers and advertising agencies that
create ads and buy media in different countries. International advertising is
also reckoned as a major force that mirrors both social values, and
propagates certain values worldwide.
6. International promotion and distribution
Distribution of goods from manufacturer to the end user is an important
aspect of business. Companies have their own ways of distribution. Some
companies directly perform the distribution service by contacting others
whereas a few companies take help from other companies who perform the
distribution services. The distribution services include: The purchase of
goods. The assembly of an attractive assortment of goods. Holding stocks.
Promoting sale of goods to the customer.

INTERNATIONAL MARKET SEGMENTATION


Market segmentation is the process in marketing of dividing a market into distinct
subsets (segments)
that behave in the same way or have similar needs. Because each segment is fairly
homogeneous in their
needs and attitudes, they are likely to respond similarly to a given marketing
strategy. That is, they are
likely to have similar feelings and ideas about a marketing mix comprised of a given
product or service,
sold at a given price, distributed in a certain way, and promoted in a certain way.
Broadly, markets can be divided according to a number of general criteria, such as
by industry or public
versus private sector. Small segments are often termed niche markets or specialty
markets. However, all
segments fall into either consumer or industrial markets. Although it has similar
objectives and it
overlaps with consumer markets in many ways, the process of Industrial market
segmentation is quite
different.
The process of segmentation is distinct from targeting (choosing which segments to
address) and
positioning (designing an appropriate marketing mix for each segment). The overall
intent is to identify
groups of similar customers and potential customers; to prioritise the groups to
address; to understand
their behaviour; and to respond with appropriate marketing strategies that satisfy
the different
preferences of each chosen segment.
Improved segmentation can lead to significantly improved marketing effectiveness.
With the right
segmentation, the right lists can be purchased, advertising results can be improved
and customer
satisfaction can be increased.

DEFINATION:
The process of defining and subdividing a large homogenous market into clearly
identifiable segments having similar needs, wants, or demand characteristics.
Its objective is to design a marketing mix that precisely matches
the expectations of customers in the targeted segment.

Few companies are big enough to supply the needs of an entire market; most
must breakdown the total demand into segments and choose those that the
company is best equipped to handle.
Four basic factors that affect market segmentation are
clear identification of the segment,
measurability of its effective size,
its accessibility through promotional efforts, and
its appropriateness to the policies and resources of the company.
The four basic market segmentation-strategies are based on
behavioral,
demographic,
psychographic, and
geographical differences.

International Marketing Communications (Promotion)


Media Choices for International Marketing
Marketing communications in international markets needs to be conducted with care. This
lesson will consider some of the key issues that you need to take into account when promoting
products or services in overseas markets. There will be influences upon your media choice,
cultural issues to be considered, as well as the media choices themselves personal selling,
advertising, and others.
Other factors that need to be considered in relation to international marketing
communications (Promotion) include:
The work ethic of employees and customers to be targeted by media.
Levels of literacy and the availability of education for the national population.

The similarity or diversity of beliefs, religion, morality and values in the target
nation.
The similarity or diversity of beliefs, religion, morality and values in the target
nation.
The family and the roles of those within it are factors to take into account.

Factors Influencing Pricing Strategy in International


Marketing

Some of the most important factors influencing pricing


strategy in international marketing are as follows:
Pricing decisions are complex in international marketing. A firm may have to follow different
pricing strategies in different markets. Whatever might be the strategy followed, pricing has to
reflect the proper value in the eyes of the consumer. Pricing is an important strategic and tactical
competitive weapon that can be used by a firm in international marketing.

It represents that element of the marketing mix, which is controllable by the firm to a large
extent. A firm should integrate pricing strategies with the other elements of the international
marketing mix.
Choice of a pricing strategy is dependent on:

Choice of a pricing strategy is dependent on:


1) Corporate goals and objectives
2) Customer characteristics
3) Intensity of inter-firm rivalry
4) Phase of the product life cycle

Having considered the factors influencing the choice of


strategy, let us now turn specifically to different strategies:

1) Skimming Strategies:
One of the most commonly discussed strategies is the skimming
strategy. This strategy refers to the firms desire to skim the market, by
selling at a premium price. Skimming refers to the objective of
achieving highest possible contribution in a short time. To use this
approach, the product has to be unique and the target market should
be willing to pay the high price. Success of this strategy depends on the
ability and speed of competitive reaction. A firm with a small market
share can face aggressive local competition when using skimming.
Maintenance of high quality requires lot of resources. If the product is
sold cheaply at home, then the problems of gray market can surface.
This strategy delivers results in the following situations:
i) When the target market associates quality of the product with its
price, and high price is perceived to mean high quality of the product.
ii) When the customer is aware and is willing to buy the product at a
higher price just to be an opinion leader.
iii) When the product is perceived as enhancing the customers status
in society.
iv) When competition is non-existent or the threat from potential
competition exists in the industry because of low entry and exist
barriers.

v) When the product represents significant technological


breakthroughs and is perceived as a high technology product.
In adopting the skimming strategy the firms objective is to achieve an
early break-even point and to maximize profits in a shorter time span
or seek profits from a niche.

2) Penetration Pricing Strategies:


As opposed to the skimming strategy, the objective of penetration
price strategy is to gain a foothold in a highly competitive market. The
objective of this strategy is market share or market penetration. Here,
the firm prices its product lower than the others do in competition.
Penetration pricing uses deliberate low prices to stimulate market
growth and capture market share. It can be useful when there is a
mass market and price sensitive customers. Japanese companies
increasingly resort to penetrative pricing due to intense local
competition.
This strategy delivers results in the following situations:
i) When the size of the market is large and it is a growing market.
ii) When customer loyalty is not high customers have been buying the
existing brands more because of habit rather than any specific
preferences for it.
iii) When the market is characterized by intensive competition
iv) When the firm uses it as an entry strategy
v) Where price-quality association is weak.

3) Differential Pricing Strategies:


This strategy involves a firm differentiating its price across different
market segments. The assumption in this strategy is that different
market segments do not communicate or have different search costs
and value perceptions of the product. In other words heterogeneity in
the market motivates a firm to adopt this strategy.

4) Geographic Pricing Strategies:


This strategy seeks to exploit economies of scale by pricing the product
below the competitors in one market and adopting a penetration
strategy in the other. The former is termed as second market
discounting. This second market discounting is a part of the
differential pricing strategy where the firm either dumps or sells below
its cost in the market to utilize its existing surplus capacity. So, in
geographic pricing strategy, a firm may charge a premium in one
market, penetration price in another market and a discounted price in
the third.

5) Product Line Pricing Strategies:


These are a set of price strategies, which a multi-product firm can
usefully adopt. An important fact to be noted is that these products
have to be related, in other words belonging to the same product
family. Faced with multi-products and fluctuating demand, the firm
may adopt a combination of the following strategies to effectively
manage its product line or maximize its profits across the product line.

i) Price Bundling:
This strategy is used by a firm to even out the demand for its product.
This is useful strategy for perishable; time-bound products like food,
hotel room or a seat on a flight and for products cannot be substituted,
like the package of stereo music system. Off-season discounts and,
season tickets for music festivals are examples of price bundling
strategy. This is a passive strategy aimed at correctly bundling the
prices of related items so that the firm is able to maximize its profits.
ii) Premium Pricing:
This strategy is used by a firm that has heterogeneity of demand for
substitute products with joint economies of scale. Consider the
example of a colour television set. There are different models available
with different features, like the one with a remote control and another
without it. Both are substitutable and satisfy the customer needs. But
the firm may opt to premium price the first model and position it as
the top of the product line for high income or upper income group of
customers or for whom communicating that they have arrived is
important,
iii) Image Pricing:
This strategy is used when consumers infer quality from the prices of
substitute models or competing products. The firm varies its prices
over different brands of the same product line. This strategy is
commonly used in textiles, cosmetics, toilet soaps and perfumes.

iv) Complementary Pricing:


This strategy is used by a firm that has customers with high
transaction costs for one or more of its products. Transaction costs are
all those costs that a customer has to incur to buy the product, like the
registration fees that a flat buyer has to pay in order to be a legal
owner or the processing fees that the bank may charge to give a credit
card to the customer.
v) Captive Pricing Strategy:
Here a special price deal is offered to loyal customers or those who are
regularly buying one of the products of the firm. A typical example is
the Gillette shaving system, which offers two twin blades free with its
razor to induce the buyer to purchase its blades. Kodak adopted this
strategy, when it offered a film roll free to all buyers who bought its
camera. As may be observed this is a strategy aimed at building
customer loyalty.
vi) Loss Leader Strategy:
This is another example of complementary pricing strategy. This
strategy involves dropping the price on a well-known brand to
generate demand or traffic at the retail outlet.
vii) Two-Part Pricing:
This strategy is used by products that can be divided into two distinct
parts. For example, membership of a video library has two parts one
is the membership fee, which is annual and the other is rent for each

time frame for which a videocassette is rented. As may be observed the


price has two components, the fixed fees and the variables usag
Choice of a pricing strategy is dependent on:
1) Corporate goals and objectives
2) Customer characteristics
3) Intensity of inter-firm rivalry
4) Phase of the product life cycle
Having considered the factors influencing the choice of
strategy, let us now turn specifically to different strategies:

1) Skimming Strategies:
One of the most commonly discussed strategies is the skimming
strategy. This strategy refers to the firms desire to skim the market, by
selling at a premium price. Skimming refers to the objective of
achieving highest possible contribution in a short time. To use this
approach, the product has to be unique and the target market should
be willing to pay the high price. Success of this strategy depends on the
ability and speed of competitive reaction. A firm with a small market
share can face aggressive local competition when using skimming.
Maintenance of high quality requires lot of resources. If the product is
sold cheaply at home, then the problems of gray market can surface.

This strategy delivers results in the following situations:


i) When the target market associates quality of the product with its
price, and high price is perceived to mean high quality of the product.
ii) When the customer is aware and is willing to buy the product at a
higher price just to be an opinion leader.
iii) When the product is perceived as enhancing the customers status
in society.
iv) When competition is non-existent or the threat from potential
competition exists in the industry because of low entry and exist
barriers.
v) When the product represents significant technological
breakthroughs and is perceived as a high technology product.
In adopting the skimming strategy the firms objective is to achieve an
early break-even point and to maximize profits in a shorter time span
or seek profits from a niche.

2) Penetration Pricing Strategies:


As opposed to the skimming strategy, the objective of penetration
price strategy is to gain a foothold in a highly competitive market. The
objective of this strategy is market share or market penetration. Here,
the firm prices its product lower than the others do in competition.
Penetration pricing uses deliberate low prices to stimulate market
growth and capture market share. It can be useful when there is a
mass market and price sensitive customers. Japanese companies

increasingly resort to penetrative pricing due to intense local


competition.
This strategy delivers results in the following situations:
i) When the size of the market is large and it is a growing market.
ii) When customer loyalty is not high customers have been buying the
existing brands more because of habit rather than any specific
preferences for it.
iii) When the market is characterized by intensive competition
iv) When the firm uses it as an entry strategy
v) Where price-quality association is weak.

3) Differential Pricing Strategies:


This strategy involves a firm differentiating its price across different
market segments. The assumption in this strategy is that different
market segments do not communicate or have different search costs
and value perceptions of the product. In other words heterogeneity in
the market motivates a firm to adopt this strategy.

4) Geographic Pricing Strategies:


This strategy seeks to exploit economies of scale by pricing the product
below the competitors in one market and adopting a penetration
strategy in the other. The former is termed as second market
discounting. This second market discounting is a part of the
differential pricing strategy where the firm either dumps or sells below

its cost in the market to utilize its existing surplus capacity. So, in
geographic pricing strategy, a firm may charge a premium in one
market, penetration price in another market and a discounted price in
the third.

5) Product Line Pricing Strategies:


These are a set of price strategies, which a multi-product firm can
usefully adopt. An important fact to be noted is that these products
have to be related, in other words belonging to the same product
family. Faced with multi-products and fluctuating demand, the firm
may adopt a combination of the following strategies to effectively
manage its product line or maximize its profits across the product line.
i) Price Bundling:
This strategy is used by a firm to even out the demand for its product.
This is useful strategy for perishable; time-bound products like food,
hotel room or a seat on a flight and for products cannot be substituted,
like the package of stereo music system. Off-season discounts and,
season tickets for music festivals are examples of price bundling
strategy. This is a passive strategy aimed at correctly bundling the
prices of related items so that the firm is able to maximize its profits.
ii) Premium Pricing:
This strategy is used by a firm that has heterogeneity of demand for
substitute products with joint economies of scale. Consider the
example of a colour television set. There are different models available
with different features, like the one with a remote control and another
without it. Both are substitutable and satisfy the customer needs. But

the firm may opt to premium price the first model and position it as
the top of the product line for high income or upper income group of
customers or for whom communicating that they have arrived is
important,
iii) Image Pricing:
This strategy is used when consumers infer quality from the prices of
substitute models or competing products. The firm varies its prices
over different brands of the same product line. This strategy is
commonly used in textiles, cosmetics, toilet soaps and perfumes.
iv) Complementary Pricing:
This strategy is used by a firm that has customers with high
transaction costs for one or more of its products. Transaction costs are
all those costs that a customer has to incur to buy the product, like the
registration fees that a flat buyer has to pay in order to be a legal
owner or the processing fees that the bank may charge to give a credit
card to the customer.
v) Captive Pricing Strategy:
Here a special price deal is offered to loyal customers or those who are
regularly buying one of the products of the firm. A typical example is
the Gillette shaving system, which offers two twin blades free with its
razor to induce the buyer to purchase its blades. Kodak adopted this
strategy, when it offered a film roll free to all buyers who bought its
camera. As may be observed this is a strategy aimed at building
customer loyalty. complementary pricing strategy. This strategy

involves dropping the price on a well-known brand to generate


demand or traffic at the retail outlet.
vii) Two-Part Pricing:
This strategy is used by products that can be divided into two distinct
parts. For example, membership of a video library has two parts one
is the membership fee, which is annual and the other is rent for each
time frame for which a videocassette is rented. As may be observed the
price has two components, the fixed fees and the variables usage fees
vi) Loss Leader Strategy:
This is another example of
.