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International Marketing Mix

Introduction

When launching a product into foreign markets firms can use a standard marketing mix or
adapt the marketing mix, to suit the country they are carrying out their business activities in.
This article takes you through each element of the marketing mix and the arguments for and
against adapting it suit each foreign market.

The diagram below illustrates the two options available to firms when they are devising their
international marketing mix strategy.

International Marketing Mix:Product

Basic marketing concepts tell us that we will sell more of a product if we aim to meet the
needs of our target market. In international markets this will involve taking into consideration
a number of different factors including consumer's cultural backgrounds, religion, buying
habits and levels of personal disposable income. In many circumstances a company will have
to adapt their product and marketing mix strategy to meet local "needs and wants" that cannot
be changed. McDonalds is a global player however, their burgers are adapted to local needs.
In India where a cow is a sacred animal their burgers contain chicken or fish instead of beef.
In Mexico McDonalds burgers come with chilli sauce. Coca-cola is some parts of the world
taste sweeter than in other places.
The arguments for standardisation state that the process of adapting the product to local
markets does little more than add to the overall cost of producing the product and weakens
the brand on the global scale. In todays global world, where consumers travel more, watch
satellite television, communicate and shop internationally over the internet, the world is a
smaller than it used to be. Because of this there is no need to adapt products to local markets.
Brands such as MTV, Nike, Levis are all successful global brands where they have a
standardised approach to their marketing mix, all these products are targeted at similar groups
globally.

As you can see both strategies; using a standard product and an customised product can work
just as well. The right approach for each organisation will depend on their product, strength
of the brand and the foreign market that the marketing is aimed at.

International Marketing Mix: Promotion

As with international product decisions an organisation can either adapt or standardise their
promotional strategy and message. Advertising messages in countries may have to be adapted
because of language, political climate, cultural attitudes and religious practices. For example
a promotional strategy in one country could cause offence in another. Every aspect of
promotional detail will require research and planning one example is the use of colour; red is
lucky in China and worm by brides in India, whilst white is worn by mourners in India and
China and brides in the United Kingdom. Many organisation adapt promotion strategies to
suit local markets as cultural backgrounds and practices affect what appeals to consumers.

The level of media development and availability will also need to be taken into account. Is
commercial television well established in your host country? What is the level of television
penetration? How much control does the government have over advertising on TV, radio and
Internet? Is print media more popular than TV?

Before designing promotional activity for a foreign market it would be expedient to complete
a PEST analysis so that you have a complete understanding of the factors operating in the
foreign market you would like to enter.

International Marketing Mix:Price (Pricing)

Pricing on an international scale is a complex task. As well as taking into account traditional
price considerations such as fixed and variable costs, competition and target groups (click
here for further information about marketing mix pricing) an organisation needs to consider
additional factor such as

the cost of transport


tariffs or import duties
exchange rate fluctuations
personal disposal incomes of the target market
the currency they want to be paid in and
the general economic situation of the country and how this
will influence pricing.
The internet has created further challenges as customers can view global prices and purchase
items from around the world. This has increased the level of competition and with it pricing
pressures, as global competitors may have lower operating costs.

International Marketing Mix:Place

The Place element of the marketing mix is about distributing a product or service to the
customer, at the right place and at the right time. Distribution in national markets such as the
United Kingdom will probably involve goods being moved in a chain from the manufacturer
to wholesalers and onto retailers for consumers to buy from. In an overseas market there will
be more parties involved because the goods need to be moved around a foreign market where
business practices will be different to national markets. For example in Japan there are
approximately five different types of wholesaler involved in the distribution chain.
Businesses will need to investigate distribution chains for each country they would like to
operate in. They will also need to investigate who they would like to sell their products and
services to businesses, retailers, wholesaler or directly to consumers. The distribution strategy
for each country a business operates in could be different due to profit margins and
transportation costs.

Conclusion

Prior to designing an international marketing mix a business should carry out


a PEST analysis for every country they would like to operate in. This will help
them determine what elements of the marketing mix can be standardised and which
elements will need adjustments to suit local needs. It may well be that a business is
able to use a standard marketing mix in the majority of cases and only need to
adjust it on the rare occasion. Or every country may need its own marketing mix.
international promotion mix & pricing decision
PROMOTION
Promotion plays a vital role in providing information of the product to the foreign customers. It also
creates the desirability of the product among foreign potential buyers. Foreign companies desire to
communicate with their marketing intermediaries and potential buyers to ensure favourable sentiment
toward themselves and their products. Promotion is more culture bound than other Ps.
Hence, the foreign companies must take special care in promoting the product in the host country.

The promotion mix include:


1. Advertising
3. Sales Promotion, and
2. Personal Selling
4. Public Relations

1. ADVERTISING
Though advertising is not given due importance in developing countries, it plays crucial role in
international marketing and particularly for consumer goods and consumer durables. The international
firm while formulating advertising strategy should consider -
(a) Message
(b) Medium
Extent of global advertising efforts.

SALES PROMOTION
Sales promotion includes specialised marketing efforts like coupons, in-store promotions, sampling,
direct mail campaigns, co-operative advertising and trade fair attendance. International companies
attend trade shows like Paris Air Show, Tokyo Auto Mart etc. Most of the Airlines companies use
sales promotion to lure customers.

PUBLIC RELATIONS
Public relations include efforts aimed at enhancing a firm's reputation and image with the general
public. The consequence of public relations is that the firm is a 'good corporate citizen.' This image in
its turn enhances company sales.

Pricing Decision

PRICING DECISIONS
Though the pricing is significant among the 4 Ps, it receives the least attention in the international
marketing. Pricing decisions can be studied from the following approaches:
Supply and Demand
Cost
Elasticity or Cross Elasticity of Demand
Exchange Rates
Market Share
Tariffs and Distribution Costs
Culture
Purchasing Power

PRICING POLICIES
The pricing policies of international companies include:
Standard price policy
Two-tiered pricing
Market pricing.

Standard price policy: Under the standard price policy, the international company sells the product at
the same price for the customers of any country or nationality. Crude oil producers like Kuwait Oil,
Aramco and Pemex sell their products to all customers at price determined by supply of and demand
for crude oil in the world crude oil market. .

Two-tiered pricing policy: International company under this policy sells its product at two prices, viz.,
one price for domestic sales and another price for the foreign sales. This policy is adopted due to the
involvment of shipping costs, tariffs and foreign distribution costs.

Marketing pricing policy: International companies following this policy customise their pricing on a
market-by-market basis in order to maximise their profits in each market. Japanese automobiles
follow this policy in pricing their cars.

Alternative pricing strategies: There are a number of alternative pricing strategies in addition to the
above-mentioned strategies. These include:
Discounts (cash, quantity, functional etc.)
Financing or credit terms
Bundle or unbundle.

Factors affecting international pricing

Pricing factors of international business vary from those domestic business. A number of factors affect
the international pricing. The important among them are:
(a) Cost
(b) Competition
(c) Product Differentiation
(d) Exchange Rate
(e) Economic Conditions of the Importing Country:
(f) Government Factors:
(g) Other incentives like supply of finance, inputs etc. at lower prices in order to encourage the
domestic exports.

The normal ex-price structure is as follows:


(i) Cost of production
(ii) Producer's profit
(i) + (ii) = Ex-factory gate price
(iii) Packing and Marking
(iv) Loading charges at the factory
(v) Transportation charges to docks, railway station or airport
(vi) Handling charges and fee at port, railway station, airport
(vii) Cost of documents (like cost of lading and airway bill)
(viii) Consular invoice, certificate of origin
(ix) Export duty (if any)
(x) (i) to (ix) = C and F Price
(xi) Cost of insurance
(xii) Sea or air freight charges
(i) to (xii) = CIF Price
(xiii) Unloading charges at destination
(xiv} Import duties and taxes
(xv) Fee paid to the Clearing Agent
(i) to (xv) = Landed Price
(xvi) Transportation charges to Importer's Warehouse
(xvii) Importer's Margin/Mark-up
(xviii) Mark-up/Margin of all other market intermediaries in the importing country
(i) to (xviii) = Price to the consumer

DUMPING

Dumping is a form of price discrimination. Under dumping the international company charges different
prices for the same product in different markets. Dumping means selling the products at below the
cost of production or at below the on going price in the market. Consequently, the imported goods are
sold at prices so low as to be detrimental to local producers of the same kind of merchandise. I I For
example, China dumped its steel, USA and Malaysia dumped cooking oil in India. Consequently,
Indian Government imposed
antidumping measures to protect domestic industry.

Types of Dumping
(1) Sporadic dumping : Sporadic dumping occurs when an international company sells its unsold
inventories in a foreign country to get rid of them.
(2) Predatory dumping: Predatory dumping is selling the product in a foreign market at a loss as a
strategy of entering the market. Zenith uses this strategy for selling televisions and computers.
(3) Persistent dumping: Persistent dumping involves consistently selling the product at lower prices in
one market than in other markets. Japan sells its electronic products at high prices in Japan and sells
the same products consistently at lower prices in USA and India.
(4) Reverse Dumping: Under reverse dumping the product is sold at high price in international
markets and at a low price in the domestic market.

Antidumping Terms
Dumping adversely affects the domestic manufacturers, suppliers of raw materials, components,
labour and other stakeholders of the domestic companies. Further, it affects the economic activity in
the domestic country and also the government revenue. Hence, the domestic governments 'importing'
impose antidumping terms/measures.

managing distribution channel


Managing distribution channels

International companies either sell directly or indirectly.


Indirect selling takes place through domestic agent/domestic merchants. This is a long channel
involving a number of marketing intermediaries.
International Market Intermediaries

place/distribution channels could be studies under:


(1) Direct Selling (2) Indirect Selling

1. Direct selling: Foreign company develops its own overseas marketing department or foreign
marketing intermediaries and sells the product in the foreign market.
2. Indirect selling: Indirect selling is through market intermediaries.

Types of Market Intermediaries

(1) Foreign Distributor: It is a foreign company having exclusive rights to distribute the company's
product in a foreign country.
(2) Foreign Retailer: It is a retailing company firm in a foreign country engaged by the distributor of the
foreign country concerned to deal in and sell the products.
(3) State-Controlled Trading Company : It is a government company authorised to deal in and sell the
products/services of foreign companies. For example, State Trading Corporation in India.
(3) Export Broker: It is a domestic company engaged in arranging for export of goods of domestic
companies by charging a fee.
(4) Manufacturer's Export Agent /Sales Representatives: It is a firm exclusively engaged to take up all
export activities of a domestic manufacturer. This agent works for a commission .
(5) Export Management Company: This company manages the entire export activities of a domestic
company on contract.
(6) Co-operative Exporter : Manufacturers of a particular product in the domestic country form into a
co-operative union to manage their export activities. This co-operative union manages the export
activities of its members. Examples include GE, Singer and Borg-Warner.
(7) Web-Pomerence Association: It is an association jointly formed by two or more domestic
manufacturers to export their products. It is basically an export cartel.
(8) PurchasinglBuying Agent: It is an agency firm of a foreign buyer/importer. Foreign buying/
importing company appoints agents to arrange for buying products from other countries .
(9) Country-controlled Buying Agent: It is a foreign government's agency or a quasi-governmental firm
engaged in buying/importing products from other countries. This firm buys products on behalf of the
government of the importing country .
(10) Resident Buyer: It is an agency engaged in buying the products on behalf of the importer. This
agent locates his firm near the manufacturers in the exporting country .
(11) Export Merchant: It is a firm engaged in buying the products in the domestic country in order to
export to foreign countries on its own.
(12) Export Drop Shipper: Export drop shipper is also known as a desk jobber or cable merchant. He
arranges a link between the exporter and importer. He informs the requirements of the customers in a
foreign country to the exporter. Exporter, in his turn sends the products directly to the importer.
(13) Export Distributor: Export distributor is granted exclusive right to represent the manufacturer in
selling the product in foreign countries. He operates either in his own name or manufacturer's name .
(14) Trading Company: Trading companies act as a link between exporting companies and importing
companies.

PRODUCT & BRANDING DECISION


International Marketing

International Marketing mix

The international marketing mix consists of 4 Ps viz.,


- Product
- Price
- Place
- Promotion

Product & Branding Decision

A product is something both tangible and intangible. The tangible products can be described in terms
of physical attributes like shape, dimension, components, form, colour etc.
The intangible
products include various services like merchant banking, mutual funds, insurance, consultancy, air
travel etc. However, sometimes both tangiable and intangible are combined to give a total product.

. The global markets must see the total product which includes tangible and intangible.
The study of product in the international market includes:
1. Product Development
2. Product Life-cycle
3. Branding Decisions
4. Packaging Decisions

Market Segmentation: The main purpose of the market segmentation is to satisfy the customer needs
more precisely. Market segmentation helps to enter the foreign markets in a phased manner

Product Positioning: Product positioning attempts to occupy an appealing space in a consumer's mind
in relation to the space occupied by other competitive products.

Product Adoption : Product to be adopted in a foreign market must demonstrate Five factors.
They are:
(1) Relative advantage over existing alternatives.
(2) Products cleanliness and sanitation are accepted in rich countries.
(3) Compatible with local customs and habits:
(4) Observism : If the product is used publicly the others can observe the product..
(5)Complexity: If the product's qualities are difficult to understand then other product has slow market
acceptance.

2. PRODUCT LIFE CYCLE

INTERNATIONAL PRODUCT LIFE CYCLE


International product life cycle model is based on empirical actual pattern of trade. I I This model
explains the relationship among the product life cycle trade and investment.

International product life cycle model explains:


(1) High-income, mass-consumption countries initially export, and later import the product as they
lose their export markets.
(2) Later, the other advanced countries shift from an importing country to an exporting country.
(3) After some time, even the less developed countries shift from the status of importing country.

(1) New products are initially introduced in high-income countries/markets as the latter offer high
potential demand
(2) . Initially products are produced where they are sold .
(3) Mostly product inventions take place in high-income countries .
(4) Entrepreneurs in middle-income countries take the advantage of low cost of labour and
otherfactors of production in the production of the new products .
(5) Market stabilises when the product reaches maturity, the design, technology and markets stabilise.
(6) Production from low income countries displaces the production of the high income countries due to
the cost advantage .
(7) Companies of high-income countries shift to low-income countries to take the advantage of low
cost factors of production .
(8) These companies gain the ownership and control over the production of low-income countries .
(9) The producers of low-income countries produce and sell higher volumes due to the low cost of
production and price. Further, these producers also export in higher volumes due to heavy demand,
consequent upon low cost of factors .
(10) Low-income countries export to high-income countries and compete with the industries of
highincome countries who enjoyed monopoly at the initial stage of the cycle .
(11) With this stage, cycle completes its turn. Textiles is an example of this cycle. This product has
gone through the complete cycle for the investing country (UK), other developed countries and finally
the developing countries. Similarly, electronics industry passed through all the stages. This product
shifted from USA to Japan to Korea to India.

Stages of International Product Life Cycle

Stages of international product life cycle include:


(1) Stage Zero: Local Innovation: The product in this stage is a familiar product in the local market.
Product innovations take place mostly due to the changing wants of the local people .
(2) Stage 1: Overseas Innovation: After a product is successful in the domestic market, the producer
desires exporting it to the foreign markets due to excess production compared to its demand in the
domestic country.
(3) Stage 2: Maturity : The development of the product reaches the peak stage even in foreign
markets. The producer modifies it and develops it based on taste and preference of the customers in
foreign markets. The producer exports the products even to less developed countries in this stage .
(4) Stage 3: Worldwide Imitation: The local manufacturers in various foreign countries start to imitate
the popular foreign products. They modify those products slightly based on the local needs and
produce the same at less cost and sell them at cheaper prices .
(5) Stage 4: Reversal: Competitive advantage of innovative or original manufacturer disappearsat
this1stage as producers in many foreign countries imitate the product, develop it further and produce
it at less cost. This stage also results in product standardisation and competitive
disadvantage. The product at this stage does not have to be either capital intensive or technology
intensive, but it becomes labour intensive - a strong competitive advantage possessed by developing
countries.

International Branding Decision

A trademark in USA according to the Lauham Trademark Act, 1947, "includes


any word, name, symbol or device or any combination thereof adopted and used by manufacturer or
merchant to identify his goods, and distinguish them from those manufactured or sold by others."

BRANDING DECISION

Generic or No Brand: The first decision regarding branding is whether to brand or not. The trend
towards non-branding products is increasing world-wide. In fact, the scales of non-branded products
is increasing particularly in retail stores. The increase in demand for non-brand products is due to the
availability of these products at less price. In addition, non-brand products are available - In a number
of sizes and models.
Branded Products: Most of the global companies go for branding. The customers of different countries
find it easy to identify the branded products and they are aware of the ingredients and utility of the
branded products. For example" the customers throughout the world are aware of the products of
Colgate-Palmolive, Pepsi or Coke etc. The global company can get better price and profits through
branded products.
Private Brand: Most of the exporting companies go for dealer's brand or private brand. The
advantages of private branding include: easy in giving dealer's acceptance, possibility of getting larger
market share, less promotional expenses etc. Private branding is more appropriate for the small
companies who export to various foreign countries.
Manufacturer's Brand: The manufacturer sells the products in his own brand. The advantages of
manufacturer's brand include: better control of products and features, better price due to more price
inelectricity, retention of brand loyalty and better bargaining power.
Single Brand: The global company go for a single brand for all its exports to the same country (or
Single Brand): The advantages of single brand in single market include: better impact on marketing
,permittmg more focussed marketing, brand receives full attention, reduction in cost of promotion etc.
Multiple Brands: The marketing conditions and the features of the customers vary wIdely from one
region to the other, in the same country. Therefore, the exporter uses multiple branding decisions in
such cases. Multiple branding enables the exporter to meet the needs of all segments. Theother
advantages of multiple branding include: creation of excitement among employees, gaining
of more shelf space, avoidance of negative connotation of existing brand etc.
Local Brands: Global companies have started widely using the local brands in order to give the
impression of cultural compatibility of the local market. The advantages of local branding include:
elimination of difficulty in pronunciation, elimination of negative connotations, avoidance of taxation on
international brand etc.
World Wide Brand/Global Brand: Exporters normally go for global brand. The advantages of global
brand include: reduction of advertising costs, elimination of brand confusion, better marketing impact
and focus, status for prestigious brands and for well-known designs etc.

Strategies for Branding Decisions


(1) If the product has production consistency and salient attributes which can be differentiated, then it
would be better for the manufacturer to go for branding otherwise better to sell the product without
any brand .
(2) If the manufacturer is least dependent person, it would be feasible to go for the manufacturer's
own brand otherwise, it would be feasible to go for a private brand .
(3) If there are intermarket differences like demographic and psychological, it would be feasible for
having a local brand. Otherwise, it would be better to go for global brand .
(4) If there are intermarket differences like demographic and psychological, it would be feasible for
multibrands. Otherwise it would be feasible to go for single brand.

4 Different types of terms of


payment in International
Trade.
If we do not go in detail about definition and deep parameters, I will call this slogan
Business is money. Although business man enjoy his day to day life in trade, if a loss
occurs in business, everything collapse. So payment of any sales proceeds plays a very
important role than any other roles in business.

Most of the beginners of exports may worry about the


terms of payment. Because, unlike other domestic
business, you are dealing with a buyer who situates
thousands of miles away from your place crossing
borders of your country. You may or may not know the
financial condition or credit worthiness of your
buyer. You may not be meeting the buyer personally at
initial stage, may not be aware of the specific policy of trade of buyers country, no idea
about political status or natural calamity chances of the region etc.etc.

Payment term in any business is a major part of sales contract. Terms of payment in
exports and imports plays an important role in international business. What are the
different types of mode of payment in exports and imports?

Let us discuss different type of terms of payment in international trade.

The Major ways of making payment in export and import are given below:

How to make payment to overseas seller in International trade of exports and


imports?

Advance payment

With a sellers point of view, an advance payment is the safe mode of payment for any
business including export business. Receiving amount of sales in advance helps exporter
in various ways to plan his financial activities smoothly. However with a buyers point of
view, advance payment carries little risk, as he advances payment before dispatch of
goods. Advance payment of term in exports and imports is opted by a buyer only when
he knows the seller in details on genuineness as a seller. Also read Advance payment
the best way of terms for business

Letter of credit.( L.C.)

Letter of credit is another type of payment term opted by importers and exporters. I have
explained in detail about Letter of credit and its mechanism in a couple of articles in
same website. The details about letter of credit includes advantages of LC to an exporter,
advantages of LC to an importer Disadvantages of Letter of credit to an exporter,
disadvantage of letter of credit to an importer, different types of letter of credit etc.. You
may read the same to have a clear knowledge on Letter of credit. Although letter of
credit has some advantages and disadvantages, it is a safe mode of payment in
international trade for both exporter and importer. So LC is one of the safe types of
mode of payment in international trade. Also read
Letter of credit - How does LC work? What are the advantages of Letter of Credit to
Exporter? How LC is benefited to Importer? Are there any disadvantages to importer for
a consignment under Letter of Credit? What are the disadvantages of LC to an
exporter? Who are the parties involved in Letter of Credit? How to check authenticity
of LC? What is Prime Banker?

D.A.P or D/P basis - Documents against Payments

Documents against Payment DP/DAP is another term of payment in international trade.


The documents under consignment are delivered to buyer/importer only after collecting
payment of goods by buyers bank. A detailed article has been written in same website
about DP/DAP terms of payment. You may go through the same to know more about
DP/DAP terms of payment in exports and imports. Also read
Is DP terms of payment safe in export business? How does Bill of Lading work in DP
payment terms?

D.A terms means Documents against Acceptance

Documents against Acceptance are another term of payment in international payment. I


have written a detailed article about DA terms of payment in same website. You may go
through the same for further read.

Can a Buyer (Importer) make part payment in Advance and balance on credit basis in
exports and imports?

Yes, In an international trade, a Buyer can effect part payment as advance and balance
amount with a credit period or under DP terms. Also read Documents against
Acceptance. - How reliable the terms of payment in exports How to make DA mode of
payment safe

I believe this article is only a window to have deep knowledge about terms of payment in
international trade. I know, some of you may have a good experience in handling
different types of terms of payment in exports and imports.

I request you to share your experience about terms of payment in


exports and imports.

Comment below your thoughts on payment terms


in international trade.

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