Marketing Management Unit 15

Unit 15 International Marketing Management

Structure:
15.1 Introduction
Objectives
15.2 Nature of International Marketing
15.3 International Marketing Concept
The strategic concept of marketing
15.4 International Market Entry Strategies
15.5 Approaches to International Marketing
15.6 International Product Policy
15.7 International Promotions Policy
Advertising
Direct mailing
Personal selling
Sales promotion
Trade fairs and exhibitions
15.8 International Branding
15.9 Country of Origin Effects
15.10 International Pricing
15.11 Summary
15.12 Glossary
15.13 Terminal Questions
15.14 Answers
15.15 Case Study

15.1 Introduction
In the previous unit we dealt with the contemporary concepts in marketing
like CRM and Internet marketing. We analysed rural and services marketing,
the definitions, forms, and significance of customer relationship
management. In this unit, we will deal with another modern concept that has
gained popularity in the last two decades-international marketing. The study
of international marketing is intended to provide marketers with a systematic
methodology and intellectual framework to understand and work in the
global marketplace. It also helps marketers to learn and harness the
fundamental integrity that exists within diverse business laws found in

Sikkim Manipal University Page No. 356

Marketing Management Unit 15

different countries. International business embraces areas such as

outsourcing, third country manufacturing, and manpower deployment in
different countries. International trade covers the areas of imports and
exports, including technology transfer and international financing for
projects. International marketing includes various functions like researching
international market, selecting products, pricing, distributing channels,
advertising, and promoting in selected countries.
International marketing may be distinguished from local marketing as it is
governed by the rules and regulations of the host countries. It also deals
with the cultural diversities that exist between nations as companies attempt
to get benefited by these various cultures, by promoting ethnic products that
have remarkable value for the host-country buyers. Multinational
Corporations (MNCs) need to understand the work pattern of business in
different countries. They may opt for multi-domestic operations where each
host country has got separate and unique work system as desirable and
useful to the host country. Indian business establishments enjoy several
advantages in international markets due to low-cost labour, availability of
raw materials, and skilled manpower. International marketing has become
significant from the last decade as most countries have preferred
globalisation and encompassed the market economy. With changing
landscape, India witnessed dramatic changes since 1991 in marketing, with
the onslaught of international players, offering better brands and
comparatively better products. International marketing can be defined as
‘marketing carried on across national boundaries spanning a number of
countries’. It is the performance of business activities that direct the flow of
goods and services to consumers or users in more than one nation. It is
different from domestic marketing as the exchange takes place beyond the
frontiers, thereby involving different markets and consumers who might have
different needs, wants, and behavioural attributes in their respective
countries.
The international marketer sets up his own sales subsidiary and participates
in developing the entire marketing strategy for foreign markets. International
marketing companies need to decide how their internationalisation strategy
can be adopted within the overall marketing strategy, including their
marketing programmes of sales, advertising, and sales promotion in both
domestic and international markets. The firm also needs to understand the
Sikkim Manipal University Page No. 357
Marketing Management Unit 15

different international marketing environments that the company plans to

operate in. Understanding different cultural, social, and political
environments becomes part of the internationalisation process, leading a
firm to operate in various foreign markets. International marketing helps in
understanding different marketing environments and managing the
differences across the markets in tune with its domestic operations.

Case Let

Indian Carpet Industry

In this era of globalisation, every company and every industry wants to go
global. India also wants to sell carpets to the foreign markets. This can
only be done through exports when the profits in the exports increase we
go in for International Marketing, which lead to international trade and
international business. How it happens? This happens only when our
company becomes international, multinational and transnational.
The carpet industry at present is passing through international marketing
stage.
The carpets that are exported follow the concept of Ethnocentricity. It
means they see only similarities in markets and assume the products and
practices that succeed in the home country will, due to their demonstrated
superiority, be successful anywhere In order to make the carpet industry
an MNC the export of carpets have to increase to more than $ 100 million
turnover per annum. This can only happen in case this industry is properly
organised and given more incentives by the Government being a labour
intensive industry.
The question of its becoming transnational cannot arise unless this
industry falls in the hands of MNC itself and a large number of carpet
weavers are trained on a large scale through Carpet Management
Schools which is a far of dream. However, effort should be made to give
more incentives to the carpet weavers so that the child labour in this
industry is completely abolished and the objection of the importers on the
use of child labour is removed.
(Source: International Marketing-3rd Edition, PK Vasudeva, Excel Books)

Sikkim Manipal University Page No. 358

Marketing Management Unit 15

This unit provides answers to the following questions:

 What is the nature and concept of international marketing?
 How can companies enter the international market?
 Why companies want to enter the international market?
 How do companies operating in international market decide their product
mix, promotion mix and prices?

Objectives:
After studying this unit, you should be able to:
 describe the nature of international marketing
 realise the concept of international marketing
 explain the international market entry strategies
 analyse the approaches to international marketing
 realise the international product policy
 explain the international promotion policy
 analyse the international branding policy
 describe the concept of ‘country of origin effects’
 realise international pricing policy

15.2 Nature of International Marketing

International marketing, with its certain distinctive characteristics, is
functionally very similar to domestic marketing. What is dissimilar in
international marketing is the scope of the product market situation and
strategies followed by players to cater to the international markets.
Marketing can be conceived as an integral part of two processes. They are:
1. Technical
2. Social
In technical process, domestic and international marketing are identical. The
technical process includes non-human factors such as product, price, cost,
brand, etc. The basic principles regarding these variables are of universal
applicability.
The social aspect of marketing is unique in any given stratum, because it
involves human elements, namely, the behavioural pattern of consumers

Sikkim Manipal University Page No. 359

Marketing Management Unit 15

and the given characteristics of a society, such as customers, attitudes,

values, etc. It is obvious that international marketing, to the extent it is
visualised as a social process, will be different from domestic marketing.
International marketing has to take care of such barriers to free trade, which
may be both visible and invisible. Even when there is complete free trade,
logistics may create problems totally different from those experienced in
domestic operations.
Since human needs and wants will have different attributes in foreign
markets, perception of these needs will require an overall appreciation of the
environment, and the social and individual value systems will be prevalent in
each country.

Self Assessment Questions

1. International marketing is very similar to domestic marketing, only the
products are modified according to cultures. (True/False)
2. Price is a part of the ____________ process that forms a part of
marketing.

15.3 International Marketing Concept

During the past three decades, the concept of marketing has changed
dramatically. It has evolved by focussing on the product to make it a “better”
product, where better was based on internal standards and values. The
objective was profit, and the means to achieve that objective was selling or
persuading the potential customer to exchange his/her money for the
company’s product.
15.3.1 The strategic concept of marketing
By the 1990s, it was clear that the “new” concept of marketing was outdated
and the times demanded a strategic concept. The strategic concept of
marketing, a major evolution in the history of marketing thought, shifted the
focus of marketing from the customer or the product to the customer in the
context of the broader external environment. To succeed, marketers must
know the customer in a context including the competition, government policy
and regulation, and the broader economic, social, and political macro forces
that shape the evolution of markets. In International marketing, this may
mean working closely with home-country government trade negotiators and

Sikkim Manipal University Page No. 360

Marketing Management Unit 15

other officials and industry competitors to gain access to a target-country

market.
The strategic concept of marketing focuses more on stakeholders’ benefits
than profit for the company. Stakeholders are individuals or groups who
have an interest in the activity of a company. They include the employees
and management, customers, society, and government, to mention only the
most prominent.

Self Assessment Questions

3. If a foreign company wants to succeed in India, it has to work closely
with the Indian government. (True/False)
4. Earlier, the objective of marketing was generating profits but the focus
has shifted to stakeholder satisfaction. (True/False)

15.4 International Market Entry Strategies

There are two methods to entry into foreign markets. They are indirect
exporting and direct exporting. In the first method, the manufacturers take
the help of merchant exporters to get products exported to foreign markets.
In direct exporting, the manufacturers decide to export themselves. Thus,
the manufacturers have to decide, whether they will go directly for exports or
take the help of merchant exporters who are very often recognised as export
houses, trading houses, etc. Some government trading organisations like
State Trading Corporation, MMTC, and National Small Industries
Corporations also act as trading houses.
There are two specific reasons for why a manufacturer may resort to direct
exporting:
1. Success in foreign markets can boost the manufacturer’s image in the
domestic market.
2. There are a number of benefits available to exporters as, for example,
exemption from income tax for export profits.
Apart from direct and indirect exporting, the other popular methods of
entering international markets are:
 Joint ventures
 Strategic alliances

Sikkim Manipal University Page No. 361

Marketing Management Unit 15

 Direct investment
 Contract manufacturing
 Franchising
Joint venture
A joint venture is a strategic alliance where two or more parties, usually
businesses, form a partnership to share markets, intellectual property,
assets, knowledge, and profits. A joint venture differs from a merger, in the
sense that there is no transfer of ownership in the deal.
For example, Best Price Modern Wholesale is a joint venture between Wal-
Mart and Bharti Enterprises. American retail giant Wal-Mart chose this route
to enter the Indian market.
Figure 15.1 depicts the first best price modern wholesale store that was
opened in Amritsar, Punjab

Fig. 15.1: Best Price Modern Wholesale Store in Amritsar

(Source: http://www.eurobrandsindia.com/blog/wp-
content/uploads/2009/08/newsmlmmd-4bd3c2be31ce8d8a514158a4166495cc-
111_india-s-bharti-wal-mart-best-price-modern-wholesb.jpg?w=300)

Establishing a joint venture with a foreign firm has long been a popular
mode for entering a new market. The most typical joint venture is a 50/50
venture, in which there are two parties, who hold a 50% ownership stake
and contribute a team of mangers to share operating control.

Sikkim Manipal University Page No. 362

Marketing Management Unit 15

Strategic alliance
A strategic alliance is formed when two or more businesses join together for
a set period of time. The companies, generally, are not in direct competition,
but have similar products or services that are directed towards the same
target group. For example, Tata Motors and Fiat entered into a strategic
alliance to cooperate in areas like research and development, and
marketing.
In the new economy, strategic alliances enable business to gain competitive
advantage through access to a partner's resources, including markets,
technologies, capital, and people. Choosing a strategic alliance as the entry
mode will overcome some of those problems like established competition,
hostile government regulations, and operating complexity. In the process, it
will help reduce the entry cost.
Direct investment
Through Foreign Direct Investment a firm invests directly in facilities to
produce and/or market a product in a foreign country. For example, in the
early 1980’s, Honda, a Japanese automobile company, built an assembly
plant in Ohio and began to produce cars for the North American market.
These cars were substitutes for imports from Japan. Once a firm undertakes
FDI, it becomes a Multinational Enterprise (The meaning of Multinational
being “more than one country”).
Contract manufacturing
Contract manufacturing is a process that establishes a working agreement
between two companies. As part of the agreement, one company will
custom produce parts or other materials on behalf of their client. In most
cases, the manufacturer will also handle the ordering and shipment
processes for the client. As a result, the client does not have to maintain
manufacturing facilities, purchase raw materials, or hire labour in order to
produce the finished goods.
Companies like D-Link, TVS Electronics, and WeP Peripherals offer contract
manufacturing services.
Franchising
Franchising is basically a specialised form of licensing in which the
franchiser not only sells intangible property (normally a trademark) to the

Sikkim Manipal University Page No. 363

Marketing Management Unit 15

franchisee, but also insists the franchisee to abide by strict rules with
respect to how business is done. The franchiser will also often assist the
franchisee to run the business on an ongoing basis.
While licensing works well for manufacturers, franchising is often suited to
the global expansion efforts of service and retailing. McDonald’s, Tricon
Global Restaurants (the parent of Pizza Hut, Kentucky Fried Chicken, and
Taco Bell), and Hilton Hotels have all used franchising to build a presence in
foreign markets.

Self Assessment Questions

5. Future Generali is a joint venture between Future Group of India and
Generali of______________
(a) Germany
(b) USA
(c) Italy
(d) Japan
6. Maruti Suzuki is an example of __________________
(a) Joint venture
(b) Strategic alliance
(c) Contract manufacturing
(d) Franchising
7. In ___________method exporting, there are no merchants involved.
8. The Body Shop has entered India through the ___________route.

15.5 Approaches to International Marketing

In this section, you will learn about the various approaches to international
marketing, from domestic marketing to global marketing practice. The
following are the various approaches:
 Domestic marketing
 Export marketing
 Multinational
 Multi-regional marketing
 Global marketing
Let us now study the various approaches in detail.

Sikkim Manipal University Page No. 364

Marketing Management Unit 15

 Domestic marketing – It is referred to as marketing aimed at a single

market in which the firm faces a single set of competitive, economic, and
market issues and must deal with customers defined by geographic
boundary. This is essentially a single country marketing strategy.
 Export marketing – The definition and scope of export marketing starts
when a firm decides to undertake marketing activities beyond its
domestic market or from its base market. This is a situation when
products are shipped from one country to another country for the
purpose of marketing. The company not only concentrates on business
in the domestic market but also markets on business in different
countries.
 Multinational marketing – The multinational marketing results in the
development of MNCs like Unilever, Kodak, Procter and Gamble. They
operate in many countries and have developed assets abroad and
market products and services across many geographic boundaries.
They compete by developing multi-domestic strategies for each country
to suit their business operations to that country’s marketing conditions.
 Multi-regional marketing – It leads to multi-regional marketing. As you
have seen above, multinational marketing often leads to individualised
marketing strategies for host country adaptability. It is also wastage of
scarce resources leading to diseconomy of scale of operation. So
companies are looking at multi-regional marketing for achieving their
economies of scale and higher productive utilisation of resources.
Country operations are now grouped region wise, depending on the
similarity of product market situations. Strategies for multi-regional
marketing cover many similar regions like South East Asia, Pan Pacific
regions, European markets, etc. Such integrations are based on either
similar product market situations or on the basis of liberal trade pacts
between two countries.
 Global marketing – A global marketing strategy is the creation of a
single marketing strategy at a global scale. It involves creation of a
single strategy for a product or service or a corporation for the entire
global market, which encompasses many markets at the same time and
is aimed at leveraging the commonalities across many markets. While in
other cases, marketing strategies were tailored to the specific product

Sikkim Manipal University Page No. 365

Marketing Management Unit 15

market situation in that country, global marketing strategies serve as a

guideline throughout the world market.

Activity 1
Liberalisation has helped Indian companies to go global. Conduct a study
on what policy changes in the Indian market has led to increase in global
marketing.

Self Assessment Questions

9. If a company sells its product only in the Indian sub-continent, it is
involved in ___________ marketing.
(a) Domestic
(b) Multinational
(c) Multi-regional
(d) Global
10. Unilever follows a global marketing strategy to sell its products and
services. (True/False)
11. In export marketing, the product is adapted as per the culture of the
recipient country. (True/False)

15.6 International Product Policy

The demand patterns and benefits sought by consumers vary across
different product markets in the context of an international market. A
marketing manager planning to go global has to:
1. Identify the need for product planning
2. Take a decision about product adaptation versus standardisation
Need for product planning
Consumers will buy only what suits them. This may not be what the
company is presently manufacturing. What is acceptable in India may not be
accepted in foreign markets. Again, what is acceptable in Germany may not
be acceptable in the UK. Tastes may differ. This may be important
especially in the case of manufactured food products. There are
100 varieties of Nescafe to suit the tastes of people in different countries.
Thus, export marketers need a different approach to product planning.

Sikkim Manipal University Page No. 366

Marketing Management Unit 15

Product adaptation
A product that is perfectly good for one market may have to be adapted for
another. There can be many reasons for this. Physical conditions may be
different. Functional requirements may vary from market to market. People
in different places may use products differently or for different purposes. The
outdoor garden furniture would require a different type of finish as compared
to furniture used indoors. Again, a manufacturer of men’s suits has to take
into account that the arms of Frenchmen tend to be longer in proportion to
the rest of their bodies than those of Germans. In some cases, cultural
factors are very important. A very simple and visible example can be seen in
case of automobiles. American automobile majors like Ford and GM
manufacture left hand drive vehicles while they also manufacture right hand
drive vehicles for India. Figure 15.2 depicts a Ford car with steering on the
left side and figure 15.3 depicts a Ford car with steering on the right side-the
model that is sold in countries like India.

Fig. 15.2: Ford Car with Left Hand Drive

(Source:
http://imganuncios.mitula.net/used_2010_ford_focus_c_max_for_sale_
94982815419174805.jpg)

Sikkim Manipal University Page No. 367

Marketing Management Unit 15

Fig. 15.3: Ford Car with Right Hand Drive

(Source: http://www.autoindiaforum.com/wp-content/uploads/2009/03/ford-
ikon-2.jpg)

Product standardisation
Even though product adaptation becomes inevitable in the case of certain
products, it should be realised that there is sound economic logic behind a
product policy, which suggests uniformity in all markets. There are various
factors in favour of international product standardisation as per the following:
 Economies of scale in production – When only one standard version
is marketed in all the areas, it will be possible to have larger production
runs, which will result in lower manufacturing costs.
 Economies in product research and development – Similarly,
product standardisation will allow recovery of the costs incurred in
product research and development from the entire sales. This will
reduce the recovery period and also lower the break-even point.
Moreover, additional expenditure on adapting product to each individual
market can be avoided.
 Consumer mobility – Consumers are becoming increasingly more
mobile and transcontinental travel is now fairly common. A consumer,
who is loyal to a particular brand in his/her home market, is more likely
to remain loyal even in a foreign country when the product is the same.
 Made-in-image – When the name of a country is associated with a high
standard of quality in the minds of the consumers, a product
manufactured in that country may enjoy a psychological premium in the
foreign markets.

Sikkim Manipal University Page No. 368

Marketing Management Unit 15

 Impact of technology – Industrial products generally tend to have

standard specifications and do not require much adaptation for foreign
markets, unless climatic and similar considerations call for it.
The basic argument in favour of uniform multinational product strategy is
that it is least costly, in terms of both manufacturing and marketing costs for
the company. Pepsi and Coca-Cola are two outstanding examples, which
offer the same product and follow identical promotional themes in all the
markets. Therefore, the question before the management would be to find
out how far uniformity would be feasible, and at the same time, a profitable
strategy.
Figure 15.4 depicts an image of Samsung 3D LED television. Samsung sells
the same product without any changes throughout the world.

Fig 15.4: Samsung Sells the Same 3D LED TV Across the Globe
(Source: http://www.samsungtvrepair.biz/wp/wp-content/uploads/home-tv-
repair-samsung.jpg)

Self Assessment Questions

12. Tide sells detergent jars in the western market but sachets and packets
in India. It is an example of product ________________.
13. Increasing globalisation can be one of the reasons of opting for product
standardisation. (True/False)

15.7 International Promotions Policy

In case a firm wants to export directly, it will have to bring its product to the
notice of potential buyers. But this is a more difficult task than the

Sikkim Manipal University Page No. 369

Marketing Management Unit 15

corresponding task in domestic marketing for three main reasons. They are:
 The exporter does not have sufficient information as a basis for making
promotional decisions
 Customer abroad has no previous knowledge of the firm and its
products
 Only limited effort is possible because of resource constraint
Various elements of the promotion mix used in international marketing are
discussed in the following subsections.
15.7.1 Advertising
The basic difference between domestic and international advertising and
promotion is essentially a cross cultural communication and, therefore,
international promotion will have to take into account the social customs,
attitudes, beliefs, and other similar factors. Of the various means of
promotion, such as advertising, direct mailing, point of purchase displays,
trade fairs and exhibitions, advertising is the most susceptible to such
sociological differences.
Figure 15.5 depicts a Volkswagen Jetta’s print ad published in India. It has
been made keeping the Indian audience in mind.

Fig. 15.5: Volkswagen Jetta Ad

(Source:
http://files.coloribus.com/files/adsarchive/part_1482/14820905/file/volkswagen
-jetta-ravan-small-61179.jpg)

In the case of designing a campaign for the international market, the

advertiser will have to closely work with the advertising agency appointed to

Sikkim Manipal University Page No. 370

Marketing Management Unit 15

do the job. Three specific questions are to be answered in this connection.

They are:
1. What to communicate?
2. Whom to communicate?
3. How to communicate?
What to communicate depends on the corporate objective related to the
advertising campaign. The objective may be to increase sales, establish the
brand name, indicate market presence, etc.
Market segment identification is what is meant by the question of target
audience. The segmentation base for consumer products may be age, sex,
income, and other relevant marketing variables.
How to communicate concerns the choice of media. There are various
media available, especially in the developed countries, such as TV, radio,
specialised journals, and cinemas.
15.7.2 Direct mailing
One of the most cost effective methods of promotion is the direct mailing
method. Two distinctive features of direct mailing method are:
1. It is selective
2. It is personal
It is selective because the approaches are made directly to only those who
have been identified as the target audience.
It is personal because the letter and other publicity materials are mailed
either by name or by designation to the identified receiver.
The cost involved in direct mailing is the lump sum cost of producing the
publicity material, plus the cost of each letter, envelope, and the postage.
Considering that all letters will not be responded to, the real cost should be
calculated on cost per response.
15.7.3 Personal selling
Though the oldest method, it continues to be the most widely used and
effective means of reaching the buyers. This involves an alive, immediate,
and interactive relationship between two or more persons.
Personal selling can also cultivate long-term personal relationship with the
customer. Personal selling can also be used mainly in industrial markets for
selling technical goods, such as machinery and equipment.
Sikkim Manipal University Page No. 371
Marketing Management Unit 15

15.7.4 Sales promotion

Another increasingly popular method is stores promotion where a country’s
merchandise is promoted by a chain or a department store. India had earlier
arranged such promotion in association with Bloomingdales in U.S.A. and
Gallerie Laffaitte in Paris. The most important event in the category of stores
promotion for Indian products, however, was the ‘Expedition India’
organised by one of the largest US Chain Stores, J.C. Penny, along with
their Indian associate Banaras House. Air India and Government of India
Tourist Office also collaborated in this venture.
15.7.5 Trade fairs and exhibitions
Fairs and exhibitions constitute the means of presenting goods and services
in an attractive manner with the aid of colour, light, and motion, in order to
catch the imagination of the visitors, attract their attention, and get them
interested in the objects displayed. They help reach the public which may
not be reached in any other way or which by nature would disregard other
media of publicity. Fairs are more useful for industrial products where
demonstration is very effective.
The India Trade Promotion Organisation participates in nearly 40
international fairs and encourages participation by Indian parties. ITPO
organises India International Trade Fair that is held in New Delhi every year.
Businesses from different countries display their products in the event.
Figure 15.6 depicts a snapshot of India International Trade Fair.

Fig. 15.6: A Snapshot of Indian International Trade Fair, New Delhi

(Source:
http://2.bp.blogspot.com/_BJSXUuHCCvM/SwOdY9ZV8XI/AAAAAAAAANk/
Z4kB_Lf_gUM/s1600/Pragati_Maidan,_inside_hall_18_(3).JPG)

Sikkim Manipal University Page No. 372

Marketing Management Unit 15

Activity 2
What are the various export promotion councils in India and how do they
help in promoting opportunities for Indian marketers across the globe?
Prepare a report on this.

Self Assessment Questions

14. The most important part of international advertising is ______________
communication.
(a) Product
(b) Cross-cultural
(c) Quality
(d) Benefits
15. Direct mailing is a non-personal and secretive method of product
promotion. (True/False)
16. India International Trade Fair is organised by the _______________.

15.8 International Branding

The traditional orientation of branding suggests that brand name is a part of
the brand consisting of words or letters that form a means to identify and
distinguish a firm's offer. A brand mark is the symbol or pictorial diagram
that helps in the identification of the product.
There are generic brand names that have become a generically descriptive
term for a class of products like Nylon, Aspirin, Kerosene, and Zipper.
A trademark is a brand mark to which the owner legally claims exclusive
access. Trademark protection confers the exclusive right to use brand name
with any trademark, logo, slogan, or product name aberrations.
Branding strategies
There are four recognised branding strategies:
1. Corporate umbrella branding
2. Family branding
3. Range branding
4. Individual branding
Let us now study the four recognised branding strategies in detail.

Sikkim Manipal University Page No. 373

Marketing Management Unit 15

1. Corporate umbrella branding – It is used by firms such as Heinz,

Kellogg's, and Cadbury’s. The corporate name is used as the lead name
for all their products, for example Kellogg's Healthwise, Kellogg's
Frosties, Kellogg's Corn Flakes.
2. Family umbrella – Names are used to cover a range of products in a
variety of markets. For example, Marks and Spencer use their St
Michael brand for food, household goods, and toiletries.
3. Range branding – It is used for a range of products with a particular link
in a specific market. For example, GlaxoSmithKline uses brand Horlicks
for its range of health foods.
Figure 15.7 depicts the range of Horlicks products that includes health
drinks for adults, teenagers, women, and kids, and biscuits.

Fig. 15.7: Range of Horlicks Products

(Source: http://2.bp.blogspot.com/-OdfSnK_Dnk0/TMXOQ3I_-
BI/AAAAAAAACck/txvSKr1rdv0/s1600/horlicks+megabrand.jpg)

4. Individual brand – Names are used with individual products in a

particular market, with different weights, colours, flavours, and pack
sizes. Procter & Gamble and Unilever use individual brand names such
as Clinic Plus, Ariel, and Ponds with no reference to the corporate
name.
Brand piracy
One of the most difficult challenges for brand management is dealing with
brand piracy. Research suggests that the problem of forgery of famous
brand names is increasing and many fake products have been found to
originate in developing countries, mainly the developing countries of Asia.
The issue of brand piracy is clearly costing international companies vast
revenues and the United States has led the way in insisting that

Sikkim Manipal University Page No. 374

Marketing Management Unit 15

governments crack down on the companies undertaking the counterfeiting.

The music industry has particularly suffered from illegal practices. A report
published by the International Federation of the Phonographic Industry
(IFPI) in 2003 showed that the illegal music market was worth USS4.6bn
(£2.8bn) globally. The myth of music piracy was of a victimless crime but the
IFPI reported that the money was going to support criminal gangs as well as
sucking out money from the legitimate music industry.

Self Assessment Questions

17. BMW uses ____________ branding policy.
(a) Corporate family umbrella
(b) Family umbrella
(c) Range
(d) Individual
18. Pampers and Rejoice are individual brands of ………………………..

15.9 Country of Origin Effects

Various factors like brand image, brand personality, brand associations, and
promotional messages influence the perception of customers about the
quality of a brand. One such factor that influences an individual’s perception
towards brands is the country where it is made. This is referred to as the
country of origin effects.
For example, Italian and German cars are world renowned, Japanese
electronics products and Swiss chocolates are popular among people.
Factors that contribute to the country image are:
 Economy of the country
 Technology
 Wealth index
 Regulatory mechanisms
 Government
 Business history
Let us now study the factors that contribute to the image of a country in
detail.

Sikkim Manipal University Page No. 375

Marketing Management Unit 15

 Economy – The level of economic growth acts as a key alternate for the
country’s other activities. You can see that all the countries mentioned
above as examples are highly industrialised and developed countries.
 Technology – This factor is generally, directly related to the level of
economic growth of the country. Higher the technological capability of a
country, more trusted will be its products, especially technical products.
 Wealth index – This refers to the perceived or actual overall wealth of a
country as indicated by the number of millionaires and billionaires, level
of consumption, size of the luxury and leisure industries, etc.
 Regulatory mechanisms – With the increasing popularity of
international marketing, the existence and competence of regulatory
mechanisms (like anti-piracy laws) have become a critical factor in
creating the image of a country.
 Government – Reputation of the government and its corporate
governance – how bureaucratic, transparent, corrupt or efficient is a
country’s government is instrumental in building the image of the
country.
 Business history – This refers to the development of business in a
country and what a country has specially been known for traditionally.
For example, India has always been known as agriculture based
country.

Self Assessment Questions

19. Technical products from India might not sell in U.S.A. as compared to
those from South Korea. (True/False)
20. Watches from Switzerland are considered to be one of the finest across
the globe. (True/False)

15.10 International Pricing

Pricing is a critical issue in international marketing, as the value of the
product will vary from market to market. For fixing export prices, the
minimum to be charged for exports is provided by direct costs and the
maximum is determined by ‘what the traffic will bear’. The following sources
may be utilised for finding out the level, which the traffic can bear.

Sikkim Manipal University Page No. 376

Marketing Management Unit 15

 Previous files, if the firm has exported in the past, with suitable
adjustment for the possible inflation in the target market.
 Average unit price realised for exports made to different markets from
the Monthly Bulletin of Foreign Trade Statistics – Exports.
 Average unit price paid by importers in the target market to the various
suppliers from its import statistics.
 A visit to trade fairs.
 A reference to the departmental store catalogues which give the retail
prices of the various goods sold by them.
Another point to be noted while pricing for exports is that like domestic
marketing, price is only one element of international marketing mix. Some
non-price factors to be considered in international marketing include the
following:
 Very often, importers do not have adequate confidence in the quality of
goods produced in India and other developing countries. For example,
Indians had to sell their storage batteries 10% cheaper in Saudi Arabia
than U.S. and European batteries, even though the quality was
comparable.
 If products are well differentiated and they have built up a brand image
for themselves, manufacturers are in a position to charge comparatively
higher prices. Brand names like Dunlop, HMT, Bata, GKW, Lucas, L&T,
Kirloskar, etc. have already built up a good image and these products
are able to realise a much higher price.
 People may be willing to pay a very high price, if the particular goods
catch their fancy. This applies particularly to handicrafts manufactured
by developing countries.
 It may be useful to note that it is easier to sell in developed countries
with a higher price tag but in developing countries, a lower price may
help in increasing sales. In general, price constitutes a barrier to
demand when it is too low just as much as when it is too high.

Self Assessment Questions

21. As _____________ of a product will vary in different markets, pricing
decisions are important in international marketing.
22. Price of a product is often linked to the image of the brand and
___________.
Sikkim Manipal University Page No. 377
Marketing Management Unit 15

15.11 Summary
Let us recapitulate the important concepts discussed in this unit:
 International marketing is the process of focusing the resources and
objectives of a company on marketing opportunities at international
level.
 The main approaches to international marketing include export
marketing, multinational marketing, and global marketing.
 Exporting is a mode of entry into international markets. Exporting to a
foreign country can be direct or indirect. Apart from this, other entry
strategies include joint venture, strategic alliance, direct investment,
contract manufacturing, and franchising.
 Multinational companies operate in different countries with a marketing
programme which can either be adaptable to a specific country’s market
situation or by standardising the offer across the globe.
 The international marketing programme takes into account issues like
product planning, pricing decisions, mode of entry, and promotion mix
decisions for international market entry.
 The basic difference between domestic and international promotion is
that the latter is essentially a cross cultural communication.

15.12 Glossary
Brand piracy: The act of naming a product in a manner which can result in
confusion with other better known brands.
Contract manufacturing: A firm that manufactures components or
products for another "hiring" firm.
Domestic marketing: It is a form of marketing in which the firm faces only
one set of competitive, economic, and market issues.
Global marketing: The performance of business activities that direct the
flow of goods and services to consumers or users in more than one nation.
International marketing: It is the performance of marketing across two
different countries.
Multinational marketing: It is the marketing activity of MNCs, done through
direct investment and asset creation across geographic boundaries.

Sikkim Manipal University Page No. 378

Marketing Management Unit 15

Stakeholders: A person, group, or organisation that has direct or indirect

stake in an organisation because it can affect or be affected by its actions,
objectives, and policies.

15.13 Terminal Questions

1. How is international marketing different from domestic marketing?
2. List the factors that influence the product mix in international marketing.
3. “The use of media requires global adaptation.” Do you agree? Justify
your answer by giving suitable examples.
4. Will the pricing and product policy of a multinational firm be different in a
developed and an underdeveloped country? Justify your answer.
5. Design strategies for international market place for a company
marketing Indian handicrafts.
6. Describe the Country of Origin effects.

15.14 Answers

Self Assessment Questions

1. False
2. Technical
3. True
4. True
5. (c)
6. (b)
7. Direct
8. Franchising
9. (c)
10. False
11. False
12. Adaptation
13. True
14. (b)
15. False

Sikkim Manipal University Page No. 379

Marketing Management Unit 15

16. India Trade Promotion Organisation

17. (a)
18. P&G
19. True
20. True
21. Value
22. Quality

Terminal Questions
1. Domestic marketing focuses on a single nation whereas international
marketing focuses on more than one nation. For more details, refer
section 15.2 and 15.5.
2. The target audience, their needs, government regulations, culture, etc
influence international product mix. For more details, refer section 15.6.
3. The social and cultural system of every country is different, hence
adaptation is required. For more details, refer section 15.7.
4. Yes, the strategies will differ because of the differences in purchasing
power. For more details, refer section 15.6 and 15.10.
5. Product needs to be standard, priced, and promoted as per the country.
For more details, refer section 15.6, 15.7 and 15.10.
6. Consumer’s perception towards a brand is influenced by its country of
origin. For more details, refer section 15.9.

15.15 Case Study

Microsoft Re-Thinks its Unified Pricing Strategy

Microsoft is studying ways to offer its software at different price points
around the world, signaling a possible departure from its unified global
pricing practice.
Although it has already made pricing concessions in some isolated cases,
such as Thailand, where competitive pressure from open source products
had been mounting, the Redmond, Washington-based vendor has generally
stuck to a system where its products are priced the same around the world.

Sikkim Manipal University Page No. 380

Marketing Management Unit 15

Now, facing pressure for change from some customers, particularly in

emerging markets, Microsoft is working with governments in those countries
to price its software in a way that is relevant to that market, Martin Taylor,
general manager of platform strategy at Microsoft, said in a conference call
with financial analysts on Friday.
"From a pricing perspective, I think one of the most difficult challenges that
we work on is to really understand, let's call it this 'Big Mac' index, in terms
of how much does a Big Mac cost in India versus in New York versus in
Taipei, and how do you map a similar Big Mac index to software? It's a very
difficult problem," Taylor said, according to a transcript of the call.

Fig. 15.8: One of Microsoft’s Most Popular Products

(Source: http://pimisc.priceindia.in/software/wp
content/uploads/2008/10/microsoft-office-2007.jpg )

The Big Mac index is an annual listing of prices for Big Mac hamburgers in
several countries compiled by The Economist magazine.
One problem for Microsoft is that, unlike hamburgers, software doesn't spoil,
which makes it easier for buyers to shop around for a better deal and buy
their software from another country. To address this, Taylor suggested that
Microsoft could offer different prices for the different language editions of its
products.
"English speaking is an area that we have to really think about," he said.
"When you have markets where you have specific languages then it's a little
bit easier to do."
Microsoft is working with several unspecified governments to tailor its
offerings, Taylor said. "We've got quite a few different initiatives that we're

Sikkim Manipal University Page No. 381

Marketing Management Unit 15

beginning to work on that we'll be announcing in the coming months," he

said. Taylor didn't provide specifics.
The problem Taylor and his company are facing is a tough one, said Laura
DiDio, a senior analyst at Boston-based The Yankee Group.
"I can absolutely see and sympathise with what he is grappling with. What
can you do? You want to make your products affordable, particularly to
companies in the Pacific Rim, because they just don't have the money, and
then what do you say to your customers in established markets such as
North America and Western Europe?" DiDio said.
DiDio expects Microsoft to come up with a solution for its woes. Not only will
it negotiate on pricing or offer tailored version of its software for various
countries, it will also talk to governments about jobs the company has
created in their region, bring in Chairman and Chief Software Architect Bill
Gates for some star power, and the Bill and Melinda Gates Foundation may
even contribute to a local cause, she said.
"I don't want to suggest that Bill Gates is using his charity as leverage to get
Windows in anywhere, but it certainly does help," she said.
Paul DeGroot, an analyst at Directions on Microsoft Inc. in Kirkland,
Washington, doesn't expect Microsoft to change its global pricing strategy
overnight, but does see some changes happening at the local level.
Discussion Question:
1. Why does Microsoft want to rethink its unified pricing strategy?
(Hint: Due to increasing pressure from environmental conditions in
different countries, Microsoft wants to do away with its unified strategy.)
(Source: infoworld.com)

References:
 Tapan, P. K. (2010). Marketing Management: Excel Books, New Delhi.
 Vasudeva, P.K. (2006). International Marketing, 3rd Edition, Excel Books,
New Delhi.
 Cateora and Graham (2007). International Marketing, McGraw Hill.

Sikkim Manipal University Page No. 382

Marketing Management Unit 15

E-References:
 http://worldacademyonline.com/article/23/111/nature_of_international_m
arketing.html – Retrieved on February 18, 2012
 http://en.reingex.com/Product-Policy.shtml – Retrieved on February 18,
2012
 http://en.reingex.com/Export-Prices.shtml – Retrieved on February 18,
2012

_________________

Sikkim Manipal University Page No. 383