MKT-312 International Marketing For EMBA PDF

Study Note
International Marketing
Prepared by
Ahmed Sabbir
Prepared according to the Course Curriculum of

EMBA Program of PSTU
Unit-I
Introduction to International Marketing
Marketing Marketing is the delivery of customer satisfaction at a profit-it is the simplest definition.
It basically involves-
 Identify needs of the customer.
 Find or develop product/service that can satisfy the needs.
 Maintain customer relation.
International International marketing is the performance of business activities designed to plan, price,
Marketing Defined promote, and direct the flow of a company’s goods and services to consumers in more than one
nation for a profit.
Example, considering Apple - the tech giant designs its iPhone in California; outsources
its manufacturing jobs to different countries like - Mongolia, China, Korea, and Taiwan;
and markets them across the world. Apple have not restricted its business to a nation,
rather expanded it to throughout the world.
The International The international marketer’s task is more complicated than that of the domestic marketer
Marketing Task because the international marketer must deal with at least two levels of uncontrollable
uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all
business environments, but each foreign country in which a company operates adds its
own unique set of uncontrollable factors.
Figure 1.1 illustrates the total environment of an international marketer.

 The inner circle depicts the controllable elements that constitute a marketer’s
decision area.
 It includes internal/company environment, which is under marketing manager’s
control. Decision regarding
 Utilization of resources
 Product
 Price
 Distribution channel
 Promotion
 The controllable elements can be altered in the long run and, usually, in the short
run to adjust to changing market conditions, consumer tastes, or corporate
objectives.
 The second circle encompasses those environmental elements at home that have
some effect on foreign-operation decisions.
 Elements of domestic environment are:
 Political and legal force
 Economic-(Tax, VAT, incentives by government, etc)
 Technological Level
 Competitive structure
International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 2|

 The outer circles represent the elements of the foreign environment for each
foreign market within which the marketer operates. The elements of foreign
environment is uncontrollable. Such elements are:
 Economic forces
 Political/Legal forces
 Cultural forces-Cultural adaption, cultural differences.
 Geography and infrastructure
 Technological Level
 Competitive structure
 Structure of distribution
These forces constitute the principal elements of uncertainty an international marketer
must cope with in designing a marketing program.
Cultural The task of cultural adjustment, however, is the most challenging and important one
Adjustment confronting international marketers; they must adjust their marketing efforts to cultures
to which they are not attuned.
International marketers must:
 adjust marketing efforts to cultures which they are not attuned to
 be aware of frames of reference they are using in making decisions or evaluating the
potential of the market
– An important factor in determining or modifying a marketer’s reaction to
situations—social and even nonsocial.
– Cross-cultural misunderstandings can also occur when a simple hand gesture
has a number of different meanings in different parts of the world. When
wanting to signify something is fine, many people in the United States raise a
hand and make a circle with the thumb and forefinger. However, this same hand

gesture means “zero” or “worthless” to the French, “money” to the Japanese,
and a general sexual insult in Sardinia and Greece.
Major Obstacles: The key to successful international marketing is adaptation to environmental differences
The Self-Reference from one market to another. Adaptation is a conscious effort on the part of the
Criterion and international marketer to anticipate the influences of both the foreign and domestic
Ethnocentrism uncontrollable factors on a marketing mix and then to adjust the marketing mix to
minimize the effects.
The primary obstacles to success in international marketing are a person’s self-reference

criterion (SRC) and an associated ethnocentrism.
The Self-Reference Criterion

Unconscious reference to one’s own cultural values, experiences, and knowledge
as a basis for decisions
Example: Religious Values
The SRC refers to the assumption that what is suitable for the home market will be
suitable for the foreign market and therefore there is no need to test whether or not the
product should be altered. That means, having sold a product successfully in the
domestic market a firm may assume that the product will, without adaptation, also be
successful in foreign markets.
In international marketing scenarios, in different cultural environments and hence a self-

referenced behavior may not be the “correct” behavior from the perspective target
culture. Hence realization of these differences of culture and the possibility of self-
reference criterion is important in international marketing.
It is of crucial importance when examining foreign markets that the culture of the country
is seen in context of the country. It is better to regard the culture as different from, rather
than better or worse than, the home culture. e.g.: Like McDonalds when entered India
they sold product aloo tikki burger in spite of their beef burger.
It is very important to understand cultural differences, otherwise we will fail to recognize

the need to take action, discount the cultural differences that exist among countries or
react to a situation in a way that is offensive to our host.
To counter the impact of the self-reference criterion, the corporation must select
appropriate personnel for international assignments and engage in sensitivity training.
Ethnocentricism
A belief that one’s own culture is superior and that all other cultures are inferior
It is the notion that people in one’s own company, culture, or country know best
how to do things.
Example: “America is the best”
Where the ethnocentric attitude exists, senior management view domestic techniques and
employees as superior to foreign and the most effective in the business. The domestic
business is seen as its priority and view overseas sales as addition to its domestic sales.

A business with this attitude typically identifies markets where demand and culture is
similar to the domestic market.
Cross Country Cross cultural is a comparison of a culture with one or more other cultures. The purpose
Analysis is to provide detailed information about the development of others in their own cultures
and compare this development across cultures. The comparison looks at not only what is
different between the cultures, but also what is similar or universal among them.
Cross-cultural marketing is defined as the strategic process of marketing among

consumers whose culture differs from that of the marketer’s own culture at least in one
of the fundamental cultural aspects, such as language, religion, social norms and values,
education, and the living style.
Cross-cultural marketing demands marketers to be aware of and sensitive to the cultural

differences; to respect the right to culture by the consumers in various cultures and
marketplaces, marketers should understand that they deserved the right to their cultures.
If the marketers want to be the winners in the cross-cultural marketing they must create
the marketing mix that meets the consumer’s values on a right to their culture.
Stages of Once a company has decided to go international, it has to decide the degree of marketing
International involvement and commitment it is prepared to make. There are five stages of
Marketing international marketing involvement.
Involvement
1. No Direct Foreign Marketing:

 Company does not actively pursue customers in foreign markets, but receives
them through unintended channels
 Products are bought abroad through domestic wholesalers/distributors, website
on the internet
2. Infrequent Foreign Marketing:
 Company sells to foreign markets only when a temporary surplus of product
exists
 As domestic demand increases and absorbs surpluses, foreign sales activity is
reduced or even withdrawn.
 Few companies fit this model because of the need to develop long term
relationships in foreign countries
 For example, rice market in Bangladesh of India.
3. Regular Foreign Market:
 Companies produce their products and services to primarily sell domestically,
but also internationally.
 At this level, the firm has permanent productive capacity devoted to the
production of goods and services to be marketed in foreign markets.
 A firm may employ foreign or domestic overseas intermediaries, or it may have
its own sales force or sales subsidiaries in important foreign markets.
 The primary focus of operations and production is to service domestic market
needs.
 As overseas demand grows, production is allocated for foreign markets
 Products may be adapted to meet the needs of individual foreign markets

 Profit expectations from foreign markets move from being seen as a bonus in
addition to regular domestic profits to a position in which the company becomes
dependent on foreign sales and profits to meet its goals.
 For example, Toyota
4. International Marketing:
 Companies in this stage are fully committed to and involved in international
marketing activities.
 Such companies seek markets all over the world and sell products that are a
result of planned production for markets in various countries.
 This planning generally entails not only the marketing but also the production of
goods outside the home market.
 At this point, a company becomes an international or multinational marketing
firm.
 For example- Uniliver, Nestle do their business according to this phase etc.
5. Global Marketing:
 Companies that treat the world, including their home market, as one market.
 Market segments are defined by income levels, usage patterns, or other factors
that frequently span countries and regions
 For example, Coca-Cola, IBM, Microsoft etc.
Difference between Licensing Franchising

Licensing and Licensing is an arrangement in which a Franchising is an arrangement in which
Francizing company (licensor) sells the right to use the franchisor permits franchisee to use
intellectual property or produce a business model or brand name for a fee, to
company's product to the licensee, for conduct business, as an independent
royalty. branch of the parent company
(franchisor).
Licensee operate just like licensor Use of brand name but may have efficient
resource and production facility.
In case of licensing, the licensee bears In case of franchising, the franchiser does
the developmental cost and the risk not bear the development cost and the risk
associated with launching foreign of commencing operations overseas,
operations. because such costs are expected to be
borne by the franchisee only.
It is a permanent contract It is term based contract
In this case, licensee firm remit profit. Franchising firm does not remit profit.
Example, Coca-Cola Example: KFC

Unit-II
Dynamic Environment of International Marketing
Balance of Trade A ‘balance of trade’ is a relationship between the country’s imports and exports, in
monetary value.
The term "Balance of Trade" may be defined as, the difference in value between the total
exports and total imports of a nation during a specific period of time.
A positive balance is known as a trade surplus if it consists of exporting more than is

imported; A negative balance is referred to as a trade deficit or, informally, a trade
gap.
Balanced Trade means “A condition in which an economy runs neither a trade
surplus nor a trade deficit.”
Balance of Balance of Payments (BoP) is an accounting record of all monetary transactions

Payments (BoP) between a country and the rest of the world. These transactions include payments for
the country's exports and imports of goods, services, and financial capital, as well as
financial transfers.
It is used to summarize all international economic transactions for that country
during a specific time period, usually a year.
The balance of payments is an indicator of the international economic health of a
country. Its data help government policymakers plan monetary, fiscal, foreign
exchange, and commercial policies. Such data can also provide information for
decisions in international marketing. Two important decisions for a firm are the
choice of location of supply for foreign markets and the selection of markets to sell
to. Balance-of payments analysis can show which nations are importers and exporters
of the products in question. The firm can thus identify its own best import and export
targets that are, countries to sell to and countries to supply from.
Simply, BOP is the difference between receipt and payments.
Receipt:
 Mechanize export sales
 Money spent by foreign tourists
 Transportation
 Payments of dividend and interest for FDI abroad.
 New foreign investment
Payment
 Cost of goods imported
 Overseas Spending of tourists
 New overseas investment
 Cost foreign military and economic aid

Component of A balance-of-payments statement includes three accounts:
BOP  Current account , a record of all merchandise exports, imports, and services
plus unilateral transfers of funds;
 Capital account , a record of direct investment, portfolio investment, and
short-term capital movements to and from countries; and
 Reserves account, a record of exports and imports of gold, increases or
decreases in foreign exchange, and increases or decreases in liabilities to
foreign central banks. Of the three, the current account is of primary interest
to international business.
Protectionism It means the restriction of imports into a country by government measures.

“Protectionism” may be defined as, Government actions and policies that restrict or
restrain international trade, often done with the intent of protecting local businesses
and jobs from foreign competition.
Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to
local businesses and direct state intervention.
Arguments for (1) Protection of an infant industry,
protectionism: (2) Protection of the home market,
(3) Need to keep money at home,
(4) Encouragement of capital accumulation,
(5) Maintenance of the standard of living and real wages,
(6) Conservation of natural resources,
(7) Industrialization of a low-wage nation,
(8) Maintenance of employment and reduction of unemployment,
(9) National defense,
(10) Increase of business size, and
(11) Retaliation and bargaining
Disadvantages There are also weaknesses in using the system of protectionism.

of Trade  Protectionism can cause a retaliations reaction from other countries, ruining
Protectionism the relationship of the two nations. This is a major issue right now between
the United States and China. U.S. put restrictions on the Chinese tires, so
China retaliated by putting up barriers against different U.S. goods, such us
their chicken. This hostility decreases the specialization level of the two
nations, harming their economy.
 In the long term, trade protectionism weakens the industry. Without
competition, companies within the industry won't innovate and improve
their products or services.
 Protectionism prevents nations from maximizing their specialization level,
using up factors of production moronically inefficiently.
 Inefficiency of resource allocation
 Home industry gets extremely non-competitive.
 Trade protectionism is a great barrier for companies that are willing to
expand to other countries and are stopped due to these barriers.

Trade Barriers Trade barriers are restrictions on international trade imposed by the government.
They either impose additional costs or limits on imports and/or exports in order to
protect local industries.
Trade barriers can be
 Tariff Barriers
 Non-Tariff Barriers
A tariff, simply defined, is a tax imposed by a government on goods entering at its

borders. Tariffs may be used as revenue-generating taxes or to discourage the
importation of goods, or for both reasons. Tariff rates are based on value or quantity
or a combination of both.
In general, tariffs:
Increase Inflationary pressures.
Special interests’ privileges.
Government control and political considerations in economic matters.
The number of tariffs (they beget other tariffs via reciprocity).
Weaken Balance-of-payments positions.

Supply-and-demand patterns.
International relations (they can start trade wars).
Restrict Manufacturers’ supply sources.

Choices available to consumers.
Competition
In addition, tariffs are arbitrary, are discriminatory, and require constant

administration and supervision. They often are used as reprisals against protectionist
moves of trading partners.
Nontariff Barriers
Nontariff barriers include: quotas, levies, embargoes, sanctions and other
restrictions, and are frequently used by large and developed economies.
Types of Nontariff Barriers

Specific Limitations on Trade
 Quotas
 Import licensing requirements
– A quota is a specific unit or dollar limit applied to a particular type
of good.
– Great Britain limits imported television sets; Germany has
established quotas on Japanese ball bearings; Italy restricts Japanese
motorcycles; and the United States has quotas on sugar, textiles, and,
of all things, peanuts. Quotas put an absolute restriction on the
quantity of a specific item that can be imported.
– Import licenses limits quantities on a case-by-case basis,
– Japan and foreign rice; Banana wars between the United States and
the EU

 Proportional restrictions of foreign to domestic goods (local-content
requirements)
 Minimum import price limits
 Embargoes
Customs and Administrative Entry Procedures
 Valuation systems
 Antidumping practices
 Tariff classifications
 Documentation requirements, e.g., IRC
 Fees
Standards
 Standards disparities
 Intergovernmental acceptances of testing methods and standards
 Packaging, labeling, marking standards
Governmental Participation in Trade
 Government procurement policies
 Export subsidies
 Countervailing duties
 Domestic assistance programs
Charges on Imports
 Prior import deposit requirements
 Administrative fees
 Special supplementary duties
 Import credit discriminations
 Variable levies
 Border taxes
Others
 Voluntary export restraints (VER):
 Common in textiles, clothing, steel, agriculture, and automobiles, the VER is an
agreement between the importing country and the exporting country for a
restriction on the volume of exports.
 Japan’s VER on U.S. automobiles
 Orderly marketing agreements
Antidumping Anti-dumping duty is a tariff imposed on imports manufactured in overseas

Penalties countries and that are priced below the fair market value of similar goods in the
domestic market.
The government imposes anti-dumping duty on foreign imports when it believes that
the goods are being dumped in the domestic market.
Anti-dumping duty is imposed to protect local businesses and markets from unfair
competition by foreign imports.
International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 10 |

Unit-III
Cultural Dynamics
Culture Culture is sum of

 Values
 Belief-Belief in religion
 Behavior-each and every time activities
 Norms-Group activity
Culture is the sum of the values, rituals, symbols, beliefs, and thought processes
that are learned and shared by a group of people, then transmitted from
generation to generation.
Culture resides in the individual’s mind.
Elements of Five elements:

Culture
1. Values,
2. Rituals,
3. Symbols
4. Beliefs, and
5. Thought processes
International marketers must design products, distribution systems, and
promotional programs with due consideration of each of the five.
Cultural Values
Underlying the cultural diversity that exists among countries are
fundamental differences in cultural values, that is, the importance of things
and ideas.
Examples: individualism vs. collectivism, power distance, uncertainty
avoidance, masculinity/femininity.
The cultures of the nations differed along four primary dimensions:
– Individualism/Collectivism Index- which focuses on self-
orientation;
– Power Distance Index- which focuses on authority orientation;
– Uncertainty Avoidance Index- which focuses on risk orientation;
– Cultural Values and Consumer Behavior- which focuses on
assertiveness and achievement.
Rituals
Life is filled with rituals, that is, patterns of behavior and interaction that are
learned and repeated. The most obvious ones are associated with major
events in life. Marriage ceremonies and funerals are good examples.

Symbols
Culture is a system of symbols. Symbols are anything used to represent
express and stand for an event situation. Symbols direct to guide our
behavior.
Bowing head, whistling, winkling of eyes situation, all are the symbols, which
express a specific object idea about other. Baitullah is the symbol of God and
we pray to it. Other examples are flag, anthem, picture, statues are symbols.
– Language
 Linguistic distance
– Aesthetics as symbols
 Insensitivity to aesthetic values can offend, create a negative
impression, and, in general, render marketing efforts ineffective or
even damaging
Beliefs
It includes religion, superstitions, and their related power structures. Religion
impacts people’s habits, their outlook on life, the products they buy, the way
they buy them, even the newspapers they read.
Acceptance of certain types of food, clothing, and behavior are frequently
affected by religion, and such influence can extend to the acceptance or
rejection of promotional messages as well.
Superstition plays a much larger role in a society’s belief system in some parts
of the world, for example, in parts of Asia, ghosts, fortune telling, palmistry,
head-bump reading, phases of the moon, demons, and soothsayers are all
integral parts of certain cultures.
Thought Processes
The degree to which ways of thinking vary across cultures.
 Difference in perception
Asians tend to see the whole picture and can report details about the
background and foreground. Westerners alternatively focus on the
foreground and can provide great detail about central figures but see
relatively little in the background.
Influence of Consumption patterns, living styles, and the priority of needs are all dictated
Culture on
Consumpti
by culture. Culture prescribes the manner in which people satisfy their
on desires. Not surprisingly, consumption habits vary greatly. The consumption
of beef provides a good illustration. Some Thai and Chinese do not consume
beef at all, believing that it is improper to eat cattle that work on farms,
Eating habit, food preparation method is different in culture. The eating

habits of many people seem exotic to Americans. The Chinese eat such things
as fish stomachs and bird’s nest soup (made from bird’s saliva). The Japanese
eat uncooked seafood, and the Iraqis eat dried, salted locusts as snacks while
drinking. Food preparation methods are also dictated by culture preferences.
Asian consumers prefer their chicken broiled or boiled rather than fried.

Consequently, the Chinese in Hong Kong found American-style fried chicken
foreign and distasteful.
Not only does culture influence what is to be consumed, but it also affects
what should not be purchased. Muslims do not purchase chickens unless
they have been halalled, and like Jews, no consumption of pork is allowed.
Influence of In addition to consumption habits, thinking processes are also affected by

Culture on
Thinking culture. When traveling overseas, it is virtually impossible for a person to
Processes observe foreign cultures without making references, perhaps unconsciously,
back to personal cultural values. This phenomenon is known as the self-
reference criterion. Because of the effect of the SRC, the individual tends to be
bound by his or her own cultural assumptions.
Influence of The context of a culture is either high or low in terms of in-depth background
Culture on
Communic information. This classification provides an understanding of various cultural
ation orientations and explains how communication is conveyed and perceived.
Processes
North America and northern Europe (e.g. Germany, Switzerland and
Scandinavian countries) are examples of low context cultures. In these types
of society, messages are explicit and clear in the sense that actual words are
used to convey the main part of information in communication. The words
and their meanings, being independent entities, can be separated from the
context in which they occur. What is important, then, is what is said, not how
it is said and not the environment within which it is said.
Japan, France, Spain, Italy, Asia, Africa and the Middle Eastern Arab nations
in contrast, are high-context culture. In such cultures, the communication may
be indirect, and expressive manner in which the message is delivered
becomes critical. Because the verbal part (i.e. words) does not carry most of
the information, much of the information is contained in the nonverbal part
of the message to be communicated. The context of communication is high
because it includes a great deal of additional information, such as the message
sender’s values, position, background, and associations in the society. As
such, the message cannot be understood without its context.
Cultural • Being attuned to the nuances of culture so that a new culture can be
Sensitivity
and viewed objectively, evaluated and appreciated
Tolerance – Cultures are not right or wrong, better or worse, they are simply
different
– The more exotic the situation, the more sensitive, tolerant, and
flexible one needs to be

Culture Underlying the cultural diversity that exists among countries are
Values
fundamental differences in cultural values. The cultures of the nations
differed along four primary dimensions and that various business and
consumer behavior patterns can be closely linked to these four primary
dimensions.
Hofstede, who studied over 90,000 people in 66 countries, found that the
cultures differed along four primary dimensions
Individualism/Collective Index(IDV)
This refers to the strength of the ties that people have to others within their
community.
The Individualism/Collective Index refers to the preference of behavior that
promotes one’s self-interest. Cultures that are high in IDV reflect an “I”
mentality and tend to reward and accept individual initiative, while those low
in individualism reflect a “we” mentality and generally subjugate the
individual to the group.
Individualism pertains to societies in which the ties between individuals are
loose; everyone is expected to look after himself or herself and his or her
immediate family.
Collectivism as its opposite pertains to societies in which people from birth
onward are integrated into strong, cohesive groups, which throughout
people’s lifetime continue to protect them in exchange for unquestioning
loyalty. The collectivist side means that people like to belong to their social
framework and share the values of one’s groups. That is, people are
influenced by one’s family and the extended family consisting of neighbors
and relatives.
Power Distance Index(PDI)
The power distance index measures the tolerance of social inequality, that is,
power inequality between superiors and subordinates within a social system.
A high PDI score indicates that a society accepts an unequal, hierarchical

distribution of power, and that people understand "their place" in the system.
A low PDI score means that power is shared and is widely dispersed, and that
society members do not accept situations where power is distributed
unequally.
High power scores tend to indicate a perception of differences between
superior and subordinate and a belief that those who hold power are entitled
to privileges.
Uncertainty Avoidance Index(UAI)

The uncertainty avoidance index explains the intolerance of ambiguity and
uncertainty among members of a society.

Cultures with high UAI scores are highly intolerant of ambiguity, and as a
result tend to be distrustful of new ideas or behaviors. They tend to have a
high level of anxiety and stress and a concern with security and rule
following.
Cultures scoring low in uncertainty avoidance are associated with a low level
of anxiety and stress, a tolerance of deviance and dissent, and a willingness to
take risks.
Masculinity/Femininity (MAS)
The masculinity/femininity index refers to one’s desire for achievement and
entrepreneurial tendencies, and the extent to which the dominant values in
society are “masculine”.
Assertiveness, the acquisition of money and not caring for others, and the
quality of life or people are all cultural traits in countries with high MAS
scores.
Low-scoring cultures are associated with fluid sex roles, equality between the
sexes, and an emphasis on service, interdependence, and people.
Some cultures allow men and women to take on many different roles, while
others make sharp divisions between what men should do and what women
should do. In societies that make a sharp division, men are supposed to have
dominant, assertive roles and women more service-oriented, caring roles.
Subculture A subculture is a distinct and identifiable cultural group that has values in
common with the overall society but also has certain characteristics that are

unique to itself. Thus, subcultures are groups of people within a larger society.
Although the various subcultures share some basic traits of the wider culture,
they also preserve their own customs and lifestyles, making them
significantly different from other groups within the larger culture of which
they are a part. Indonesia, for instance, has more than 300 ethnic groups, with
lifestyles and cultures that seem thousands of years apart.
There are many different ways to classify subcultures. Although race or ethnic
origin is one obvious way, it is not the only one. Other demographic and social
variables can be just as suitable for establishing subcultures within a nation.

Unit-IV
Segmentation Targeting and Positioning
Global Market Market segmentation is the process of subdividing a market into distinct
Segmentation subsets of customers that behave in the same way or have similar needs.
Global market segmentation is the process of dividing the world market into
distinct subsets of customers that behave in the same way or have similar
needs.
Or, it is the process of identifying specific segments-whether they be country
groups or individual consumer groups-of potential customers with
homogeneous attributes who are likely to exhibit similar buying behavior.”
Bases for Geographic Segmentation:

Segmenting - Geographic segmentation calls for dividing the market into different
Market
geographical units.
- The advantage of geography is proximity: Markets in geographic
segments are closer to each other and easier to visit on the same trip or to
call on during the same time window.
- Geographic segmentation also has major limitations: The mere fact that”
markets are in the same world geographic region does not meant that they
are similar.
- Japan and Vietnam are both in East Asia, but one is a high income,
postindustrial society and the other is an emerging, less developed, pre
industrial society.
Demographic Segmentation
- Demographic segmentation-is based on measurable characteristics of
populations such as age, gender, income, education, and occupation.
- A number of demographic trends aging population, fewer children, more
women working outside the home, and higher incomes and living
standards-suggest the emergence of global segments.
- For most consumer and industrial products, national income is the single
most important segmentation variable and indicator of market potential.
- The World Bank segments countries into high income, upper middle
income, lower middle income, and low income.
Psychographic Segmentation
- In Psychographic Segmentation, segments are defined on the basis of
social class, lifestyle and personality characteristics.

- People in the same demographic group can exhibit very different
psychographic profiles.
- Psychographic variables include:
 Interests
 Opinions
 Personality
 Self-Image
 Activities
 Values
 Attitudes
Behavior Segmentation
- Behavior segmentation focuses on whether people buy and use a product,
as well as how often and how much they use it.
- Consumers can be categorized in terms of
 Usage rates for example, heavy, medium, light, and nonuser.
 User status: potential users, nonusers, ex-users, regulars, first-
timers, and users of competitors’ products.
Benefit Segmentation
- Benefit segmentation is the segmentation of the consumers based on what
particular benefit of the product appeals to them.
- Benefit segmentation in marketing considers that for a particular service
or product what is the value perceived, advantages or benefit that a
customer gets.
- This type of segmentation may be used in clothing, appliance, consumer,
cosmetic, and several other industries.
- Benefit segmentation can be used by mobile phone manufacturers to
divide their market into work-oriented customers, highly social
customers, and customers who consider mobile phones as a status
symbol. Highly social customers would expect mobile phones to be
durable, technologically advanced, and easy to use. Work-oriented
customers would prefer buying phones that are inexpensive and durable.
Mobile phones are considered as a status symbol by many people. They
expect their phone to be technologically advanced, expensive, sleek, and
stylish.
Vertical Versus Horizontal Segmentation

Horizontal segmentation means selling a product to a wide spectrum of consumers,
while vertical segmentation narrows your selling focus to target consumers in a
smaller demographic. Segmenting the marketing vertically means picking a specific
niche and trying to brand yourself as a product or service that specializes in that
niche.

Vertical segmentation is based on product category or modality and price
points. For example, in medical imaging there is X-ray, computed axial
tomography (CAT)” scan, magnetic resonance imaging (MRI), and so on.
Each modality has its own price points. One company decided to take a
different approach and segment the same market by the health care delivery
system: national research and teaching hospitals, government hospitals, and
so on. It then rolled out a campaign that was regional, national, and finally
global, which was tailored for each different type of health care delivery. This
horizontal segmentation approach worked as well in markets outside the
home-country launch market as it did in the home country.
Global Targeting is the act of evaluating and comparing the identified groups and
Targeting then selecting one or more of them as the prospect(s) with the highest
potential. Actually, Market targeting is nothing but selecting the best
profitable segment.
Criteria For The three basic criteria for assessing opportunity in global target markets are
Targeting the same as in single-country targeting.
1. Current Segment Size and Growth Potential
- Is the market segment currently large enough that it presents a
company with the opportunity to make a profit?
- If it is not large enough or profitable enough today, does it have
high growth potential so that it is attractive in terms of a
company’s long-term strategy?
2. Potential Competition
- A market or market segment characterized by strong competition
may be a segment to avoid or one in which to utilize a different
strategy. Often a local brand may present competition to the
entering multinational.
- In Peru, Inca Kola is as popular a Coca-Cola. In Bangladesh Mojo
is a same type soft drinks brand.
3. Compatibility and Feasibility
- If a global target market is judged to be large enough, and if
strong competitors are either absent or not deemed to represent
insurmountable obstacles, then the final consideration is whether
a company can and should target that market.
- In many cases, reaching global market segments requires
considerable resources such as expenditures for distribution and
travel by company personnel.
- Another question is whether the pursuit of a particular segment
is compatible with the company’s overall goals and established
sources of competitive advantage.

Selecting a There are three basic categories of target marketing strategies:
Global Target 1) standardized marketing,
Market 2) concentrated marketing, and
Strategy
3) Differentiated marketing.
Standardized Global Marketing

- Standardized global marketing is analogous to mass marketing in a
single country.
- It involves creating the same marketing mix for a broad market of-
potential buyers. This strategy calls for extensive distribution in the
maximum number of retail outlets.
- The appeal of standardized global marketing is clear: greater sales
volume, lower production costs, and greater profitability.
- Coca-Cola, one of the world’s most global brands, uses the appeal of
youthful fun in its global advertising. Its sponsorship program is
global and is adapted to events that are popular in specific countries
such as soccer in -other parts of the world versus football in the United
States.
Concentrated Global Marketing

- The second global targeting strategy involves devising’ a marketing
mix to reach a single segment of the global market. In cosmetics, this
approach has been used successfully.
- For example, winter halter (a German company) is a hidden champion
in the dishwasher market, but the company has never sold a
dishwasher to a consumer. It focuses exclusively on dishwashers for
hotels and restaurants. It offers dishwashers, water conditioners,
detergents, and service.
Differentiated Global Marketing

- The third target marketing strategy is a variation of concentrated
global marketing. It entails targeting two or more distinct market
segments with different marketing mixes. This strategy allows a
company to achieve wider market coverage.
- One of the world masters of differentiated global marketing is SMH,
the Swiss Watch Company. SMH offers watches ranging from the
Swatch fashion accessory watch at $50 worldwide to the $100,000.
- VW marketed cars for various target group. (Porshe, Skoda, VW golf
etc.)
Global Market Positioning is arranging for a product to occupy a clear distinctive

Product and desirable place relative to competing products in the minds of target
Positioning
consumers.

Positioning is what happens in the mind of the customer. The position that a
product occupies in the mind of a customer depends on a host of variables,
many of which “are controlled by the marketer.
Global High-tech and high-touch positioning are two strategies that can work well
product for a global product.
positioning
strategy High-tech Positioning
- High-tech products are sophisticated, technologically complex,
and/or difficult to explain or understand. (e.g., Cell phones and
audio/video components, automobiles are high-tech categories with
strong global positions).
- Such products are frequently purchased on the basis of concrete
product features, although image may also be important. Buyers
typically already possess or wish to acquire considerable technical
information.
- Marketing communication for high-tech products should be
informative and emphasize features.
- High-tech products may be divided into three categories:
 Technical products-Computers, chemicals, tires, and financial
services are just a sample of the product categories whose
buyers have specialized needs; require a great deal of product
information and who share a common “language.”
 Special-interest products- While less technical and more leisure
or recreation oriented, special-interest products also are
characterized by a shared experience and high involvement
among users. Again the common language and symbols
associated with such products can transcend language and
cultural barriers. Fuji bicycles, Adidas, and Nike Sports
equipment, Canon cameras are successful example of special
interest products.
 Demonstrable products- Products that “speak for themselves” in
advertising of features and benefits can also travel well.
High-touch Positioning
- Marketing of high-touch products requires less emphasis on
specialized information and more emphasis on image. Like high-tech
products, however, high-touch categories are highly involving for
consumers.
- Buyers of high-touch products also share a common language and set
of symbols relating to themes of wealth, materialism, and romance.
- The three categories of high-touch products are
 products that solve a common problem,

 Global village products- Channel fragrances, designer fashions,
mineral water, and pizza are all examples of products whose
positioning is strongly cosmopolitan in nature. In global markets,
products may have a global appeal by virtue of their country of
origin. The “American-ness” of Levis, Sony is a name
synonymous with vaunted Japanese quality.
 Products with a universal theme.

Unit-V
International Entry & Expansion Strategies
Decision Before doing any business internationally through sourcing, exporting,

Criteria for investing, or a combination of these strategies, the company must look at
International conditions in the potential country to analyze what the advantages,
Business disadvantages, and costs will be and whether it is worth the risk.
Political Risk
Political risk, or the risk of a change in government policy that would adversely
impact a company’s ability to operate effectively and profitably, is a deterrent to
expanding internationally. The lower the level of political risk, the more likely it
is that a company will invest in a country or market.
The difficulty of assessing political risk is inversely’ proportional to a country’s
stage of economic development: All other things being equal the less developed
a country, the more difficult it is to predict political risk. The higher the level of
income per capita, the lower the level of political risk.
Market Access
A key factor in locating production facilities is market access. If a country or a
region limits market access because of local content laws, balance-of-payments
problems, or any other reason, it may be necessary to establish a production
facility within the country itself.
Factor Costs and Conditions

Factor costs are land, labor, and capital costs. The cost of these factors depends
on their availability and relative abundance. Labor includes the cost of workers
at every level: manufacturing and production, professional and technical, and
management.
World factor costs that affect manufacturing can be divided into three tiers.
 The first tier consists of the industrialized countries where factor costs’
are tending to equalize.
 The second tier consists of the industrializing countries-for example,
Singapore, and other Pacific Rim countries-that offer significant factor
costs savings as well as an increasingly developed infrastructure and
political stability, making them extremely attractive manufacturing
locations.
 The third tier includes Russia and other countries that have not yet
become significant locations for manufacturing activity. Third-tier
countries present the combination of lower factor costs (especially

wages) offset by limited infrastructure development and greater political
uncertainty.
Shipping Considerations
In general, the greater the distance between the product source and the target
market, the greater the time delay for delivery and the higher the transportation
cost. However, innovation and new transportation technologies are cutting both
time and dollar costs.
For example, Acer, a Taiwanese company and the seventh largest producer of
computers, practices what it calls the “fast-food business model.” Using this
logistics strategy eliminates the minimum one- to two-month time lag for
shipping goods by sea and costly inventory expense and provides consumers
with the latest product.
Country Infrastructure
In order to present an attractive setting for a manufacturing operation, it is
important that the country’s infrastructure be sufficiently developed to support
a manufacturing operation.
The required infrastructure will vary from company to company, but minimally
it will include power, transportation and roads, communications, service and
component suppliers, a labor pool, civil order, and effective governance.
Foreign Exchange
Exchange rate an important criteria for international market decision making.
At any point in time, what has been an attractive location for production may
become much less attractive due to exchange rate fluctuation. The prudent
company will incorporate exchange volatility into its planning assumptions and
be prepared to prosper under a variety of exchange rate relationships.
Creating a The first step in choosing export markets is to establish the key factors
product profile influencing sales and profitability of the product in question. If a company is
for getting started for the first time in exporting, its product-market profile will
International most likely be based on its experience in the home market, which may or may
Entry not be relevant to the individual export markets being considered.
The basic questions to be answered can be summarized as the nine Ws:
1. “Who buys our product?
2. Who does not buy our product?
3. What need or function does our product serve?
4. What problem does our product solve?

5. What are customers currently buying to satisfy the need and/ or solve
the problem for which our product is targeted?
6. What price are they paying for the products they are currently buying?
1. When is our product purchased?
7. Where is our product purchased?
8. Why is our product purchased?
Any company must answer these critical questions if it is going to be successful
in export markets. Each answer provides an input into decisions concerning the
four Ps. Remember, the general rule in marketing is that, if a company wants to
penetrate an existing market, it must offer more value than its competitors-better
benefits, lower prices, or both. This applies to export marketing as well as
marketing in the home country.
Market Selection Criteria

Once a company has created a product-market profile, the next step in choosing
an export market is to appraise each possible market.
Six criteria should be assessed:
(1) Market potential: What is the basic market potential for the product?
To answer this question, secondary information is a good place to start.
Various market research firms (For example, Nielsen, Dunnhumby),
sales literature, catalogs, and technical bulletins should be considered
this secondary sources of information.
(2) Market access: This aspect of market selection concerns the entire set of
national controls that applies to imported merchandise and any
restrictions that the home-country government might have. It includes
such items as export license, import duties, import restrictions or quotas,
foreign exchange regulations, and preference arrangements.
(3) Shipping Costs and Time: Preparation and shipping costs can affect the
market potential for a product. if a similar product is already being
manufactured in the target market, shipping costs may render the
imported product uncompetitive. If it takes months for the product to
reach the target market and the product competes in a rapidly changing
category such as computers, alternative transportation strategies should
be considered. It is important to investigate alternative modes of
shipping as well as ways to differentiate a product to offset the price
disadvantage.
(4) Potential competition: Using a country’s commercial representatives
abroad can also be valuable. The commercial representative could
provide a very useful report based on a comparison of the company’s
product with market needs and offerings.

(5) Service requirements: If service is required for the product, can it be
delivered at a cost that is consistent with the size of the market?
(6) Product fit. With information on market potential, cost of access to the
market, and local competition, the final step is to decide how well a
company’s product fits the market in question. In general, a product fits
a market if it satisfies the criteria discussed previously and is profitable.
International The first issue that an expanding firm must address is whether to export or
Market Entry produce locally. In many emerging markets, this issue is resolved by a national
and Expansion policy that requires local production.
Decision Any company wishing to enter the market of such a country must source locally.
Model In high-income countries, local production is normally not required, so the
choice is up to the company.
Assuming that the choice is up to the company, the trade-offs for local versus
regional or global production are cost, quality, delivery, and customer value.
Costs include labor, materials, capital, land, and transportation. Scale economies
are an important factor in determining cost: For every product, there is some
minimum volume required to justify the investment required to establish a
production site. If the product is heavy, transportation costs are greater and
provide an incentive to locate production closer to the Customer. Offsetting
transportation costs are scale economies that result from spreading fixed costs
over a greater production volume.
1. Sourcing: Home, third, or host country?
Cost, market access, country of origin factors
2. In country or in-region marketing organization.
Cost, market impact assessment. If choice is to establish own
organization, must decide who to appoint to key positions.
3. Selection, training, and motivation of local distributors and agents.
4. Marketing mix strategy: Goals and objectives in sales, earnings, and
share of market positioning; marketing mix strategy
5. Strategy implementation
If a company decides to source locally, it has a choice of buying, building, or

renting its own manufacturing plant or signing a local contract manufacturer. A
contract manufacturer may be in a position to add production to an existing
plant with less investment than the manufacturer would require to achieve the
same volume of production. If this is the case, the contract manufacturer is in a
position to quote an attractive price.

Different types A company has four different modes of foreign market entry
of market – Exporting
entry strategies – Contractual agreements
– Strategic alliances
– Direct foreign investments
Exporting
- Exporting is just one strategy for a company that has decided to go
international.
- Exporting accounts for some 10% of global activity
 Direct exporting – the company sells to a customer in another country
 Indirect exporting – the company sells to a buyer (importer or
distribution) in the home country, who in turn exports the product
 The Internet
o Initially, Internet marketing focused on domestic sales
o A surprisingly large number of companies started receiving
orders from customers in other countries,
o Resulting in the concept of international Internet marketing (IIM)
 Direct sales-Particularly for high technology and big ticket industrial
prod
Contractual agreements
- Long-term,
- Non-equity association between a company and another in a foreign
market
 Licensing
- A means of establishing a foothold in foreign markets without large
capital outlays
- A favorite strategy for small and medium-sized companies
- Legitimate means of capitalizing on intellectual property in a foreign
market
 Franchising
- Franchiser provides a standard package of products, systems, and
management services
- Franchise provides market knowledge, capital, and personal
involvement in management
- Expected to be the fastest-growing market-entry strategy
 A strategic international alliance (SIA)

– A business relationship established by two or more companies to
cooperate out of mutual need

– To share risk in achieving a common objective
– SIAs are sought as a way to shore up weaknesses and increase
competitive strengths
– Firms enter SIAs for several reasons
o Opportunities for rapid expansion into new markets
o Access to new technology
o More efficient production and innovation
o Reduced marketing costs
o Strategic competitive moves
o Access to additional sources of products and capital
• Many companies entering SIAs

– To be in strategic position to be competitive
– To benefit from the expected growth in the single European
market
• International joint ventures (IJVs)
– A partnership of two or more participating companies that have
joined forces to create a separate legal entity
– Four characteristics define joint ventures
 JVs are established, separate, legal entities
 The acknowledged intent by the partners to share in the
management
of the JV
 There are partnerships between legally incorporated
entities such as companies, chartered organizations, or
governments, and not between individuals
 Equity positions are held by each of the partners

Direct Foreign Investment
• Factors that influence the structure and performance of direct
investments
– Timing
– The growing complexity and contingencies of contracts
– Transaction cost structures
– Technology transfer
– Degree of product differentiation
– The previous experiences and cultural diversity of acquired firms
– Advertising and reputation barriers
Export Selling vs. Export Marketing

– Export selling involves selling the same product, at the same price, with
the same promotional tools in a different place
– Export marketing tailors the marketing mix to international customers
– The only marketing mix element that differs is the place-that is, the
country where the product is sold. This selling approach may work for
some products or services; for unique products with little or no
international competition, such an approach is possible. Similarly,
companies new to exporting may initially experience success with
selling. However, as companies mature in the global marketplace or as
new competitors enter the picture, it becomes necessary to engage in
export marketing.
In global marketing, the issue of customer value is inextricably tied to the

sourcing decision. If customers are nation elastic, they may put a positive value
on the feature “made in the home country. Such preferences must be identified
using market research and factored in to solve for value in the equation.
Global companies succeed by convincing customers in world markets that it is

their brand that signifies value and quality, not the country or origin. A
successful global company can source its product from any location: The
customers trust the brand and don’t care about the country of origin.
Exporting Decision Criteria

Export marketing targets the customer in the context of the total market
environment. The export marketer does not take the domestic product “as is”
and simply sell it to international customers. To the export marketer, the product
offered in the home market is a starting point. It is modified as needed to meet
the preferences of international target markets.

Similarly, the export marketer sets prices to fit the marketing strategy and does
not merely extend home-coup-try pricing to the target market. Charges incurred
in export preparation, transportation, and financing must be taken into account
in determining prices. Finally, the export marketer also adjusts strategies and
plans for communications and distribution to fit the market.
Export marketing is the integrated marketing of goods and services that are
destined for customers in international markets.
Export marketing requires.

1. An understanding of the target market environment
2. The use of marketing research and the identification of market potential
3. Decisions concerning product design, pricing, distribution and
channels, advertising, and communications the marketing mix
Stages of Export Marketing

1. The firm is unwilling to export; it will not even fill an unsolicited export
order.
This may be due to perceived lack of time (“too busy to fill the order”)
or to apathy or ignorance.
2. The firm fills unsolicited export orders but does not pursue unsolicited
orders.
Such a firm would be an export seller.
3. The firm explores the feasibility of exporting (this stage may bypass stage
2).
4. The firm exports to one or more markets on a trial basis.
5. The firm is an experienced exporter to one or more markets.
6. After this success, the firm pursues country- or region focused marketing
based on certain criteria (e.g., all countries where English is spoken, all
countries where it is not necessary to transport by water).
7. The firm evaluates global market potential before screening for the best
target markets to include in its marketing strategy and plan. All markets-
domestic and international-are regarded as equally worthy of
consideration. At this point, other environmental factors may come into
play and the marketer might want to explore joint ventures or foreign
direct investment opportunities to maximize international opportunities.
The probability that a firm will advance from one stage to the next depends on
different factors. Moving from stage 2 to stage 3 depends on management’s

attitude toward the attractiveness of exporting and its confidence in the firm’s
ability to compete internationally. However, commitment is the most important
aspect of a company’s international orientation.
Before a firm can reach stage 4, it must receive and respond to unsolicited export
orders. The quality and dynamism of management are important factors that
can lead to such orders. Success in stage 4 can lead a firm to stages 5 and 6. A
company that reaches stage 7 is a mature geocentric enterprise that is relating
global resources to global Opportunity. To reach this stage requires
management with vision and commitment.
The export- Table summarizes some of the export-related problems that a company
related typically faces.
Problems Logistics Servicing Exports
1. Arranging transportation 12. Providing parts availability
2. Transport rate determination 13. Providing repair service
3. Handling documentation 14. Providing technical advice
4. Obtaining financial information 15. Providing warehousing
5. Distribution coordination Sales Promotion
6. Packaging 16. Advertising
7. Obtaining insurance 17. Sales effort
Legal Procedure 18. Marketing information
8. Government red tape Foreign Market Intelligence
9. Product liability 19. Locating markets
10. Licensing 20. Trade restrictions
11. Customer/ duty 21. Competition overseas
Piggyback This is an arrangement whereby one manufacturer obtains distribution of

Marketing products through another’s distribution channels. Both parties can benefit: The
active distribution partner makes fuller use of its distribution system capacity
and thereby increases the revenues generated by the system.
Important components to the definition of piggyback marketing are:
• Products should be complementary ( i.e. Non-competing)
• Low-cost market-entry strategy
• Maximum promotion in the right markets
The manufacturer using the piggyback arrangement does so at a cost that is
much lower I than that required for any direct arrangement. Successful
piggyback marketing requires that the combined product lines be
complementary. They must appeal to the same customer, and they must not be
competitive with each other. if these requirements are met, the piggyback
arrangement can be a very effective way of fully utilizing an interlamination
channel system to the advantage of both parties.

Unit-IV
International Marketing Planning
Planning Planning is a systematized way of relating to the future. It is an attempt to manage

Process for the effects of external, uncontrollable factors on the firm’s strengths, weaknesses,
Global objectives, and goals to attain a desired end. Further, it is a commitment of
Market resources to a country market to achieve specific goals. In other words, planning
is the job of making things happen that may not otherwise occur.
Planning relates to the formulation of goals and methods of accomplishing them,

so it is both a process and a philosophy. Structurally, planning may be viewed as
corporate, strategic, and/or tactical. International corporate planning is essentially
long-term, incorporating generalized goals for the enterprise as a whole. Strategic
planning is conducted at the highest levels of management and deals with
products, capital, and research, and long- and short-term goals of the company.
An international marketer who has gone through the planning process has a
framework for analyzing marketing problems and opportunities and a basis for
coordinating information from different country markets.
Another key to successful planning is evaluating company objectives, including

management’s commitment and philosophical orientation to international
business.
Company objectives and resources

 Each new market requires
- A complete evaluation, including existing commitments, relative to
the parent company’s objectives and resources
 Defining objectives clarifies the orientation of the domestic and
international divisions, permitting consistent policies
International commitment
 After company objectives have been identified, management needs to
determine whether it is prepared to make the level of commitment required
for successful international operations-commitment in terms of dollars to be
invested, personnel for managing the international organization, and determination
to stay in the market long enough to realize a return on these investments.
 The degree of commitment to an international marketing cause reflects the
extend to a company’s involvement
For the company already committed, the key decisions involve
 allocating effort and resources among countries and product(s),
 deciding on new markets to develop or old ones to withdraw from, and
 Determining which products to develop or drop.

Guidelines and systematic procedures are necessary for evaluating international
opportunities and risks and for developing strategic plans to take advantage of
such opportunities.
Phases of Whether a company is marketing in several countries or is entering a foreign
the market for the first time, planning is essential to success. The first-time foreign
marketer must decide what products to develop, in which markets, and with what
Planning
level of resource commitment. For the company already committed, the key
Process decisions involve allocating effort and resources among countries and product(s),
deciding on new markets to develop or old ones to withdraw from, and
determining which products to develop or drop. Guidelines and systematic
procedures are necessary for evaluating international opportunities and risks and
for developing strategic plans to take advantage of such opportunities.
There are four phases of the international planning process.

Phase I : Preliminary Analysis and Screening; Matching Company/ Country
needs
A critical first step in the international planning process is deciding in which
existing country market to make a market investment. A company’s strengths and
weaknesses, products, philosophies, and objectives must be matched with a
country’s constraining factors and market potential. In the first part of the
planning process, countries are analyzed and screened to eliminate those that do
not offer sufficient potential for further consideration.
The next step is to establish screening criteria against which prospective countries
can be evaluated. These criteria are ascertained by-
 an analysis of company objectives,
 resources, and
 Other corporate capabilities and limitations.
Once evaluation criteria are set, a complete analysis of the environment within
which a company plans to operate is made. The environment consists of the
uncontrollable elements and includes both home-country and host country
restraints, marketing objectives, and any other company limitations or strengths
that exist at the beginning of each planning period.
The results of Phase 1 provide the marketer with the basic information necessary
to:
(1) evaluate the potential of a proposed country market;
(2) identify problems that would eliminate the country from further
consideration;
(3) identify environmental elements which need further analysis;
(4) Determine which part of the marketing mix can be standardized. for global
companies or which part of and how the marketing mix must be adapted
to meet local market needs; and
(5) Develop and implement a marketing action plan.
Phase 2: Adapting the Marketing Mix to Target Markets.
A more detailed examination of the components of the marketing mix- product,

Promotion, price, and Place.
The primary goal of Phase 2 is to decide on a marketing mix adjusted to the
cultural constraints imposed by the uncontrollable elements of the environment
that effectively achieve corporate objectives and goals.
The answers to three major questions are generated in Phase 2:
(1) Which elements of the marketing mix can be standardized and where is
standardization not culturally possible?
(2) Which cultural/environmental adaptations are necessary for successful
acceptance of the marketing mix? and
(3) Will adaptation costs allow profitable market entry?
Based on the results in Phase 2, a second screening of countries may take place,
with some countries dropped from further consideration.

Phase 3: Developing the Marketing Plan.
At this stage of the planning process, a marketing plan is developed for the target
market-whether a single country or a global market set.
The marketing plan begins with a situation analysis and culminates in the
selection of an entry mode and a specific action program for the market. The
specific plan establishes what is to be done, by whom, how it is to be done, and
when. Included are budgets and sales and profit expectations.
A marketing plan includes-
 Objectives and mission.
 Introduce Product.
 Production/sourcing
 Promotion strategy
 Distribution channel
 Budget
 Revenue forecast
 Sales service
 Conclusion
Phase 4-Implementation and Control

All marketing plans require coordination and control during the period of
implementation. Many businesses do not control marketing plans as thoroughly
as they could even though continuous monitoring and control could increase their
success.
An evaluation and control system requires performance objective action, that is,
to bring the plan back on track should standards of performance fall short. A
global orientation facilitates the difficult but extremely important management
tasks of coordinating and controlling the complexities of international marketing.
Market Companies must decide whether to expand by seeking new markets in existing
Expansion countries or, alternatively, seeking new country markets for already identified
Strategies and served market segments. These two dimensions in combination produce four
strategic options as presented in Figure 1.
 Strategy 1 concentrates on a few segments in a few countries. This is

typically a starting point for most companies.

 In strategy 2, country concentration and segment diversification, a
company serves, many ‘market ‘in a few countries.
 Strategy 3; country diversification ‘and market segment concentration, is
the classic global strategy whereby a company seeks out the world market
for a product. The appeal of this strategy is that by serving the world
customer, a company can achieve a greater accumulated volume and
lower costs than any competitor and, therefore, have an un-assailable
competitive advantage. This is the strategy of the well-managed business
that serves a distinct need and customer category.
 Strategy 4, country and segment diversification, is the corporate strategy
of a global, multi-business company. At the operating business level,
however, managers of individual units must focus on the needs of the
world customer their particular global market.
Stages of The stages in the evolution of the global corporation, from domestic to
Development international, multinational, global, and transnational is depicted in the following
Model table.
Stage & Domestic International Multinational Global Transnational
Company
Strategy Domestic International Multi- Global Global
domestic
Model - Coordinated Decentralized Centralized Integrated
Federation Federation Hub Network
View of Home Extension National Global Global
World Country Markets Markets Markets markets
or Resources and resources
Orientation Ethnocentric Ethnocentric Polycentric Mixed Geocentric
Domestic Stage
- focus on domestic markets
- environment scanning is local
- Structure is domestic, typically functional or divisional, foreign sales
through an export department and logistics are outsourced.
Stage two – International

• Extends marketing, manufacturing and other activities outside the main
country
• remains ethnocentric (home country orientated)
• groups people together in an international division
• strategy of ‘extension’
• International company sees extension market opportunities outside the
home country and extends marketing program to exploit those
opportunities.
• For example, Macdonald, Ericsson, P&G etc.

Stage three – Multinational
• A multinational company operates in more than one country and typically
operates in a number of major global markets.
• Discover that different markets need some degree of adaptation, e.g.
Toyota first entered US in 1957 as Toyopet
• ‘multi-domestic’ focus
• adapts domestic marketing mix to suit the differing international markets
• At this point, its orientation shifts from ethnocentric to polycentric.
• The company has extensive experience in a number of international
markets and has established marketing, manufacturing, and R&D
facilities in several countries.
• For example, Unilever, Philips, Coca-Cola.
Stage four – Global

• Global Organisations which create value by extending products and
programmes on serving emerging global markets.
• Major strategic departure
• global marketing and/or sourcing strategy
• Focus globally and supply from domestic market e.g Harley Davidson.
• supply domestic market from global sources e.g. Gap
• Must understand the limitations of competitive advantage
• Firms focused on market globally but not interest to conducting R&D,
design or manufacturing. For example, BMW, or Mercedes etc.
Stage five - Transnational

• Transnational Companies have the capability to combine global
efficiencies, local responsiveness and the ability to leverage knowledge
across the worldwide system.
• Sales, investments and operations in many countries
• integrated world enterprise that links global markets and global supplies
• geocentric - recognises similarities and differences and adapts to them
• adaptation adds value
• key assets are dispersed, interdependent and specialised e.g. R&D
• E.g. Caterpillar - manufactures and assembles in many countries
- components are shipped-in from many countries
- they are assembled
- then despatched to different countries
• experience and knowledge are shared globally
• scans the world for information
• ‘grow or die’ - aspirations are global
• global bias for key functions e.g. finance, NPD, supply chain
management

Table: Key assets, role of the country and knowledge area
Stage & Domestic International Multinational Global Transnational
Company
Key Located in Core Decentralized All in home Dispersed
Assets home centralized and self- Country except interdependent
country others sufficient marketing and specialized
dispersed or sourcing
Role of Single Adapting and Exploiting Marketing or Contributions
country country leveraging local sourcing to company
units competencies opportunities worldwide
Knowledge Home Created at Retained Marketing or All functions
Country center and within sourcing developed
transferred operating developed jointly and
units jointly and shared
shared
In Stage 4, Key assets are dispersed, specialized, and interdependent. A

transnational automobile company-Toyota, for example-makes engines and
transmissions in various countries and ships these components to assembly plants
located in each of the world regions. Specialized design labs might be located in
different countries and work together on the same project. The role of country
units changes dramatically as a company moves across the stages of development.
In the stage 2 international company, the role of the country unit is to adapt and
leverage the competence of the parent or borne-country unit.
In the stage 5 transnational, the role of each country is to contribute to the
company worldwide;
In the international and multinational, the responsibility of the marketing
organization is to realize the potential of the individual national markets. In the
transnational, the responsibility of the marketing unit is to realize the potential of
the national market and, if possible, to contribute to the success of marketing
efforts worldwide by sharing successful innovations and ideas with the entire
organization.
Strengths at each level

1) International
• exploit’s the parent company’s knowledge and capabilities
through worldwide diffusion of products
2) Multinational
• flexible ability to respond to national differences
3) Global
 Global market or supplier reach, which leverages the home –country
organization, skills, and resources
 cost advantage through centralised operations
4) Transnational
• combines above in an integrated network, which leverages
worldwide learning and experience

Unit-V
Competitive Analysis and Strategy
Forces A useful way of gaining insight into the nature of competition is through industry
influencing analysis. As a working definition, an industry can be defined as a group of firms
Competition in that produce products that are close substitutes for each other. In any industry,
an industry
competition works to drive down the rate of return on invested capital toward the
rate that would be earned in the economist’s perfectly’ competitive industry.
According to Michael E. Porter of Harvard University, a leading theorist of

competitive strategy, there are five forces influencing competition in an industry.
Threat of New Entrants
Bargaining Power Rivalry among Bargaining Power of

of Suppliers Competitors Buyers
Threat of Substitute
Products
FIGURES Forces influencing Competition in an industry
Threat of New Entrants
This force considers how easy or difficult it is for competitors to join the
marketplace in the industry being examined.
The easier it is for a competitor to join, the greater the risk of a business's market
share being depleted. Barriers to entry include absolute cost advantages, access to
inputs, economies of scale and well-recognized brands.
New entrants to an industry bring new capacity, a desire to gain market share and
position, and, very often, new approaches to serving customer needs.
Porter describes eight major sources of barriers to entry, the presence or absence
of which determines the extent of the threat of new industry entrants.
1) Economies of scale- refers to the decline in per unit product costs as the
absolute volume of production per period increases.
2) Product differentiation is the extent of a product’s perceived uniqueness-

3) Capital requirements. Capital is required not only for manufacturing
facilities (fixed capital) but also for financing R&D, advertising, field sales
and service, customer credit, and inventories (working capital).
4) One-time switching costs- These are one-time costs the buyer faces when
switching an existing supplier’s product to a new entrant.
5) Distribution channels- To the extent that channels are full, expensive to
enter, or unavailable the cost of entry is substantially increased b because a
new entrant must create and establish new channels.
6) Government policy- In some cases the government will restrict
competitive entry. Japan’s postwar industrialization strategy was based on
a policy of preserving and protecting national industries in their
development and growth phases.
7) Cost advantages- Access to raw materials, favorable locations, and
government subsidies are several examples.
8) Expected competitor response-If new entrants expect existing competitors
to respond strongly to entry, their expectations about the rewards of entry
will certainly be affected.
Threat of Substitute Products

Substitute products are produced in a different industry –but crucially satisfy the
same customer need.
If there are many credible substitutes to a firm's product, they will limit the price
that can be charged and will reduce industry profits.
The extent of the threat depends upon
 The extent to which the price and performance of the substitute can match
the industry's product
 The willingness of customers to switch
 Customer loyalty and switching costs
If there is a threat from a rival product the firm will have to improve the
performance of their products by reducing costs and therefore prices and by
differentiation.
Bargaining Power of Suppliers
This force analyzes how much power a business's supplier has and how much
control it has over the potential to raise its prices, which, in turn, would lower a
business's profitability.
If suppliers have enough leverage over industry firms, they can raise prices high
enough to significantly influence the profitability of the industry.
Several factors influence supplier bargaining power:
1. Suppliers will have the advantage if they are large and relatively few in
number.

2. When the suppliers’ products or services are important inputs to user firms,
are highly differentiated, or carry switching costs, the suppliers will have
considerable leverage over buyers.
3. Suppliers will also enjoy bargaining power if their business is not threatened
by alternative products.
4. The willingness and ability of suppliers to develop their own products and
brand names if they are unable to get satisfactory terms from industry
buyers will influence their power.
e.g., A good example of the bargaining power of suppliers is OPEC, which
controls the price of oil.
Bargaining Power of Buyers
Porter’s Five Forces of buyer bargaining power refers to the pressure consumers
can exert on businesses to get them to provide higher quality products, better
customer service, and lower prices.
The ultimate aim of industrial customers is to pay the lowest possible price to
obtain the products or services that they use as inputs. Usually, therefore, the
buyers’ best interests are served if they can drive down profitability in the supplier
industry.
The following are conditions under which buyers can exert power over suppliers:
1. When they purchase in such large quantities that supplier firms depend
on the buyers’ business for survival.
1. When the supplier’s products are viewed as commodities-that is, as
standard or undifferentiated-buyers are likely to bargain hard for low
prices because many supplier firms can meet their needs.
2. When the supplier industry’s products or services represent a significant
portion of the buying firms’ costs.
3. When the buyer is willing to achieve backward vertical integration.
Rivalry Among Competitors

This force examines how intense the competition currently is in the marketplace,
which is determined by the number of existing competitors and what each can do.
Rivalry among firms refers to all the actions taken by firms in the industry to
improve their positions and gain advantage over each other. Rivalry manifests
itself in price competition, advertising battles, product positioning, and attempts
at differentiation.

Rivalry competition is high when there are just a few businesses equally selling a
product or service, when the industry is growing and when consumers can easily
switch to a competitor's offering for little cost.
When rivalry competition is high, advertising and price wars can ensue, which
can hurt a business's bottom line.
To the extent that rivalry among firms forces companies to innovate and/or
rationalize costs, it can be a positive force. To the extent that it drives down prices
and, therefore, profitability, it creates instability and negatively influences the
attractiveness of the industry.
Several factors can create intense rivalry:
1. Once an industry becomes mature, firms focus on market share and how
it can be gained at the expense of others.
2. Industries characterized by high fixed costs are always under pressure to
keep production at full capacity to cover the fixed costs. Once the industry
accumulates excess capacity, the drive to fill capacity will push prices-and
profitability-down.
3. A lack of differentiation or an absence of switching costs encourages
buyers to treat the products or services as commodities and shop for the
best prices. Again, there is downward pressure on prices and profitability.
4. Firms with high strategic stakes in achieving success in an industry
generally are destabilizing because they may be willing to accept
unreasonably low profit margins to establish themselves, hold position, or
expand.
Porter’s Michael Porter’s Diamond Model (also known as the Theory of National
Diamond Model Competitive Advantage of Industries) is a diamond-shaped framework that
of National focuses on explaining why certain industries within a particular nation are
Competitive
competitive internationally, whereas others might not. And why is it that certain
Advantage
companies in certain countries are capable of consistent innovation, whereas
others might not?
Porter argues that any company’s ability to compete in the international arena is
based mainly on an interrelated set of location advantages that certain industries
in different nations posses, namely:
 Firm Strategy, Structure and Rivalry;
 Factor Conditions;
 Demand Conditions; and
 Related and Supporting Industries.
If these conditions are favorable, it forces domestic companies to continuously

innovate and upgrade. The competitiveness that will result from this, is
helpful and even necessary when going internationally and battling the
world’s largest competitors.

Factor The phrase factor conditions refers to a country’s endowment of resources. Factor
Conditions
resources may have been created or inherited and are divided into five categories:
human, physical, knowledge, capital, and infrastructure.
Human Resources
- The quantity of workers available, the skills possessed by these workers,
wage levels, and the overall work ethic of the workforce together
constitute a nation’s human resource factors.
- Countries with a plentiful supply of low-wage labor have an obvious
advantage in the current production of labor-intensive products;
- Again, low wage countries may be at disadvantage when it comes to the
production of sophisticated products requiring highly skilled workers
capable of working without extensive supervision.
Physical Resources
- The availability, quantity, quality, and cost of land, water, minerals, and
other natural resources determine a country’s physical resources.
- A country’s size and location are also included in this category because
proximity to markets and sources of supply, as well as transportation
costs, are strategic considerations. These factors are obviously important
advantages or disadvantages to industries dependent on natural
resources.
Knowledge Resources
- The availability within a nation of a significant population with scientific,
technical, and market-related knowledge means a nation is endowed with
knowledge resources.
- The presence of these factors is usually a function of the educational
orientation of the society as well as the number of research facilities and
universities-both government and private—operating in the country.

- These factors are important to success in sophisticated products and
services and to doing business in sophisticated markets.
Capital Resources
- Countries vary in the availability, amount, cost, and types of capital
available to the country’s industries.
- The nation’s savings rate, interest rates, tax laws, and government deficits
all affect the availability of capital.
- The advantage to industries with low capital costs versus those located in
nations with relatively high costs is sometimes decisive. Firms paying high
capital costs are frequently unable to stay in a market in which the
competition comes from a nation with low capital costs.
Infrastructure Resources
- Infrastructure includes a nation’s banking system, health care system,
transportation system, and communications system, as well as the
availability and cost of using these systems. More sophisticated industries
are more dependent on advanced infrastructures for success.
The nature of home-market demand conditions for the firm’s or industry’s

products and services is important because it determines the rate and nature of
improvement and innovation by the firms in the nation.
Three characteristics of home demand are particularly important to the creation
Demand of competitive advantage:
Conditions (1) the composition of home demand,
(2) the size and pattern of growth of home demand, and
(3) the means by which a nation’s home demand pulls the nation’s products and
services into foreign markets.
The composition of home demand determines how firms perceive, interpret, and
respond to buyer needs. Competitive advantage can be achieved when the home
demand sets the quality standard and gives local firms a better picture of buyer
needs, at an earlier time, than is available to foreign rivals. This advantage is
enhanced when home buyers pressure the nation’s firms to innovate quickly and
frequently.
The size and pattern of growth of home demand are important only if the
composition of the home demand is sophisticated and anticipates foreign
demand. Large home markets offer opportunities to achieve economies of scale
and learning while dealing with familiar, comfortable markets.
Rapid home-market growth is another incentive to invest in and adopt new

technologies faster, and to build large, efficient facilities. The best example of this
is Japan, where rapid home market growth provided the incentive for Japanese
firms to invest heavily in modern, automated facilities. Early home demand,

especially if it anticipates international demand, gives local firms the advantage
of getting established in an industry sooner than foreign rivals. Equally important
is early market saturation, which puts pressure on a company to expand into
international markets and innovate. Market saturation is especially important if it
coincides with rapid growth in foreign markets.
Related and The presence of related and supporting industries provides the foundation on
Supporting which the focal industry can excel.
Industries
A nation has an advantage when it is home to internationally competitive
industries in fields that are related to, or in direct support of, other industries.
Internationally competitive supplier industries provide inputs to downstream
industries that are likely to be internationally competitive in terms of
technological innovation, price, and quality. Access is a function of proximity both
in terms of physical distance and cultural similarity. It is not the inputs themselves
that give advantage. It is the contact and coordination with the suppliers that
allow the firm the opportunity to structure the value chain so that linkages with
suppliers are optimized. These opportunities may not be available to foreign
firms.
Firm Strategy, The national context in which companies operate largely determines how
Structure and companies are created, organized and managed: it affects their strategy and how
Rivalry
they structure themselves.
Differences in management styles, organizational skills, and strategic perspectives
create advantages and disadvantages for firms competing in different types of
industries, as do differences in the intensity of domestic rivalry. In Germany, for
example, company structure and management style tend to be hierarchical.
Managers tend to come from technical backgrounds and to be most successful
when dealing with industries that demand highly disciplined structures, such as
chemicals and precision machinery.
Perhaps the most powerful influence on competitive advantage comes from

domestic rivalry. Domestic rivalry keeps an industry dynamic and creates
continual pressure to improve and innovate. Local rivalry forces firms to develop
new products, improve existing ones, lower costs and prices, develop new
technologies, and improve quality and service.
Domestic rivalry is instrumental to international competitiveness, since it
forces companies to develop unique and sustainable strengths and capabilities.
The more intense domestic rivalry is, the more companies are being pushed to
innovate and improve in order to maintain their competitive advantage. In the
end, this will only help companies when entering the international arena.
A good example for this is the Japanese automobile industry with intense rivalry
between players such as Nissan, Honda, Toyota, Suzuki, Mitsubishi and Subaru.

Because of their own fierce domestic competition, they have become able to more
easily compete in foreign markets as well.
Other Forces There are two final external variables to consider in the evaluation of national
Acting on the competitive advantage: chance and government.
Diamond
Chance
Chance events play a role in shaping the competitive environment. Chance events
are occurrences that are beyond the control of firms, industries, and usually
governments. Included in this category are such things as wars and their
aftermath, major technological breakthroughs, sudden dramatic shifts in factor or
input cost (e.g., the oil crises), dramatic swings in exchange rates, and so on.
Chance events are important because they create major discontinuities in

technologies that allow nations and firms that were not competitive to leapfrog
over old competitors and become competitive—even leaders-in the changed
industry. For example, the development of microelectronics allowed many
Japanese firms to overtake American and German firms in industries that had
been based on electromechanical technologies- areas traditionally dominated by
the Americans and Germans.
Government
Although it is often argued that government is a major determinant of national
competitive advantage, the fact is that government is not a determinant but rather
an influence on determinants.
Government influences determinants by virtue of its role as a buyer of products

and services and by its role as a maker of policies on labor, education, capital
formation, natural resources, and product standards. It also influences
determinants by its role as a regulator of commerce, for example, by telling banks
and telephone companies what they can and cannot do.
By reinforcing positive determinants of competitive advantage in an industry.

Government can improve the competitive position of the nation’s firms.
Governments devise legal systems that influence competitive advantage by
means of tariff and non tariff barriers and laws requiring local content and labor.
Generic In addition to the five forces model of industry competition, Porter developed a
Strategies for
framework of so-called generic business strategies based on two sources of
Creating
Competitive competitive advantage: low cost and differentiation.
Advantage Figure shows that the combination of these two sources with the scope of the
target market served (narrow or broad) or product mix width (narrow or wide)
yields four generic strategies:
• cost leadership,

• product differentiation,
• focused differentiation, and
• Cost focus.
Cost-leadership Advantage
When the unique value delivered by a firm is based on its position as the
industry’s low-cost producer, in broadly defined markets or across a wide mix of
products, a cost leadership advantage occurs.
Whatever its source, cost-leadership advantage can be the basis for offering lower
prices (and more value) to customers in the late more competitive stages of the
product life cycle.
e.g., Walmart
Differentiation
When a firm’s product delivers unique value because of an actual or perceived
uniqueness in a broad market, it is said to have a differentiation advantage.
This can be an extremely effective strategy for defending market position and
obtaining above-average financial returns; unique products often command
premium price,
E.g., Apple, Mcdonald, FedEx
Focused Differentiation
A focused differentiation strategy requires offering unique features that fulfill the
demands of a narrow market.
Premium/high prices are charged for uniqueness of product/service.

For example, the dedication of Mercedes-Benz to cutting-edge technology, styling,
and safety innovations has made the firm’s vehicles prized by those who are rich
enough to afford them.
Focused cost
A focused cost leadership strategy requires competing based on price to target a
narrow market. A firm that follows this strategy does not necessarily charge the
lowest prices in the industry. Instead, it charges low prices relative to other firms
that compete within the target market.
In the shipbuilding industry, for example, Polish and Chinese shipyards offer
simple, standard vessel types at low prices that reflect low production costs.

Unit-VI
Product Decisions
Definition of Product
A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that
might satisfy a want or need.
A product, can also be defined as a collection of physical, psychological, service, and symbolic attributes that
collectively yield satisfaction, or benefits, to a buyer or user.
A Product can be a physical goods (automobiles, books), a services (checking of account in a bank),
or an idea (consultancy in a firm, advice of a physician).
A number of frameworks for classifying products have been developed. A frequently used
classification is based on users and distinguishes between consumer and industrial goods. Both
types of goods, in turn, can be further classified on the basis of other criteria, such as how they are
purchased (convenience, preference, shopping and specially goods) and their life span (durable,
non-durable and disposable). These and other classification (frameworks developed for domestic
marketing are fully applicable to international marketing).
Products: Local, National, International, and Global
From local to global markets, there are four product categories

1. Local Products
2. National Products
3. International Products and
4. Global Products
Local Products
A local product is available in a portion of a national market. In U.K, the term local product is
synonymous with regional product. These products may be new products that a company is
introducing using a rollout strategy, or a product that is distributed exclusively in that region.
Sometimes, the local product, marketed in one region is expanded to other regions of the nation
based on its acceptability.
For example, Amrita food products in Barishal.
National Products
A national product is one that, in the context of a particular company, is offered in a single national
market. Sometimes national products appear when a global company caters to the needs and
preferences of particular country markets.

For example, Coca-Cola developed a no carbonated, ginseng flavored beverage for sale only in Japan
and a yellow, carbonated flavored drink called Pasturing to compete with Peru’s favorite soft drink,
Inca Cola.
Such examples notwithstanding there are several reasons why national products-even those that are
quite profitable-may represent a substantial opportunity cost to a company.
 First, the existence of a single national business does not provide an opportunity to develop
and utilize international leverage from headquarters in marketing, R&D, and production.
 Second, the local product does not allow for the transfer and application of experience gained
in one market to other markets.
 A third shortcoming a single-country product is the lack of transferability of managerial
expertise acquired in the single-product area.
International products
International products are offered in multinational, regional markets. The classic international
product is the Euro product, offered throughout Europe but not in the rest of the world. A company
can move from international to global position. This is possible through acquisition of businesses
operating in multi-regions.
For example, Renault car which was an Euro product entered the Brazilian market and became a
multi-regional company. Renault combined with Nissan in Asia and moved from a multi-regional
to a global position.
Global Product
Global products are those products that are marketed internationally under the same brand name,
features and specifications across countries. Global products are different from regional products or
brands, which are specific to a particular region.
Apple is an American company which produces its products in China. India imports Apple
products. For India, Apple products are global products. Sony, General Electric and Levis are other
strong global brands.
The main advantages of global products is the achievement of economies of scale and Economies of
scope. Global brand recognition is another advantage.
Review Question
Differentiate between national and international products
Global Products and Global Brands
Global product
Global products are offered in global markets. A global product is designed to meet the needs of
global market. Global Products are standardized products with a common brand name, with
uniform features in all countries. E.g.: Gillette, Benetton Sweaters

Local brand focus on a single national market and international brands are offered in several market
in a particular region. Global brands are brands that are recognized throughout much of the world.
Global brands have the same name and in some instances a similar image and positioning
throughout the world.
The qualities of a global brand:
 It has the same name as is the case for Coke, Sony, BMW, Harley-Davidson, and so on; or it
may be the same meaning in different languages, as is true of Unllever’s Snuggle (United
States) fabric softener,
 A global brand has a similar image, similar positioning, and is guided by the same strategic
principles.
 The marketing mix for a global brand may vary from country to country. Marlboro, Coke,
Sony, Mercedes, and Avon-one will indeed find that the marketing mix for these products
varies from country to country.
 The same positioning worldwide.
 It may be easy to pronounce, recognize and remember in foreign languages. E.g., Dove,
Google.
Global product differs from a global brand in one important respect: It does not carry the same name
and image from country to country. Like the global brand, however, it is guided by the same
strategic principles, is similarly positioned, and may have a marketing mix that varies from country
to country.
Product Positioning
Occupy a clear distinctive and desirable place relative to competing products in the minds of
target consumers.
Positioning refers to the act of locating a brand in customers’ minds over and against other
products in terms of product attributes and benefits that the brand does and does not offer.
Positioning Strategy
Several general strategies have been suggested for positioning products: positioning by attribute or
benefit, quality/price, use or application, and use/user. Two additional strategies, high-tech and
high-touch, have been suggested for global products.
Attribute or Benefit
A frequently used positioning strategy exploits a particular product attribute, benefit, or feature. In
global marketing, the fact that a product is imported can itself represent a benefit positioning.
Economy, reliability, and durability are other frequently used attribute/benefit positions.
Volvo automobiles are known for solid construction that offer safety in the event of a crash. In the
ongoing credit card wars, VISA’s advertising focuses on the benefit of worldwide merchant
acceptance.

Quality/Price
This strategy can be thought of in terms of a continuum from high fashion/quality and ‘high price to
good value (rather than low quality) at a low price.
The American Express Card, for example, has traditionally been positioned as an upscale card whose
prestige justifies higher annual fees than VISA or MasterCard. The Discover card is at the other end
of the continuum. Discover’s value position results from no annual fee and a cash rebate to
cardholders each year.
Use/User
Positioning can also be achieved by describing how a product is used or associating a product with
a user or class of users the same way in every market. For example, Benetton users the same
positioning for its clothing when it targets the global youth market. Marlboro’s extraordinary success
as a global brand is due in part to the product’s association with cowboys.
High-tech Positioning
- High-tech products are sophisticated, technologically complex, and/or difficult to explain or

understand. (e.g., Cell phones and audio/video components, automobiles are high-tech
categories with strong global positions).
- Such products are frequently purchased on the basis of concrete product features, although
image may also be important. Buyers typically already possess or wish to acquire
considerable technical information.
- Marketing communication for high-tech products should be informative and emphasize
features.
- High-tech products may be divided into three categories:
 Technical products-Computers, chemicals, tires, and financial services are just a sample
of the product categories whose buyers have specialized needs; require a great deal
of product information and who share a common “language.”
 Special-interest products- While less technical and more leisure or recreation oriented,
special-interest products also are characterized by a shared experience and high
involvement among users. Again the common language and symbols associated with
such products can transcend language and cultural barriers. Fuji bicycles, Adidas,
and Nike Sports equipment, Canon cameras are successful example of special interest
products.
 Demonstrable products- Products that “speak for themselves” in advertising of features
and benefits can also travel well.
High-touch Positioning
- Marketing of high-touch products requires less emphasis on specialized information and

more emphasis on image. Like high-tech products, however, high-touch categories are
highly involving for consumers.

- Buyers of high-touch products also share a common language and set of symbols relating to
themes of wealth, materialism, and romance.
- The three categories of high-touch products are
 products that solve a common problem,
 Global village products- Channel fragrances, designer fashions, mineral water, and pizza
are all examples of products whose positioning is strongly cosmopolitan in nature. In
global markets, products may have a global appeal by virtue of their country of origin.
The “American-ness” of Levis, Sony is a name synonymous with vaunted Japanese
quality.
 Products with a universal theme.
Product Design Considerations

Product design is a key factor in determining success in global marketing. Global marketers need
to consider four factors when making product design decisions:
 preferences,
 cost,
 laws and regulations, and
 Compatibility.
Preferences
There are marked and important differences in preferences around the world factors such as color
and taste. Marketers who ignore preferences do so at their own peril.
Sometimes, a product design that is successful in one world region does meet with success in the
rest of the world. BMW and Mercedes dominate the luxury car market in Europe and are strong
competitors in the rest of the world, with exactly the same design.
Cost
In approaching the issue of product design, company managers must consider cost factors broadly.
Of course, the actual cost of producing the product will create a cost floor. Other design related
cost whether incurred by the manufacturer or the end user-must also be consider.
Laws and Regulations

Compliance with laws and regulations in different countries ahs a direct impact on product design
decisions, frequently leading to product design adaptations that increase costs. This may be seen
especially clearly in Europe, where one impetus for the creation of the single market was to
dismantle regulatory and legal barriers-particularly in the areas of technical standards and health
and safety standards.
Compatibility
The last product design issue that must be addressed by company managers is product compatibility
with the environment in which it is used.
For example, electrical systems are designed such a way that range from 50 to 230 volts and from 50
to 60 cycles, means that the design of any product powered by electricity must be compatible with
the power system in the country of use.

Labeling and Instructions
Product labeling and instructions must comply with national law and regulation. For example, there
are very precise labeling requirements for prescription drugs and poisons. In addition, however,
labeling can provide valuable consumer information on nutrition, for example. Finally, many
products require operating and installation instructions.
Global Product Planning Strategic Alternatives
To capitalize on opportunities outside the home country, company managers must devise and
implement appropriate marketing programs. Depending on organizational objectives and market
needs, a particular program may consist of extension strategies, adaptation strategies, or a
combination of the two.
The following strategies are possibilities:

 An extension strategy that calls for offering a product virtually unchanged (i.e., “extending”
it) in markets outside the home country.
 An adaptation strategy involves changing elements of design, function, or packaging in
response to needs or conditions in particular country markets.
 Product invention entails developing new products “from the ground up” with the world
market in mind.
The extension/adaptation/creation decision is one of the most fundamental issues addressed by a
company's global marketing strategy.
Strategy 1: Product/Communication Extension (Dual Extension)

Many companies employ product/communication extension as a strategy for pursuing
opportunities outside the home market. Under the right conditions, this is the easiest product
marketing strategy and, in many instances, the most profitable one as well.

Companies pursuing this strategy sell exactly the same product, with the same advertising and
promotional appeals as used in the home country, in some or all world-market countries or
segments. The product-communication extension strategy has an enormous appeal to global
companies because of the cost savings associated with this approach.
For example-Gillette Razor
Strategy 2: Product Extension/Communication Adaptation

When a product fills a different need, appeals to a different segment, or serves a different function
under conditions of use that are the same or similar to those in the domestic market, the only
adjustment that may be required is in marketing communications.
Bicycles and motor scooters are examples of products that have been marketed with this approach.
They satisfy recreational needs in some countries but serve as basic or urban transportation in many
other countries.
The appeal of the product extension/communication adaptation strategy is it’s relatively low cost of
implementation.
Because the product in this strategy is unchanged” R&D, tooling, manufacturing setup, and
inventory costs associated with additions to the product line are avoided. The only costs of this
approach are hi identifying different product functions and revising marketing communications
(including advertising, sales promotion, and point of-sale material) around the newly identified
function.
Strategy 3: Product Adaptation/Communication Extension
A third approach to global product planning is to extend, without change, the basic home-market
communications strategy while adapting the product to local use or preference conditions.
For example, Soap and detergent manufacturers have adjusted their product formulations to meet
local water and washing equipment conditions with no change in their basic communications
approach.
Strategy 4: Dual Adaptation

Sometimes, when comparing a new geographic market to the home market, marketers discover that
environmental conditions or consumer preferences differ; the same may be true of the function a
product serves or consumer receptivity to advertising appeals.
A company may also utilize the product-communication adaptation (dual adaptation) strategy. As
the name implies, both the product and one or more promotional elements are adapted for a
particular country or region.
Unilever’s experience with fabric softener in Europe exemplifies the classic multinational road to
adaptation.
The four alternatives are not mutually exclusive. A company can simultaneously utilize different
product/communication strategies in different parts of the world.

Strategy 5: Product Invention
When potential customers have limited purchasing power, a company may need to develop an
entirely new product, designed to satisfy the need or want at a price that is within the reach of the
potential customer. Invention is a demanding but potentially rewarding product strategy for
reaching mass markets ill LDCs.

Unit-VI
Pricing Decisions for International Markets
Pricing Define
In the narrowest sense, price is the amount of money charged for a product or a service. More
broadly, price is the sum of the values that customers exchange for the benefits of having or using
the product or service.
Price can be defined in ratio terms, giving the equation
Resources given up
Price = ---------------------------
goods received
Price is the only element in the marketing mix that determine a firm’s market share and profitability.
It is treated as a key strategic tool for creating and capturing customer value. Prices have a direct
impact on a firm’s bottom line.
Explain the parameters on which Pricing decision are based
Pricing is a very critical decision in international marketing management because it is a major factor
influencing a firm’s total revenue from exports and its profitability. There is no thumb rule or any
formula that can be applied in pricing a product correctly. There is no doubt that as is the case in the
domestic market the interaction of the market force like demand and supply affect the price at which
the product can be sold in the international market. Besides, several other factors: economic, social,
political, marketing conditions and product attributes influence the decision making in the
international marketing.
In any given marketing three basic factors determine the limits of pricing decisions of a firm. These
are product cost, the purchasing power of the consumers and demand and supply force.
The marketing manager uses following the parameters for arriving at a price.
1. Costs
2. Demand and supply
3. Economic, legal and political conditions
Costs: Costs represent the base line for setting the price. In other words, costs represent the price
floor beyond which prices cannot be dropped. Costs are made up of two components, fixed costs
and variable costs.
Cost-based pricing involves setting prices based on the costs of producing, distributing, and selling
the product plus a fair rate of return for the company’s effort and risk. A company’s costs may be an
important element in its pricing strategy .
Demand & Supply: For a marketing manager, the upper limit is demonstrated by the demand and
supply conditions as they exist in the market. The demand conditions are interpreted from the

market conditions and the consumer behavior whereas; the supply conditions are interpreted by an
analysis of the competition. The prices charged by the competitors, and the attributes and quantity
sold by the competitors, set the supply parameters.
Economic, Legal and Political conditions: These represent parameters outside the market forces
which influence the price structure. The countries where the economic policies are directed by the
Government, the economic and political conditions have an important bearing on price structures.
Economic factors such as a boom or recession, inflation, and interest rates affect pricing decisions.
Legalities lengthen any process and complicate it and thereby influence the price structure.
The more the legal constraints to be adhered to, more the price charged from the customers, in an
effort to pass the increase in costs.
Step of arriving at the Price

A suggested process for arriving at the price would include the following steps: Notes
1. Analysis of the marketing goals
2. Choosing the marketing mix
3. Composing the marketing mix
4. Determining the pricing policy
5. Defining the pricing strategy
6. Arriving at a specific price.
The marketing manager arrives at a price, within the parameters of cost, demand & supply and
economic, political and legal parameters, by adopting a process that fulfils his marketing objective.
Export Pricing
Export pricing is a technique of fixing the prices of goods and services which are intended to be
exported and sold in the overseas markets.
Export pricing is much more difficult than domestic pricing, because the exporter has to take into
account not only the cost of production but also the influence and impact of the conditions prevailing
in the international markets.
Discuss on the information needed for pricing decisions
An important pre-requisite for scientific export pricing decisions is regular availability of authentic
basic data relating to export products, foreign market and other relevant marketing information. The
details of information requirements vary from product to product, market to-market and firm to
firm. In general, the following information is usually necessary for facilitating export pricing
decision:

Product Information
1. Production cost details:
a) Prime cost
b) Factory overheads
c) General Administration overheads
2. Cost of distribution
a) Cost of packing
b) Cost of selling
c) Cost of transportation including insurance
d) Distribution costs
3. Cost of marketing support-advertising, sales promotion and technical literature.
These data may have to be obtained for the exporting countries, for competing countries and for
consuming countries.
4. Nature of the product
a) Whether a consumer or an industrial product
b) Elasticity of demand
c) Demand be pushed up by promotion
d) Importance given to the price-quality mix
e) Elasticity of supply of the product
5. International levies, taxes, etc.
6. Export incentives
7. Product guarantees
8. Installation and after-sales service requirements, and
9. Percentage incidence of rejects.
Market Information
1. Market Structure-high competition, little competition or low competition
2. Peculiarities of the market-developed and developing countries. Particular segments in
developed countries may be interested in low price goods.
3. Ruling price in the foreign market including prices of substitutes
4. Terms of payment offered by the competitors and demanded by importers
5. Import duties, border fiscal charges and quota, restrictions.
6. Major sources of supply in the importing country-local and foreign
7. Trade preferences and/or trade agreements, if any
8. Extent of G.S.P. concessions, if any
9. Brand image, brand loyalty and consumer preferences
10. The nature of market segmentation, if any
11. Publicity-need, media and cost
12. Channels of distribution and margins allowed to various intermediaries
13. Shipping freight, insurance, packing, banking, transportation and other charges incidental to
export, and
14. Documentation and invoicing requirements, health and sanitary regulations and other
government regulations.
Information Required at the Micro Level

Some of the strategic points of information necessary for pricing decisions at the micro level cover
the following aspects:
1. Production capacity of the firm-installed as well as utilized
2. Proportion of total production supplied to the home market
3. Proportion at present exported
4. Competition among domestic firms in the export field, and
5. Additional export possibilities
As regards the supplies for additional exports, the essential information required is:
1. Whether it would involve curtailment of supplies to the domestic market?
2. Whether it would lead to the utilization of idle capacity, or
3. Whether it would require commissioning of new capacity?
Factors affecting International Pricing Strategies
Pricing strategy is an important part of fixing the international price. The price has to be competitive
and based on the quality of a product. Different pricing strategies are adopted in different foreign
countries because of certain environmental factors like political, economic, socio-cultural, and legal
and so on.
There are three main factors which affect the export price strategy to be adopted by the exporter in
the foreign markets, viz. the characteristics of the product and the nature of its demand, the
philosophy of its management and the market characteristics. The pricing strategy is a short-term
tool to make fit the prices in the changing competitive situations in the short run with its pricing
policy decisions.
 Characteristics of the product and the nature of its demand: It is a major factor in fixing the
price of the product at a particular time. In other words, improvement in quality of the
product and product adaptation according to the changing competitive conditions in the
foreign market should be taken as a continuous process. Elasticity of demand is another
factor, which influences the price. If the demand of a product is inelastic, the price
reduction will not help to increase the revenue. In such a case, higher prices may be fixed
taking in view the competitive position in the market. If, on the other hand, product is
highly elastic, the sales revenue can be appreciably increased by slightly reducing the
price. Thus, pricing strategy, i.e. whether to fix higher price or lower price as compared to
the competitor’s prices very much depends upon the elasticity of demand and the
competitive position.

 The philosophy of the management: As we know that the main objective of management of
every concern is to maximize profits, this is an adverse relationship between the price and
the demand. The management can earn more profit at increased revenue by reducing the
price if the demand is more elastic. On the other hand, if the objective of the management is
to export a committed value of merchandise, the price may be even lower than the marginal
cost.
 Market characteristics: Market characteristics such as number of competitors and degree of
competition, supply position, quality of the product, substitutes available in the market etc.
determines the pricing strategy of the firm. These market characteristics vary from country
to country.
Pricing Approaches
Normally, the following pricing strategies are used in the export market:
1. Market Penetration Strategy: Under this strategy, exporters offer a very low introductory price
to speed up their sales and, therefore, widening the market base. It aims at capturing the
products in the market especially if the quality of the product is proved with its wide acceptance.
E.g. Orascom’s Banglalink introduce in Bangladeh.
2. Probe Pricing Strategy: Fixing low price for its product may have an adverse effect on the
imagwe of the firm and of the product. It may raise doubts in the minds of the buyers about the
quality of the product if it is lower than the price of competitors or if it is reduced subsequently.
In this strategy, the exporter may fix a higher price in the export market during the early stages of product
introduction. This is done to find out or probe the reaction of the buyers towards the price. The prices are
then adjusted accordingly.
3. Follow the Leader Pricing Strategy: In a competitive world market or where adequate market
information is not available, it may be useful to follow the leader in the market comparing its
product with that of the leader the exporter may then fix the price of its product. In such cases
the price of the product is lower than the leader’s product. However, this price has no rational
or scientific base for fixing the price.
4. Skimming Pricing Strategy: Under this strategy, a very high introductory price is fixed to skim
the revenue from the market. This policy is generally introduced when there is no competition
in the market. Such prices continue to be high till competitors enter the foreign market. As soon
as competitors enter the market, the exporter reduces the price. Sony has been a frequent
practitioner of market-skimming pricing, in which prices start high and slowly drop over time.
Condition for skimming price
 A sufficient number of buyers have a high current demand;
 The high initial price does not attract more competitors to the market;
 The high price communicates the image of a superior product.

5. Differential Trade Margins Strategy: Variation in trade margins may be adopted by the exporter
as the pricing strategy in foreign market. This strategy allows various types of discounts on the
list price. Quantity discounts encourage procuring huge orders. It may be based on the value or
on the quantity purchased or on the size of the package purchase. Special discounts may be
allowed while introducing the product.
6. Standard Export Pricing Strategy: In some cases, exporter quotes the standard price or list price
that is one price for all. But still there should be some margin for negotiations as in many markets
especially in under developed countries. In such cases, fixed prices may serve as a starting point
for negotiation. Hence, it is desirable to keep a certain margin for the negotiations. This strategy
is generally adopted in the export of capital goods i.e. plant & machinery.
7. Captive Product Pricing: The Captive Product Pricing is the pricing strategy adopted by the
marketers wherein, the price of the core product is generally kept low, whereas the captive
products are highly priced. For example, Gillette Razor. Another example is, printers are
generally low cost compared to the ink cartridges which are expensive and have to be bought
again from time to time. This strategy is adopted by the firms to attract the customers for the low
priced core products and make revenues from the markup added to the captive products.
8. Cheaper Price for Original Equipment and Higher Price for Spare Parts: In certain cases it might
be useful to quote lower prices for the original equipment and charging higher prices for spares
and replacement parts to be exported later as and when required. This strategy is useful where
only the supplier of the original equipment can supply standard spare parts. This strategy could
be used for tractors, telephone equipment, defense armaments, and railway equipment and so
on. For example, Nissan
Cycle of Price Setting
Market prices for

Production and Value>CostCustomer Value
similar Value
marketing cost =Profit
Lower cost
through volume Value>Differential from
lower cost alternative
Investment in Price
Special Value Considered Price Offerings
if Viable
Cycle of Price Setting

What is dumping?
Dumping is a form of price discrimination.

In international trade, when a company exports a product at a price that is lower in the foreign
importing market than the price in the exporter's domestic market in order to gain a competitive
advantage over other suppliers.
Discrimination in the form of dumping is a common international commercial practice. There is
nothing illegal about the practice of dumping. When dumping leads to material injury to the
domestic industry of the country where it is being done, the designated Authority initiates
investigations and imposition of anti-dumping duties
Types of Dumping
The major types of Dumping prevalent today are:
1. Over-capacity dumping:
2. Government-support dumping
3. Tactical dumping (discriminatory pricing)
4. Predatory dumping
Over-capacity dumping occurs when a company produces and sells products at a price that is lower
than the average cost of production, trying to cover at least its fixed costs.
Government-supported dumping takes place when the government supports a particular industry
by providing subsidies, because of which such firms can sell their products at a price below the
production costs.
Tactical dumping occurs when a firm sells the same product at different prices in different markets.
Predatory dumping aims at eliminating the competition to gain exclusive control of the market. It is
an extreme form of discriminatory pricing where the firm aims at monopolizing a market. This
method of dumping is most likely to cause destructive injury to the country where the product is
being dumped.
Q. Define Dumping. Explain the various forms of dumping
Counter Trade
Counter-trade is one of the oldest forms of trade in the government mandate to pay for goods and
services with something other than cash.
Countertrade is a reciprocal form of international trade in which goods or services are exchanged
for other goods or services rather than for hard currency.
In short, a good-for-goods deal is Counter-trade. Counter trade constitutes an estimated 5-30 percent
of total world trade.
There are three primary reasons for Counter-trade:
(i) Provides a trade financing alternative to those countries that have an international debt
and liquidity problems,
(ii) Relationship may provide LDCs and MNCs with access to new markets, and
(iii) Fits well conceptually with the resurgence of bilateral trade agreements between the
governments.
Types of Counter-trade
There are several types of Counter-trades including barter, counter-purchase, compensation trade,
switch trading, and offsets and clearing agreements.
 Barter is the simplest of many types of Counter-trades. It is a onetime direct and
simultaneous exchange of products of equal value (one product or another). By removing
money as a medium of exchange, barter makes it possible for cash tied countries to buy and
sell. Although price must be considered in any counter-trade, price is only implicit and best
in the case of barter.
 Under a counter purchase arrangement, the exporter sells goods or services to an importer
and agrees to also purchase other goods from the importer within a specified period. A recent
example of this is the ongoing trade between Congo and China where infrastructure is being
traded for a supply of metals. Unlike barter, which is a single transaction with an exchange
price only implied, counter-purchase involves two separate transactions—each with its own
cash value. A supplier sells a facility or product at a set price and orders unrelated or non-
resultant products to offset the cost to the initial buyer.
 Next is compensation trade or buy back. A compensation trade requires a company to
provide machinery, factories or technology and to buy products made from this machinery
over an agreed on period. Unlike counter-purchase, which involves two unrelated products, the two
contracts in a compensation trade are highly related. Under a separate agreement to the sale of
plant or equipment, a supplier agrees to buy part of the plant’s output for a number of years.
 In an offset, a foreign supplier or manufacturer is required to assemble the product locally
and purchase local components as an exchange for the right to sell its products locally. In
effect, the supplier has to manufacture at a location that may not be optimal from an
economic point of view. Offsets are often found in purchases of aircraft and Military
equipment.
 Switch Trading: In this method one company trades products and services or, in some cases,
builds infrastructure like roads, railway lines, hospitals with another nation and, in turn, are
obligated to make a purchase from that nation. One such example is a deal proposed by the
Philippine Government where they offer to trade Philippine coffee for essential products.
 Clearing Agreement is clearing account barter with no currency transaction required. With
a line of credit being established in the central banks of two countries, the trade in this case
is continuous and the exchange of products between two governments is designed to achieve
an agreed on value or volume of trade tabulated or calculated in non-convertible “clearing
account units”.
Q. Explain Transfer pricing. Which are different forms of transfer pricing?
Transfer Pricing

In international marketing, different units under the same corporate body but located in different
foreign countries, exchange goods and services among themselves. The pricing of such exchanges
(of goods and services) is known as transfer pricing.
A rational system of transfer pricing is required to ensure profitability at each level. Global
companies, while determining transfer prices for supplies to subsidiaries and affiliated in foreign
countries, take into account a number of factors like taxes and duties leviable in the countries
concerned, their market conditions, ability of the potential customers to pay for the customers to pay
for the company’s products, different profit transfer rules, Marketing Mix conflicting objectives of
joint venture partners and varying government regulations.
There are four major approaches to transfer pricing:
1. Transfer at cost
2. Transfer at cost plus overhead and margin
3. Transfer at price derived from end market prices
4. Transfer at “arm’s length price”
Details of these methods are given below:

 Transfer at Cost Method: This approach is based on the assumption that lower costs lead to
better performance by the subsidiary/affiliate. This also helps to keep duties at the receiving
end to the minimum. The companies using this method of transfer pricing do not have
expectations of profits on transfer sale. Rather, the receiving unit (subsidiary or affiliate) is
expected to generate profit by subsequent sale.
 Transfer at Cost plus Method: This method is applied in recognition of the principle that
profit must be shown for every product or service at every stage of movement through the
corporate system. But this may result in pricing that is completely unrelated to the
competition or demand conditions in foreign markets. However, some companies having
wide experiences and information about various foreign markets use this method quite
successfully.
 Market-based Transfer Pricing Method: Under this method, the price is derived from the
competitive foreign market price. It may therefore be too low for the selling subsidiary and
the production cost may not be covered. It may be fruitfully used to enter a new market
which may be too small to support local manufacturing. This method enables a company to
establish its name or franchise in the new market without undertaking production there.
 Transfer at “Arm’s Length Price”: In this method, the transfer price is the price that
unaffiliated parties in a similar transaction agree on. The arm’s length price may be usefully
applied if it is viewed not as a single point price but rather a range of prices. In fact, pricing
at arm’s length in the case of differentiated products, results not in pre-determinable specific
prices but in prices that fall within a pre-determinable range. The problem with this method
occurs when the product has no external buyers or is sold at different prices in different
markets.

Of all the four methods, the cost plus and the market based pricing are the most popular methods
used by companies in the case of inter firm transfer.
Grey Marketing
A Grey market, in simple terms, is the buying of a good in one market and selling it in another
market to benefit from the difference in prices prevailing in the 2 markets. It is also known as a
parallel market. It is the selling of a good through a distribution channel which has not been
authorized to sell that good by the original manufacturer. Although it is legal, it is unofficial and
unauthorized. Grey marketing could occur within a country but it is becoming increasingly
prevalent across countries among international brands with high price differentials and low costs of
transportation, tariffs, taxes etc.
Grey markets tend to develop in markets where information about the prices of similar goods like
cars, designer goods, consumer durables etc are cheap and easy to obtain.
3 main types of Grey Marketing are:

 Imported manufactured goods which are unavailable or very expensive in the host country
 Unissued securities which are not yet traded in the official markets
 Unregulated trading in commodity futures (crude oil)

Unit-VII
Terms of Payment and Delivery
Terms of Payment
These are the conditions under which the seller will complete the sale if they are satisfied. The terms
include the specific period within which the buyer needs to pay off the amount dues to the seller of
the product or service. It can be said in general that, terms of payment reflects the extent to which
the seller requires a guarantee of payment before he loses control over the goods.
There are four main methods using by the exporters and importers to fulfil the contract value. These
are Advance payment, open Account System, Consignment Sale and Documentary Collection.
Advance Payment/Cash in Advance

 A prepayment by an importer ((foreign buyer)) to an exporter (seller) before goods are
shipped, or a cash advance for travel expenses.
 This method is the most desirable for the Exporter; the Importer has to rely on the integrity
of the Exporter and his capacity to execute the order in time.
 In this Payment terms, the exporter can avoid credit risk because payment is received before
the ownership of the goods is transferred and the least attractive option for the buyer. If the
exporter is not sure about creditworthiness of the buyer, he may prefer cash in advance as extra
precaution.
 On the account of the above, some countries have imposed Exchange Control restriction
regarding imports. For example, as per regulation of Bangladesh Bank an exporting firm will
be allowed to send a maximum of US$ 10,000 any bank guarantee against a bonafide business
purpose using their own Exporter’s Retention Quota (ERQ) etc.
Open account
 It is just opposite to the Advance payment.
 Open account means that payment is left open to an agreed-upon future date.
 When an Exporter agrees to sell the commodity on open account system to the Importer, he
despatches the goods to the buyer directly followed by the transport documents and an
invoice requesting payment.

 An open account transaction is a sale where the goods are shipped and delivered before
payment is due, which is usually in 30 to 90 days.
 Obviously, this option is the most advantageous option to the importer in terms of cash
flow and cost, but it is consequently the highest risk option for an exporter.
 The Exporter loses control over the goods completely and leaves everything on the
integrity of the buyer.
Consignment Sale
 An international consignment transaction is based on a contractual arrangement in which
the foreign distributor receives, manages, and sells the goods for the exporter who retains
title to the goods until they are sold.
 Selling on consignment means giving your car to someone else, usually a motor dealer, to
sell on your behalf. Generally you set the minimum price you will accept and the dealer will
add a commission to it. If you sell goods sold on consignment, you have agreed to sell the
goods without first buying those goods from the owner. Typically, your agreement specifies
one of the following:
1. You agree to sell the goods on behalf of the owner as an agent
2. You agree to purchase the goods for an agreed price when you find a buyer.
 Goods regularly sold on consignment include: motor vehicles, boats, wedding and formal
dresses, cameras, farm machinery and artworks.
 Exporting on consignment is risky as the exporter is not guaranteed any payment and its
goods are in a foreign country in the hands of an independent distributor or agent.
Characteristics of Consignment
 Applicability Recommended for use in competitive environments to enter new
markets and increase sales in partnership with a reliable and trustworthy foreign
distributor.
 Risk: Significant risk to the exporter because payment is required only after the goods
have been sold to the end customer
 Pros:
o Help enhance export competitiveness on the basis of greater availability and
faster delivery of goods
o Help reduce the direct costs of storing and managing inventory
 Cons
o Exporter is not guaranteed payment
o Additional costs associated with risk mitigation measures
Documentary Collection
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a
payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank
(importer’s bank), along with instructions for payment. Funds are received from the importer and

remitted to the exporter through the banks involved in the collection in exchange for those
documents.
The Exporter prepares the proper financial and commercial document including the transport
document and hands over to his Banker requesting in clear terms as to how the documents are to be
delivered to the Importer at the other end.
Four main parties to a documentary collection are the Principal, i.e. the Exporter, The Remitting
Bank – The Exporter’s Bank, The Collecting Bank – The Bank in the Importer’s country and The
Importer, the consignee.
o When the Exporter wants the Bank to hand over the export documents to the Importer only
against payment immediately, the bill of exchange is called a Sight Draft.
o In case the Exporter wishes to give some time (30 days, 60 days, 90 days, etc.) to the Importer
to arrange for the funds but at the same time would not like to part with the documents
before payment of money, the appropriate bill of exchange is called a D/P (Document against
Payment).
Banks act as intermediaries to collect payment from the buyer in exchange for the transfer of
documents that enable the holder to take possession of the goods. The procedure is easier than a
documentary credit, and the bank charges are lower. The bank, however, does not act as surety of
payment but rather only as collector of funds for documents.
Types of payment
There are three standard ways of payment methods in the export import trade international trade
market:
1. Clean Payment
2. Collection of Bills
3. Letters of Credit L/C
Clean Payments
In clean payment method, all shipping documents, including title documents are handled directly
between the trading partners. The role of banks is limited to clearing amounts as required.

Clean payment method offers a relatively cheap and uncomplicated method of payment for both
importers and exporters.
There are basically two types of clean payments:
1. Advance Payment: In advance payment method the exporter is trusted to ship the goods
after receiving payment from the importer.
1. Open Account: In open account method the importer is trusted to pay the exporter after
receipt of goods. The main drawback of open account method is that exporter assumes all
the risks while the importer get the advantage over the delay use of company’s cash
resources and is also not responsible for the risk associated with goods.
Payment Collection of Bills in International Trade

In this method of payment in international trade the exporter entrusts the handling of commercial
and often financial documents to banks and gives the banks necessary instructions concerning the
release of these documents to the Importer.
There are two methods of collections of bill:
1. Documents against Payment D/P: In this case documents are released to the importer only
when the payment has been done.
2. Documents against Acceptance D/A: In this case documents are released to the importer only
against acceptance of a draft.
The Payment Collection of Bills also called “Uniform Rules for Collections” is published by
International Chamber of Commerce (ICC) under the document number 522 (URC522) and is
followed by more than 90% of the world’s banks.
Letter of Credit L/C

Letter of Credit also known as Documentary Credit is a written undertaking by the importers bank
known as the issuing bank on behalf of its customer, the importer (applicant), promising to effect
payment in favor of the exporter (beneficiary) up to a stated sum of money, within a prescribed time
limit and against stipulated documents.
L/C is a definite conditional undertaking of the L/C issuing Bank to the beneficiary (exporter) to
honor submitted complied import bills.
It is published by the International Chamber of Commerce under the provision of Uniform Custom
and Practices (UCP) brochure number 500.

Figure- flow chart of documentary credit
Applicant/
Importer/Buyer: Applicant is the buyer of the goods or services supplied by the seller.
Letter of credit is opened by the issuing bank as per applicant's request.
Beneficiary/
Exporter/ Seller: Seller of goods or provider of service.
Beneficiary is the party in whose favor the LC is established.
Issuing Bank: The bank that issues or opens LC at the request of an applicant or its own
behalf.
Advising Bank: Advising bank is the bank through which the LC is advised to the exporter.
Or, the bank to which the issuing bank forwards the LC with instruction to
notify the exporter/beneficiary. It is a bank situated in the exporting country.
Documents related to import

As per article-5 of UCP-600, banks deal with documents and not with goods, services or performance
to which documents may relate.
The document that deals with are given below:
• Commercial invoice
• Transport document (Bill of lading/air way bill, Rail way receipt etc)
A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier
which details a shipment of merchandise and gives title of that shipment to a specified party.
A bill of lading is a document that is usually stipulated in a credit when the goods are
dispatched by sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a

document of tile to the goods. It also constituted a document that is, or may be, needed to
support insurance.
• Insurance documents
• Bill of Exchange
• Other documents-Certificate of Origin, Packing list, Inspection certificate, Shipping advice,
Radio activity measurement certificate, Weight Certificate and so on.
L/C Types
 Revocable & Irrevocable Letter of Credit (L/C): A Revocable Letter of Credit can be cancelled
without the consent of the exporter. An Irrevocable Letter of Credit cannot be cancelled or
amended without the consent of all parties including the exporter.
 Sight & Time Letter of Credit: If payment is to be made at the time of presenting the
document then it is referred as the Sight Letter of Credit. In this case banks are allowed to
take the necessary time required to check the documents. If payment is to be made after the
lapse of a particular time period as stated in the draft then it is referred as the Term Letter of
Credit.
 Confirmed Letter of Credit (L/C): When an issuing bank authorize or requests another bank
/third bank to confirm its irrevocable credit and the letter has added its confirmation, such
confirmation constitutes a definite undertaking of the confirming bank in addition to that of
issuing bank. This type of L/C is called confirmed irrevocable letter of credit. A confirmed
letter of credit is typically used when the issuing bank of the letter of credit may have
questionable creditworthiness and the seller seeks to get a second guarantee to assure
payment.

Unit-VIII
International Logistics & Distribution Channel
 What is a Distribution Channel?

 Compare direct and indirect selling channels. Discuss the types of direct and indirect intermediaries
in brief.
 What factors influence the choice of distribution channels and mode of transportation?
 The Value Chain Concept with its activities.
International Distribution
Distribution means the process by which we make the goods or the service available to the end
consumer.
Distribution is the course that goods take between production and the final consumer. This course
often differs on a country by country basis and MNCs will spend a considerable amount of time in
examining the different systems that are in place, the criteria to choose distributors and channels
and how distribution segment will be employed.
The marketing function of distribution involves the critical process of ensuring that the products of
a firm reach the proper location for sale at the proper time and in proper quantity.
Distribution decisions are also of critical importance because they are often long-term in nature,
involving the signing of contracts with transporters or equipment leasers or the development of
expensive capital equipment or infrastructures, such as rail lines, wharfs, ports, docks and loading
facilities.
This process, difficult in domestic markets grows more complicated in international environments
because it has two stages. First, the international exporter must transport goods from the domestic
production site the foreign market, and then establish methods of distribution for the goods within
the foreign country.
What Is a Distribution Channel?
A distribution channel in marketing refers to the path or route through which goods and services
travel to get from the place of production or manufacture to the final users.
When the Companies have to market abroad they use two principal distribution channels: (i) direct
selling and (ii) indirect selling.
Direct Selling
Direct selling is employed when a manufacturer develops an overseas channel. This channel requires
that the manufacturer deals directly with a foreign party without going through an intermediary in
a home country.

Dell grew its consumer personal computer (PC) business in the 1990's and 2000's using the direct
sales model.
A distribution system is said to be direct when the product or service leaves the producer and goes
directly to the customer with no middlemen involved.
The greatest advantage of direct selling channel is the active market exploitation, since the
manufacturer is more directly committed to its foreign markets.
Direct selling has a number of problems also. It is difficult channel to manage if the manufacturer is
unfamiliar with foreign market. Moreover, the channel is time consuming and expensive. Without a
large volume of business the manufacturer may find it too costly to maintain the channel.
Indirect selling
Indirect selling also known as the local or domestic channel is employed when a manufacturer
markets its product through another firm that acts as the manufacturer’s sales intermediary
(middleman).
As such, the sales intermediary is just another local or domestic channel for the manufacturer
because there are no dealings abroad with a foreign firm. By exporting through an independent local
middleman, the manufacturer has no need to set up an international department.
An indirect distribution channel relies on intermediaries to perform most or all distribution
functions.
Advantages
 The channel is simple and inexpensive. The manufacturer incurs no startup cost for the
channel and is relieved of the responsibility of physically moving goods overseas.
 Because the intermediary very likely represents separate clients who can help share
distribution costs, the costs on moving the goods are further reduced.
Disadvantage
 Dependence on intermediary
 Lesser control: Exporter does not enjoy much control over marketing operations.
Types of intermediaries: direct channel

There are several types of intermediaries associated with the direct channels:
1. Foreign Distributor:
A foreign distributor is a foreign firm that has exclusive rights to carry out distribution for a
manufacturer in a foreign country or specific area. Order must be channeled through the
distributor even when the distributor chooses to appoint a subagent or sub-distributor. The
distributor purchases merchandise from the manufacturer at a discount and then resells or
distributes the merchandise to the retailers and sometimes final consumers. In this regard,
the distributor’s function in many countries may be a combination of wholesaler and retailer.

But in most cases the distributor is usually considered as an importer or foreign wholesaler.
The length of association between the manufacturer and its foreign distributor is established
by a contract that is renewable provided the continued arrangement is satisfactory to both.
There are a number of benefits for using a foreign distributor. Unlike agents, the distributor
is a merchant who buys and maintains merchandise in its own name. This arrangement
simplifies the credit and payment activities for the manufacturer. To carry out the
distributing function the foreign distributor is often required to warehouse adequate
products, parts, and accessories. Apple Computer now does its own distribution in Japan
because the services of Toray Industry, its foreign distributor, proved inadequate.
2. Foreign Retailer:
If foreign retailers are used, the product in question must be a consumer product rather than
an industrial product. There are many channels by which a manufacturer may contact
foreign retailers and trust them in carrying product ranging from a personal visit by
manufacturer’s visit to mailings of catalogues, brochures and other literature to prospective
retailers. Retailers enable producers to reach a wider audience, particularly if broad coverage
by the major retail chains can be obtained.
3. State Controlled Trading Company:
For some products particularly utility and telecommunication equipment a manufacturer
must contact and sell to the state controlled companies.
4. End User:
Sometime a manufacturer is able to sell directly to foreign end users with no intermediaries
involved in the process. This direct channel is a logical and natural choice for costly industrial
products. For most consumer products the approach is practical for some products and in
some countries. A significant problem with consumer purchasers can result from duty and
clearance problems. A consumer may place an order without understanding his or her
country’s import regulations. When the merchandise arrives the consumer may not be able
to claim it. As a result the product may be seized or returned on a freight collect basis.
Types of Intermediaries: Indirect Channel

A manufacturer may find it difficult, rather impractical, to sell directly to various foreign parties
(foreign distributors, foreign retailers, state controlled trading companies and end users) for a
majority of products. Other intermediaries have come between these foreign buyers and
manufacturers.
1. Agents who look after the interests of manufacturers: Export Broker is to bring a buyer and
seller together, for which he is paid the fee. The Broker may be assigned some or all foreign
market seeking potential buyers. As a representative of the manufacturer the export broker
may operate under its own name or that of the manufacturer. For any action performed the
broker receives a fee/ commission. An export broker does not take the title of the goods. He
is very useful because he has the extensive knowledge of the market, its supply, demand and
foreign customers.
2. Manufacturer’s export agent or sales representative: Manufacturer’s export agent is not a
manufacturer’s employee. In fact, he is an independent businessperson who usually retains
his/her identity by not using the manufacturer’s name. Having more freedom than the
manufacturer’s own sales person, a sales representative can select when, where and how to
work within the assigned territory.
Like a broker the manufacturers export agent works for commission. Unlike the broker, the
relationship with the manufacturer is continuous and more permanent. The contract is for a
definite period of time and the contract is renewable by mutual agreement. The
manufacturer, however, retains some control because the contract defines the territory, terms
of sale, method of combination and so on.
3. Export Management Company: An Export Management Company (EMC) manages under
contract the entire export programme of a manufacturer. An EMC is also known as a
Combination Export Manager (CEM) because it may function as Export Department or
several allied but non-competing manufacturers. In this regard, those export brokers and
manufacturer’s export agents who represent a combination of clients can also be called EMC.
When compared with export brokers and manufacturer’s export agents the EMC have
greater freedom and considerable authority. EMC provide extensive service ranging from
promotion to shipping arrangement and documentation.
4. Cooperative exporter: A cooperative exporter is a manufacturer with its own export
organization that is retained by other manufacturers to sell in some or all-foreign markets. In
fact, this intermediary is also a manufacturer; however, it functions like any other export
agent. The usual arrangement is to operate as an export distributor for other suppliers
sometimes acting as a commission representative or broker. Because, the cooperative
exporter arranges shipping it takes possession of goods but not the title.
5. Webb-Pomerene association: A Webb-Pomerene Association is formed when two or more
firms usually in the same industry join together to market their products overseas. Basically
a Webb-Pomerene Association is an export cartel. Although cartels are illegal in some of the
countries like US,
6. Purchasing/buying agent: An agent who purchases goods on behalf of foreign buyers. By
residing and conducting business in the exporter’s country the purchasing agent is in a
favorable position to seek a product that matches the foreign principal’s preferences and
requirements. Operating on the overseas customers’ behalf the purchasing agent acts in the
interest of the buyer by seeking the best possible price. Therefore, the purchasing agent’s
client pays a fee or commission for the services rendered. The purchasing agent is also known
as Commission Agent, Buyer for Export, Export Commission House and Export Buying
Agent.
7. Country controlled buying agent: The country controlled buying agent is empowered to
locate and purchase goods for its country. This agent may have a representative, who makes
formal visit to the supplier country when the purchasing need arises.

8. Resident buyer: Resident Buyer is another variation on the purchasing agent. The resident
agent as the name implies is an independent agent that is usually located near the highly
centralized production industry.
9. Export merchant: One kind of domestic merchant is the export merchant. An export
merchant seeks out need in foreign markets and makes purchases from manufacturers in its
own country to fill those needs. Usually the merchant handles staple goods, undifferentiated
products or those in which brands are unimportant. After having the merchandised packed
and marked to specifications, the export merchant resells the goods in his name through his
contacts in the foreign markets.
10. Export drop shipper: An export drop shipper also known as a desk jobber or cable merchant
is a special kind of export merchant. As all these imply the mode of operation requires the
drop shipper to request the manufacturer to “drop ship” a product directly to the overseas
customers.
The export drop shipper places an order with a manufacturer directing the manufacturer to
deliver the product directly to the foreign buyer on the receipt of order from overseas. The
manufacturer collects payment from the drop shipper who in turn is paid by the foreign
buyer.
11. Export distributor: This distributor is authorized and granted an exclusive marketing right
to represent the manufacturer and to sell in some or all-foreign markets. It pays for goods in
his domestic transaction with the manufacturer and handles all financial risks in the foreign
trade.
12. Trading companies: The buyers and sellers in the foreign markets have no knowledge of each
other or no knowledge of how to contact each other. Trading companies have come into
existence to fill this void. In international marketing activities, for many countries this type
of intermediaries may be the most dominant form in volume of business and in influence.
Many trading companies are large and have branches wherever they do business.
The Value chain Concept
Harvard’s Michael Porter has proposed the value chain as a tool for identifying ways to create more
customer value.
Value Chain is a synthesis of activities performed to design, produce, market, deliver, and support
its product.
2.2 Activities of Value Chain

Nine strategically relevant activities—five primary and four support activities
The primary activities are

(1) Inbound logistics- bringing materials into the firm.
(2) operations, or converting materials into final products;
(3) outbound logistics, or shipping out final products;

(4) marketing, which includes sales; and
(5) Service means after sales service.
Specialized departments handle the support activities—

(1) Procurement,-acquisition of goods and service from outside suppliers.
(2) Technology development- pertains to the equipment, hardware, software, procedures and
technical knowledge brought to bear in the firm's transformation of inputs into outputs.
(3) Human resource management- consists of all activities involved in recruiting, hiring, training,
developing, compensating and (if necessary) dismissing or laying off personnel.
(4) Firm infrastructure- It refers to an organization's structure and its management, planning,
accounting, finance and quality-control mechanisms. Infrastructure covers the costs of general
management, planning, finance, accounting, legal, and government affairs.
What factors influence the choice of distribution channels and mode of transportation?
Factors Affecting the Choice of Distribution Channels

The factors affecting the choice of distribution channels, they may be described as under:
 The nature of the product:

Is it perishable or fragile? Perishable goods, such as vegetables, butter, Bakery products, fruits, and
seafood, etc. require direct selling as they must reach the consumers as easily as possible after
production because of the dangers associated with delays and repeated handling.
Industrial and consumer goods: When the product being manufactured and sold is Industrial in
nature, direct channel of distribution is useful because of the relatively small number of
customers need for personal attention, salesman technical qualifications, and after-sale services,
etc. However, in the case of consumer product, the indirect channel of distribution, such as
wholesalers, retailers are the most suitable.
 The degree of control over distribution.
Greater control over the distribution process requires greater involvement by a firm in terms of
time, money and energy.

Whatever distribution mix a firm wishes to employ may be constrained by the availability of
middlemen or channels of distribution, by political limitations imposed by the characteristics of
the country or by infrastructural deficiencies in the country, which limit types, and methods of
usable distribution modes.
 Cost:
Whatever distribution mix a firm wishes to employ may be constrained by the availability of
middlemen or channels of distribution, by political limitations imposed by the characteristics of
the country or by infrastructural deficiencies in the country, which limit types, and methods of
usable distribution modes.
 Development:
The development level of a nation also affects the distribution resources and network. A lack of
refrigerated methods of transportation will limit the marketing for frozen goods or fresh
produce.
Factors to Consider while choosing the most Suitable Mode of Transport

Transportation is a means of moving goods from the place of production to the place of
consumption. Whenever a new company is to be established, the transportation function is to be
kept in mind before selecting the site of the company. To supply a product both between the
countries and within a country there are fundamentally three modes of transportation: air, water
(ocean and inland) and land (rail and truck).
The appropriate transportation mode depends on (i) market location, (ii) speed and (iii) cost.
 Market location: A firm must first consider market location. Contiguous markets can be
served by rail or truck as the case may be. To supply goods between continents sea or air
transportation is needed.
 Speed: Speed is another consideration to decide the mode of transport. When speed is
essential, air transportation is preferred mode of distribution.
 Cost: The cost is another factor to be considered in the selection of the transportation. Cost is
directly related to speed – a quick delivery costs more. The cost of transportation adds to the
cost of the goods so it should always be kept in mind.
 Nature of Commodity: Rail transport is most suitable for carrying cheap, bulk and heavy
goods. Perishable goods which require quick delivery may be carried through motor
transport or air transport keeping in mind the cost and distance.

Unit-IX
Communication Decision for International Markets
Communication involves transmitting, receiving, and processing information. When a person,

group, or organization attempts to transfer an idea or message and the receiver is able to
comprehend the information, communication takes place.
Communication is interchange of thought or information between two or more persons to bring about mutual
understanding and desired action. It is the process of conveying information from a sender to a receiver
with use of a medium in which the communicated information is understood the same way by both
sender and receiver.
Marketing communications are the means by which firms attempt to inform, persuade, and remind
consumers-directly or indirectly—about the products and brands they sell.
Brand communication is undertaken by organizations to create popularity for their product among
the end-users. Brand communication goes a long way in promoting products and services among
target consumers.
Steps in Developing an Effective Communication
The important steps in developing an effective communication are the following:

1. Identifying the target Audience: The target audience may be different in different countries
for the same product. In several cases the need to be fulfilled and satisfied by the product
varies between markets. For example, a bicycle is a basic means of transportation in a country
like Bangladesh. The important category of consumers for the same is small farmers, blue-
collar workers and students. In some advanced countries, bicycles are used for sporting and
exercising, hence the target audience is different. Certain consumer durables which are used
even by the high income as well as low income groups in advanced countries may be used
only by high income groups in developing countries.
2. Determining Communication Objectives: The communication objectives may be different in
different cases. When the product is in the introduction stage in a market the emphasis of
communication could be on consumer education and creation of primary demand. In a
market where the product is at other stages of the life cycle, the communication objectives
would be different. If there is a new competition in a market, countering that competition
could be a major objective of advertising in that market at that point of time.
Communication objective should be-
 Brand awareness
 Increase sales
 Increase customer confidence
 Building brand image
 Capture market share
3. Determining the message: Formulating a message requires solving four problems:
 what to say (message content),
 how to say it logically (message structure),
 how to say it symbolically (message format), and
 who should say it (message source).
The decisions regarding the message content, message structure, message format and
message source are influenced by certain environmental factors such as cultural factors
and legal factors. The differences in the environmental factors among the countries may
call for different messages as deemed appropriate for each market.
4. Budget Decisions: The total promotional expenditure and apportionment of this amount to
different elements of the promotion mix are very important and difficult decisions.
Review Q. What are the steps involved in developing an effective communication?
Integrated Marketing Communication
Integrated marketing communications (IMC) is of the coordination and integration of all marketing
communications tools, avenues, and sources in a company into a seamless program designed to
maximize the impact on customers and other stakeholders.
As defined by the American Association of Advertising Agencies, Integrated Marketing

communications “recognizes the value of a comprehensive plan that evaluates the strategic roles of a variety
of communication disciplines advertising, public relations, personal selling, and sales promotion and combines
them to provide clarity, consistency, and maximum communication impact.”
In integrated marketing communication, all the dimensions of marketing communication work
together for increased sales and maximum cost effectiveness. It is an approach to achieving the
objectives of a marketing campaign, through the coordinated use of different promotional methods
that re-enforce each other.

Steps of Integrated Marketing Communication
Components of IMC
 The Foundation: It involves detailed analysis of both the product and the target market. It is
essential for marketers to understand the brand, its offerings and end-users. They need to be
aware of the needs, attitudes and expectations of the target customers as well as keep a close
watch on competitor’s activities.
 The Corporate Culture: The features of products and services have to be in line with the
work culture of the organization. Every organization has a vision and the marketers to keep
that in mind before designing products and services.
 Brand Focus: Brand Focus represents the corporate identity of the brand.
 Consumer Experience: Marketers need to focus on consumer experience, i.e. what the
customers feel about the product. A consumer is likely to choose a product which has good
packaging and looks attractive. Products need to meet and exceed customer expectations.
 Communication Tools: Communication tools include various modes of promotion of a
particular brand; such as advertising, direct selling, promoting through social media such as
facebook, twitter, etc.
 Promotional Tools: Brands are promoted through various promotional tools such as trade
promotions, personal selling and so on. Organizations need to strengthen their relationship
with customers and external clients.
 Integration Tools: Organizations need to keep a regular track on customer feedbacks and
reviews.
Review Question
 Define Integrated Marketing Communication. What are its components?
 Explain the tools used in Integrated marketing communication in brief.

Global Communication Strategy
A Global Communication strategy is extremely beneficial for a firm. It can help market the product
or service in many different countries around the world. Global communication has historically
required large budgets. However, emerging communication techniques like social media can make
global communication campaigns affordable for companies of all sizes.
The major benefits of a Global Communication Strategy are:

 Consistency: Creating a global communication program enables a firm to communicate a
consistent message to customers in all its export markets. Consumers receive marketing
messages from a number of different sources, so delivering a consistent message is the most
effective way to reach consumers.
 Reduced Risk: The risk in developing a global campaign can be reduced by building a
communication strategy that is successful in delivering results in your domestic market.
Building an existing brand progressively, market by market, is the safest and most cost
effective way to create a global brand.
 Localization: A firm’s global communication program does not necessarily have to
communicate the same message exactly in every local market. It’s important to understand
and respect the language, cultural and business differences in individual territories. The firm
should adapt its communication strategy keeping in mind the local preferences, in terms of
the language, cultural and business differences. This process is called localization.
 Leadership: A firm can build on the benefits of a global brand using Brand Leadership. This
involves defining the important elements of its brand, but using a flexible approach and
customizing the communication for local markets. To ensure the brand’s success, the firm
needs to monitor the success of the communication campaign in each market with the aim of
establishing brand leadership across all key territories.
 Management of Campaigns: Running a consistent communication program reduces the cost
and complexity of managing campaigns for a firm. Some multinational companies employ
communication agencies for each territory. If each agency creates a different campaign for
the local market, costs can rise rapidly because of the duplication of effort. By developing a
single global communication strategy, the firm can reduce the number of agencies it uses,
and eliminate duplicate costs.
 Media Planning: The changing pattern of media has made it easier to develop affordable
global campaigns. Global communication campaigns of the early 2000s relied heavily on
mainstream television and press advertising. Because of the emergence of social media and
the importance of Web search, a firm can now focus on placing its messages in the media that
consumers prefer. When consumers in different countries search the Web, they will receive
the same consistent branding message from the firm’s website irrespective of where they are
located.

Review Question
1. What are the major benefits of an effective global communication strategy?
Factors Influencing Communication Decisions
Different countries interact in business-related activities on an everyday basis. There are different
economic, social and cultural differences among them. These differences prove to be obstacles in
business communication. Knowledge of such factors eliminates the common mistakes and
misunderstandings involved with business communication between different cultures. There are
various factors which influence business communication decisions in international markets.
These are explained below.
Advertising:
 Any paid form of non-personal presentation and promotion of ideas, goods, or services by an
identified sponsor. It is a means by which a firm communicates with potential customers,
highlighting its product.
 Global advertising is the use of the advertising appeals, messages, art, copy, photographs,
stories, and video segments in multiple country markets. Global campaigns with unified themes
can help to build long-term product and brand identities and offer significant savings by
reducing costs involved in producing advertisements. Global advertising also offers companies
economies of scale in advertising as well as improved access to distribution channels.
 There are two major decisions that a firm has to address:
 The major question faced by firms is if the specific advertising message and media
strategy needs to be changed from country to country. Local country managers can share
important information, such as when to use caution in advertising creativity. Example:
Some Examples of Cultural considerations are: Images of Male/female intimacy are in
bad taste in Japan, and illegal in Saudi Arabia
 Another issue faced by advertisers is which medium to use when communicating with
the target audience. The available alternative media can be broadly categorized as:
1. Print media: daily and weekly newspapers to magazines and business publications
with national, regional, or international audiences
2. Electronic media: broadcast television, cable television, radio, and the Internet
3. Other media: outdoor, transit, and direct mail advertising
Globally, media decisions must take into account country specific regulations.
Example: In Europe, television advertising either does not exist or is extremely limited in
Denmark, Sweden and Norway. The time allowed for advertising each day varies from
12 minutes in Finland to 80 in Italy, with 12 minutes per hour per channel allowed in
France and 20 in Switzerland, Germany, and Austria.

Public Relations
 Public relations (PR) is the process of maintaining a favorable image and building beneficial
relationships between an organization and the public communities, groups, and people it
serves.
 The Tools that are generally used under Public Relations can be News releases, Media kits,
Press conferences
 Public relations professionals who are responsible for international business operations
should serve as more than a company mouthpiece. They should be able to simultaneously
build consensus and understanding, create trust and harmony, articulate and influence
public opinion, anticipate conflicts, and resolve disputes.
 Public Relations expenditures are growing at an average of 20% per year.
 Public relations practices can be affected by:
 Cultural traditions
 Social and political contexts
 Economic environment
Personal Selling
Personal selling is personal communication between a firm representative and a potential customer
to persuade prospective customer to buy something their product or service idea. This is in contrast
to the mass, impersonal communication of advertising, sales promotion and other promotional tools.
The efforts of sales people have a direct impact on such diverse activities as:
 Increase awareness of new products and business ventures.
 Keeping existing products running well in market.
 Provide convenience to customers as products are sold directly at homes.
 Creating a relationship and trust through interpersonal approach.
 Generating actual sales for the firms.
 Direct Feedback from customers.
 Supplement with the product promotion.
 Provides an effective method in explaining firm’s reliability and reputation, product features,
clarifying customer doubts and resolving their issues.
One of the major limitations is its high cost, especially in advanced countries.
Sales promotion:
 Short-term incentives to encourage the purchase or sale of a product or service.
 Sales promotion refers to any paid consumer or trade communication program of limited
period that adds substantial value to a product or brand.
 Sales promotion is a vital element of marketing communication policy which accounts
for more promotional expenditures than advertising, personal selling and publicity in
some countries.

 Consumer sales promotions are intended to make consumers aware of a new
product, to encourage nonusers to sample an existing product, or to boost overall
consumer demand.
Example: Coupons, rebates, Loyalty programs, free sampling, etc.
e.g., Tk. 5 off for buying 1 lire Coca-Cola
 Trade sales promotions are designed to raise product availability in distribution
channels. For example, point of purchase displays, trade shows, etc. e.g..,5 bag
cement given to dealer as free.
 Business to business Sales promotion is targeted at the B2B market. For example,
Price reductions, trade ins, trade shows, etc.
Objectives of Sales Promotion:
 Building product awareness-Sales promotion is highly effective in exposing customers to

products for the first time. They serve as key promotional components in the early stage of
product introduction.
 Creating interest-Sales promotion is integral and effective in creating interest among
customers.
 Provide information- some sales promotion techniques provide information to customers.
 Stimulating demand- Sales promotion builds demand by convincing customers to make a
purchase.
 Reinforcing a Brand-After purchase, Sales promotion can be used to encourage additional
purchase and also as a reward for purchase loyalty in the form of special promotions.
Benefits of Sales Promotion are as follows:

 Provides a real incentive to buyers
 Reduces the perceived risk associated with purchasing a product
 Provides accountability for communications activity
 Provides methods of collecting additional data for database
Review Questions
1. Define Sales promotion. What are the different types of Sales Promotion?
2. What are the major decisions that the firm has taken for an advertising strategy in the global market?


MKT-312 International Marketing For EMBA PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MKT-312 International Marketing For EMBA PDF

Uploaded by

Copyright:

Available Formats

Study Note

Prepared according to the Course Curriculum of

Figure 1.1 illustrates the total environment of an international marketer.

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 2|

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 3|

The primary obstacles to success in international marketing are a person’s self-reference

The Self-Reference Criterion

In international marketing scenarios, in different cultural environments and hence a self-

It is very important to understand cultural differences, otherwise we will fail to recognize

Example: “America is the best”

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 4|

Cross-cultural marketing is defined as the strategic process of marketing among

Cross-cultural marketing demands marketers to be aware of and sensitive to the cultural

1. No Direct Foreign Marketing:

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 5|

Difference between Licensing Franchising

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 6|

A positive balance is known as a trade surplus if it consists of exporting more than is

Balance of Balance of Payments (BoP) is an accounting record of all monetary transactions

Simply, BOP is the difference between receipt and payments.

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 7|

Protectionism It means the restriction of imports into a country by government measures.

Disadvantages There are also weaknesses in using the system of protectionism.

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 8|

A tariff, simply defined, is a tax imposed by a government on goods entering at its

Weaken Balance-of-payments positions.

Restrict Manufacturers’ supply sources.

In addition, tariffs are arbitrary, are discriminatory, and require constant

Types of Nontariff Barriers

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 9|

Antidumping Anti-dumping duty is a tariff imposed on imports manufactured in overseas

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 10 |

Culture Culture is sum of

Elements of Five elements:

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 11 |

Eating habit, food preparation method is different in culture. The eating

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 12 |

Influence of In addition to consumption habits, thinking processes are also affected by

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 13 |

A high PDI score indicates that a society accepts an unequal, hierarchical

Uncertainty Avoidance Index(UAI)

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 14 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 15 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 16 |

Bases for Geographic Segmentation:

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 17 |

Vertical Versus Horizontal Segmentation

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 18 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 19 |

Standardized Global Marketing

Concentrated Global Marketing

Differentiated Global Marketing

Global Market Positioning is arranging for a product to occupy a clear distinctive

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 20 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 21 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 22 |

Decision Before doing any business internationally through sourcing, exporting,

Factor Costs and Conditions

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 23 |

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 24 |

Market Selection Criteria

International Marketing, Course-MKT-312 Prepared by Ahmed Sabbir 25 |

If a company decides to source locally, it has a choice of buying, building, or