International Marketing

In recent times, companies are not restricted to their national borders, but are open

for international marketing. With the increasing change in customers’ demands,

choices, preferences and tastes, the economies are expanding and giving way to

more competitive marketing. Thus, organizations need to respond rapidly to the

demands of the customers with well-defined marketing strategies.

In simple words, international marketing is trading of goods and services among

different countries. The procedure of planning and executing the rates, promotion

and distribution of products and services is the same worldwide.

The word ‘International Marketing’ is defined as the exchange of goods and services

across national borders to meet the requirements of the customers. It includes

customer analysis in foreign countries and identifying the target market.

The major participants in international marketing are as follows −

 Multinational Corporations (MNCs) − A multinational corporation (MNC) is

an organization that ensures the production of goods and services in one or

more countries other than its home country. Such organizations have their

offices, help desks or industrial set-up across nations and usually have a

centralized head office where they co-ordinate global management.

 Exporters − They are the overseas sellers who sell products, and provide

services across their home country by following the necessary jurisdiction.

 Importers − They are the overseas buyers who buy products and services

from exporters by complying with the jurisdiction. An import by one nation is

an export from the other nation.

  Service companies − A service company generates revenue by trading on

services and not on physical commodities. A public accounting company is

the best example of a service company. Revenue here is generated by

preparing returns of income tax, performing audit services, and by

maintaining financial records.

Many companies believe that their targets are limited if they only concentrate on a

single market like the U.S. Market and Global marketplace is competitive. Thus, to

enrich their market presence such companies are always on a lookout for better

opportunities worldwide.

Issues in International Marketing

International marketing is not as easy as domestic marketing. International marketing

environment poses a number of uncertainties and problems. As against, national

markets, international markets are more dynamics, uncertain, and challenging.

Especially, cultural diversities and political realities in several nations create a plenty

of barriers that need special attention. In the same way, geographical constraints

cannot be totally undermined. Widespread terrorism has created a new threat to

international trade.

Though the world is advancing in terms of information technology, innovative and

superior methods of organizing marketing efforts (like horizontal organisation,

network organisation, virtual organisation), global efforts for smooth international

trades, and so forth, yet international marketing is not that much easy to pursue, it

has become a challenge to accept.

1. Tariff Barriers:
Tariff barriers indicate taxes and duties imposed on imports. Marketers of guest

countries find it difficult to earn adequate profits while selling products in the host

countries. Sometimes, to prevent foreign products and/or promote domestic

products, strategically tariff policies are formulated that restricts international

marketing activities. Frequent change in tariff rates and variable tariff rates for

various categories of products create uncertainty for traders to trade internationally.

Antidumping duties levied on imports and defensive strategies create difficulty for

exporters.

2. Administrative Policies:

Bureaucratic rules or administrative procedures – both in guest countries and host

countries – make international (export and/or import) marketing harder. Some

countries have too lengthy formalities that exporters and importers have to clear.

Unjust dealings to get the formalities/ matters cleared create many problems to some

international players. International marketers have to accustom with legal formalities

of several courtiers where they wants to operate.

3. Variations in Exchange Rates:

Every nation has its currency that is to be exchanged with currencies of other

nations. Currencies are traded every day and rates are subject to change. Indian

Rupee, European Dollar, US Dollar, Japanese Yen, etc., are appreciated or

discounted at national and international markets against other currencies. In case of

extraordinary and unexpected moves (ups and downs) in currency/exchange rates

between two courtiers create serious settlement problems.

4. Political Instability or Environment:

Different political systems (democracy or dictatorship), different economics systems

(market economy, command economy, and mixed economy), and political instability
are some of real challenges that international markers have to face. Political

atmosphere in different courtiers offer opportunities or pose challenges to

international marketers.

Governments in different nations have their priorities, philosophies, and approaches

to the international trades. They may adopt restrictive (protectionist) or liberal

approach to international business operations. Especially, political approaches of

dominant nations have more influence in international marketing activities.

Long-term trend of global political environment is unpredictable and uncertain.

Economic policies of different nations (industrial policies, fiscal policies, agricultural

policies, export-import policies, etc.,) do have direct impact on international trade.

Drastic change in these policies creates endless difficulties to international traders.

While dealing with international markets, international political and legal environment

needs a special attention.

5. Considerable Diversities:

Different countries have their own unique civilization and culture. They pose special

problems for international marketers. Global customers exhibit considerable cultural

and social diversities in term of needs, preferences, habits, languages, expectations,

buying capacities, buying and consumption patterns, and so forth. Social and

personal characteristics of customers of different nationalities are real challenges to

understand and incorporate. Compared to local and domestic markets, it is more

difficult to understand behaviour of customers of other countries.

In the same way, as against domestic markets, to design and modify marketing mix

over time for international markets seem more difficult. Market segmentation, product

design, pricing, and distribution need more information and efforts. Promoting
products in international markets is a formidable task. Message preparation and

execution in suitable media in international markets is not easy game to play.

Language and religious diversities are the real challenge for international business

players. There are 6000 languages in the world. China (20%) is the largest in term of

native speakers, followed by English (6%), and followed by Hindi (5%). Yet English is

recognized as global business language.

6. Place Constraints (Diverse Geography):

Trade in foreign countries of far distance itself practically difficult. In case of

perishable products, it is a real challenge. Exporting and importing products via sea

route and making arrangements for effective selling involves more time as well risks.

Segmenting and selecting international markets require the marketers to be more

careful.

International Marketing Orientations- EPRG Framework

Ethnocentric Approach

Under this orientation, the management beliefs that marketing practices followed
in the home country will succeed in the foreign markets. No adaptation is
required to launch a business into another country.
In this orientation Foreign markets are looked as just extended arms of domestic
markets. In such firms all foreign market operation planning and strategizing is done
from the home base. There is little or no differentiation in products, price and
promotional measures according to international market.

The management is inclined over hiring top executives from home country because
they have a notion that domestic nationals have more supremacy over driving the
business.

The example of such change is NISSAN which in the first years of its existence on
international arena was following ethnocentric approach by selling its cars abroad
exactly as they were sold in their domestic market in Japan, after several years of its
international trading the company realized that ethnocentric international marketing
orientation is no longer relevant for some industries including automobile industry in
which they were operating and changed its approach to polycentric.

Advantages of Ethnocentric Orientation

 There is better coordination between the home and host country as strategic
decisions are taken centrally for all subsidiaries.
 Saves cost of hiring top level management in international market as officials can
migrate from the home country whenever required.
 The parent company can have a better watch on the operations and hence
exercise an effective control over the subsidiary.
Disadvantages of Ethnocentric Orientation
 It shows cultural short-sightedness of the organization.
 The failure rate of business decisions under this approach is relatively high.

Polycentric Approach

In the polycentric approach of the EPRG Framework is the opposite of the

ethnocentric approach. A company that utilizes this approach carefully consider
different markets abroad to identify host countries that could potentially offer
the most benefits. The manager under this approach believe that all markets
are different in nature and thus have their different needs.

It means that if a company has a local headquarter and a separate office

overseas in a host country that manages the operations in that or more
countries, the marketing strategies are locally created and implemented based
on the local needs.

Businesses that utilize the polycentric approach of the EPRG Framework

strongly believe that every market has its differences. For this reason, these
types of companies implement different marketing strategies for each market.
Advantages of Polycentric Orientation
 Lower manpower cost as it does not require specialized officials from home
country to run operations.
 Local officials have knowledge about the local market and hence take market
centric decisions.
Disadvantages of Polycentric Orientation
 Lower control of headquarters over host country management.
 Overall cost of the company generally tends to rise due to targeted offerings and
promotions.
Example of Polycentricism
McDonald’s is a prominent example of a firm following polycentric approach. Having
originated in USA, its menu in USA is centered around their local preference which is
beef and meat. When coming to India, it realized that Indians are culturally averse to
eating beef.

Another firm with its polycentric approach is google. Rather than attempting a
single doodle worldwide, it adapts itself according to different countries. There
may be a different person being honored in India and at the same time some
other festival being celebrated in USA.
Regiocentric Approach

In a regiocentric approach of the EPRG Framework, businesses create and

implement internationalization strategies for specific regions. Companies that
utilize this type of approach use this for the area in which the local business is
operated. Regiocentric strategy assumes that all countries of the region can be
regarded as a single market.
The company that follows the Regiocentric approach of the framework studies
the similarities and differences in the world and its various operating regions and
designs the strategies accordingly. The management of the company
figures out the economic, social, cultural, and political similarities between the
native area and overseas region and satisfy the similar needs and demands of
the potential customers.

The cultural and regional identity of India, Pakistan, and Bangladesh is quite
similar whereas Norway and Spain that both falls in Europe are very different in
terms of culture, climate, and transport amongst other aspects.

Advantages of Regiocentric Orientation

 Cultural fit is the biggest advantage of regiocentricism as managers find it
convenient to communicate with each other and other employees.
 The customers from the same region have similar likabilites and hence it is easy
to communicate and deliver to them.

Disadvantages of Regiocentric Orientation

 It may lead to confusion between regional objectives and global objectives. The
true essence of globalization may become blurry.
Example of Regiocentricism
Coca Cola has been using a regiocentric approach in formulating its messages for a
basket of countries which includes India, Pakistan and Bangladesh.

The tire major also has clubbed various countries with similar policies and economic
landscape. Asia-Pacific is one region, Europe is another and the rest of the world is
divided into Latin America, North America, Middle East and Africa.

Geocentric Approach

Geocentric approach encourages global marketing. This does not equate

superiority with nationality. Irrespective of the nationality, the company tries to
seek the best men and the problems are solved globally within the legal and
political limits. Thus, ensuring efficient use of human resources by building
strong culture and informal management channels.

The companies following the Geocentric approach of the EPRG Framework are
truly the global players as they display the act and strategy of ‘think global,
act local’. They view the entire world as their potential market and take
effective and efficient steps to satiate the needs and demands of the
customers. They recognize the differences and similarities between the native
home country and international markets and blend their ethnocentric and
polycentric views working out a significant strategy for success. Their global
strategy is aptly and fully responsive to the needs and wants of the local
customers encouraging global marketing.
Advantages of Geocentric Orientation
 A geocentric approach makes it possible for businesses to be competitive
wherever they are launched.
 It’s a win-win situation for both the firm and the international markets as it is
standardized but at the same time very agile.
Disadvantages of Geocentric Orientation
 It is a challenge to find a management that is capable of adapting to multiple
styles at once.
 There is a benefit lost in terms of being experts in one country or domain.
Example of Geocentricism
KFC has a ‘vegetarian thali’ and a Chana snacker to cater to vegetarians in India.
Viacom’s MTV channels are branded according to the country they are operated in
namely MTV India, MTC China, MTV Korea and many more. It hires more people
from these nationalities and plays according to respective cultures.