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MODULE 1. UNDERSTANDING INTERNATIONAL MARKETING

Topics

International Marketing Defined

Concepts in International Trade

Learning Outcomes
At the end of the topic students will be able to;

Differentiate international marketing from domestic marketing

Identify marketing activities
State phases of international marketing
Explain the reasons why companies venture into international marketing
Explain the balance of payment
Describe trade barriers

COURSE OVERVIEW
In this course you will learn what is the role of international marketing to a country stability and
marketability. It enables to identify the difference between international and domestic market. You
will also learn what are the phases of international marketing a business is into and reasons why
corporations venture into international trade. What are the balance of payment and the trade
barriers.
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AT THE PICTURE VERY CLOSELY……….

WHAT IS INTERNATIONAL MARKETING

International marketing is the application of marketing principles in more than one country, by
companies overseas or across national borders. International marketing is based on an extension of
a company’s local marketing strategy, with special attention paid to marketing identification,
targeting, and decisions internationally

The difference between domestic and international marketing

✓ Domestic marketing is when commercialization of goods and services are limited to the
home country only while International marketing, as the name suggests, is the type of
marketing which is stretched across several countries in the world, i.e. the marketing of
products and services is done globally.
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DIFFERENCES BETWEEN DOMESTIC AND INTERNATIONAL MARKETING

Domestic Marketing International Marketing

A Filipino Manufacturer A Filipino manufacturer
selling locally selling to a U.S importer
Consumer Filipinos like it sweet Americans prefer it bland
Purchasing power Low High
Product or Packaging Remains the same Changes may be needed
Currency Peso Dollar
Payment Cash or credit cards Through Banks
Physical Distribution Short Haul Longer Haul
Language Filipino or English English
Communication Likely to be cheaper Likely to be more expensive

Example.
✓ When Mc Donalds Corporation decided to expand their business they need to consider a lot
of aspects before they can venture outside Philippines just like in people in India it is
forbidden for them to eat beef for their patties that is why the patties of their burger is from
the camel meat. That is one perfect example of international marketing.
✓ Some such examples are Amazon, Citigroup, Coca-Cola, etc. These companies have
independent operations in each country, and each country has its own set of offices,
employees, etc. In fact, even the products and marketing campaigns are customized as per
local needs.
THE DIFFERENT INTERNATIONAL MARKETING ACTIVITIES

✓ Detailed analysis of potential markets

✓ Planning and development of products-clearly defined in suitable package-that
consumers want
✓ Distribution of products through channels that provide the services or
convenience demanded by buyers
✓ Product promotion to inform and educate consumers about the goods or services
✓ Setting of prices which reflect reasonable value (or utility) of products to
consumers
✓ A technical and non-technical customer service-both before and after a sale is
made
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Above are some activities in international trade wherein during the expansion of the business those
are the following things to be done like for example if putting up a business outside the country
what are the things that needed to be considered first and to conduct a marketing research if who
will be a potential consumer of your product in short who will be your market just like when
Jollibee Foods expanded their business outside they first consider is the taste and the product is
saleable are there foreigners buying the product or just a Filipino citizen who will dine in the store.

PHASES OF INTERNATIONAL MARKETING

*Topics for Activities 1.1 and 1.2.

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EASING WORLD TRADE RESTRICTIONS

Balance of Payments

✓ The balance of payments always balances. Goods, services, and resources traded
internationally are paid for; thus every movement of products is offset by
a balancing movement of money or some other financial asset.

✓ The balance of payments (BOP) reflects all payments and obligations to foreigners vs. all
payments and obligations received from foreigners. It's a record of all financial flows in and
out of a country.

✓ The balance of payments (BOP) is a statement of all transactions made between entities
in one country and the rest of the world over a defined period of time, such as a quarter or
a year.

Example:

o The balance of payments tracks international transactions. When funds go

into a country, a credit is added to the balance of payments (“BOP”). When
funds leave a country, a deduction is made. For example, when a country
exports 20 shiny red convertibles to another country, a credit is made in
the balance of payments.
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“Why is there a need to know and study the BOP?”

1. The answer is that the overall state of BOP has an effect on country’s trade policies. One
policy which the Philippine government keeps on discussing and amending is its investment
policy. As you probably know by now, the Philippines is always deficit-ridden. One way of
correcting this imbalance is to encourage investments, another is to intensify the export of
goods and services

2. A favourable BOP will have a ripple effect, one way or the other, on the following aspects;
domestic economic policies on wages, employment and investments. A solid BOP can help
strengthen a country’s currency value.

3. The BOP helps economists and analysts understand the strength of a country's economy in
relation to other countries. For example, a country with a large trade deficit is essentially
borrowing money to purchase goods and services, but a country with a large trade
surplus is doing the opposite.

Why are there trade barrier?

The most common barrier to trade is a tariff–a tax on imports. Tariffs raise the price of imported
goods relative to domestic goods (good produced at home). ... Barriers to trade are often called
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“protection” because their stated purpose is to shield or advance particular industries or segments
of an economy.

Example of Protectionism

A typical example of protectionism is the Common Agricultural Policy (CAP) of the European
Union. ... The EU subsidizes the European farmers so that they produce more output and become
competitive with their foreign peers. The subsidies increase consumption because producers can
charge more competitive prices.

◦ INFANT INDUSTRY - In the 1950’s and 1960’s, most of the manufacturing industries in the Philippines
enjoyed protection in the sense that competing imported products were subjected to high duties and taxes
before they could enter the Philippine market. This was done to encourage domestic consumption of
locally manufactured products.

◦ INDUSTRIALIZATION – It is argued that the more local companies there are, the more employment
opportunities for Filipinos will be. The higher the employment, the higher the probability of economic
progress.

◦ CONSERVATION OF NATURAL RESOURCES - This refers to wise use and management of valuable
natural resources as timber, fish, game, topsoil, pastureland, minerals, forests, wildlife and watershed
areas. Products from and live specimen of endangered species of flora and fauna cannot be exported.

◦ NATIONAL DEFENSE – Import barriers would help the nation accumulate more crucial materials for
future economic or military welfare in the form of either stockpiles or emergency capacity to produce.

◦ DUMPING – Dumping is an international price discrimination practice in which an exporting firm

deliberately sells merchandise at a lower price in a foreign market than it charges in other markets
specifically and usually its home market.

Two kinds of dumping

✓ Predatory Dumping – This happens

when the firm discriminates in
favor of some foreign buyers
temporarily for the purpose of
eliminating some competitors and
of later raising its price when the
competition is trounced and;

✓ Persistent Dumping – Which goes

on indefinitely.
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*Topics for Activity 1.3 and 1.4.

Activity 1.2. Upon reading and understanding international business and trade, how are you going
to define it, based on your observation on international marketing write example also.
__________________________________________________________________________________________________________________
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Activity 1.2. How are you going to differentiate international and domestic marketing? Do their
marketing activities differ to each other? Explain and cite examples.
__________________________________________________________________________________________________________________
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Activity 1.3. What do you think are the main reason why businesses venture into international
market?
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__________________________________________________________________________________________________________________

Activity 1.4. When you encounter trade barriers, what does it mean to you? Is it good for the
business that venture across the country or not? Explain your answers.
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
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• There are several advantages

of international marketing, including
that international marketing can
significantly help boost a brand's
reputation. Regardless, customers
recognise a brand that is selling in
multiple markets to be of higher
quality and better service than brands
that sell locally.
• There are many reasons why global
marketing is very important to U.S.
companies. Most companies realize
that their target market is limited if
they just concentrate on a U.S. market.
When a company thinks globally, it
looks for overseas opportunities to
increase its market share and
customer base.

RESOURCES

Balance of Payments (2020). https://investinganswers.com/dictionary/b/balance-payments-bop

Jeong, L. and Garcia, L. (2016). International Marketing 2nd Edition. C & E Publishing Inc.
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