Introduction to

International
Marketing
Dr.S.Dinesh
SoM- SASTRA
 Definition
►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.
►According to the American
Marketing Association (AMA)
"international marketing is the
multinational process of planning
and executing the conception,
pricing, promotion and distribution
of ideas, goods, and services to
create exchanges that satisfy
individual and organizational
objectives."
Czinkota

►International marketing is the

process of planning and
conducting transactions across
national borders to create
exchanges that satisfies the
objectives of individuals and
organisations.
Prof.Green

►International marketing
focusses its resources on global
market opportunities and
threats.
Usunier

►International marketing is the

method of internationalisation
of the process of the firm; it is
a tool to obtain improvement
in the firm’s position in the
global market.
 Difference between Domestic and
International Marketing
►What is the difference between marketing
domestically and internationally
► Marketing concepts are universal (goal is to make a profit by satisfying
customers)
► Difference is that in international marketing ALL environments have to be
taken into consideration when the marketing plan is developed and
executed

►Must consider the legal environment,

governmental controls, climate &
weather, cultural beliefs, buyer
behavior… (uncontrollable elements)
 McDonalds
► McDonalds entered in India, they did an
extensive research before zeroing upon the
menu on offer for the Indian consumers. The
entire menu was tailer made as per Indian
consumer taste.
► The company stuck to 40% Pure Vegetarian
offering unlike any other overseas market.
McDonald’s also made sure to respect Indian
culture by not serving beef or pork recipes
which on the other hand were popular
ingredients in other markets. McDonalds also
made sure to create recipes with Indian spices
to match the local taste. 
 Kellogg’s
► Kellogg’s, the global giant when it comes
to cereals, entered in India in 1994 and
introduced their proprietary ‘original’
recipe which failed miserably in the Indian
subcontinent. The main reason was that
Kellogg’s India did not correctly ascertain
their competition.
► Indian consumers were used to local
homemade wheat based breakfast recipes.
► Kellogg’s quickly learnt from their
mistake and customised their product from
their original recipe to wheat flakes, rice
flakes etc-
 More Examples
►Nokia – Dust resistant phone, anti slip
grip and in built flash light for India rural
consumer.
►Hindustan Unilever – Introduced
shampoo sachets priced at Re 1 for price
sensitive Indian consumer.
►MTV – Localised programming help to
gain wider audience.
 Differences between domestic and
international marketing
Domestic
Research data is available in a single
language and is usually easily
accessed
Business is transacted in a single
currency
Head office employees will normally
possess detailed knowledge of the
home market
Promotional messages need to
consider just a single national culture
Market segmentation occurs within a
single country
International
Research data is generally in foreign
languages and may be extremely difficult
to obtain and interpret
Many currencies are involved, with wide
exchange rate fluctuations
Head office employees might only possess
and outline knowledge of the characteristic
foreign markets
Numerous cultural differences must be
taken into account
Market segments might be defined across
the same type of consumer in many
different countries.
 Differences between domestic and
international marketing (continued)
Domestic
Communication and control are
immediate and direct
Business laws and regulations are
clearly understood
Business is conducted in a single
language
Business risks can usually identified and
assessed
Planning and organizational control
systems can be simple and direct
International
International communication and control
might be difficult
Foreign laws and regulations might not
be clear
Multilingual communication is requires
Environments may be so unstable that it
is extremely difficult to identify and
assess risks
The complexity of international trade
often necessitates the adoption of
complex and sophisticated planning,
organization and control systems
 Differences between domestic and
international marketing (continued)
Domestic
Functional specialization within a
marketing department is possible
Distribution and credit control are
straightforward
Selling and delivery documentation is
routine and easy to understand
Distribution channels are easy to
monitor and control
Competitors’ behavior is easily
predicted
New product development can be
geared to the needs of the home
International
International marketing managers require a
wide range og marketing skills
Distribution and credit control may be extremely
complex
Documentation is often diverse and complicated
due to meeting different border regulations
Distribution is often carried out by
intermediaries, so is much harder to monitor
Competitors’ behavior is harder to observe,
therefore less predictable
New product development must take account of
all the markets the product is sold in.
 Benefits of international
marketing
new product for the new market

►Survival higher standard of living

►Growth of overseas market Market penetration

Product development
►Sales and profit Market expansion
Diversification
PP (profit potential) = I (inventory or potential
►Diversification demand, in units) x (P (sale price per unit) - E
(expenses per unit))
►Inflation and price moderation
►Standard of living constitute reserve capacity
Abundance of raw material
No restrictions imposed on production
Reason for international marketing
larger scale (more output) can be achieved

Open up new markets 
New customer groups

►Market diversification
►Small or saturated domestic market
Decline in consumer purchasing power
►Economies of scale Increased Competition
Fixation of prices
►International production Technology advancement
at a lower cost

International customer necessities
►Customer relationship Degree of customer satisfaction
►International competitiveness
Organisation, Industry -> Strategy ->
Performance (Market share, profit, cost
reduction….
Selecting international market

► Resourcing
Market entry
► Product fit Market size
Market growth
► Market factors Intellectual property
Differentiation
► Competitive factors Dynamic product line
► Entry methods and organisational
capabilities
► Trade restraint
Tariffs
Non-Tariffs
Import Quotas
Voluntary Export Restraints
Moontex

Market entry methods

 Licensing
A company sells licenses to other companies
to use intellectual property (IP), brand, design
or business programs.

Microsoft Office
Nestle and Starbucks
entered into a $7.15
billion
coffee licensing deal
 Franchising
Franchising is a form of marketing and
distribution in which the owner of a business
system (the franchisor) grants to an individual or
group of individuals (the franchisee) the right to
run a business selling a product or providing a
service using the franchisor's business system.

• McDonald's.
• Dominos.
• KFC.
• Pizza Hut.
• Subway.
• Baskin Robbins.
Contracting
Completing or representing on behalf of other businesses

HCL
ICG PS outsourcing
 Strategic alliance

Google and NASA together developing google earth

ICICI Bank and Vodafone India – mobile money transfer
 Strategic Orientation: EPRG
Schema
Orientation EPRG Schema

Domestic Marketing (Ethnocentric)

Extension

Multi-Domestic (Polycentric)
Marketing

Global Marketing (Regio/Geocentric)

 Strategic Orientation: EPRG
Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
1. Ethnocentric or Domestic Marketing Extension Concept:
Home country marketing practices will succeed elsewhere
without adaptation; however, international marketing is
viewed as secondary to domestic operations

2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally
 Strategic Orientation: EPRG
Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
3. Regiocentric:
Sees the world as one market and develops a standardized
marketing strategy for the entire world

4. Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world
Global Marketing Environment

Global
Regional
Local

Marketing Mix

Environment
 The International Marketing Task

Foreign Environment
(Uncontrollables)
7. Structure of 1. Competition
Distribution Domestic environment Environmental
(Uncontrollables) uncontrollables
country market A
(Controllables) 1. Competition
Price Product 2. Technology
5. Political- Target Environmental
Market 7
6. Geography and Legal uncontrollables
Infrastructure Promotion Place or 2 .Technology country
Distribution market B
4.
Culture Environmental
3. Economy
uncontrollables
5. Political- 3. Economy country
Legal market C
4. Culture
Firms
Firms must
must adapt
adapt to
to uncontrollable
uncontrollable environment
environment
of
of international
international marketing
marketing by
by adjusting
adjusting the
the
marketing
marketing mix
mix (product,
(product, price,
price, promotion,
promotion, and
and
distribution)
distribution)
 Special Problems of IM
► Political & Legal differences.
► Cultural differences.
► Economic differences.
► Differences in the currency units & their
fluctuations.
► Differences in language.
► Differences in marketing infrastructure. ( In terms of
promotion channels, distribution channels etc )
► Trade restrictions.( Import controls )
► High cost if distance coverage.( Has an impact on
time, mode of transport, obsolesce and goods
perishing costs)
► Differences in Trade Practices.
 Why Go Global
►Firms are motivated to expand their
markets internationally for two reasons :
►Push factors : Refer to the compulsion of
domestic markets like saturation of
markets, international competition etc
that amount to reactive reasons for going
global.
►Pull factors : Refer to proactive reasons,
that attract firms to global markets. This
talks about the potential in the global
markets to be more profitable and high
growth prospects.
Why Go Global

►Reasons to consider going global:

►Foreign attacks on domestic markets
►Foreign markets with higher profit
opportunities
►Stagnant or shrinking domestic markets
►Need larger customer base to achieve
economies of scale
►Reduce dependency on single market
►Follow customers who are expanding
Driving Forces
►Liberalization
►MNC’s
►Technology
►Transportation and communication
revolution
►Product development costs and
efforts.
►Rising aspirations and wants
►Competition
►World economic trends
►Regional integration
►Leverages
Participants of IM

► Private Firms.
► MNC’s
► Other large firms
► MSME’s
► Public sector undertakings
► Trading companies
► Individuals.
 Objectives Of
International Marketing
►Identifying the needs and wants of
International Customer : Undertaking IMR
& analyzing market segments, seeking to
understand similarities & differences in
customer groups across different
countries.
►Achieving Global customer satisfaction :
Adapting products and services & other
elements of the MM to satisfy different
customer needs across countries
Objectives Of
International Marketing
►Staying ahead of the competitors by
providing better products / services :
Assessing, monitoring & responding to
global competition by offering better
value, developing superior Brand Image &
product positioning , broader product
range, competitive price, high quality,
good performance, better distribution &
after sales service.
Objectives Of
International Marketing
►Co-coordinating marketing
activities : Coordinating and
integrating marketing strategies
across countries, regions and
global markets, which involve
centralization, delegation,
standardization & local
responsiveness.
 Market Entry Strategies
► Exporting ► Joint venture
► Low investment ► Considerable investment
► Low control of promotion ► More control
► Licensing ► Able to benefit from
partner’s experience
► Low investment
► Must work with partner
► Low control of promotion,
positioning, and quality ► Direct investment
► Able to benefit from ► Large investment
existing distribution and ► Risky
market knowledge
► Greater control
► May lack knowledge of
market
 Modes of Entry
► Exporting is a relatively low risk strategy in which
few investments are made in the new country.  A
drawback is that, because the firm makes few if any
marketing investments in the new country, market
share may be below potential. 
► Further, the firm, by not operating in the country,
learns less about the market
► What do consumers really want? 
► Which kinds of advertising campaigns are most
successful? 
► What are the most effective methods of
distribution? 
► If an importer is willing to do a good job of
marketing, this arrangement may represent a “win-
win” situation, but it may be more difficult for the
firm to enter on its own later if it decides that larger
profits can be made within the country
Exporting

► Need for limited finance

► Less Risk
► Proactive and reactive motivations.
► Forms of Exporting :
► Indirect Exporting
► Direct exporting
► Intracorporate transfers.
Types of Export Intermediaries

► Export Management companies

► International Trading Companies
► Manufacturer/s agents
► Manufacturers export agents
► Export and import brokers
► Freight forwarders.
 Modes of Entry
► Licensing and franchising are also low exposure
methods of entry—you allow someone else to use
your trademarks and accumulated expertise.  Your
partner puts up the money and assumes the risk. 
Problems here involve the fact that you are training
a potential competitor and that you have little
control over how the business is operated. 
► For example, American fast food restaurants have
found that foreign franchisers often fail to maintain
American standards of cleanliness.  Similarly, a
foreign manufacturer may use lower quality
ingredients in manufacturing a brand based on
premium contents in the home country.
Modes of Entry

►Contract manufacturing involves

having someone else manufacture
products while you take on some of
the marketing efforts yourself.  This
saves investment, but again you
may be training a competitor.
 Direct entry
►Direct entry strategies, where the firm
either acquires a firm or builds operations
“from scratch” involve the highest
exposure, but also the greatest
opportunities for profits.  The firm gains
more knowledge about the local market
and maintains greater control, but now
has a huge investment. 
►In some countries, the government may
expropriate assets without compensation,
so direct investment entails an additional
risk.  A variation involves a joint venture,
where a local firm puts up some of the
money and knowledge about the local
market.
International Strategic Alliances

► Advantages:
► Ease of market entry.  It may be useful
for a firm to partner with another that
already has a presence in and
knowledge of a market.  For example,
Kentucky Fried Chicken (KFC) partnered
with the Mitsubishi Keirishi in entering
Japan.  By doing so, KFC was assured of 
managerial talent to deal with local
regulations and handling logistics (e.g.,
labor and construction) while Mitsubishi
in turn got the use of an authentic
American brand name.
Advantages of International Alliances

►Shared risk.  Some projects are just

too big for any one company to
approach alone.  Boeing can partner
with Rolls Royce, with the latter
making the engines for the aircraft,
while Boeing makes the frame. 
Many times, deep sea oil
exploration is too big a commitment
for any one oil company, so two or
more may together.
International Strategic Alliances

►Shared knowledge and expertise. 

Intel, known for its cutting edge
innovations in computer chips, can
partner with a Japanese firm do to
its manufacturing.
►Synergy and competitive
advantage.  “Synergy” refers to the
idea that the resources held by two
firms, when combined, add up to
more than the sum of their parts. 
 Disadvantages of International
Alliances
► Legal obstacles.  Since both firms have their
own interests, complicated legal agreements
may have to be made up.  Also, there may be
limitations on market concentration, and there
may be some concern about the legality of
technology transfer.  In some countries, as
previously mentioned, it may be difficult to
enforce agreements.
► Complacency:  If two firms join forces where
they previously competed, they may become
complacent in developing new products,
improving quality, and lowering costs and
prices.  When competition is place, firms tend
to maintain greater discipline, which is needed
for competitive ability in the long run.
 Disadvantages of International
Alliances

► Costs of coordination.  When two firms have different cultures

(e.g., individualistic vs. collective or authoritarian vs. more
participative), more effort may be needed in circulating
information and reaching decisions.  For example, Oracle, an
aggressive computer firm in the Silicon Valley with a strong
emphasis on meritocracy might have difficulty working with a
collectivistic Japanese firm.
► Blurred lines between areas of competition and cooperation. 
Suppose Sony and Compaq, which both make computers, want
to collaborate on making memory chips.  To do so, they may
have to share information about other computer technology in
areas where they may compete.  There is now a question of
what to share and what to hold back.  Not only is time spent
deciding whether to share or withhold, but essential
information may end up not being available to those who need
it.