Akshay

Vaishnaw
INTERNATIONAL MARKETING
Introduction:
International marketing as the marketing of goods and
services across the national borders.
Organization is part of association with enterprise
which also operated in other countries.
There is some degree of influence on or control of
organization’s marketing activities from outside the
country in which it sells products.

International marketing only part of

represents
international trade flows.
(E.g.) McDonald, Unilever, Ford, etc.
INTERNATIONAL MARKETING
Definition:
“International Marketing is defined as the
performance of business activities designed to plan,
price, promote, and direct the flow of a company’s
goods and services to consumers or users in more
than one nation for a profit.”

3
 REASONS FOR INTERNATIONAL
MARKETING
Two factors which motivate firms to go for international are:
a) Pull factors:
- which are proactive reasons, those forces of
attraction
which pull business to foreign markets.
b) Push factors:
-it refer to compulsions of domestic market, like saturation
of market, which prompt companies to internationalize.
Some of the important reasons for going international are:
1. Profit motive:
- IB could be more profitable than domestic.
- it is profit advantage. 4
2. Growth opportunities:
- enormous growth potential of many foreign markets is a very
strong attraction for foreign companies.
3. Domestic Market Constraints:
-domestic demand constraints drive many companies to
expanding the market beyond the national border.
(E.g.) Fall in birth rate implies contraction of market for several
baby products.
-technological advances have increased size of optimum scale of
operation substantially in many industries making it necessary to
have foreign market.
4. Competition:
- it become a driving force behind internationalization.
-protected market doesn’t normally motivate companies to
seek business outside the home market.
-strategy of counter – competition is to penetrate home market of
potential foreign competitor to diminish its competitive
strength
and to protect domestic market share from foreign penetration. 6
5. Government and Regulations:
-many government gives no. of incentives and other positive
support to domestic companies to export and to invest in
foreign countries.
-companies may be obliged to earn foreign exchange to
finance their imports and to meet certain other foreign
exchange requirements like payment of royalty, dividend, etc.
6. Monopoly Power:
-it may arise from factors like monopolization of certain
resources, patent rights, technological advantage, product
differentiation, etc.
-it includes knowledge about foreign customers,
marketplaces or market situations not widely shared by other
firms. 6
7. Spin – Off benefits:
-IB improve its domestic business, improve image of
company, may have pay – offs for internal market too by
giving domestic market better products.
-another attraction of exports is economic incentives offered
by government.
8. Strategic Vision:
-stimulus for internationalization comes from urge to grow,
need to become more competitive, need to diversify and to
gain strategic advantages of internationalization.
-the systematic and growing internationalization of many
companies is essentially a part of their business policy or
strategic management.
7
 SCOPE OF INTERNATIONAL
MARKETING
 The scope of IB for developing countries amply
demonstrated
is by rapid strides made by several developing
countries like Singapore, Taiwan, South Korea, etc.
 Rapid strides are indications of enormous global business
opportunities which Indian firms could exploit.
Product modifications to suit the requirements of foreign
markets will enable international marketing of many
products by Indian firms.
There are more international marketing opportunities for
developing products that suit specific markets.
Indian firms with products of acceptable quality may
explore foreign markets.
Many products, which become patent off provide
international marketing opportunities for firms because of
low cost advantage.
India is important exporter of many products like spices and
sea food, mostly commodity exports.
Lot of potential exists for developing their value added
exports. (leather, textiles, etc.).
New competitive environment is compelling Indian firms to
be more cost and quality conscious and market oriented and
pay more attention to R & D. indeed a companies have
developed a global orientation.
(E.g.) No. of Indian companies like Reliance, Arvind Mills,
Bajaj, Ranbaxy, Sundaram Fastners, Tata, Birla, etc. have
potential to become global players.
 CHALLENGES WITH
INTERNATIONAL MARKETING
• Competition.
• Legal Restrains.
• Government Controls.
• Varied Consumer Behaviour.
• Ecological factors – Weather, etc.
• Cultural differences.
• Currency exchange.
 DIFFERENCES BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
Basis For Domestic Marketing International Marketing Comparison

Activities like production, promotion,

Meaning distribution, selling, etc. within the
geographical boundaries of the nation.
Area served Small area
Government interference Less rules & regulations
Those activities extended over the
geographical limits of the country.
Large area
Comparatively high rules & regulations

Business operation Operation in one country Operation in multiple countries.

Usage of latest
Limited Sharing and use of latest technology.
technology
Risk factor Low risk Very high risk (socio-cultural factors,
exchange rates, etc.)

Capital requirement Less Investment Huge Investment

Customers with different taste,

Nature of customers Similar nature preferences, habits, etc.

Small survey to know market Deep research on foreign markets due to

Research conditions lack of familiarity. 12
 INTERNATIONAL MARKETING
DECISIONS
1. International Business Decisions:
-decision based on serious consideration of no. of important
factors like future & present overseas opportunities,
domestic opportunities, company resources, etc. to take up
international business.
2. Market Selection Decisions:
-selection of market is decided based on thorough analysis
of various overseas market environment, resources,
objectives, etc.
3. Entry and Operating Decisions:
-it is to determine the appropriate mode of entering the
foreign market.
4. Marketing Mix Decisions:
-elements of marketing mix like product, promotion, price,
place should be suitably designed so that they may adapted to
characteristics of overseas market.
5. International Organization Decision:
-this decision is based on certain factors like volume of
export business, nature of overseas market, nature of
product, size and resources of company and length of its
export experience.
-nature of organization structure of company depend on
factors like international orientation, nature and size of
business, future plans, etc.
 PROBLEMS IN INTERNATIONAL
MARKETING
1. Political and Legal difference.
2. Cultural differences.
3. Economic differences.
4. Differences in the Currency unit.
5. Differences in the Language.
6. Differences in the Marketing Infrastructure.
7. Trade Restrictions.
8. High costs of Distance.
9. Differences in Trade Practices.
 FUTURE OF INTERNATIONAL
MARKETING
1. Globalization of supply chain and operations management.
2. International Investments.
3. Information surge and consumer choice.
4. World growth.
5. Domination of World Economy.
6. Trade cycle decision rule.
7. Pervasiveness of free markets.
8. Accelerating growth of global markets.
9. Rise of Internet and Information technology.
 DYNAMIC ENVIRONMENT OF
INTERNATIONAL TRADE
Introduction:
• Explosion of trade and emergence of the
global economy.
• Intensification of global competition
• More emerging markets
•Developments in technology allow communications
with global consumers and movement of goods
Balance of Payments (BP):
• When countries trade there are financial
transactions
among businesses or consumers of different nations.
• Money constantly flows into and out of a country.
“The system of accounts that records a nation’s
international financial transactions is called its balance of
payments (BP).”
• Itrecords all financial transactions between a country’s
firms, and residents, and the rest of the world usually over a
year.
• The BP is maintained on a double-entry
bookkeeping
system.
BP Receipts: BP Payments:
• Merchandise export • Cost of goods imported.
sales.
•Spending U.S.
•Money spent by foreign by tourists
tourists. overseas. overseas
• Transportation. • New
• Payments of •investments.
Cost of foreign
dividends
and interest from military and economic
FDI
abroad. aid.
•New foreign
investments in the
U.S.
The Balance of Payment includes three accounts:
a) Current account:
-a record of all merchandise exports, imports
and services plus unilateral transfers of funds.
b) Capital account:
-a record of direct investment, portfolio investment and
short-term capital movements to and from countries.
c) The Official 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.
Balance of Trade:
“The relationship between merchandise imports
and exports is referred to as the balance of merchandise
trade or trade balance.”
•If a country exports more goods than it imports, it is
said to have a favorable balance of trade.
•Ifit imports more goods than it exports, it is said to
have an unfavorable balance of trade.
Protectionism:
•Countries use protectionist measures to shield a
country’s markets from intrusion by foreign competition
and imports.
Arguments for Protectionism include –
a)Infant industry – determine which particular potential industries
would develop a comparative advantage and be able to withstand
foreign competition.
b)Protection of the home market – this argument asserts that low
costs of production in other countries labour, which would flood
foreign markets.
- it is a function of two elements like i) money wage rates and ii)
productivity of labour.
c)Keep money at home – this deceptive reasoning is based on
mercantilist identity of money and wealth.
-higher volume of money makes no direct contribution to the real
income and wealth of a country.
d) Capital accumulation – a country indeed does increase capital
accumulation by imposing tariffs, but gain at the expenses of other
countries. 26
e)Standard of living and real wage – this is parallel to capital
accumulation, except the imposition of tariffs will lead to lower
national income and wage level due to retaliation.
f)Conservation of natural resources – tariffs tend to cause
extreme dependence on national resources.
g) Industrialization of low wage nation – it is quite pertinent to
underdeveloped countries.
h)Maintain employment and reduce unemployment – alternative
policies are available in order to encourage greater employment
abroad and larger volume of international trade.
i)Retaliation and Bargaining – retaliation doesn’t recover the
losses that are suffered due to foreign tariffs.
(i.e.) Retaliation further reduces volume of trade.
Bargaining as a reciprocal tool (i.e.) tariffs are raised.
Impact of Tariff (Tax) Barriers:
Tariff Barriers tend to increase due to -
 Inflationary pressures.
 Special interests’ privileges.
Government control and political considerations in
economic matters.
The number of tariffs they get via reciprocity.
Tariff barriers tend to weaken due to –
 Balance of payment positions.
 Supply and demand patterns.
International relations. (they can start trade wars).
Tariff barriers tend to restrict due to –
 Manufacturer’s supply sources.
 Choices available to consumers. √
Competition.
Non – Tariff barriers:
“A nontariff barrier is a form of restrictive trade where
barriers to trade are set up and take a form other than a tariff
(Or) (of a restriction to trade) not involving a tax or duty.”
Types of Non – Tariff Barriers:
1. Specific Limitations on Trade:
 Quotas.
 Import Licensing requirements.
Proportion restrictions of foreign to domestic goods (local
content requirements).
 Minimum import price limits.
 Embargoes. (restrictions)
2. Customs and Administrative Entry Procedures:
 Valuation systems.
 Antidumping practices.
 Tariff classifications.
 Documentation requirements.
 Fees.
3. Standards:
 Standard disparities.
Intergovernmental acceptances testing methods
of standards. and
 Packaging, labeling and marketing.
4. Government Participation in Trade:
 Government procurement policies.
 Export subsidies.
 Countervailing duties.
 Domestic assistance programs.
5. Charges on imports: 6. Others:
 Prior import deposit subsidies.  Voluntary expor
 Administrative fees. restraints.
 Special supplementary duties. Orderly marketing
agreements.
 Import credit discriminations.
 Monetary barriers.
 Variable levies.
 Boarder taxes.
Monetary barriers:
Types of Monetary Barriers:
1.Blocked Currency – it is accomplished by refusing
to allow importers to exchange its national currency
for seller’s currency.
2.Differential exchange rates – it encourages
importation of goods the government deems desirable
& discourages as the government doesn’t want by
adjusting exchange rate.
3.Government approval – an exchange permit to
import foreign goods is required from the
government.
International Monetary Fund (IMF):
To promote international monetary cooperation through a
permanent institution which provides the machinery for
consolation and collaboration on international monetary
problems.
To facilitate the expansion and balanced growth of
international trade, and to contribute thereby to the
promotion and maintenance of high levels of employment
and real income and to the development of the productive
resources of all members as primary objective of economic
policy.
To promote exchange stability, to maintain orderly
exchange arrangements among members, and
to competitive exchange depreciation. avoid
 To assist in the establishment of a multilateral
systemof
payments in respect of current transactions
members between and in theelimination of foreign
exchange
restrictions which hamper the growth of world trade.

To give confidence to members by making the general

resources of the Fund temporarily available to them under
adequate safeguards, thus providing them with the
opportunity to correct maladjustments in their balance of
payments.
World Bank:
“World Bank is an international financial
institution purposes include assisting
whose
development of itsthe
membernation’s territories, and
promoting supplementing private foreign
investment and promoting long-range balance
growth in international trade”.
- International Bankfor Reconstruction and
Development (IBRD).
Objectives:
To provide long-run capital to member countries for
economic reconstruction and development.
To induce long-run capital investment for assuring
Balance of Payments (BoP) equilibrium and balanced
development of international trade.
To provide guarantee for loans granted to small and
large units and other projects of member countries.
To ensure the implementation of development projects
so as to bring about a smooth transference from a war-
time to peace economy.
 TRANSITION FROM DOMESTIC TO
INTERNATIONAL MARKETS
1. Pre- export behavior: 2. Economic reasons:
-Company - Relative profitability.
characteristics.
- Insufficiency of domestic
- Perceived demand.
export. - Reduce business risks.
- Perceived - Legal restrictions.
import. - Increased productivity.
- Organizationa -Technological
l improvement.
 ORIENTATION OF MANAGEMENT
(INTERNATIONAL ORIENTATION)
•The degree and nature of involvement in international
business or international orientations.
•Wind, Douglas and Perlmutter had given the analysis
within the framework of modified EPRG scheme is
helpful in understanding the levels of firms in
international business.
•EPRG framework identifies four types of attitudes or
orientation towards internationalization that involves in
successive stages of evolution of international business.
Four orientations are –
1. Ethnocentric Orientation: (home country orientation)
• Overseas operations are viewed as secondary to domestic
operations and primarily as means of disposing of ‘surplus’
domestic production.
• Overseas market are developed in home office, utilizing
policies and procedures identical to those employed in
domestic market.
• Its operations are conducted from a home country base and
there is likely to be strong reliance on export agents.
• Ethnocentric position appears to be appropriate for small
company just entering international operations or for
companies with minimal international commitments
because it has minimal risk and commitments to overseas
market.
2. Polycentric Orientation: (host country orientation)
• To recognize the importance of inherent differences
in overseas market, a polycentric orientation emerges.
• In this stage, local personnel and techniques are best suited
to deal with local market conditions.
• This results in maximum degree of
geographic are recognized as being
decentralization
close to markets, psychologically
environments and customers.
• Under polycentric, marketing is normally characterized
by
adoption strategy.
• The merit of polycentric orientation is adaption of marketing
strategies to local conditions.
3. Regiocentric Orientation: (regional orientation)
• A regiocentric company views different regions as different
markets.
• Strategy integration, organizational approach and product
policy tend to be implemented at regional level.
4. Geocentric Orientation: (World orientation)
• Geocentric company views entire world as a single market
and develops standardized marketing mix, projecting a
uniform image of company and its products, for global
market.
• Itis characterized by sufficiently distinctive national
markets that ethnocentric approach is unworkable, where
importance of learning curve effects in marketing,
production technology and management philosophy.
 Advantages and Problems of orientations:
• Improved coordination and control.
• It entailing high costs in information and
collecting administering policies on
worldwide scale.
• More economical and manageable.
•Problems:
National environmental may restrict
multinational
constraints operations and approach unfeasible.
• National environmental differences is more critical for
marketing activities than for production and finance
activities.
• Desirability of particular international orientation – E, P, R
or G tends to depend on several factors like size of firm,
experience gained in market, size of potential market and
type of market and cultural dependency.
 PROCESS OF
INTERNATIONALIZATION

Local FDI
Export packaging
through own and
sales assembling
Export via representati
agent/ ves
distributor

Licensing
Internationalization process:
1. Exporting:
- local products are sold abroad.
2. Importing:
-the process of acquiring products abroad and selling
them in domestic markets.
3. Licensing:
- one firm pays a fee for rights to make or sell another
company’s products.
4. Franchising:
- a firm pays a fee for rights to use another company’s
name and operating methods.
5. Joint Venture:
- a firm operates in a foreign country through
co- ownership with local parties.
6. Strategic Alliance:
- each partner hopes to achieve through
cooperation things they couldn’t do alone.
7. Foreign Subsidiary:
- a local operation completelyowned by a
foreign firm.
PROCESS OF INTERNATIONAL
MARKETING
Growth Profitability Risk spread

USP of Access to
Marketing
products/serv
opportunities
ices imported
inputs

Decision to
Spreading SWOT enter into
R&D analysis international
costs markets
PARTICIPANTS IN INTERNATIONAL
MARKETING
Important categories are –
1. Private Firms:
It is carried out by private firms are –
a) MNCs – it is a part of international marketing.
-about one-third of international trade is estimated to
be intra-company transfers (i.e.) trade between affiliates or
divisions of MNCs located in different countries.
b) Other large firms – there are large no. of large firms active
in international marketing.
-they are not considered as MNCs, many have
manufacturing and other operational facilities.
c) SMEs – small and medium enterprises play a
significant role in international business.
- more than half of the exports are contributed by
small firms.
2. Public Sector Undertakings:
- it play very important role in international trade.
-liberalization has very significantly reduced the
role of state trading.
-state trading agencies, a number of public sector
undertakings do significant international trade, like
marketing products and buying their requirements.
a)Trading Companies – many trading companies, including
public sector like State Trading Corporation (STC), Metals
and Minerals Trading Corporation (MMTC) which are
specialized in foreign trade.
-they are merchant exporters (i.e.) those which export
products manufactured by other firms.
b)Individuals – one of the significant contribution of world
wide web and the internet is empowerment of individuals and
small firms to start business and to expand their business
horizon.
-now able to easily access information from throughout
world and get into direct contact with buyers / sellers
globally.