NITTE MEENAKSHI INSTITUTE OF

TECHNOLOGY
Bengaluru
DEPARTMENT OF MANAGEMENT STUDIES (MBA)

International Marketing Management

(20MBAMM402)
Dr. Dharmanand M
Associate Professor
NMIT
Course Objectives:
• To facilitate the students in understanding the concept of international
marketing management process, design and theories
• To enable the students to learn the major initiatives and skills relating to the
design of international marketing strategy
• To ensure specifying the essential ingredients of developing international
marketing strategy
• To familiarize basic knowledge about export – import business and
countrywide implications.
Course Outcomes: At the end of the course, students will be to:
• Demonstrate their conceptual understanding international marketing
management process, design and theories
• Apply the major concepts and initiatives relating to the design of
international marketing strategy.
• Analyze and apply the import and essential ingredients for developing
international marketing strategy
• Analyze concept of export – import business and countrywide implications
 UNIT-1
• Framework of International Marketing:
Definition – scope and challenges – difference
between international marketing and
domestic marketing – the dynamic
environment of international trade –
transition from domestic to international
markets - Competition in International
Business.
 International Marketing:
Meaning & Definition
Meaning:
• International marketing takes place when
marketing/trade is carried out ‘across the border’ or
between more than one nation.

Definition:
• IMM is defined as the performance of the business
activities designed to plan, price, promote and direct the
flow of company’s goods and services to consumers or
users in more than one nation for a profit.
International marketing would involve:

1. Identifying the needs and wants of customers in

international markets
2. Taking marketing mix decisions related to the
product, pricing, distribution, and communication-
diverse consumer and market behavior- across
different countries
3. Penetrating international markets- various modes of
entry
4. Decision making in view of dynamic international
marketing environment
 Scope of International Marketing

1. Exporting
• Establishing JV & Collaborations
• Licensing
• Consultancy
• Know-how (Technical & Managerial)
2. Importing
3. Managing of international operations
4. Re-exporting
Difference B/W Domestic & International Marketing

Basis Domestic Marketing Global Marketing

Meaning Refers to marketing within The activities of 4P’s
the geographical boundaries distribution, advertising, selling
of the nation extends over geographical limits
of the country
Area served Small Large
Govt interference Less Comparatively high
Business operation Single Country More than one country
Use of technology Limited Sharing and usage of latest
technology
Risk factor Low Very high
Capital requirements Less Huge
Nature of Customers Same Varies from country to country
Research Required but not extensively Extensive research is required
 Challenges in International Marketing

• Political & Legal Difference

• Cultural Difference
• Economic Difference
• Difference in the currency unit
• Differences in the language.
• Difference in Marketing Infrastructure
• Trade restrictions
• High cost of distance
• Difference in trade practices
 The dynamic environment of
international trade
• Trade Barriers
• Balance of Payment
• Protectionism
 Trade Barriers
• Trade barriers are government-induced
restrictions on international trade.
• They can be tariff or nontariff barriers
• Countries continue to use nontariff barriers for
a variety of reasons
• Tariff barriers have reduced considerably in
recent years
 Trade Barriers: Why?
• Governments establish tariffs and a variety
of nontariff barriers
• To encourage development of domestic
industry
• To protect existing industry
• Strategy against imports and against foreign
businesses.
 Trade Barriers – Tariff: Meaning
• A tariff is a tax imposed by one country on the goods and
services imported from another country.
• a tariff is a tax. It adds to the cost borne by consumers of
imported goods and is one of several trade policies that a
country can enact.
• Tariffs are paid to the customs authority of the country
imposing the tariff. Tariffs on imports coming into the
United States, for example, are collected by Customs and
Border Protection, acting on behalf of the Commerce
Department. In the U.K., it's HM Revenue & Customs
(HMRC) that collects the money.
 Why Are Tariffs and Trade Barriers Used?
• For Protecting Domestic Employment: The possibility of increased competition
from imported goods can threaten domestic industries. These domestic companies
may fire workers or shift production abroad to cut costs, which means higher
unemployment)
• For Protecting Consumers: A government may levy a tariff on products that it feels
could endanger its population. For example, South Korea may place a tariff on
imported beef from the United States if it thinks that the goods could be tainted
with a disease.
• For protecting Infant Industries: The government of a developing economy will
levy tariffs on imported goods in industries in which it wants to foster growth.
• For National Security: Defense industries are often viewed as vital to state
interests, and often enjoy significant levels of protection. For example, while both
Western Europe and the United States are industrialized, both are very protective
of defense-oriented companies.
• Retaliation
 Key takeaways on Tariff
• Tariffs, or taxes imposed on imports, have been making
news lately as the Trump administration initiated multiple
tariff rounds on China and elsewhere.
• Tariffs are a type of protectionist trade barrier that can
come in several forms.
• While tariffs may benefit a few domestic sectors,
economists agree that free trade policies in a global market
are ideal.
• Tariffs are paid by domestic consumers and not the
exporting country, but they have the effect of raising the
relative prices of imported products.
 Trade Barriers _ Non-Tariff: Meaning
• A nontariff barrier is a way to restrict trade
using trade barriers in a form other than a tariff.
Nontariff barriers include:
• License
• Import quotas,
• A voluntary export restraint (VER)
• Anti dumping Penalties
• Boycotts and embargoes
• Local Content Requirement
 Non-Tariff Barriers to Trade
• Licenses: A license is granted to a business by the government and
allows the business to import a certain type of good into the country. For
example, there could be a restriction on imported cheese, and licenses
would be granted to certain companies allowing them to act as importers.
• An import quota: is a restriction placed on the amount of a particular
good that can be imported. This sort of barrier is often associated with the
issuance of licenses.
• A voluntary export restraint (VER) is usually levied at the behest of
the importing country and could be accompanied by a reciprocal VER. For
example, Brazil could place a VER on the exportation of sugar to Canada,
based on a request by Canada. Canada could then place a VER on the
exportation of coal to Brazil.
 Non-Tariff Barriers to Trade
Boycotts and embargoes: Government boycott is an absolute
restriction against the purchase and importation of certain goods
from other countries. Embargo is a refusal to sell a specific country
• A public boycott either formal and informal and may be
government sponsored
• Eg: US boycotts- which has dispute

Local Content Requirement: For example, a restriction on the

import of computers might say that 25% of the pieces used to make
the computer are made domestically, or can say that 15% of the
value of the good must come from domestically produced
components.
 Non-Tariff Barriers to Trade
Anti dumping Penalties: Designed to prevent
foreign producers- “predatory pricing”- foreign
producer intentionally sell pdts- below cost
price- undermine the competition & take
control of the market
• Investigations are costly long time to resolve-
but still penalties- keeps some countries out of
the markets
 Balance of Payment:
• The assets and liabilities or the credits and debits
must offset each other
• When they balance, it does not mean a nation is
in particularly good or poor financial condition
• A balance of payments is a record of condition,
not a determinant of condition
• Each of the nation’s financial transactions with
other countries is reflected in its balance of
payments.
 EXAMPLE - BALANCE OF PAYMENT
Top Ten 2014 U.S. Trading Partners ($ billions, merchandise trade)
Rank Country Total Trade Exports Imports Balance
— Total 3969.1 1623.3 2345.8 –722.5
1 Canada 658.1 312.0 346.1 –34.1
2 China 590.7 124.0 466.7 –342.7
3 Mexico 534.5 240.3 133.9 106.4
4 Japan 200.9 67.0 133.9 –66.9
5 Germany 172.6 49.4 123.2 –73.8
6 South 114.1 44.5 69.6 –25.1

Korea
7 United 107.9 53.9 54.0 –0.1
Kingdom
8 France 78.2 31.2 47.0 –15.8
9 Brazil 72.8 42.4 30.3 12.1
10 Taiwan 67.4 26.8 40.6 –13.8
Source: http://www.census.gov /foreign-trade/top, 2015.
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction 2
or distribution without the prior written consent of McGraw-Hill Education. 0
 BOP Equilibrium

 When a country do not draw the international reserves to make

excess payments or accumulates reserves, such a state is called
BoP equilibrium,
 Disturbance in BOP may be short or long term one
 The disturbance may affect the stability and international standing.
 Instruments of Trade Policy
Tariffs
Dumping
Quantitative restrictions
Quotas
 Protectionism
 It is the economic policy of restraining trade
between states through methods such as tariffs on
imported goods, restrictive quotas and a variety of
government regulations designed to discourage
imports and prevent foreign take over of domestic
markets and companies.
 Protectionism
 The reality of trade is that this is a world of tariffs,
quotas, and nontariff barriers designed to protect
a country’s markets from foreign investment
 Although the World Trade Organization has been
effective to some extent in reducing tariffs,
countries still resort to measures of protectionism
 Countries use legal barriers, exchange barriers,
and psychological barriers to restrict the entry of
unwanted goods
 Arguments for Protectionism:
 Protection of an infant industry
 Protection of the home market
 Need to keep money at home
 Encouragement of capital accumulation
 Maintenance of the standard of living
 Conservation of natural resources
Reasons for entering International Markets

profitability

Achieving
Growth economies of
scale

Why should
Spreading firm enter Risk spread
R & D cost
international
market
Marketing
Access to
opportunities
imported
due to life
inputs
cycle
Uniqueness of
products &
services
1. Growth: firms go international- domestic markets saturate- forced to
look for an alternate markets- overseas. Countries like India, USA,
China- few companies choose to internationalize
2. Profitability: Exporters benefit form the higher profit margins in the
foreign markets. Policy incentives such as exemption form indirect
taxes & duties , government incentives for export oriented production
3. Achieving economies of scale: large scale production capacities-
makes the domestic firms – to dispose the goods in international
markets
4. Risk spread: company operating only in domestic markets- dependent
on economic fluctuations- foreign markets- risk is spread
5. Access to imported inputs: number of incentive schemes which
provides duty exemption- for import of inputs used for export
production. Helps companies to access imported goods- technical
know how- upgrade operations & competitiveness
6. Uniqueness of product or service: Indian products such as
herbal & medicinal plants, value added BPO services, software
development etc- competitive edge- other countries-
international market
7. Marketing opportunities due to life cycle: when product /
service- saturated in domestic / international markets- firms
convert into marketing opportunities- operating in international
markets
8. Spreading R&D costs: spreading the potential market size-
recovers quickly the cost incurred on R&D. price skimming
strategies (for pharmaceutical products, microprocessors etc)
 Ways to enter into International Market
• Exporting. Exporting is the direct sale of goods and / or services in another country.
• Licensing. Licensing allows another company in your target country to use your property.
• Franchising. is a method of distributing products or services involving a franchisor, who
establishes the brand's trademark or trade name and a business system, and a franchisee,
who pays a royalty and often an initial fee for the right to do business under the franchisor's
name and system.
• Joint venture: A joint venture is a combination of two or more parties that seek the
development of a single enterprise or project for profit, sharing the risks associated with its
development.

• Foreign direct investment: Foreign direct investment (FDI) is a category of cross-border

investment in which an investor resident in one economy establishes a lasting interest in and
a significant degree of influence over an enterprise resident in another economy.

• Wholly owned subsidiary: A wholly-owned subsidiary is a corporation with 100% shares held
by another corporation, the parent company. Although a corporation may become a wholly-
owned subsidiary through take over by the parent company or split off from the parent
company. The parent company holds a normal subsidiary from 51% to 99%.

• Piggybacking: Use existing work or an existing product as a basis or support.

Orientation of Management & Companies

• Consider the study of “EPRG”

Concept.
• Ethnocentric Orientation.
• Polycentric Orientation.
• Regiocentric Orientation.
• Geocentric Orientation.
 EPRG CONCEPT
• The behavioral attributes of the firm’s management in casual
exports to global markets can be described under EPRG
(Ethnocentric, Polycentric, Regiocentric and Geo centric)concept
1. Ethnocentric orientation:
• Belief which considers one’s own culture as superior to others-
ethnocentric orientation
• Firms or managers- obsessed with the belief- marketing strategy-
worked in domestic market- would also work for the
international market.
• Ignore environmental factors b/w markets
• Attempt to market their products- similar needs or indigenous
(original) products are acceptable to consumers in those markets.
Eg: Ayurveda products, herbal, Unani, mysore silk, ancient idols
etc
• Ethnocentric orientation may be of following types:
1. Firms are more accustomed- cultural differences is
overlooked. Eg: Indian handicrafts exporters- Small and
medium sized enterprises
2. Environmental differences are recognized- market strategy
focus- more on home country objectives than international
objectives
3. Ethnocentrism considers- overseas operation- means of
disposing the surplus
4. Eg: food items (batter of dosa, idli mix, chutney powders,
sambhar curry)- not only the Indian population, but also in
Dubai, Singapore etc
 2. Polycentric orientation:
• Polycentric approach is highly market oriented. Based on the belief
that there is substantial difference between each markets- unique
• Each market is unique- in terms of political, cultural, legal,
economic, consumer behavior and market structure
• Needs more corporate resource, little coordination among various
affiliates, duplication of certain activities
• Economies of scale is hardly achieved
3. Regio centric orientation:
• Firm treats a region as a uniform market- similar marketing
strategy- within a region- but not across the region
• Eg: Starbucks- interior works.
• Eg: Mcdonald’s strategy to not to serve pork in the
middle east and slaughter animals through the “halal”
process followed
 4. Geocentric orientation:
• Considers whole world as a single market- formulate
integrated marketing strategies
• Identifies similarities between different markets and formulate
uniform marketing strategy

• SRC (Self Reference Criterion):

• It is an unconscious reference to one own cultural values,
experience and knowledge as a basis for decision making
 Transition from Domestic to
International Market

1. Domestic marketing:
Market focus Domestic
Orientation Ethnocentric
Marketing mix decisions Focused on domestic customers

• Firms will pay little attention to the for changes- international

marketing environment changes
• Ethnocentrism- predisposition of the firm to be concerned only
with the viability & the legitimacy of the home country
2. Export marketing:

Market focus Overseas (targeting and entering foreign

markets)
Orientation Ethnocentric
Marketing mix decisions • Focused mainly on domestic
customers
• Export- extension of the domestic
marketing
• Decision made at headquarters

• Indirect exporting- intermediate trading

houses- gradually firms develop backward
linkages & product customization- foreign
market needs
3. International marketing:
Market focus Differentiation in country markets by way of
developing or acquiring new brands
Orientation Polycentric
Marketing mix • Developing local products depending upon country
decisions needs
• Decisions by individual subsidiaries

• Over a period of time- export company- caters to specific needs of

markets in overseas markets
• Coz of growing prominence- company devise fierce strategies-
prominence in the existing market
• Polycentric orientation- predisposition of the firm- differences
among the market-market specific strategies.
• Products are manufactured in the home country- separate product
adaptations
4. Multinational marketing:

Market focus Consolidation of operations on regional basis- gains from

economies of scale
Orientation Regiocentric

Marketing mix Product standardization on regional basis

decisions
• After company establishing- its operations in multiple markets-
consolidate operations for economies of scale- manufacturing
and marketing mix decisions
• Markets are divided into regional sub segments- similarity in
responding to the marketing mix decisions
5. Global marketing:

Market focus Consolidating firm’s operations on global basis

Orientation Geocentric
Marketing mix Globalization of marketing mix with local
decisions variants
Joint decision making across firm’s global
operations

• Single marketing method across international markets with

little adaptations
• Reduction of cost inefficiencies & duplication of effort among
national and regional subsidiaries
 Process of International Marketing
1st stage - Motivation for the International Marketing
• Growth
• Profitability
• Risk spread
• Access to imported input
• Uniqueness of products/services
• Life cycle marketing opportunities
• Spreading R&D cost
2nd stage – SWOT analysis
• 3rd Stage – Decision to enter International Market
• 4th Stage – International Marketing decision
• Market identification and targeting
• Entry mode selection
• Product decision
• Distribution channel decision
• Market promotion decision
• 5th Stage – Enter International market
• 6th Stage – Review Performance
• 7th Stage - Consolidation
 Companies Competition in International
Business
• Political & Legal Difference
• Cultural Difference
• Economic Difference
• Difference in the currency unit
• Differences in the language.
• Difference in Marketing Infrastructure
• Trade restrictions
• High cost of distance
• Difference in trade practices
Thank you