EFINITION OF INTERNATIONAL MARKETING

DEFINITION OF INTERNATIONAL MARKETING International Marketing can be defined as exchange of goods and services between different national markets involving buyers and sellers. According to the American Marketing Association, International Marketing is the multi-national process of planning and executing the conception, prices, promotion and distribution of ideal goods and services to create exchanges that satisfy the individual and organizational objectives.

CONCEPTS OF INTERNATIONAL MARKETING

Domestic Marketing: Domestic Marketing is concerned with marketing practices within the marketers home country. II. Foreign Marketing: It refers to domestic marketing within the foreign country. III. Comparative Marketing: when two or more marketing systems are studied, the subject of study is known as comparative marketing. In such a study, both similarities and dis-similarities are identified. It involves an analytical comparison of marketing methods practiced in different countries. IV. International Marketing: It is concerned with the micro aspects of a market and takes the company as a unit of analysis. The purpose is to find out as to why and how a product succeeds or fails in a foreign country and how marketing efforts influence the results of international marketing. V. International Trade: International Trade is concerned with flow of goods and services between the countries. The purpose is to study how monetary and commercial conditions influence balance of payments and resource transfer of countries involved. It provides a macro view of the market, national and international.

VI. Global Marketing: Global Marketing consider the world as a whole as the theatre of operation. The purpose of global marketing is to learn to recognize the extent to which marketing plans and programmes can be extended world wide and the extent to which they must be adopted. DIFFERENCE BETWEEN DOMESTIC MARKETING AND INTERNATIONAL MARKETING Marketing is the process of focusing the resources and objectives of an organisation on environmental opportunities and needs. It is a universal discipline. However, markets and customers are different and hence the practice of marketing should be fine tuned and adjusted to the local conditions of a given country. The marketing man must understand that each person is different and so also each country which means that both experience and techniques obtained and successful in one country or countries. Every country has a different set of customers and even within a country there are different sub-sets of customers, distribution channels and media are different. If that is so, for each country there must be a unique marketing plan. For instance, nestle tried to transfer its successful four flavour coffee from Europe to the united states lost a 1% market share in the us. It is important in international marketing to recognize the extent to which marketing plans and programmes can be extended to the world and the extent to which marketing plans must be adapted. Prof.Theodore Levitt thought that the global village or the world as a whole was a homogeneous entity from the marketing point of view. He advocated organisation to develop standardized high quality word products and market them around the world using standardized advertising, pricing and distribution. The companies who followed Prof. Levitts prescription had to fail and a notable failure amongst them was Parker pen. Carl Spiel Vogel, Chairman and CEO of the Backer Spiel Vogel Bates worldwide advertising agency expressed his view that Levitts idea of a homogeneous world is non sensible and the global success of Coca Cola proved that Prof. Levitt was wrong. The success of Coca Cola was not based on total standardization of marketing mix. According to Kenichi Ohmae, Coke succeeded in Japan because the

company spent a huge amount of time and money in Japan to become an insider. Coca Cola build a complete local infrastructure with its sales force and vending machine operations. According to Ohmae, Cokes success in Japan was due to the ability of the company to achieve global localisation or Glocalisation i.e. the ability to be an insider or a local company and still reap the benefits of global operations. Think global and act local is the meaning of Glocalisation and to be successful in international marketing, companies must have the ability to think global and act local. International marketing requires managers to behave both globally and locally simultaneously by responding to similarities and dissimilarities in international markets. Glocalisation can be a source of competitive advantage. By adapting sales promotion, distribution and customer service to local needs, Coke capture 78% of soft drink market share in Japan. Apart from the flagship brand Coca Cola, the company produces 200 other non- alcoholic beverages to suit local beverages. There are other companies who have created strong international brands through international marketing. For instance, Philip Morris has made Marlboro the number one cigarette brand in the world. In automobiles, Daimler Chrysler gained global recognition for its Mercedes brand like his competitor Bayerische. Mc Donalds has designed a restaurant system that can be set up anywhere in the world. Mc Donalds customizes its menu in accordance with local eating habits.

SCOPE OF INTERNATIONAL MARKETING International Marketing constitutes the following areas of business:Exports and Imports: International trade can be a good beginning to venture into international marketing. By developing international markets for domestically produced goods and services a company can reduce the risk of operating internationally, gain adequate experience and then go on to set up manufacturing and marketing facilities abroad. Contractual Agreements: Patent licensing, turn key operations, co

production, technical and managerial know how and licensing agreements are all a part of international marketing. Licensing includes a number of contractual agreements whereby intangible assets such as patents, trade secrets, know how, trade marks and brand names are made available to foreign firms in return for a fee. Joint Ventures: A form of collaborative association for a considerable period is known as joint venture. A joint venture comes into existence when a foreign investor acquires interest in a local company and vice versa or when overseas and local firms jointly form a new firm. In countries where fully owned firms are not allowed to operate, joint venture is the alternative. Wholly owned manufacturing: A company with long term interest in a foreign market may establish fully owned manufacturing facilities. Factors like trade barriers, cost differences, government policies etc. encourage the setting up of production facilities in foreign markets. Manufacturing abroad provides the firm with total control over quality and production. Contract manufacturing: When a firm enters into a contract with other firm in foreign country to manufacture assembles the products and retains product marketing with itself, it is known as contract manufacturing. Contract manufacturing has important advantages such as low risk, low cost and easy exit. Management contracting: Under a management contract the supplier brings a package of skills that will provide an integrated service to the client without incurring the risk and benefit of ownership. Third country location: When there is no commercial transactions between two countries due to various reasons, firm which wants to enter into the market of another nation, will have to operate from a third country base. For instance, Taiwans entry into china through bases in Hong Kong. Mergers and Acquisitions: Mergers and Acquisitions provide access to markets, distribution network, new technology and patent rights. It also reduces the level of competition for firms which either merge or acquires. Strategic alliances: A firm is able to improve the long term competitive advantage by

forming a strategic alliance with its competitors. The objective of a strategic alliance is to leverage critical capabilities, increase the flow of innovation and increase flexibility in responding to market and technological changes. Strategic alliance differs according to purpose and structure. On the basis of purpose, strategic alliance can be classified as follows: i. Technology developed alliances like research consortia, simultaneous engineering agreements, licensing or joint development agreements. ii. Marketing, sales and services alliances in which a company makes use of the marketing infrastructure of another company in the foreign market for its products. iii. Multiple activity alliance involves the combining of two or more types of alliances. For instance technology development and operations alliances are generally multi- country alliances. On the basis of structure, strategic alliance can be equity based or non equity based. Technology transfer agreements, licensing agreements, marketing agreements are non equity based strategic alliances. Counter trade: Counter trade is a form of international trade in which export and import transactions are directly interlinked i.e. import of goods are paid by export of goods. It is therefore a form of barter between countries. Counter trade strategy is generally used by UDCs to increase their exports. However, it is also used by MNCs to enter foreign markets. For instance, PepsiCos entry in the former USSR. There are different forms of counter trade such as barter, buy back, compensation deal and counter purchase. In case of barter, goods of equal value are directly exchanged without the involvement of monetary exchange. Under a buy back agreement, the supplier of a plant, equipment or technology. Payments may be partly made in kind and partly in cash. In a compensation deal the seller receives a part of the payment in cash and the rest in kind. In case of a counter purchase agreement the seller receives the full payment in cash but agrees to spend an equal amount of money in that country in a given period.

nternational trade is the exchange of capital, goods, and services across international borders or territories.[1] In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of laborintensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[2] International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics. For more, see The Observatory of Economic Complexity. Trading is a value added function of the economic process of a product finding its market, where specific risks are to be borne by the trader, affecting the assets being traded which will be mitigated by performing specific functions.
nternational 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." International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. Differences between international Trade and international Marketing-Trade includes both buying and selling activities, international marketing concentrates on selling aspect of the exchange process.

-Selling concentrates on finding buyers for given quality and quantity products on most advantageous terms for the seller. The marketing focuses on the total process of deciding the product quality and quantity, and exchanging these with the buyers with a view to maximize benefits for both the parties involved in the exchange process. -A third difference is the difference in the items exchanged. For example, different types of currencies are often traded across international borders.

nternational marketing
International marketing involves recognising that people all over the world have different needs. Companies like Gillette, Coca-Cola, BIC, and Cadbury Schweppes have brands that are recognised across the globe. While many of the products that these businesses sell are targeted at a global audience using a consistent marketing mix, it is also necessary to understand regional differences, hence the importance of international marketing. Organisations must accept that differences in values, customs, languages and currencies will mean that some products will only suit certain countries and that as well as there being global markets e.g. for BIC and Gillette razors, and for Coca-Cola drinks, there are important regional differences - for example advertising in China and India need to focus on local languages. Just as the marketing environment has to be assessed at home, the overseas potential of markets has to be carefully scrutinised. Finding relevant information takes longer because of the unfamiliarity of some locations. The potential market size, degree and type of competition, price, promotional differences, product differences as well as barriers to trade have to be analysed alongside the cost-effectiveness of various types of transport. The organisation then has to assess the scale of the investment and consider both short- and longterm targets for an adequate return. Before becoming involved in exporting, an organisation must find the answers to two questions: 1. Is there a market for the product? 2. How far will it need to be adapted for overseas markets? The product must possess characteristics that make it acceptable for the market - these may be features like size, shape, design, performance and even colour. For example, red is a popular colour in Chinese-speaking areas. Organisations also have to consider different languages, customs and health and safety regulations.

Standardisation
If a company offers a product, which is undifferentiated between any of the markets to which it is offered, then standardisation is taking place. The great benefit of standardisation is the ability to compete with low costs over a large output. The diagram below illustrates the use of a standardised products and marketing mix: In most markets, however, there are many barriers to standardisation. It is not difficult to think about the standard marketing mix for a product and how this might vary from one country to another. For example:

product - tastes and habits differ between markets price - consumers have different incomes place - systems of distribution vary widely promotion - Consumers' media habits vary, as do language skills and levels of literacy.

With differentiated marketing, on the other hand, an organisation will segment its overseas markets, and offer a marketing mix to meet the needs of each of its markets. The great benefit of standardisation is that costs are lowered, profitability is increased and the task of supplying different markets becomes substantially easier. The diagram illustrates the process of adapting the marketing mix to meet the needs of different geographical markets:

However, it could also be argued that the success of many products in international markets has come about because marketers have successfully adapted their marketing mix to meet local needs. To a large extent the standardisation/adaptation dilemma depends upon an organisation's view of its overseas markets and the degree to which it is prepared to commit itself to meeting the needs of overseas customers. There are three main approaches, which can be applied: 1. Polycentrism - with this marketing approach, a business will establish subsidiaries, each with their own marketing objectives and policies, which are decentralised from the parent company. Adaptation takes place in every market using different mixes to satisfy customer requirements. 2. Ethnocentrism - overseas operations are considered to be of little importance. Plans for overseas markets are developed at home. There is little research, the marketing mix is standardised and there is no real attention to different customer needs and requirements in each market. 3. Geocentrism - standardisation takes place wherever possible and adaptation takes place where necessary. This is a pragmatic approach. A confectionery and soft drinks manufacturer like Cadbury Schweppes typically produces a range of standard items that are sold throughout the globe using similar marketing mix. However, differences may occur in such aspects as distribution channels and pricing as well as advertising in languages that are relevant to particular cultures. In addition such a company would produce some products which cater for particular tastes, and which are relevant to particular cultures. New products might then be tested in a regional area, before consideration of which other areas of the globe to roll out that product to. Standardisation - refers to manufacturing, marketing or employing other processes in a standard way. Differentiation - is the process of making products or aspects of the marketing mix different so as to appeal to different markets. Read more: http://businesscasestudies.co.uk/business-theory/marketing/international-

marketing.html#ixzz2gTw96urc Follow us: @Thetimes100 on Twitter | thetimes100casestudies on Facebook he exporter should ask himself if the product or service is exportable. A product (or service) which is successful in the local market will not always be as successful in international markets. Although the exporter works in the globalization age, each market is different in its on way (culture, perceptions, forms of doing business....). Therefore, only through international Market research the exporter can find out if the product or service has potential or not in each target market. Furthermore, the exporter should look at what types of modifications and/or adaptations should carry out on the product or service in his international marketing strategy. There are two common mistakes that export managers make with respect to their product (or service) and exporting.
o o

The first and main one is to believe that what is good in the home market will also be good in international markets. The other is that they don't keep in mind the different channels available for the distribution of their product (importers, subsidiaries, etc.) Example of the course International product policy:

Product packaging: Product packaging is the art and science of creating boxes, covers, tubes, bags and other containers that are sturdy enough to protect the product inside, and that are effective promotional pieces in themselves. To a very large degree, the quality of design work on the package affects how well your products sell. When shopping, you reach for products whose packaging is attractive and looks professional, and you instinctively shy away from unattractively packaged products. The design of the container along with the images, logos, marketing text, ingredients and fine print, all go into creating something people will feel confident to buy. Therefore it is essential that packaging be of the highest quality so that it acts as your in-store salesperson. Issues in packaging in international markets: International marketers need to take into account the following factors for deciding appropriate packaging in various international markets;

changes in climates across countries

lengthy & difficult transportation

lengthy periods on shelves

varying sizes of packaging

different consumer preferences in packaging

some standardization needed to make the product recognizable

growing environmental consciousness

different types of channels of distribution

different cost pressures

environmental concerns Issues in labeling: International marketers also need to design appropriate labeling for various markets, to cater for the market differences as well as to adhere to regulations. In the following are the list of issues marketers face in labeling in international markets; different languages of foreign markets information details to be provided instructions for use different price or currencies different promotions consumer preferences in various markets (color, wording style etc..) rules and regulations of foreign countries Issues in warranty and service policies: International marketers also face issues, whether to standardize or to localize warranty and service policies in international markets. Factors favoring standardization or localization of warranty and service policies in international markets are listed below;

122

International Marketing MKT630 VU

Factors

favoring standardization

presence of multinational customer goods purchased in one market but consumed elsewhere products affecting human health and safety standardized products

Factors

favoring localization

different competitive situation different quality levels in different markets different use conditions lack of international service network stronger guarantees when the company is entering in new market (marketing tactic) barriers to import of replacement parts and traveling of foreign staff availability of human resources & ability of local distributors Strategies to cope with negative country of origin (COO) stereotypes: Marketers of products from developing world often face negative attitudes from the customers in developed countries. There are ways in which international marketers attempt to address this issue though product policy, pricing, distribution and communication; Product Policy:
-

Select a brand name that disguises the country of origin or even involves a favorable COO (Giordano

Bossini)
-

Sheer innovation & drive for superior quality also help firms to overcome COO biases in the long

run. Pricing:
-

Selling the product at a relatively low price will attract value-conscious customers who are less

concerned about the brand's country of origin.

-

For product categories where price plays a signal of quality - high price may help.

Distribution:
-

Companies could influence consumer attitudes by using highly respected retailers.

Communication:
-

Firm can use communication strategy to

1. Improve the country image. 2. Bolster the brand image

Deletion

The twenty-first century marketplace is dynamic, fast-changing, and increasingly fickle. More and more businesses realize that no product lasts forever, and that sales levels can fluctuate dramatically over time. As a result, companies are under pressure to evaluate their existing product line and to make continuous decisions about adding new products or deleting existing ones. Brands must task their engineering and design teams to produce successful products that generate a consistent stream of sales for both short-term profit and long-term survival. An organization must establish a series of successful products, if that organization wants to maintain a consistent stream of sales or else grow sales over time. One reason for this pattern is the product life cycle. No product lasts forever, and sales levels can fluctuate dramatically over time.
Factors in Product Deletion

Deletion is the process of removing products that perform below market expectations or fail to meet company objectives. Deletion results in either product replacement or product elimination. Product deletion requires the company to evaluate its entireproduct mix and pinpoint where organizational resources can be allocated elsewhere to generate consistent revenue streams. In addition to weak sales and profit, brands delete products that fail to align with marketing strategies, or that demonstrate an unfavorable market outlook. Market trends and consumer tastes often dictate whether products perform well in the longterm or taper off as a passing fad. However, factors including a companys business model, culture (or local tastes), government politics and/or regulations, and product malfunction can all contribute to the removal of a product. Failure rates of products vary by industry. Despite significant investment in productdevelopment and market research, it is estimated that failure rates for new packaged goods range anywhere from 75% to rates as high as 90% (source: catalinamarketing.com). When considering innovative new products, Harvard Professor John T. Gourville estimates that approximately half of all such products fail.
Business Impact of Product Deletion

Once a company eliminates a product from its offering, the brand must decide whether its goal is to maintain or increase sales. To maintain revenues, the company must continue investing in its remaining products and ensure they are competitively positioned in the marketplace. However, if the company seeks to increase sales in the near future, then it must introduce a new group of successful products to generate additional revenue.

EY POINTS

Products are modified to compete more effectively in the market, and appeal to evolving consumer and business demands. Multiple stakeholders ranging from employees and customers can influence productmodifications. Product time, cost, visual appeal, usability and reliability are all factors that influence how and when a product is modified.

External influences often prompt manufacturers to modify products. These are usually driven by competitive pressures, globalization, new technologies, or unexpected and significant events.
TERMS

stakeholders

A person, group, organization, member, or system who affects or can be affected by an organization's actions.

iterative

Of a procedure that involves repetition of steps (iteration) to achieve the desired outcome; in computing this may involve a mechanism such as a loop.

recall

To withdraw, retract (one's words etc.); to revoke (an order).

modified rebuy

the repurchase of a good with changes to the details of the order

ricing in international markets

Checklist of factors impacting on pricing in international markets
Market positioning of product or service via price in the target market, e.g. high price to signal high value and exclusivity Membership of tariff union such as the European Union: check all aspects of rules surrounding products or services originating in the union versus those imported from outside the union. Prices already operating in home country where relevant Currency exchange rates with other countries, both actual and potential Costs of tariff and other barriers Any variation in local taxes, including value added tax Prices of similar products already available in the target country Trade discounts and other special deals already operating in the target country, e.g. regular discounts off the manufacturers list price for reaching volume targets Distributor markup already operating in the target country, i.e. the difference between the distributors price and the customers price

For multinationals, the prices at which goods are transferred between subsidiaries called transfer pricing.

Availability of web-based selling structures and distributors both to reduce selling costs and to promote goods

Possibility of parallel trade pricing, i.e. goods imported from low-tax country into parallel country with higher taxes

Reaction of current competitors via price to new entrants.