Introduction to

International Marketing

If we distributed pictures
only in the United States,
wed lose money. It takes the
whole world now to make the
economics of movie-making
work.
- William Mechanic
President, 20th Century Fox

Half the people in the world

have yet to take their first
picture. The opportunity is
huge, and its nothing fancy.
We just have to sell yellow
boxes of film.
- George M.C. Fisher
CEO, Eastman Kodak Co.

International Marketing
Today we live in a world of Global outsourcing.
Global Trade is at its potential high and the trend is
going to grow in future.
Peter Drucker says, No Institution, whether a
business, a university or a hospital, can hope to
survive, let alone to succeed, unless it measures
up to the standards set by the leaders in its field
any place in the world.
So also, the Indian business environment has seen
a sea change in the level of competition since the
opening up of the domestic markets for
participation of MNCs.

 In 1950, the International Trade was worth

$55 billion. From here, it has raised to
$10120 billion in 2005.
Germany ranks the first in exports and
exported goods worth $912.3 billion with a
global share of 10% in 2004. USA ranked
second with $818.8 billion and 8.9% share.
India was 30th with exports of $75.6 and a
share of 0.8%.

 In imports, the USA has imported goods

worth $1525.5 billion with a global share of
16.1%. India ranks 23rd with imports of $97.3
billion and 1% of the global share.
This data shows that India has to go a long
way in international Trade and the scope is
tremendous.

International Marketing
...is the marketing of goods and services across national
frontiers.
is the marketing operations of any company that sells
and / or produces within a given country when :
The organization is a part of, or associated with an
enterprise which also operates in other countries, and
There is some degree of influence or control on its
activities from outside the country in which it sells and /
or produces
The process of planning and conducting transactions
across national borders to create exchanges that satisfy
the objectives of individuals and organizations.

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)

Global Marketing
Environment
Global
Regional
Local
Marketing Mix

Environment

Major International Marketing

Decisions

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
MNCs
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.
MNCs
Other large firms
SMEs
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
Low investment
Low control of promotion

Licensing
Low investment
Low control of promotion,
positioning, and quality
Able to benefit from
existing distribution and
market knowledge

Joint venture
Considerable investment
More control
Able to benefit from
partners experience
Must work with partner

Direct investment

Large investment
Risky
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 entryyou 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.