Module 1-amity university International marketing notes bba sem 6 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 I. 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 dissimilarities 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. Need for International Marketing: (1) International interdependence of countries and growing world population: Selfsufficiency in

all respects is not attained by any country in the world. Due to geographical and other factors, no country can produce all its requirements. There is international interdependence due to which every country has to import certain goods and export goods, in order to pay for imports. The awareness of mutual dependence favors the growth of international marketing. (2) No uniform geographic and climatic conditions: there is any uniformity of geographic and climatic conditions in all countries. A country does not have the capacity to produce all the goods required by it. Due to natural and other economic factors, a country can import the goods, which it is not in a position to produce. (3) No uniform production cost:International marketing is needed because the production cost in all countries is not the same. Every country can produce certain commodities with low production cost because of some favourable factors. Exchange of goods on the basis of comparative cost is beneficial to all countries. (4) Increasing needs and better standard of living:International marketing is needed to fulfill the increasing needs of consumers for production and improved products and for providing good standard of living to the people. (5) Need of developing closer economic and cultural cooperationInternational marketing is needed for developing closer economic and cultural co-operation between different countries. Thus, the global resources can be used fully at the global level. International marketing is required for economic integration among the countries of the world. (6) Problem of surplus production and scarce production in some countries:International marketing is needed because ofsurplus production in some countries and scarce production in some other countries. Some countries have huge unutilized production capacity. Some countries have no capacity to fulfill even their domestic requirements. This problem can be solved by international marketing which helps in exchange of goods according to the requirements of different countries. (7) Bridging gap between developed and developing nations: International marketing is needed to bridge the gap between developed and developing nations. International marketing helps in

exchange of goods and services and helps in transfer of technical know-how and skills, thereby accelerating the development of developing countries. (8) Economic growth of developing countries and peace in the world:International marketing is needed for quick economic growth of developed and developing countries. It helps in transfer of technology and quick industrial development in developing countries. The developed countries provide help to developing countries. International marketing develops co-operation among countries and thereby world peace and prosperity. OBJECTIVES OF INTERNATIONAL MARKETING To bring countries closer for trading purpose and to encourage la rge scale free trade among the countries of the world. To bring integration of economies of different countries and there by to facilitate the process of globalization of trade. To establish trade relations among the nations and thereby to maintain cor dial relations among nations for maintaining world peace. To facilitates and encourage social and cultural exchange among different countries of the world. To provide better life and welfare to people from different countries of the world. In addition, to provide assistance to countries facing natural calamities and other emergencies situations. To provide assistance to developing countries in their economic and industrial growth and thereby to remove gap between the developed and developing countries. To ensure optimum utilization of resources (including surplus production) at global level. To encourage world export trade and to provide benefits of the same to all participating countries. To offer the benefits of comparative cost advantage to all countries participating in international marketing. To keep international trade free and fair to all countries by avoiding trade barriers. Difference between International and Domestic Marketing International Marketing Domestic Marketing 1. Meaning It refers to those activities which results into transfers of goods and services from one country to another. It refers to those activities which results into transfers of goods and

services inside the country itself. 2. Barriers International trade is characteristics by tariff and non tariff barriers. Domestic marketing has no such restrictions. 3. Currencies It involves exchange on the basis of different currencies. It involves exchange in the basis of same currencies. 4.Government Interference Exchange takes place under government rules and regulations. There is high degree of government interference. Government in interference is zero or minimum only incase of essential commodities. 5. Culture Trade should be done taking diverse Culture does not affect in domestic into consideration. Even things like colour combination can be affect the trade. marketing. 6.Mode of Payment Letter of credit is normally as mode of payment. Cash, Cheques, DDs are the most common. 7.Mobility of Factors of Production Factors of Production are relatively immobile as compared to domestic marketing. Domestic Trade enjoys greater mobility in factors of production. 8. Competition International Trade is subject to intense competition. Competition is not as intense as it is in international marketing. 9. Documentation International Marketing is subject to complex documentation Domestic trade does not involve much of documentation. 10. Risk International Marketing is subject to high risk. Political, foreign exchange risk, bad debt risk are few of them. Domestic Marketing is also subject

to risk but not as high as international marketing. 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. Problems in International Marketing (1) Political and Legal Differences: The political and legal environment of foreign markets is different. The complexity generally increases as the number of countries in which a company does business increases. The political and legal environment is not the same in all provinces of many home markets. For example, the political and legal environment is not exactly the same in all the states of India. (2) Cultural differences: Cultural differences pose one of the most difficult problems in

international marketing. It is essential to understand cultural differences to formulate successful marketing strategies. However, many domestic markets, are also not free from cultural diversity. (3) Currency unit differences: The currency unit differs from nation to nation. This may sometimes cause problems of currency convertibility, besides the problems of exchange rate fluctuations. There may be differences also in the monetary system and regulations. (4) Language differences: An international marketer often faces problems due to language differences. Even when the same language is used in different countries, the same words or terms may have different meanings. However, the language problem is not something peculiar to international marketing. For example, the multiple languages in India. (5) Marketing Infrastructure Differences: The availability and nature of marketing facilities available in different countries may differ widely. For example, an advertising medium very effective in one market may not be available, or may be underdeveloped, in another market. (6) High Costs of Distance: When the markets are far removed by distance, the transport cost becomes high and the time require