International Marketing exam notes:

Q1- How does international marketing differ from domestic marketing?

Basis Domestic Marketing International Marketing

Definition It is concerned with the It is the performance of

marketing practises within business activities
the researchers or designed to plan, price,
Marketers home country promote and direct the
(domestic market). flow of a companys goods
and services to consumers
or users in more than one
nation for a profit.
Role of Politics Political factors are of Political factors play a vital
minor importance. role.
Languages & Cultures One language and culture. Many
languages and difference
in cultures.
Financial Climate Uniform financial climate. Variety of financial climate.
Risk Involved Normal risk is involved. Higher risks of different
nature are involved.
Control of Marketing Control of marketing Control of marketing
Activities activities is easy as activities is difficult
compared to international because of different factors
activities. like regional, cultural,
political, etc.
Payment Minimum payment and Considerable payment and
credit risks. credit risks.
Familiarity Well familiarity with Lack of Familiarity with
domestic market. foreign markets, research
becomes essential.
Knowledge Requirement Management knowledge is Specific management
required. knowledge and
competence is required.
Product Mix Product mix is decided Product mix is decided
keeping in view the according to foreign
satisfaction and more market.
sales.
Product Planning and Product planning and Product planning and
Development development according to development according to
domestic market. foreign market.
Focus Focus of interest is on Focus of interest is on
general information. strategic emphasis.
Market Aspect Market is much more Different or diverse
homogeneous and different markets fragmented in
segments. nature
Consumers Domestic marketing has to While International
deal with only one set of marketing has to deal with
customers different types of
 customers and their tastes.

Unit 5:
International Promotion- International promotion is promoting the business
internationally or it is the marketing carried out by companies in overseas or across
national borderlines.
Feature of International Promotion-
1. Multi lingual advertisements
2. Wider platform for all the products and services
3. Wider brand awareness through different medias(internet/magazines/tv/radio)
4. Advertising campaigns on a large scale
5. Conducting charitable contributions

Constraints/problems in International promotion:

1. Language barriers: The advertising will have to be translated, not just into the
generic language category (e.g., Portuguese) but also into the specific version spoken
in the region (e.g., Brazilian Portuguese). (Occasionally, foreign language ads are
deliberately run to add mystique to a product, but this is the exception rather than the
rule).
2. Cultural barriers: Subtle cultural differences may make an ad that tested well in
one country unsuitable in anothere.g., an ad that featured a man walking in to join
his wife in the bathroom was considered an inappropriate invasion in Japan.
Symbolism often differs between cultures, and humor, which is based on the contrast
to peoples experiences, tends not to travel well. Values also tend to differ between
culturesin the U.S. and Australia, excelling above the group is often desirable, while
in Japan, The nail that sticks out gets hammered down. In the U.S., The early bird
gets the worm while in China The first bird in the flock gets shot down.
3. Local attitudes toward advertising: People in some countries are more receptive to
advertising than others. While advertising is accepted as a fact of life in the U.S.,
some Europeans find it too crass and commercial.
4. Media infrastructure: Cable TV is not well developed in some countries and regions,
and not all media in all countries accept advertising. Consumer media habits also
differ dramatically; newspapers appear to have a higher reach than television and
radio in parts of Latin America.
5. Advertising regulations: Countries often have arbitrary rules on what can be
advertised and what can be claimed. Comparative advertising is banned almost
everywhere outside the U.S. Holland requires that a toothbrush be displayed in
advertisements for sweets, and some countries require that advertising to be shown
there be produced in the country.

Important Media of International Advertising:

1. NEWSPAPERS
They provide information about politics, sports, business and socio-cultural life of a
community.
A large percentage, about 80 per cent educated people read newspapers. Educated
and well-to-do people read English language newspapers; others read Hindi or
regional language papers. Newspapers are printed from most metro cities and due to
heavy competition the prices of newspapers have been going down. The profi ts of a
newspaper come from the advertisements printed in them.
Newspaper owners have not only accepted their role as a vehicle of advertisements,
they have geared themselves up for improved coverage, better print and paper and
competitive advertisement rates. Fast moving consumer goods fi rms having wide
distribution network use newspapers. They are good for providing information about
products, fi rms and their local distribution network. The main shortcoming of
newspaper as a media is that the readership of newspapers among the youth is
limited.
Newspapers are of several kinds: National English language, National Hindi, National
business, Regional language, Newspaper supplements, Midday and evening papers,
Tabloids
Newspapers have their own advertising departments, which are engaged in selling
advertising space. They pursue both the advertisers as well as the agencies to book
the space. Special efforts are made during festive seasons and occasions like cricket
test matches.
The newspaper sells space at a column centimeter rate. There are special rates for
special positions in the newspaper like the front page, solus position, when no other
advertisement appears on the same page/place. Advertisements for sports goods can
be usefully advertised on the sports page of the newspaper. Newspapers are now
accepting color advertisements too. Teaser advertisements are carried out in split runs
in newspapers, when a part of the advertisement is carried in one part of the
newspaper and the rest in the next part. On their part, newspapers carry out surveys
about buying patterns, habits and seasonality of sale of selected products.
The main advantages of newspapers are as follows:
i. Advertisers can focus on the geographic area they want to cover.
ii. Newspapers get their readers total attention.
iii. Size of the advertisement does not matter.
iv. Advertisements can be put in the newspapers quickly.
v. It is easy to talk to the readers to know their views about the advertisement.

2. MAGAZINES
Magazines cater to different categories. There are magazines exclusively for
consumers, for fi lm fans, for women and then there are technical magazines
dedicated to science and technology, computers, and other engineering disciplines
like chemical engineering, genetics and medical sciences.
Magazines can be categorized as follows:
Political
Social
Professional magazines for doctors and engineers
Regional language
 Film
Computer based
Wild life
Arts
Theatre
Newspaper magazine supplements
Magazines carry information about current events, new developments and plans of
the concerned area. Their coverage is limited, their getup glossy but could be of
indifferent quality. They are published from most major cities and in all possible
languages of the land. The price of magazines depends on its coverage, gloss and can
be very different for magazines even from the same town, publisher or discipline.
Magazines adorn the homes of the elite as also of the commoner. They put the buyers
in a special group and boost their egos. The disadvantage of advertising in magazines
can be the excessive clutter of advertisements in most magazines. And yet, the elite
and the busy business magnet have hardly any time for looking at anything else
except some business magazines.
The main advantages of magazines as media are:
i. It is easy to select magazine for the target segment.
ii. Readership surveys are easy through magazines.
iii. Can plan advertising to equate with the magazines interests.
iv. Message stays with the reader for a long time (as long as the magazine is in front
of the consumer).
v. Advertising quality can be good.

3. RADIO
With the advent of television, especially the colour variety, radio has lost much of its
appeal at least in the areas where TV coverage is good and TV signals strong. In the
remote villages in India, only radio is available and it remains a good advertising
media. From fi lm music to news, radio provides entertainment of the audio kind,
which is useful for advertising products for rural markets. Frequency modulation (FM)
has emerged as a major technological development because of its excellent voice
quality in a given range of geographic area. Teenagers in metros are hooked to FM
radio programmes.
The media caters to the entire country. The media costs are comparatively low for
radio.
The major disadvantage of radio as a media is that there is a lot of advertising on this
media.
The major advantages are:
i. It is easy to place the advertisement in local radio station.
ii. It is easy to conduct listeners research.
iii. Can be connected to radio programmes.
iv. It is possible to increase or decrease the advertising frequency within a reasonable
notice period.

4. TELEVISION
Television is definitely the most sought after entertainment media. It can be quite
intoxicating in the sense that people get hooked on to TV programmes. During the fi
rst telecast of the epics Ramayana and Mahabharata, most city people were glued to
their TV sets, cancelling even important appointments. For advertisers, TV is not
media with a big reach but also one that allows it to demonstrate its products. These
demonstrations along with the advertisement message help to reaffirm the
customers views in favour of the product.
Television caters to the entire family, as during the day, each member of the family
sits down to watch one or the other TV programme, albeit at separate times. During
noon and afternoon, when the husband goes to work, the housewife watches TV.
Without meaning to be gender biased, the programmers place programmes of
womens interest at that time.
Andrew Sullivan wrote in the New York Times Magazine, Meanwhile on TV, Americas
Fox Family
Channel has introduced two separate channels for boys and girls, boyzChannel and
girlzChannel, to attract advertisers and consumers more efficiently. Fox executives
told Wall Street Journal that this move reflects what TV researcher tell them about
viewing habits: In general terms, girls are more interested in entertainment that is
more relationship-oriented, while boys are action-oriented.
When TV started for the first time in India in early 1960s, telecast was limited to two
hours a day of black and white programmes. From those days to the present times,
with continuous 24 hour programming and that too on more than 40 channels, TV has
taken giant strides forward.
The popularity of TV programmes is such that advertisers are ready to pay huge
amounts for telecasting their advertising fi lms as they provide wide area coverage
and reach out to a very large audience. With demonstrations of the product in use, TV
advertising has taken over the role of personal selling to a large extent. The only
negative aspect of TV advertising is the high cost of advertising. With rising income
levels and the race for purchasing new products, advertising expenses are on the
increase with no sign of coming down. The positive points of advertising on TV are:
i. Ability to demonstrate the product as a working model.
ii. Creativity can reach new heights.
iii. Advertising quality can be excellent.
iv. Can reach millions of viewers.
v. It can be telecast as often as the budget permits.
vi. Audience research can be easily conducted.

5. OUTDOOR MEDIA
In the area where hoardings, billboards and kiosks are placed provide high exposure
advertising.
Car owners are the people most affected by outdoor advertising, so much so that in
Delhi the government has put a ban on outdoor media to avoid distractions caused by
hoardings.
The cost of the media is commensurate with its limited usage. The media, where
allowed by the government, is most often used to promote the firm, its brand and one
single most important (at a time) product of the firm.
The negative aspect of the media is its limited reach, lack of opportunity for giving
detailed product information and in some cases government regulations.
The plus points of advertising on outdoor media are: Advertiser can select geographic
coverage & Creativity possibilities are good.

6. POINT OF PURCHASE (POP)

In retail business, POP plays a major role in advertising. The following are the usual
POP materials used:
i. Posters
ii. Danglers
iii. Sign boards
iv. Streamers
v. In-store closed circuit TV, which continuously shows product displays at various
levels as in- store commercials
vi. Merchandising that decorates the shop displays
vii. Shop main signboards
viii. Window displays
In most shops due to multiple brands on display, there is a clutter of POP, which takes
away the main benefits of POP. The plus points of POP are:
i. Consumer research is possible.
ii. Impact is direct on the viewer.
iii. Can be changed easily.
iv. Advertising material creativity can be directed to the shops clienteles needs.

7. DIRECT MAIL
This is advertising in the form of letters to customers. The letters can be crafted with a
personalized format and approach. They sometimes take the role as the chosen
media, especially in high-value personal products like digital diary, personal computer
and service industry offers like hotel and airline deals. Care should be taken to ensure
that the direct mail letter looks like a normal business communication otherwise there
are chances that the letter will be put into the waste-paper basket.
With a plethora of mail received by executives, they read only the ones which look
businesslike and readable.
The target market segment can be reached quite accurately with specific mailing
addresses being available to the marketers from trade and industry associations.
The cost of direct mail can vary on the basis of quality of the materials used and the
size of the mailing list. Since direct mail is targeted to only the real consumer with no
aberrations, they can be focused and personalised, making the readers feel important.
Care should be taken to ensure that even from the envelope the mailer gives the
impression of a personal letter. Else the direct mail has the possibility of being
consigned to the readers waste-paper basket. As most corporate buyers get hundreds
of direct mailers daily, they have to select only just a few for their perusal. Hence,
even with its close contact with the customer, direct mail remains a back-seat media.
Direct mail scores high on the following points:
i. Selection of customer groups.
ii. Geographic coverage.
iii. Flexibility in creativity.
iv. Size and frequency of the message can be as desired by the advertiser to suit the
product.
v. Advertisements quality can be good.

8. CABLE TELEVISION AND SATELLITE CHANNELS

While cable TV provides local programming, satellite channels offer fare from all over
the world.
Cable TV is developing quite fast. It gives priority to local news and events. This is a
good media for retail shops, stores and low-volume businesses!
Satellite TV, provide channels from all over the world, like CNN, BBC, Star, Zee,
National Geographic, Animal Kingdom besides our own Doordarshan channels. Each
one has its own viewership, which provides flexibility and focus for the desired market
segment to the advertiser. Satellite TV is popular with the upper class with a growing
spread and with enthusiasts of sports, movies, events and talk shows. The media cost
of local cable TV is reasonable while satellite TV costs vary on the basis of individual
programme television rating points (TRPs), which are indicators of programme
viewership and popularity.
The advantages of satellite media are:
i. Advertisements can cross international boundaries.
ii. Creativity gets major thrust.
iii. National marketing networks can make full use of the media.
iv. Viewership consists of even the elite members of society.
Cable TV has the following plus points for advertisers:
i. Low cost advertising.
ii. Local brands can use the media to their advantage.
iii. Demonstrations of the working of the products can be done easily.
The quality of telecast of cable TV, however, is suspect at times.
9. MISCELLANEOUS MEDIA
Starting from yellow pages, to directories, encyclopedias, rail and air tickets, bus
panels, balloons, elephants and camels the list is endless. Yellow pages, in particular,
have caught the fancy of the middle and upper class in urban India. Most prospective
customers use the yellow pages. Its usefulness comes from the fact that people look
at the yellow pages just before making purchase decisions.
However, most yellow pages do not dynamically promote a particular product. These
media are mostly supplementary media used for reinforcing the main thrust media.
Movie halls have slide shows as also video advertising, which are limited to the
audience who are in a way captive and thus forced to see the advertisements. A rough
estimate of media usage is as follows:
1. Print, including newspapers and magazines30 per cent
2. Television40 per cent
3. Radio7 per cent
4. POP and outdoor3 per cent
5. Direct mail14 per cent
6. Miscellaneous6 per cent
The first threeprint, radio and TVare called above the line media while the others
are called below the line media, the distinguishing factor being how the agency gets
paid for the use of the media. In case of the above the line media, the media pays the
advertisings agency a commission of 15 percent. For below the line media, the agency
bills the advertiser with a mark-up on the media bills, which again is usually 15 per
cent. Each member of the media makes claim of their usage, readership or viewership
to woo the advertising campaigns. While for the print media in India, ABC, an
independent body, publishes the exact print copies giving its coverage and
penetration in the segment, for TV, the TRPs indicate the popularity of a particular TV
channel and its individual programmes.
There are other media available now as follow:
1. Videotapes with movies: The number of movies-on-tape hired each year is
increasing each year.
With the advent of video disks they will too form a new media in India.
2. Advertisements on computer software discs.
3. Internet has emerged as a major advertising media worldwide because of the
following reasons:
i. Coverage on the web is worldwide.
ii. Availability of huge amounts of information on the internet.
iii. Entertainment sites like chat rooms.
iv. Creativity is boundless, with little or no censorship so far.
v. Live demonstrations with audio and video clips makes it really interesting.
vi. Interactivity of the media as it takes the customer from information search stage to
buying action with a few clicks of the mouse (and with the help of credit cards!).
The possibilities of new media emerging are immense and advertisers look keenly for
developments in the area.

Unit 4
COUNTER TRADE
Countertrade occurs when a firm accepts something other than money as payment for
its goods or services. Thus, countertrade is essentially a barter trade.
TYPES OF COUNTER TRADE
(1) BARTER SYSTEM
Barter is the direct exchange of goods and/or services between two parties without a
cash transaction.
(2) COUNTER PUCHASE
This is a reciprocal buying agreement. It occurs when a firm agrees to purchase a
certain amount of materials back from a country to which a sale is made.
(3) OFFSET
An example for an offset deal is that Pepsi Co sells its cola syrup to Russia for roubles
and agrees to buy Russian vodka at a certain rate for sale in the US. Going by this
example, offset resembles Counter purchase agreement. But there is difference. The
difference is that Pepsi can fulfill the obligation with any firm in Russia. From an
exporter's perspective, offset is more attractive than a straight Counter purchase deal
because it gives the exporter greater flexibility to choose the goods that it wished to
purchase.
(4) Switch trading
It refers to use of the specialized third party trading house in a countertrade
agreement. When a firm enters a counter purchase or offset deal with a country. It
often ends up with what are called counter purchase credits, which can be used to
purchase goods.
Switch trading occurs when a third-party trading house buys the firm's counter
purchase them to another firm that can better use them.
(5) BUYBACK
A buyback also called compensation occurs when a firm builds a plant in a country-or
supplies technology, equipment, training, or other services to the country-and agrees
to take a certain percentage of the plant's output as partial payment for the deal.
Countertrade is of particular importance to countries that lack convertible currency
and, as stated earlier is often used as means of reducing the drain on scarce foreign
currency holdings.
A relatively new form of countertrade involves swaps. Swaps are generally carried out
in' relation to developing countries where the government and private sector face
large debt burdens. Given that these debtors are unable to pay their debt in the
immediate future, lenders have grown amenable to exchange the debt for something
else, as for example, debt-far-equity swaps in the private sector, and debt-for-nature
swaps in the public sector.

Factors affecting international pricing

Pricing factors of international business vary from that domestic business. A number
of factors affect the international pricing. The important among them are:
(a) Cost
(b) Competition
(c) Product Differentiation
(d) Exchange Rate
(e) Economic Conditions of the Importing Country:
(f) Government Factors:
(g) Other incentives like supply of finance, inputs etc. at lower prices in order to
encourage the domestic exports.