Q.1 What are the differences between International Marketing and DomesticMarketing?

List the principles of international Marketing Ans: International Marketing vs. Domestic Marketing The striking difference between international and domestic marketing lies in theenvironment in which the two take place. The important points of differences betweeninternational and domestic marketing are:1. Sovereign Political Entities : Each country is a sovereign political entity and, therefore,they for importing and exporting the goods and services in order to safeguard theirnational interest impose several restrictions. The traders in international marketing haveto observe such restrictions. These restrictions may fall in any of the following categories.i) Tariffs and customs duties on import and export of goods and services in order to makethem costly in the importing country and not to ban their entry into the countrycompletely. In the post war period, through the efforts of General Agreement on Tariffsand Trade (GATT) there has been a significant reduction in tariff globally and on regionalbasis due to the emergence of regional economic groupings.ii) Quantitative restrictions are also imposed with an intention to restrict trade in somespecific commodities. The major objective behind the restriction is the protection of homeindustries from the competition of the foreign commodities.iii) Exchange control is another restriction imposed by almost every sovereign state. TheGovernment, in some cases, does not ban the entry of goods in the country but theimporter is not allowed the necessary foreign exchange to make the payment for the goodsimported. But, in some cases, exchange control and quantitative controls are put togetheralong with the grant of import licence.iv) Imposition of more local taxes on imported goods with an object to make the importedgoods costly is one of the restrictions in international marketing.2. Different Legal Systems: Different countries operate different legal systems and theyall differ from each other. In most of the countries follow English Common Law asmodified from time to time. Japan and Latin American countries are important exceptionsto this rule. The existence of different legal systems makes the task of businessmen moredifficult as they are not sure as to which particular system will apply to their transactions.This difficulty does not arise in the domestic trade, as laws are the same for the wholecountry.3. Different Monetary Systems: Each country has its own monetary system and theexchange rates for each countrys currency are fixed under the rules framed by theInternational Monetary Fund and, therefore, they are more or less fixed. However, inrecent years the exchange rates are fluctuating and are being determined by demand andsupply forces. Some countries operate multiple rates; i.e. different rates are applicable todifferent transactions.4. Lower Mobility Factors of Production: Mobility of different factors of production isless as between nations than in the country, itself.

However, with the advent of air

transport, the

mobility of labour has increased manifold. Similarly, the development ofinternational banking has increased the

mobility of capital and labour. In spite of thesedevelopments, the mobility of labour and capital is not as much as it

is within the countryitself.5. Differences in Market Characteristics: Market characteristics in each segment aredifferent, i.e.

demand pattern, channels of distribution, methods of promotion etc. arequite different from market to market. If we take each country a

separate market, we canassume different market characteristics there. These differences are accentuated due tothe existence of government

controls and regulations. However, this is a difference ofdegree only. Even in one single country, for example, India and America, these differencesin

market patterns may be found from state to state.6. Differences in Procedure and Documentation: The centuries old laws and customs oftrade in each

country demand different procedures and documentary requirements for theimport and export of the goods and services. The traders residing in

the territory have tocomply with these regulations and customs if they want import and export of goods andservices.

1.4 Principles of International Marketing

The essence of international marketing can be summarized in three great principles. Thefirst

identifies the purpose and task of marketing, the second the competitive reality ofmarketing and the third the principal means for

achieving the first two.

1.4.1 Customer value and the value equation

The task of marketing is to create customer value that is greater

than the value created bycompetitors. The value equation is a guide to this task. As suggested in the equation, valuefor the customer can be increased by

expanding or improving product and/or servicebenefits, by reducing the price, or by a combination of these elements. Companies with acost advantage

can use price as a competitive weapon. Knowledge of the customercombined with innovation and creativity can lead to a total offering that offers

superiorcustomer value. If the benefits are strong enough and valued enough by customers, acompany does not need to be the low-

price competitor to win customers.

1.4.2 Competitive or differential advantage

The second great principle of international marketing is

competitive advantage. Acompetitive advantage is a total offer, vis--vis relevant competition that is moreattractive to customers. The

advantage can exist in any element of the companys offer:the product, the price, the advertising and point-of-sale promotion, or the distribution ofthe

product. One of the most powerful strategies for penetrating a new national market isto offer a superior product at a lower price. The price advantage will get

immediatecustomer attention, and, for those customers who purchase the product, the superiorquality will make an impression.V = B/PWhere,V =

ValueB = perceived benefits perceived costs (for example, switching costs)