OVERVIEW

Marketing : the process of focusing the resources & objectives of an organization on environmental opportunities & needs Although marketing is a universal discipline, marketing practice varies from country to country

WHAT IS INTERNATIONAL MARKETING ?

IM is the performance of business activities designed to plan, price, promote and direct the flow of a companys goods and services to consumers or users in more than one nation for a profit. And this accounts for the complexity and diversity found in international marketing operations.

PERSPECTIVE OF IM
Marketing discipline is universal but markets & customers are quite different 3 domains of knowledge

Cross-Cultural Knowledge Country/ Regional Knowledge Cross-Border Transactions Knowledge

Need for Global Localization: Adjustment of global marketing strategies to local requirements

INTERNATIONAL MARKETING
Product Design :Canon/photocopier/McDonalds/Toyota/Ford Brand Name :Marlboro/Coke/Pepsi/Mercedes/ Product Positioning: Colgate toothpaste/Unilever fabric softener

Packaging
Advertising Strategy Sales

:Gillette razors
: Coca-cola/British Airways/Benetton

Promotion
Customer Service

:IBM
Vodafone

PERSPECTIVE OF IM
International

arena is of great importance to companies maximizing growth potential 70% of market potential is outside the US 90% of market potential for German companies is outside of Germany A large number of industries will be dominated by a handful of global companies

DRIVING FORCES AFFECTING IM

Technology Regional Economic Agreements Market Needs & Wants Transportation & Communication Improvements Product Development Costs Quality World Economic Trends Leverage The Global/ Transnational Corporation

RESTRAINING FORCES AFFECTING IM

Management Myopia & Organizational Culture National Controls & Barriers

SCENARIO
The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming Global competition is intensifying

CONT
To

compete, many International companies are continuously improving their products, expanding into foreign markets, International firms face several major problems:

Inflation, and unemployment have resulted in highly unstable governments & currencies, Governments placing more regulations on foreign firms Protectionist policies and trade barriers, Corruption.

U.S. GLOBALIZATION

MAC IN INDIA, MCDONALDS SERVES CHICKEN, FISH, AND VEGETABLE BURGERS, AND THE
MAHARAJA MACTWO ALL-MUTTON PATTIES, SPECIAL SAUCE, LETTUCE, CHEESE, PICKLES, ONIONS, ON A SESAME-SEED BUN.

NIKE: A CULTURAL ISSUE

When

Nike learned that this stylized Air logo resembled Allah in Arabic script, it apologized and pulled the shoes from distribution

COLGATE GOES TO CHINA

USING AGGRESSIVE PROMOTIONAL AND EDUCATIONAL PROGRAMS, COLGATE HAS EXPANDED ITS MARKET SHARE FROM 7% TO 35% IN LESS THAN A DECADE

MAJOR INTERNATIONAL MARKETING DECISIONS

PATTERNS OF TRADE
Trade

in goods: commodities, raw materials,part or finished goods-between different locations Trade in services:travel and tourism,financial services,consultancy,education and trainingexpanding markets E-commerce and E-business: using IT to trade across borders B2B and B2C changing relationships Business with Governments and Agenciesimpact of privatization and economic development

STAGES OF MARKETING
Export Marketing: Smaller players International marketing: some overseas activity: e.g Hidesign Multinational: marketing in countries or regions which differ significantly Global marketing-Integrated to exploit global opportunities

EXPORT MARKETING
Domestic market remains of prime importance Profitable byproduct of its domestic strategy. E.g Haldiram Bhujia Challenge is to select appropriate markets, determination of appropriate product modifications to meet the requirements and development of export channels

INTERNATIONAL MARKETING
Go beyond exporting and become more directly involved in the local marketing environment within a given country. Have its own sales subsidiaries,develop entire marketing strategies to fit new market demands. Need to understand different environments

MULTINATIONAL MARKETING
Result

of development of Multinational corporations. Characterized by extensive development of assets abroad,operate in several foreign countries as if the firms were local companies. This has led to the development of many domestic strategies also called multi-domestic strategy-whereby a MNC competes with many strategies, each tailored to a particular local market.

CONT
Challenge is to find the best possible adaptation of a complete marketing strategy for an individual country. Maximum localization

PAN REGIONAL MARKETING

Due to the smaller size and scale of individualized marketing strategies,each tailored to a specific local environment,companies have begun to emphasize strategies for larger regions. Like European Monetary Union,European Union.

GLOBAL MARKETING
Single strategy for a product,service, or company for the entire global market. E.g Dell Aimed at leveraging the commonalities across many markets Last stage in the development of the field of International Marketing

WHY ENTER FOREIGN MARKETS?

Increase market share:Domestic market may lack the size to support efficient scale manufacturing facilities. Example: Japanese electronics or automobile manufacturers Mature or saturated home markets: European Conglomerates Preferential trading agreements: India-Pakistan Return on investment: Large investment projects may require global markets to justify the capital outlays Example: Aircraft manufacturers Boeing or Airbus Weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators

WHY ENTER FOREIGN MARKETS

Economies of scale:

Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R & D or distribution Can spread costs over a larger sales base Increase profit per unit New Market creation:Chanel, Hidesign Competitor attacking all markets: Mercedes and BMW, Dell and Toshiba.

Location Advantages:Low cost markets may aid in developing competitive advantage May achieve better access to: raw materials, low cost labor, key suppliers, Key customers, Natural resources

DECIDING WHETHER TO GO INTERNATIONAL

OR NOT Not all companies need an international presence Globalization may be triggered by several factors Risk and the ability to operate globally must be carefully assessed

-Gilli Jewellers

ENVIRONMENT
All IM activities occur within legal, economic, political and other environments to which strategies and policies must relate. Marketers need to operate within the constraints of this environment and in the case of IM there will be more than one environment constraining the company at any one time.

IM V/S DOMESTIC
Environment confronted are vastly more complex and extensive than for domestic operations. Each country has its own legal system, culture,socio-economic infrastructure etc. Most of the firms environments have to be taken as they are and cannot be controlled, yet they have profound consequences for IM management.

CONT
Procedures

are needed for speedy identification of fresh market opportunities resulting environmental change. 2 Steps required for scanning environment: Firm must predict the external change that might occur and then detail how the organization would be affected by them and how it should respond. It should list the businesss major function, followed by an outline of all environmental factors likely to affect these functions.

ENVIRONMENT
There is a huge number of external variables that might affect a firms operations, creating the danger that some important variables may be overlooked. Very large companies might attempt to influence the governments and institutions that help determine environment in the first place.

ECONOMIC ENVIRONMENT
KEY

FACTORS: Nature and extent of competition, growth rates of living standards, tax regimes, import controls and marketing opportunities as a whole in order to establish the sizes and characteristics of various markets, identify high growth sectors, assess the degree of risk attached to operating in specific countries and deploy resources effectively.

ECONOMIC ENVIRONMENT
Companies need to look at: The overall economic health of the country. The likelihood of the countrys government imposing foreign exchange controls, import restrictions and deflationary economic policies such as tax increases and interest rate rises.

INTERNATIONAL MARKETING ENVIRONMENT

Economic Environment

Industrial structure
Raw material exporting economies Industrializing economies Industrial economies

Income distribution

POLITICAL ENVIRONMENT

Political consideration affect the laws and hence the business practices of the country, restrictions on entry to the market(tariff levels and controls over the foreign ownership of enterprises for e.g), the prices of a firm can change its customers and the ability to repatriate profits.

POLITICAL ENVIRONMENT
The political superstructure defines the legal environment in which business operates, particularly with respect to the law of the contract and rules on advertising and consumer protection. Economic and Political environments interrelate : political factors influence the economy, while economic hardships may trigger political upheaval.

POLITICAL ENVIRONMENT

Political instability can arise from internal revolution and insurgency, involvement in foreign wars, frequent changes of government( peacefully or through violence), bad international relations, falling national income and living standard

CONT

Political-Legal Environment

Attitudes toward international buying Government bureaucracy Political stability Monetary regulations

compensation

THE CULTURAL ENVIRONMENT

Culture

is a complex set of interrelating beliefs and ways of living. A nations culture represents a collective frame of reference through which a wide range of issues and problems are interpreted. It determines how symbols, sounds, pictures and behavior are perceived by individuals and affects socialization, friendship patterns, social institutions, aesthetics and language.

CULTURAL ENVIRONMENT
Culture consists of the following main elements: Religion, Language, shared beliefs and ethics, nonverbal language Social structure: This may range from the rigid class structure of India through to the so-called classless society of Australia. Social structure also includes gender roles and family pattern.

Buildings for certain class/caste of people in Mumbai.

CONT
Cultural

Environment

Impact of Culture on Marketing Strategy and vice-versa

Cultural traditions, preferences, behavior Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally. They have to keep in mind taboos,local tastes and historical traditions E.g:T-shirts with prints of religious deities.

LEGAL ENVIRONMENT
Local

laws determine marketing practice. Legislation may exist regarding product characteristics, packaging , labeling, brand names, length of guarantees, pricing and promotion, and many other issues. International legal considerations impinge upon the ways in which contracts of sale are drafted, the carriage of goods, insurance of payments and of consignments, and the means for financial transactions.

LEGAL ENVIRONMENT
There

is no uniform law governing International trade, only the application of a countrys domestic law to international transactions. On the plus side, the domestic commercial laws of many countries adhere to rules establish via international convention, and it is also possible to specify the country under whose law, a contract will be interpreted.

LEGAL ENVIRONMENT

In eastern Europe, where the former communist legal system lacked any form of commercial law. Many contracts within these countries are decided under English or German law, even when UK and German companies are not involved in the contract.

DECIDING WHICH MARKETS TO ENTER

Define

international marketing polices and objectives, and sales volume goals Decide how many countries to target Decide on the types of countries to enter Screen and rank each of the possible international markets using several criteria

Market size, market growth, cost of doing business, competitive advantage, risk level

DECIDING HOW TO ENTER THE MARKET

Exporting

Direct vs. indirect

Licensing, contract manufacturing, joint ownership Assembly facilities, manufacturing facilities

Joint Venturing

Direct Investment

MARKET ENTRY STRATEGIES

management contract is an arrangement under which operational control of an enterprise is vested by contract in a separate enterprise which performs the necessary managerial functions in return for a fee.Eg Marriott Hotels , Airlines (Tyrolean)

MARKET ENTRY STRATEGIES

Exporting:
Indirect: working through independent international marketing intermediaries. Direct: company handles its own exports.

MARKET ENTRY STRATEGIES

Joint Venturing:

Joining with foreign companies to produce or market products or services.

Approaches:
Licensing Contract manufacturing Joint ownership

JOINT OWNERSHIP
KFC ENTERED JAPAN THROUGH A JOINT OWNERSHIP VENTURE WITH JAPANESE CONGLOMERATE MITSUBISHI.

INDIAS TRADE WITH FOREIGN COUNTRIES

Volume of trade under various 5 year plans. 1st 5 year plan: stagnant largely due to countrys narrow production base and lack of clear policy for exports. During the first and second plan the growth rate was 1% and 2.2 % for its respective plans.

3RD FIVE YEAR

The

PLAN

Indian government during this period took financial and institutional measures to make exports an attractive proposition. Exports reached a take off stage during this period and got a big boost. Annual plan (1966-67 to 1968-69): In June 1966, Govt. of India devalued India rupee as a ,measure to make exports cheaper and more competitive in global markets.

CONT
Good results could not be achieved through devaluation because of canceling out effect due to withdrawal of incentive schemes coupled with drought conditions and poor harvests during 196768. The exports during the three year average amounted to Rs 744 crore only. During this period, trade deficit widened

4TH PLAN
Indias average exports amounted to rs 1,807 crore Annual average growth of 14% Export sector was given a status of priority sector. Export policy resolution was approved

5TH 7TH PLAN

Annual average exports during 5th plan from India amounted to Rs 4,441 crore. During 6th plan Rs 8,904 crores and during the 1st year of the 7th plan at Rs 10,420 crore. During this period trade tended to move upward. During 1988-89 exports were valued at Rs 20, 287 crores.

CASE -1
Elisa , a leading toy manufacturing company has its headquarters in UK, and operates in Japan, China and India. The business in each country are treated as a separate entity and the company adopts different strategies to respond to different markets. This is an example of which type of company?

CASE-2

Priya Foods wants to enter foreign markets. The firm is not familiar with market condition in the host nation. In general, what is the ideal mode of entry into the new market for Priya foods?