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International

Marketing
Introduction

International marketing is defined


as the performance of business
activities designed to plan, price,
promote, and direct the flow of a
companys goods and services to
consumer or users in more than one
nation for a profit.
Definition

The activity, set of institutions, and


processes for creating, communicating,
delivering, and exchanging offerings
that have value for customers, clients,
partners, and society at large in more
than one country.
International marketing consists of the activity,
institutions, and processes across national borders
that create, communicate, deliver, and exchange
offerings that have value for stakeholders and society.
Forms of international marketing include export
import trade, licensing, joint ventures, wholly owned
subsidiaries, turnkey operations, and management
contracts.
Marketing serves as a key agent of societal change
and as a key instrument for the development of
societal responsive business strategy.
Scope of International Marketing

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.
Cont
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.
Cont
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.
The International Marketing Task
Foreign Environment
(Uncontrollables)
7. Structure of 1. Competition
Distribution Domestic environment Environmental
(Uncontrollables) uncontrollables
country market A
(Controllables) 1. Competition
Price Product 2. Technology
5. Political- Target Environmental
Legal Market 7 uncontrollables
6. Geography and
Infrastructure Promotion Place 2 .Technology country
market B
4.
Culture Environmental
3. Economy
uncontrollables
5. Political- 3. Economy country
Legal market C
4. Culture
Why Firms go International

Proactive Stimuli Reactive Stimuli


Profit advantage Competitive pressures
Unique products Overproduction
Technological Stable or declining domestic
advantages sales
Exclusive information Excess capacity
Economies of scale Saturated domestic markets
Market size Proximity to customers and
ports
Reasons for marketing
abroad

s Economies of scale and scope

Existence of lucrative markets in foreign countries


Saturated markets in the home country
High R&D costs
International opportunities
Less competition
New trade agreements

Differences between domestic and


international marketing
Domestic International
Research data is available in a Research data is generally in foreign
single language and is usually languages and may be extremely
easily accessed difficult to obtain and interpret
Business is transacted in a single Many currencies are involved, with
currency wide exchange rate fluctuations
Head office employees will Head office employees might only
normally possess detailed possess and outline knowledge of the
knowledge of the home market characteristic foreign markets
Promotional messages need to Numerous cultural differences must
consider just a single national be taken into account
culture
Market segmentation occurs within Market segments might be defined
a single country across the same type of consumer in
many different countries.
Differences between domestic and
international marketing (continued)
Domestic International

Communication and control are International communication and


immediate and direct control might be difficult
Business laws and regulations are Foreign laws and regulations might
clearly understood not be clear
Business is conducted in a single Multilingual communication is
language requires
Business risks can usually identified Environments may be so unstable
and assessed that it is extremely difficult to identify
and assess risks
Planning and organizational control The complexity of international trade
systems can be simple and direct often necessitates the adoption of
complex and sophisticated planning,
organization and control systems
Differences between domestic and
international marketing (continued)
Domestic International
Functional specialization within a International marketing managers require a
marketing department is possible wide range og marketing skills
Distribution and credit control are Distribution and credit control may be
straightforward extremely complex
Selling and delivery Documentation is often diverse and
documentation is routine and complicated due to meeting different
easy to understand border regulations
Distribution channels are easy to Distribution is often carried out by
monitor and control intermediaries, so is much harder to
monitor
Competitors behavior is easily Competitors behavior is harder to
predicted observe, therefore less predictable
New product development can be New product development must take
geared to the needs of the home account of all the markets the product is
sold in.
Opportunities and Challenges
in International Marketing

To handle newly emerging forces and


dangers of unforeseen influences from
abroad, firms need to:
Be prepared and develop active
responses.
Envision new strategies.
Develop new plans.
Change the way of doing business.
Cont
The growth of global business activities offers
increased opportunities.
Knowledge transfer around the globe helps an
international firm to build and strengthen
its competitive position.
International opportunities require an
awareness of global developments, an
understanding of their meaning, and a
development of capabilities to adjust to
change.
Benefits of International Marketing

Coca Cola in India


Disney International
The Nestl Way
Nestlsells more than 8,500 products produced in 489
factories in 193 countries
Nestl is the worlds biggest marketer of infant formula,
powdered milk, instant coffee, chocolate, soups, and
mineral water
The Nestl way to dominate
markets is summarized in four
points:
(1) think and plan long term
(2) decentralize
(3) stick to what you know
(4) adapt to local tastes
Benefits of Global Marketing

Economies of scale
Unifying product development, purchasing, and
supply activities across countries
Transfer of experience and know-how across
countries through improved coordination and
integration of marketing activities
Stability of revenues and operations
4 Ps OF INTERNATIONAL MARKETING MIX
Product adaptation and development for Choice of pricing strategy
international marketing Competitor analysis
Packaging and labelling
Determination of discount
Translation of technical literature structures
Quality management Credit management

Licensing and contract manufacturing Choice of delivery terms


Product Price Costing and budgeting

Place Promotion
International advertising, public
International distribution relations and sales promotion
Control of agents International direct marketing
Export documentation Control of salespeople
Cargo insurance Translation of sales literature
Establishment of joint ventures Exhibiting
and subsidiaries
Market research

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