Imm 4th sem notes

INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418
INTERNATIONAL MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor, SJBIT 1 | P a g e

MODULE 1
Framework of international marketing
Global Business Trends
 The rapid growth of the World Trade Organization and regional free trade
areas, e.g., NAFTA and the European Union
 General acceptance of the free market system among developing countries in Latin
America, Asia, and Eastern Europe
 Impact of the Internet and other global media on the dissolution of national
borders, and
 Managing global environmental resources
International Marketing: A Definition
International marketing is defined as the performance of business activities designed to plan,
price, promote, and direct the flow of a company’s goods and services to consumers or users in
more than one nation for a profit
Marketing concepts, processes, and principles are universally applicable all over the world
Environmental Adaptation Needed
Differences are in the uncontrollable environment of international marketing
Firms must adapt to uncontrollable environment of international marketing by adjusting the
marketing mix (product, price, promotion, and distribution)
Developing a Global Awareness
To be globally aware is to have:
1. Tolerant of Cultural Differences, and
2. Knowledgeable of:
(a) Culture, (b) History, (c) World Market Potential,
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Adaptation
(of Marketing Mix)
Standardization
(of Marketing Mix)
Continuum
INFLUENCED BY 7 ENVIRONMENTAL FACTORS

(d) Global Economic, Social and Political Trends
Stages of International Marketing Involvement
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In general, firms go through five different phases in going
international:
In general, firms go through five different phases in going
international:
Infrequent Foreign MarketingInfrequent Foreign Marketing
No Direct Foreign MarketingNo Direct Foreign Marketing
International MarketingInternational Marketing
Regular Foreign MarketingRegular Foreign Marketing
Global MarketingGlobal Marketing
Strategic Orientation: EPRG
Schema
Orientation EPRG Schema
Domestic
Marketing
Extension
Multi-Domestic
Marketing
Global Marketing
(Ethnocentric)
(Polycentric)
(Regio/Geocentric)

Generally, four distinctive approaches dominate strategic thinking in international marketing:
Ethnocentric or Domestic Marketing Extension Concept:
Home country marketing practices will succeed elsewhere without adaptation; however,
international marketing is viewed as secondary to domestic operations
Polycentric or Multi-Domestic Marketing Concept:
Opposite of ethnocentrism Management of these multinational firms place importance on
international operations as a source for profits Management believes that each country is unique
and allows each to develop own marketing strategies locally
Regiocentric:
Sees the world as one market and develops a standardized marketing strategy for the entire
world
Geocentric:
Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where a
uniform, standardized marketing strategy is used for several countries, countries in a region, or
the entire world
Importance of International Marketing
 International expansion helps firm:
 Keep pace with competition
 Reach a larger market
 Reap higher profits
 Prolong the lifecycle of their products
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Levels of International Marketing
Domestic
Marketing
Export Marketing International
Marketing
Global
Marketing
 Least
international
commitment
 Domestic
focus
 Limited
international
commitment
 Involves
direct or indirect
export
 Ethnocentric
 Substantial
international
commitment
 Focus on
individual countries
or regions
 Polycentric or
Regiocentric
 Extensive
international
commitment
 Focus on
segments, rather
than countries or
regions
 Geocentric
Drivers of International Expansion
 Competition
 Regional Economic and Political Integration
 Technology
 Improvements in Transportation and Telecommunication
 Economic Growth
 Transition to Market Economy
 Converging Consumer Needs
Firm-Specific Drivers
Product Life Cycle Considerations: opportunity to prolong product lifecycle by entering
growth markets.
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Sales
Intro Growth Maturity Decline
Profits
Sales

International Marketing Vs Domestic Marketing
 Sovereign political entities
I. Tariffs Or Customs Duties
II. Quantitative Restrictions
III. Exchange Controls
IV. Local Taxes
 Different Legal Systems
 Different Monetary Systems
 Lower Mobility Of Factors Of Production
 Differences In Market Characteristics
 Differences In Procedures And Documentation
 Greater Degree Of Risk
Transition From Domestic To International Business
 Pre – Export Behaviour
1. Firm Characteristics
2. Perceived External Export Stimuli
3. Perceived Internal Export Stimuli
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The International Marketing Environment
7
3. ECONOMY
Environmental
uncontrollables
country market A
Environmental
uncontrollables
country
market B
Environmental
uncontrollables
country
market C
1. Competition
1. Competition
2. TechnologyPrice Product
Promotion Place or
Distribution
6. Geography and
Infrastructure
Foreign Environment
(Uncontrollables)
7. Structure of
Distribution
3. Economy
5. Political-
Legal
Domestic environment
(Uncontrollables)
(Controllables)
2 .Technology
4.
Culture
5. Political-
Legal
4. Culture
Target
Market

4. Level Of Organizational Commitment
 Motivation To Export
a. Bulk Sales
b. Relative Profitability
c. Insufficiency Of Domestic Demand
d. Reducing Business Risks
e. Legal Restrictions
f. Obtaining Imported Inputs
g. Social Responsibility
h. Increased Productivity
i. Technological Improvements
 How Much Commitment
a) No Involvement
b) Temporary Involvement
c) Continued Involvement
d) Global Involvement
e) Producing For Export
Balance of Payments
1. When countries trade there are financial transactions among businesses or consumers of
different nations
2. Money constantly flows into and out of a country
3. The system of accounts that records a nation’s international financial transactions is called
its balance of payments (BP)
4. It records all financial transactions between a country’s firms, and residents, and the rest
of the world usually over a year
5. The BP is maintained on a double-entry bookkeeping system
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(1) current account—a record of all merchandise exports, imports, and services plus
unilateral transfers of funds;
(2) The capital account—a record of direct investment, portfolio investment, and short-
term capital movements to and from countries;
(3) The official reserves account—a record of exports and imports of gold, increases or
decreases in foreign exchange, and increases or decreases in liabilities to foreign central
banks;
Changing Balance Of Payments
1. If a country’s expenditures consistently exceed its income, its standard of living falls
2. Its exchange rate vis-à-vis foreign monies declines
3. When foreign currencies can be traded for more dollars, U.S. products are less expensive
for foreign customers and exports increase
4. Simultaneously foreign products are more expensive for U.S. buyers and the demand for
imported goods is reduced
Balance Of Payments Equilibrium
A nation’s balance of payments is said to be in equilibrium when it is neither drawing upon its
international reserves to make excess payments nor accumulating such reserves as a result of its
receipts. The disturbance in balance of payments may be either short-term or long-term. Long –
term disturbances effect a lasting alteration in relations of one nation’s economy to other
nation’s economy. They result from changes in the forces which govern the kinds or amounts of
a country’s exports and its imports, its position as a long-term debtor or creditor or the character
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merchandise export sales.
money spent by foreign tourists.
transportation.
payments of dividends and interest from FDI
abroad.
new foreign investments in the U.S.
BP Receipts
costs of goods imported.
spending by U.S. tourists overseas.
new overseas investments.
cost of foreign military and economic
aid.
BP Payments

of the international services it renders. Each such disturbance upsets the pre-existing stability in
the balance of payments and sets in motion a number of consequences which bring it to a stable
position again.
The Impact of Tariff (Tax) Barriers
Tariff Barriers tend to Increase:
1. Inflationary pressures
2. Special interests’ privileges
3. Government control and political considerations in economic matters
4. The number of tariffs they beget via reciprocity
Tariff Barriers tend to Weaken:
1. Balance-of-payments positions
2. Supply-and-demand patterns
3. International relations (they can start trade wars)
Tariff Barriers tend to Restrict:
1. Manufacturer’ supply sources
2. Choices available to consumers
3. Competition
Six Types of Non-Tariff Barriers
(1) Specific Limitations on Trade:
1. Quotas
2. Import Licensing requirements
3. Proportion restrictions of foreign to domestic goods (local content requirements)
4. Minimum import price limits
5. Embargoes
(2) Customs and Administrative Entry Procedures:
1. Valuation systems
2. Antidumping practices
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3. Tariff classifications
4. Documentation requirements
5. Fees
(3) Standards:
1. Standard disparities
2. Intergovernmental acceptances of testing methods and standards
3. Packaging, labeling, and marking
(4) Government Participation in Trade:
1. Government procurement policies
2. Export subsidies
3. Countervailing duties
4. Domestic assistance programs
(5) Charges on imports:
1. Prior import deposit subsidies
2. Administrative fees
3. Special supplementary duties
4. Import credit discriminations
5. Variable levies
6. Border taxes
(6) Others:
1. Voluntary export restraints
2. Orderly marketing agreements
Monetary Barriers
Three types of monetary barriers include:
1. Blocked currency: Blockage is accomplished by refusing to allow importers to exchange
its national currency for the sellers’ currency.
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2. Differential exchange rates: It encourages the importation of goods the government
deems desirable and discourages importation of goods the government does not want by
adjusting the exchange rate. The exchange rate for importation of a desirable product is
favorable and vice-versa
3. Government approval: In countries where there is a severe shortage of foreign exchange,
an exchange permit to import foreign goods is required from the government
Arguments for Protectionism
• Excess productive capacity
• Excess labor
• Infant industry argument and industrialization
• Natural resources conservation and environmental protection
• Consumer protection
• National defense
Licenses
 Non-automatic import licenses
 Restrict volume and/or quantity of imports
 Automatic import licenses
 Granted freely to importing companies
 Facilitate import surveillance
 Discourage import surges
 Place administrative and financial burdens on importer
 May raise costs by delaying shipments
“Voluntary” Expansion and Restraints
 Voluntary import expansion
 Governments agree to allow imports from a particular country as result of pressure
from another country
 Increases foreign access to a domestic market
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 Increases competition and reduces local prices
 Voluntary export restraints
 Self-imposed export quotas–imposed to avoid a greater penalty
 Used by the importing country to protect local industries
Standards
 Environmental, performance, manufacturing and other standards used as barriers to
imports; primarily imposed by highly industrialized countries
 Excessive standards can help local and international industry alike, by deterring gray
markets
Percentage Requirements
 Requirement that a percentage of the products imported be locally produced
 Local content requirement
 Met by manipulating and/or assembling the product on the territory of the importing
country, usually in a foreign trade zone
 Favoring local contribution and labor
 Alternatively, limiting foreign ownership to a certain percentage
Boycotts, Embargos, Sanctions
 Boycotts
– Action group calling for a ban on all goods associated with a particular company
and/or country
– Target company may be representative of, or even synonymous with, its country of
origin
 Embargos
– Prohibiting all business deals with the target country; affects third parties
 Sanctions
– Punitive trade restrictions applied by a country or group against another country for
noncompliance
Currency Controls
 Blocked currency
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– Does not allow importers to exchange of local currency for currency a seller is willing
to accept as payment
 Differential exchange rates
– Favorable and less favorable exchange rates imposed on imports, based on the extent
to which they are necessary and desirable
– Can also be the difference between black market and government exchange rates
 Foreign exchange permits
– Give priority to imports in the national interest
– Delay access to hard currency exchange for products not deemed essential
–
Hierarchy of international marketing for a company
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COMMITMENT TO
EXPORT
ANALYS
E
DECIDE
EXPOR
T
SE
T
IMPLEMEN
T
INTERNAL FACTORS
PRODUCT
RESOURCES
TARGET MARKET
MARKET SEGMENT
ENTRY METHOD
MARKETING STRATEGY
EXTERNAL FACTORS
MARKET ENVIRONMENT
COMPETITIVE PROFILE
ORGANISE
DEPARTMENT
SUBSIDIARY
JOINT VENTURE
EXPORT HOUSE
ALLOCATE
RESOURCES
BUDGET
ARRANGE
RESOURCES
TARGET
• REVIEW
• MODIFY
• SET NEW TARGETS

Module-2 Global vision through marketing research
Introduction
Marketing research is traditionally defined as the systematic gathering, recording, and
analyzing of data to provide information useful in marketing decision making.
International marketing research involves two additional complications.
(i) Information must be communicated across cultural boundaries. That is , executive in
Chicago must be able to translate their research questions into terms that consumers in
Guanszhou, China can understand.
(ii) The environment within which the research tools are applied are often different in foreign
markets. Rather that acquire new and exotic method of research, the international marketing
research must develop the ability for imaginative and deft application of tried and tested
techniques in sometimes totally strange milieus.
BREDTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH
The basic difference between domestic and foreign market research is the broader scope
needed for foreign research, necessitates by higher levels of uncertainty. Research can be
divided into three types based on information needs:
(i) General information about the country, area and/or market
(ii) Information necessary to forecast future marketing requirement by anticipating social,
economic consumer, and industry trend within specific market or countries
(iii) Specific market information used to make product, promotion, distribution, and price
decisions and to develop marketing plans.
A country’s political stability, culture attributes and geographical characteristics are some
of the kind of information not ordinarily gathered by domestic marketing research.
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THE RESEARCH PROBLEM
A marketing research study is always a compromise dictated by limits of time, cost, and the
present state of the art. The research must strive for the most accurate and reliable information
within existing constraints. A key to successful research is a systematic and orderly approach
to the collection and analysis of data. The research process should follow these steps:
(i) Define the research problem and establish research objectives.
(ii) Determine the source of information to fulfill the research objectives.
(iii) Consider the costs and benefits of the research effort.
(iv) Gather the relevant data from secondary or primary sources, or both.
(v) Analyze, interpret, and summarize the results.
(vi) Effectively communicate the results to decision makers.
DEFINING THE PROBLEM AND ESTABLISHING RESEARCH OBJECTIVES
The research process should being with a definition of the research problem and the
establishment of specific research objectives. the major difficulty here is converting a series of
often ambiguous business problem into tightly drawn and achievable research objectives.
PROBLEMS OF AVAILABILITY AND USE OF SECOUNDARY DATA
:- The problem of availability and use of secondary data are as follows:
(i) Availability of data;-detailed data on the numbers of wholesalers, retailers,
manufacturers, and facilitating services, are unavailable for many parts of the world, as are data
on population and income. Most countries simply do not have governmental agencies that
collect on a regular basis the kind of secondary data readily available in the united state.
(ii) Reliability of data;- Available data may not have the level of reliability necessary for
confident decision making for many reasons. Official statistics are sometimes too optimistic,
reflecting national pride or politics rather that practical reality, while tax structures and fear of
the tax collector often adversely affect data.
(iii) Comparability of data:- Comparability of available data is the third shortcoming faced by
foreign marketers. In United States, current sources of reliable and valid estimates of
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socioeconomic factors and business indicators are readily available. In other countries,
especially those less developed, data can be many years out of data as well as having been
collected on an infrequent and unpredictable in many of these countries makes the problem of
currency a vital one.
(iv) Validating secondary data:- many countries have similarly high standard for the
collection and preparation of data as those generally found in the United States, but secondary
data from any source, including the United States must be checked carefully and interpreted
carefully..
GATHERING PRIMARY DATA: QUANTITATIVE AND QUALITATIVE RESEARCH
:- If, after seeking all reasonable secondary data sources, research questions are still not
adequately answered, the market research must collect primary data.- that is , data collected
specially for the particular research project at hand.
In most primary data collection. The researchers questions respondents to determine what
they think about some topic or how they might behave under certain conditions. Marketing
research methods, can be grouped into two basic types: quantitative and qualitative research. In
both methods, the marketer is interested in gaining knowledge about the market.
(i) Quantitative research:- in quantitative research, usually a large number of respondents are
asked to reply either verbally or in writing to structure questions using a specific response
format or to select a response from a set of choices. Questions are designed to obtain specific
responses regarding aspects of the respondent’s behavior, intentions, attitudes, motives and
demographic characteristics. Quantitative research provide the marketer with responses that can
be presented with precise estimations.
(ii) Qualitative research:- In qualitative research, if questions are asked they are almost always
open-ended or in-depth, and unstructured responses that reflect the person’s thoughts and
feelings on the subjects are sought. Direct observation of consumers in choice or product usage
situations in another important qualitative approach to marketing research.
Qualitative research is used in international marketing research to formulate and
define a problem more clearly and to determine relevant questions to be examined in
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subsequent research. It is also used where interest is centered on gaining an understanding of
a market, rather the quantifying relevant aspects.
Qualitative research is also helpful in revealing the impact of socio-cultural factors on
behavior patterns and in developing research hypotheses that can be tested in subsequent studies
designed to quantify the concepts and relevant relationship uncovered in qualitative data
collection.
PROBLEMS OF GATHERING PRIMARY DATA
Most problem in collecting primary data in international marketing research stem from
cultural differences among countries, and range from the inability of respondents to
communicate their opinions to inadequacies in questionnaire translation.
(i) Ability to communicate opinions:- The ability to express attributes and opinions about a
product or concept depends on the respondent’s ability to recognize the usefulness and value of
such a product or concept.
(ii) Willingness to respond;- Cultural differences offer the best explanation for the
unwillingness or the inability of many to respond to research surveys. The role of the male, the
suitability of personal gender-based inquiries, and other gender-related issues can affect
willingness to respond.
(iii) Sampling in Field Surveys:- The greater problem in sampling stems the lack of
demographic data and available lists from which to drawn meaningful samples. If current,
reliable lists are not available, sampling becomes more complex and generally less reliable.
(iv)Language and comprehension:-
(v) The most universal survey research problem in foreign countries is the language barrier.
Differences in idiom and the difficulty of exact respondents answer. Equivalent concept may
not exist in all language.
MULTICULTURAL RESEARCH
As companies become global marketers and seek to standardize various parts of the
marketing mix across several countries, multicultural studies become more important. A
company need to determine to what extent adaptation of the marketing mix is appropriate. Thus
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market characteristics across diverse culture must be compared for similarities and difference
before a company proceeds with standardization on any aspect of marketing strategy.
Multicultural research involves dealing with countries that have different languages,
economies, social structure, behavior, and attitude patterns. It is essential that these differences
be taken into account.
RESEARCH ON THE INTERNET
For many countries the internet provides a new and increasingly important medium for
conducting a variety of international marketing research. Indeed, a survey of marketing research
professionals suggests that the most important influences on the industry are the internet and
globalization. It has been suggested that there are at least seven different uses for the internet in
international research:-
(i) Online survey and buyer panels
(ii) Online focus groups.
(iii) Web visitor tracking
(iv) Advertising marketing lists
(v) E-mail marketing lists
(vi) Embedded research.
A vexing challenge facing international marketers will be the cross-cultural concern about
privacy and the enlistment of cooperative consumer and customer group. As more of the general
population in countries gain access to the internet. This tool will be all can be used one of
several methods of collecting data offering more flexibility across countries. Today the real
power of the internet for international marketing research is the ability to easily access volumes
of secondary data.
There are volumes of good secondary data that can be accessed from your computer that
will make international marketing research much easier and more efficient that it has ever been.
ESTIMATING MARKET DEMAND
In assessing current product demand and forecasting future demand reliable historical data
are required. Despite of limitations, there are approaches to demand estimation that are usable
with minimum information. The success of these approaches relies on the ability of the
researcher to find meaningful substitute or approximations for the needed economic,
geographic, and demographic relationships.
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When the desired figures are not available, a close approximation can be made
using local production figure plus imports, with adjustments for exports and current inventory
levels. In a rapidly developing economy, extrapolated figures may not reflect rapid growth and
must be adjusted accordingly. Given the greater uncertainties and data limitations associated
with foreign markets, two methods of forecasting demand are particularly suitable for
international marketers:
(i) Expert Opinion: - for many market estimation problems, particularly in foreign countries
that are new to the marketer, expert opinion is advisable. In this method, expert are polled for
their opinion about market size and growth rates. Such expert may be companies, own sales
managers or outside consultants and government officers. the key in using expert opinion to
help in forecasting demand is triangulation, that is, comparing estimates produced by different
sources.
(ii) Analogy: - This assumes that demand for a product develops in much the same way in all
countries as comparable economic development occurs in each country.
A relationship must be established between the item to be estimated and a measurable
variable. Once a know relationship is established, the estimator then attempt to draw an analogy
between the known situation and the country in question.
PROBLEM IN ANALYZING AND INTERPRETING RESEARCH INFORMATION
After data are collected, the final steps in the research process are the analysis and
interpreting of findings in light of the stated marketing problem. There are so many factors, the
researchers must take consideration these factors and, despite their limitations, produce
meaningful guides for management decisions.
Accepting information at face value in foreign market is imprudent:- The meanings of
words, the consumer’s attitude toward a product, the interviewer’s attitude, or the interview
situation can distort research findings. Just as culture and tradition influence the willingness to
give information, so they also influence the information, so they also influence the information
given.
• News paper circulation figures
• Readership and listener ship studies
• Retail outlet figures
• Sales volume can all be distorted through local business practice.
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To cope with such disparities, the foreign marketing researcher must possess three talented to
generate meaningful marketing information.
• First, the researcher must possess a high degree of cultural understanding of the market in
which research is being conducted.
• Second, a creative talent for adapting research methods is necessary. A researcher in foreign
markets often is called on to produce result under most difficult circumstances and short
deadlines.
• Third, a skeptical attitude in handling both primary and secondary data is helpful.
RESPONSIBILITY FOR CONDUCTING MARKETING RESEARCH
Depending on the size and degree of involvement in foreign marketing, a company in
need of foreign market research can rely on an outside foreign-based agency or on a domestic
company with a branch within the country in question. It can conduct using its own facilities or
employ a combination of its own research force with the assistance of an outside agency.
Many companies have executive specifically assigned to the research function in foreign
operations;
Other companies maintain separate research department for foreign operations or assign a
full-time research analyst to this activity
A trend toward decentralization of the research function is apparent. In terms of
efficiency, it appears that local analysts are able to provide information more rapidly and
accurately than a staff research department.
A comprehensive review of the different approaches to multi-country research suggests
that the ideal approach is ti have local research in each country, with close coordination between
the client company and the local research companies.
COMMUNICATING WITH DECISION MAKERS
As concert with the decision maker, it should be clearly recognized, however that getting
the information is only half problem/job. That information must also be given to decision
makers in a timely manner. High-quality international information system design will be an
increasingly important competitive tool as commerce continues to globalize, and resources must
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be invested accordingly. At the most basic level, marketing research is mostly a matter of
talking to customers. Marketing decisions makers have questions about how best to serve
customers, and those questions are posed and answered often through the media of
questionnaires and research agencies. Even when both managers and customers speak the same
language and are from the same culture, communication can become garbled in either direction.
That the customer misunderstands the questions and/or managers misunderstand the answers.
Throw in a language/cultural barrier, and the changes of misinformation expand dramatically.
The four kind of company-agency-customer relationships possible are presented in overcoming
the cultural barriers
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MODULE – 3
GLOBAL MARKETING MANAGEMENT
Planning and Organization
Introduction
Confronted with increasing global competition for expanding markets, multinational companies
are changing their marketing strategies and altering their organizational structures. Their goals
are enhance their competitiveness and to ensure proper positioning in order to capitalize on
opportunities in the global marketplace.
In fact, the flexibility of a smaller company may enable it to reflect the demands of global
markets and redefine its program more quickly than larger multinationals. Acquiring a global
perspective is easy, but the execution requires planning, organizations, and a willingness to try
new approaches-from engaging in collaborative relationships to redefining the scope of
company operations.
Global Marketing: A Old Debate and a New View
 Global Marketing Management thought has undergone substantial revision
 In the 1970s the argument was framed as “standardization vs. adaptation”
 In the 1980s it was “globalization vs. localization” or “Think local, act local”
 In the 1990s it was “global integration vs. local responsiveness”
 The basic issue is whether the global homogenization of consumer tastes allowed global
standardization of the marketing mix
GLOBAL MARKETING
Definition:
“marketing on a worldwide scale reconciling or taking commercial advantage of global
operational differences, similarities and opportunities in order to meet global objectives.
Why global marketing?
Here are three reasons for the shift from domestic to global marketing
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 Saturation of Domestic Markets
For a company to keep growing, it must increase sales. Industrialized nations have, in many
product and service categories, saturated their domestic markets and have turned to other countries
for new marketing opportunities. Companies in some developing economies have found
profitability by exporting products that are too expensive for locals but are considered inexpensive
in wealthier countries.
 World Wide Competition
One of the product categories in which global competition has been easy to track is in U.S.
automotive sales. Three decades ago, there were only the big three: General Motors, Ford, and
Chrysler. Now, Toyota, Honda, and Volkswagen are among the most popular manufacturers.
Companies are on a global playing field whether they had planned to be global marketers or not.
 E-Commerce
With the proliferation of the Internet and e-commerce (electronic commerce), if a business is
online, it is a global business. With more people becoming Internet users daily, this market is
constantly growing. Customers can come from anywhere. According to the book, “Global
Marketing Management,” business-to-business (B2B) e-commerce is larger, growing faster, and
has fewer geographical distribution obstacles than even business-to-consumer (B2C) e-
commerce.
GLOBAL MARKETING EVOLUTION
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PHASE 1
Leverage of domestic capabilities:
Foreign market entry
Objective:- Economies of scale
PHASE 2
Expansion of foreign market presence
Objective :-Economies of Scope
PHASE 3
Coordination of global operations
Objective :-Exploit synergies
throughout network

Benefits Of Global Marketing:
 Economies of scale in production and marketing can be important competitive advantages for
global companies
 Unifying product development, purchasing, and supply activities across several countries it
can save costs
 Transfer of experience and know-how across countries through improved coordination and
integration of marketing activities
 Diversity of markets by spreading the portfolio of markets served brings an important stability
of revenues and operations to many global firms
 Helps to establish relationships outside of the "political arena"
 Helps to encourage ancillary industries to be set up to cater the needs of the global player.
Disadvantages
 Differences in consumer needs, wants, and usage patterns for products
 Differences in consumer response to marketing mix elements
 Differences in brand and product development and the competitive environment
 Differences in the legal environment, some of which may conflict with those of the home
market
 Differences in the institutions available, some of which may call for the creation of entirely new
ones (e.g. infrastructure)
 Differences in administrative procedures
 Differences in product placement.
PLANNING FOR GLOBAL MARKETS
Planning is a systematized way of relating to the future. It is an attempt to manage the
effects of external, uncontrollable factors on the firm’s strengths, weakness, objectives and
goals to attain a desired end. Planning is the job of making things happen that might not
otherwise occur.
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The difference between planning for a domestic company and for an international company
Domestic Planning International Planning
1. Single language and nationality 1. Multilingual/multinational/multicultural factors
2. Relatively homogeneous market 2. Fragmented and diverse markets
3. Data available, usually accurate
and collection easy
3. Data collection a large task requiring significantly
higher budgets and personnel allocation
4. Political factors relatively
unimportant
4. Political factors frequently vital
5. Relative freedom from
government interference
5. Involvement in national economic plans;
government influences business decisions
6. Individual corporation has little
effect on environment
6. "Gravitational" distortion by large companies
7. Chauvinism helps 7. Chauvinism hinders
8. Relatively stable business
environment
8. Multiple environments, many of which are highly
unstable (but may be highly profitable)
9. Uniform financial climate 9. Variety of financial climates ranging from over-
conservative to wildly inflationary
10 Single currency 10. Currencies differing in stability and real value
11 Business "rules of the game"
mature and understood
11. Rules diverse, changeable and unclear
12 Management generally
accustomed to sharing
responsibilities and using
financial controls
12. Management frequently unautonomous and
unfamiliar with budgets and controls
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Planning allows for rapid growth of the international function, changing markets, increasing
competition, and the turbulent challenges of different national markets. The plan must be blend
the changing parameters of external country environments with corporate objectives and
capabilities to develop a sound, workable marketing program.
Planning relates to the formulation of goals and methods of accomplishing them, so it is both a
process and a philosophy. Structurally, planning may be viewed as corporate, strategic, or
tactical. International Corporate Planning is essentially long term, incorporating generalized
goals for the enterprise as a whole. Strategic planning is conducted at the highest levels of
management and deals with products, capital, and research, and long and short-term goals of the
company. Tactical planning or market planning, pertains to specific and to the allocation of
resources used to implement strategic planning goals in specific markets.
The Key success of planning is evaluating company objectives, including management’s
commitment and philosophical orientation to international business.
THE PLANNING PROCESS
Guidelines and systematic procedures are necessary for evaluating international opportunities
and risks and for developing strategic plans :
International planning process includes 4 phases:
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T
Phase 1: Preliminary Analysis and Screening-Matching Comapany and Country Needs
A critical first step in the international planning process is deciding in which existing country
market to make a market investment. A company’s strengths and weakness, products,
philosophies, and objectives must be matched with a country’s constraining factors and market
potential. In the first part of the planning process, countries are analyzed and screened to
eliminate those that do not offer sufficient potential for further considerations. The next step is
to establish screening criteria against which prospective countries can be evaluated. These
criteria are ascertained by an analysis of company objectives, resources, and other corporate
capabilities and limitations. It is important to determine the reasons for enetering a foreign
market and the returns expected from such an investment. Minimum market potential,
minimum profit, return on investment, accepatable competitive levels.
Phase 2: Adapting the Marketing Mix to Target Makets:
When target markets are slelected, the market mix must be evaluated in light of the data
generated in the phase 1. Incorrect decisions at this point lead to products inappropriate for the
intended market or to costly mistakes in pricing, advertising, and promotion. The primary goal
of phase 2 is to decide on am marketing mix adjusted to the cultural constraints imposed by the
uncontrollable elements of the environment that effectively achieves corporate objectives and
goals. Phase 2 also permits the marketer to determine possibilities for applying marketing
tactics across national markets.//
Phase 3: Developing the Marketing Plan
At this stage of the planning process, a marketing plan is developed for the target market-
whether it is a single country or a global market segment. The marketing plan begins witn a
situation analysis and culminates in the selection of an entry mode and a specific action
program for the market. The specific plan establishes what is to be done, by whom, how it is to
be done, and when. Included are budgets and sales and profit expectations.
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Phase 4: Implementation and Control
A “go” decision in phase 3 triggers implementation of specific plans and anticipation of
successful marketing. However, the planning process does not end at this point. All marketing
plans require coordination and control during the period of implementation. An evaluation and
control system requires performance-objective action, that is, bringing the plan back on track
should standards of perrformances fall short. A global orientation facilities the difficult but
extremely important management tasks of coordinating and controlling the complexities of
international marketing.
FOREIGN MARKET ENTRY STRATEGIES
When a company makes the commitment to go international, it must choose an entry strategy.
This decision should reflect an analysis of market characteristics ( such as potential sales,
strategic importance, cultural differences, and country restrictions) and company capabilities
and characteristics, including the degree of near-market knowledge, marketing involvement,
and commitment that management is prepared to make.
Alternative Market-Entry Strategies
Import regulations may be imposed to protect health, conserve foreign exchange, serve as
economic reprisals, protect home industry, or provide revenue in the form of tariffs.
A company has four different modes of foreign market entry from which to select
 exporting
 contractual agreements
 strategic alliances, and
 direct foreign investment
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EXPORTING
Exporting can be either direct or indirect. In direct exporting the company sells to a customer in
another country. In contrast, indirect exporting usually means that the company sells to a buyer
(importer or distributor) in the home country who in turn exports the product. The internet is
becoming increasingly important as a foreign market entry method. Direct sales, particularly for
high technology and big ticket industrial products a direct sales force may be required in a foreign
country. This may mean establishing an office with localor expatriate managers and staff
depending of course on the size of the market and potential sales revenues.
CONTRACTUAL AGREEMENTS
Contractual agreements are long term, noneqauity associations between a company and another
in a foreign market. Contractual agreements involve the transfer of technology, processes,
trademarks, or human skills.
•Contractual forms of market entry include:
(1)Licensing: A means of establishing a foothold in foreign markets without large capital
outlays is licensing of patent rights, trademark rights, and the rights to use technological
(2)Franchising: In licensing the franchiser provides a standard package of products, systems,
and management services, and the franchisee provides market knowledge, capital, and personal
involvement in management.
STRATEGIC INTERNATIONAL ALLIANCES
Strategic alliances have grown in importance over the last few decades as a competitive
strategy in global marketing management. A strategic international alliance (SIA) is a business
relationship established by two or more companies to cooperate out of mutual need and to share
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risk in achieving a common objective.. SIAs are sought as a way to shore up weaknesses and
increase competitive strengths. SIAs offer opportunities for rapid expansion into new markets, access to
new technology, more efficient production and marketing costs.
An example of SIAs in the airlines industry is that of the Oneworld alliance partners made up of
American Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and Qantas .
INTERNATIONAL JOINT VENTURES
International joint ventures (IJVs) have been increasingly used since 1970s.JVs are used as a
means of lessening political and economic risks by the amount of the partner’s contribution to the
venture. JVs provide a less risky way to enter markets that pose legal and cultural barriers than
would be the case in an acquisition of an existing company. A joint venture is different from
strategic alliances or collaborative relationships in that a joint venture is a partnership of two or
more participating companies that have joined forces to create a separate legal entity. Joint
ventures are different from minority holdings by an MNC in a local firm.
Four factors are associated with joint ventures:
1. They are established, separate, legal entities
2. They acknowledge intent by the partners to share in the management of the Jv.
3. They are partnerships between legally incorporated entities such as companies, chartered
organizations, or governments, and not between indiciduals
4. Equity positions are held by each of the partners.
CONSORTIA
Consortia are similar to joint ventures and could be classified as such except for two unique
characteristics.
(1)They typically involve a large number of participants.
(2)They frequently operate in a country or market in which none of the participants is currently
active.
Consortia are developed to pool financial and managerial resources and to lessen risks
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DIRECT FOREIGN INVESTMENT
A fourth means of foreign market development and entry is direct foreign investment.
Companies may manufacture locally to capitalize on low-cost labor, to avoid high import taxes,
to reduce the high costs of transportation to market, to gain access to raw materials, or as a
means of gaining market entry. Firms may either invest in or buy local companies or establish
new operations facilities.
Comparision of Market Entry Options
The following table provides a summary of the possible modes of foreign market entry:
Comparison of Foreign Market Entry Modes
Mode
Conditions Favoring this
Mode
Advantages Disadvantages
Exporting
Limited sales potential in target
country; little product adaptation
required
Distribution channels close to
plants
High target country production
costs
Liberal import policies
High political risk
Minimizes risk and
investment.
Speed of entry
Maximizes scale; uses
existing facilities.
Trade barriers & tariffs
add to costs.
Transport costs
Limits access to local
information
Company viewed as an
outsider
Licensing Import and investment barriers
Legal protection possible in
target environment.
Low sales potential in target
country.
Large cultural distance
Minimizes risk and
investment.
Speed of entry
Able to circumvent trade
barriers
High ROI
Lack of control over use
of assets.
Licensee may become
competitor.
Knowledge spillovers
License period is limited
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Licensee lacks ability to become
a competitor.
Joint
Ventures
Import barriers
Large cultural distance
Assets cannot be fairly priced
High sales potential
Some political risk
Government restrictions on
foreign ownership
Local company can provide
skills, resources, distribution
network, brand name, etc.
Overcomes ownership
restrictions and cultural
distance
Combines resources of 2
companies.
Potential for learning
Viewed as insider
Less investment required
Difficult to manage
Dilution of control
Greater risk than exporting
a & licensing
Knowledge spillovers
Partner may become a
competitor.
Direct
Investment
Import barriers
Small cultural distance
Assets cannot be fairly priced
High sales potential
Low political risk
Greater knowledge of
local market
Can better apply
specialized skills
Minimizes knowledge
spillover
Can be viewed as an
insider
Higher risk than other
modes
Requires more resources
and commitment
May be difficult to
manage the local
resources.
ORGANIZING FOR GLOBAL COMPETITION
An international marketing plan should optimize the resources committed to company
objectives. The organizational plan includes the type of organizational arrangements to be used,
and the scope and location of responsibility. Companies are usually structured around one of
three alternatives:
1. Global product divisions responsible for product sales throughout the world;
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2. Geographical divisions responsible for all products and functions within a given geographical
area; or
3. A matrix organization consisting of either of these arrangements with centralized sales and
marketing run by a centralized functional staff, or a combination of area operations and global
product management.
PRODUCTS FOR CONSUMERS IN GLOBAL MARKETS
PRODUCT DEVELOPMENT
Product planning, broadly defined, refers to the process of determining the length and depth
of the product line to be offered in the target export markets. The length is the number of
products to be offered and the depth relates to the variations of a product.
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PRODUCT ADAPTATION
A product that is perfectly good for one market may have to be adapted for another. There
can be many reasons for this. Physical conditions may be different. Functional requirements
may vary from market to market. People in different places may use products differently or for
different type of finish than furniture used indoors. Finally tastes, levels of skill and technical
development may be different and may dictate changes in products.
Adaptation may pertain to size, functions, materials, design, style, colour, tastes and
standards. Sometimes this could be done easily and at low cost but at times it may cost much.
Robinson has identified thirteen environment factors which may necessitate design changes.
The factors are –
Environmental factor Design change
1. Level of technical skills product simplification
2. Level of labour cost Automation or manulization of product
3. Level of literacy Remarking and simplification of product.
4 . Level of income Quality and price change.
5. Level of interest rates Quality and price change.
6. Level of maintenance Change of tolerance
7. Climatic differences Product adaptation
8. Isolation improvement
9. Differences in standards Recalibration of product and resizing.
10. Availability of other products Greater or lesser product integration.
11. Availability of materials Change in product structure and fuel.
12. Power availability resizing of product.
13. Special conditions Product redesign or invention.
All these factors are relevant in the marketing of durable consumer goods or machinery items.
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PRODUCT STANDARDISATION
Even though product adaptation becomes inevitable in the case of certain products, it should
be realized that there is sound economics logic behind a product policy which suggests
uniformity in all markets. Terpstra has identified six factors which may favour international
product standardization.
1. Economies of Scale in Production: When only one standard version is marketed in all the
areas, it will be possible to have larger production runs, which will result in lower
manufacturing costs.
2. Economies in Product Research and development: Similarly, product standardization
will allow recovery of all costs incurred in product research and development from the
entire sales. This will reduce the recovery period as also lower the break-even point.
Moreover, additional expenditure on adapting product to each individual market can be
avoided.
3. Economies in Marketing. When the same product is to be launched in different markets,
economies can be achieved in terms of sales literature, sales force training, inventory
management, advertising and after-sales requirements.
There are 3 marketing factors which may reinforce the standardization level:
1. Consumer Mobility: Consumers are becoming increasingly more mobile and
transcontinental travel in now fairly common. A consumer who is loyal to a particular
brand in his home market is more likely to remain loyal in a foreign country as well when
the product in question is the same.
2. Made-in Image: When the name of a country is associated with a high standard of quality
in the minds of the consumers, a product manufactured in that country may enjoy a
psychological premium in the foreign markets.
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3. Impact of Technology: Industrial products generally tend to have standard and
specifications and do not require much adaptation for foreign markets unless climatic and
similar considerations call for it.
GREEN MARKETING
At the forefront of the “green movement,” with strong public opinion and specific legislation
favoring environmentally friendly marketing and products.
•
Green marketing is a term used to identify concern with the environmental consequences of a
variety of marketing activities.
•
The designation that a product is “environmentally friendly” is voluntary, and environmental
success depends on the consumer selecting the eco-friendly product
•
In some countries each level of the distribution chain is responsible for returning all packaging,
packing, and other waste materials up the chain
MARKETING OF SERVICE
Advice regarding adapting products for international consumer markets also applies to adapting
services or intangible products
However, many consumer services are distinguished by four unique characteistics:
1.intangibility,
2.inseparability,
3.heterogeneity, and
4.perishability
Most services are inseparable and require production and consumption to occur almost
simultaneously; thus, exporting is not a viable entry method for them.
Globally, consumer services marketers face the following four barriers:
•protectionism,
•controls on transborder data flows,
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•protection of intellectual property, and
•cultural requirements for adaptation
MODULE 4- PRODUCTS AND SERVICES FOR CONSUMERS
QUALITY:
The ability of a product or service to meet customer needs. It can be defined on 2
dimensions,
 Market perceived quality
 Performance quality
Both are important but consumer perception of a quality product often has to do more with
market perceived quality. It is also measured in many industries by objective third parties.
Maintaining performance quality is critical, but frequently a product that leaves the factory at
performance quality is damaged as it passes through the distribution chain.
A product may have to change in a number of ways to meet the physical or mandatory
requirements of a new market, ranging from simple package changes to total redesign of the
physical core product.
Green marketing is a term used to identify concern with the environmental consequences
of a variety of marketing activities.
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Quality is associated with customer satisfaction. It is a means to an end.
Q: QUEST FOR EXCELLENCE.
U: UNDERSTANDING CUSTOMER’S NEEDS.
A: ACTION TO ACHIEVE CUSTOMER’S APPRECIATION.
L: LEADERSHIP.
I: INVOLVING ALL PEOPLE.
T: TEAM SPIRIT TO WORK FOR A COMMON GOAL.
Y: YARDSTICK TO MEASURE PROGRESS.
PRODUCTS AND CULTURE:
A product is the sum of physical and psychological satisfactions it provides the user. A
product is more than a physical item. It is a bundle of satisfaction that the buyer receives. A
product’s physical attributes generally are required to create its primary function. The meaning
and value imputed to the psychological attributes of a product can vary among cultures and are
perceived as negative or positive.
To maximize the bundle of satisfaction received and to create positive product attributes
rather than negative ones, adaptation of the nonphysical features of a product. The adoption of
some products by consumers can be affected as much by how the product concept conforms to
norms, values, and behavior patterns as by its physical or mechanical attributes.
An important first step in adapting a product to a foreign market is to determine the degree
of newness as perceived by the intended market. Any idea perceived as new by a group of
people is an innovation. Product diffusion is the process by which innovation spreads. A critical
factor in the newness of a product is its effect on established patterns of consumption and
behavior.
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Analyzing the 5 characteristics of an innovation can assist in determining the rate of
acceptance or resistance of the market to a product. A product’s,
 Relative advantage – The perceived marginal value of the new product relative to the old.
 Compatibility – With acceptable behavior, norms, values.
 Complexity – The degree of complexity associated with product use.
 Trial ability – The degree of economic and/or social risk associated with product use.
 Observability – The ease with which the product benefits can be communicated.
After the degree of its acceptance or resistance.
ANALYZING PRODUCT COMPONENTS FOR ADAPTATION:
A product is a multidimensional, and the sum of all its features determines the bundle of
satisfactions received by the consumer.
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Core Component:
It consists of the physical product, the platform that contains the essential technology and
all its design and functional features. It is on the product platform that product variations can be
added or deleted to satisfy local differences. Alterations in design, functional features, flavors,
color can be made to adapt the product to cultural variations. Functional features can be added
or eliminated depending on the market.
Packaging Component:
Includes style features, packaging, labeling, trademarks, brand name, quality, price of a
product’s package. Packaging component frequently require both discretionary and mandatory
changes. Care must be taken to ensure that corporate trademarks and other parts of the
packaging component do not have unacceptable symbolic meanings. Labeling law create a
special problem for companies selling products in various markets with different labeling laws
and small initial demand in each.
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Support Services Component:
Includes repair and maintenance, instructions, installations, warranties, deliveries and the
availability of spare parts. Repair and maintenance are difficult in developing countries.
The product component model can be a useful guide in examining adaptation
requirements of products destined for foreign markets. A product should be carefully evaluated
on each of the 3 components for mandatory and discretionary changes that may be needed.
MARKETING CONSUMER SERVICES GLOBALLY:
Products are often classified as tangible, whereas services are intangible. The intangibility
of services results in characteristics unique to a services. It is inseparable, heterogeneous, and
perishable. A service can be marketed as a B2B or consumer service.
There are various barriers to entering global markets for consumer services:-
• Protectionism
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• Restrictions on Transborder data flows
• Protection of Intellectual Property
• Cultural Barriers and Adaptation
BRANDS IN INTERNATIONAL MARKETS:
A GLOBAL BRAND is defined as the worldwide use of a name, term, symbol, design or
combination thereof intended to identify goods or services of one seller and to differentiate
them from those of competitors. A successful brand is the most valuable resource a company
has. Brand image is at the very core of business identity and strategy.
The brands are Kodak, Sony, Coca-cola, Toyota, Marlboro, Kellogg, Levi’s, Caterpillar, Nestle,
Mars, P&G, Gillette, and BMW.
A global brand gives a company a uniform worldwide image that enhances efficiency and
cost savings when introducing other products associated with the brand name, but not all
companies believe a single global approach is the best.
Country – of – origin (COE) can be defined as any influence that the country of
manufacture, assembly or design has on a consumer’s positive or negative perception of a
product.
PRODUCTS AND SERVICES FOR BUSINESS:
B2B marketing requires close attention to the exact needs of customers. Basic differences
across various markets are less than for consumer goods, but the motives behind purchases
differ enough to require a special approach. Global competition has risen to the point that
industrial goods marketers must pay close attention to the level of economic and technological
development of each market to determine the buyer’s assessment of quality. Companies that
adapt their products to these needs are the ones that should be the most effective in the market
place.
The demand for products and services in B2B markets is by nature more volatile than in
most common markets. The demand also varies by level of economic development and the
quality of educational systems across countries. Ultimately, product or service quality is defined
by customers, but global quality standards such as ISO 9000 are being developed that provide
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information about company’s attention to matters of quality. After sale services are hugely
important aspect of industrial sales. The demand for other kinds of business services is
burgeoning around the world. Trade shows are an especially important promotional medium in
B2B marketing.
Stages of Economic Development:
TOP 20 GLOBAL BRANDS:
1. COCA-COLA
2. MICROSOFT
3. IBM
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The age of mass
consumption
Drive to
maturity Take off
Preconditions
for take off
The traditional
society
Stages of
Economic
Development

4. GE
5. INTEL
6. NOKIA
7. DISNEY
8. MC DONALD’S
9. MARLBORO
10. MERCEDES
11. FORD
12. TOYOTA
13. CITIBANK
14. HP
15. AMERICAN EXPRESS
16. CISCO
17. AT&T
18. HONDA
19. GILLETTE
20. BMW
Module –5
Introduction
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DIRECT AND INDIRECT EXPORTING
Exporting can be either direct or indirect:
Direct exporting:
The company sells to a customer in another county. This is the most common
approach employed by companies taking their international step because the risks
of loss can be minimized. In contrast,
In direct exporting:
Usually means that the company sells to buyer in the home country who in
turn exports the product. Customer include large retailers such as wal mart or
sears, wholesaler supply houses, trading companies, and other that buy to supply
customers abroad
ex: America’s largest exporter
LICENCING:
A means of establishing a foothold in foreign markets without large capital
outlays is licensing patent right, trademarks right, and the rights to use
technological processes are granted in foreign licensing. It is a favorite strategy
for small and medium sized companies, although it is by no means. Common
examples of industries that use licensing arrangements in foreign markets are
television programming and pharmaceuticals. Not many confine their foreign
operation to licensing alone it is generally viewed as a supplement to exporting or
manufacturing rather than the only mans of entry into foreign market.
Although licensing may be the least profitable way of entering a market, the
risks and headaches are fewer than for direct investments. It is a legitimate means
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of capitalizing on intellectual property in a foreign market, and such agreements
can also benefit the economies of target countries.
FRANCHISING:
Is a rapidly growing form of licensing in which the franchising provides a
standard package of products, systems, and management services, and the
franchisee provides market knowledge, capital and personal involvement in
management. The combination of skills permits flexibility in dealing with local
market conditions and yet provides the parent firm with a reasonable degree of
control. The franchisor can follow through on marketing of the products to the
point of final sale.
INTERNATIONAL JOINT VENTURE:
International joint ventures as a means of foreign market entry have
accelerated sharply since the 1970’s. Besides serving as a means of lessening
political and economic risk by the amount of the partner’s contribution to the
venture. IJV provide a less risk way to enter markets that pose and cultural
barriers than would be the case in an acquisition of an existing company.
Distribution channels
• Getting the product to the target market can be a costly process
• Forging an aggressive and reliable channel of distribution may be the most
critical and challenging task facing the international firms
• Each market contains a distribution network with many channel choices whose
structures are
• In some markets the distribution structure is multi-layered, complex, inefficient,
even strange
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• Competitive advantage will reside with the marketer best able to build the most
efficient channel
Channel of distribution or marketing channels is defined as the whole set of
interrelated marketing agencies which are involved in making the goods
available form the producer to the consumers.
Channel of distribution structures
• The distribution process includes the physical handling and distribution of
goods, the passage of ownership (title), and the buying and selling negotiations
between producers and middlemen and between middlemen and customers
• Each country market has a distribution structure through which goods pass
from producer to use
• Within this structure are a variety of middlemen whose customary functions,
activities, and services reflect existing competition, market characteristics,
tradition, and economic development
• Channel structures range from those with little developed marketing
infrastructure such as those found in many emerging markets to the highly
complex, multi-layered system found in Japan
Japanese distribution structure
• a structure dominated by many small middlemen dealing with many small
retailers—high density of middlemen,
• channel control by manufacturers,
• a business philosophy shaped by a unique culture, and
• laws that protect the foundation of the system—the small retailer
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Distribution in Japan has long been considered the most effective non-tariff
barrier to the Japanese market .The Japanese distribution structure is different
enough from its U.S. or European counterparts
It has four distinguishing features:
• a structure dominated by many small middlemen dealing with many small
retailers
• channel control by manufacturers
• a business philosophy shaped by a unique culture
• laws that protect the foundation of the system – the small retailer.
Channel factor:
Manufacturers depend on wholesalers for a multitude of services to other
members of the distribution network. Financing , physical distribution ,
warehousing , inventory , promotion and payment collection are provided to
other channel members by wholesalers . the system works because
wholesalers and all other middlemen downstream are tied to manufacturers by
a set of practices and incentives designed to ensure strong marketing support
for their product and to exclude rival competitors from the channel .wholesaler
typically act as agent middlemen and extend the manufacturers control
through the channel the following element
1. Inventory financing :- sales are made on consignment with credit extending
for several months .
2.Cumulative rebates :- rebates are given annually for any number of reasons
including quantity purchases , early payments , achieving sales target ,
performing services , maintaining specific inventory levels , participating in
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sales promotions , remaining loyal to suppliers , maintaining manufacturers
price policies , cooperating and contributing to overall success.
3. Merchandise returns :- all unsold merchandise may be returned to the
manufacturers.
4. Promotional support :- intermediaries receive a host of displays ,
advertising layouts , management educations programs , in store demonstrations
and other dealer aids that strengthen the relationship between the middlemen
and the manufacturer.
Distribution patterns
Even though patterns of distribution are in a state of change and new
patterns are developing , international marketers need a general awareness of
the traditional distribution base . The “traditional “ system will not change
overnight and vestiges of it will remain for years to come .Nearly every
international firm is forced by the structure of the market to use at least some
middlemen in the distribution arrangement.
The following description should convey a sense of the variety of distribution
patterns.
General patterns : generalizing about internal distribution channel patterns of
various countries is almost as difficult as generalizing about behaviors patterns
of people. Despite similarities , marketing channels are not the same
throughout the world . marketing methods taken for granted in the united states
are rare in many countries.
• Middlemen Services:- The service attitudes of people in trade vary sharply
at both the retail and whole sale levels from country to country .
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• Line Breadth:- every nation has a distinct pattern relative to the breadth of
line carried by wholesalers and retailers . The distribution system of some
countries is characterized by middlemen who carry or can get everything in
other every middlemen is a specialist dealing only in extremely narrow lines.
Government regulation in some countries limit the breadth of line that can be
carried by middlemen and licensing requirement to handle certain
merchandise are not uncommon.
• Costs and Margins :- cost levels and middlemen margins vary widely
from country to country depending on the level of competition , service offered
, efficiencies for inefficiencies of scale and geographic and turnover factors
related to market size ,purchasing power , tradition and other basic
determinants.
• Channel Length :-some correlation may be found between the stage of
economic development and the length of marketing channels . In every
country , channels are likely to be shorter for industrial goods and high priced
consumer goods than for low priced products. In general , there is an inverse
relationship between channel length and the size of the purchase .combinations
wholesaler – retailer or semi wholesaler exist in many countries adding one or
two link to the length of the distribution chain.
• Nonexistent Channels : one of the things companies discover about
international channel of distribution patterns is that in many countries adequate
market coverage through a simple channel of distribution is nearly impossible.
In many instances , appropriate channels do not exist .
• Blocked Channels :- International marketers may be blocked from using the
channel of their choice. Blockage can result from competitors already
established lines in the various channel or from trade associations or cartels
having closed certain channels.
• Stocking :- the high cost of credit , the danger of loss through inflation , a lack
of capital and other concerns cause foreign middlemen in many countries to
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limit inventories this often results in out of stock conditions and sales lost to
competitors.
• Power and Competition :-distribution power tends to concentrate in countries
where a few large wholesalers distribute to a mass of small middlemen . large
wholesalers generally finance middlemen downstream . the strong allegiances
they command from their customers enables them to effectively block
existing channels and force an outsiders to rely on less effective and more
costly distribution .
• Distribution patterns are always evolving and new patterns are developing and
marketing channels are not the same throughout the world
Some general distribution patterns that are similar globally include:
Retail Patterns
• Retail Size Patterns :- the extremes in size in retailing are similar to those
that predominate in wholesaling. The retail structure and the problem it
engenders cause real difficulties afro the international marketing firm selling
consumer goods .large dominant retailers can be sold direct , but there is no
adequate way to directly reach small retailers who in the aggregate handle a
great volume of sales.
• Direct Marketing :-selling directly to the consumer through the mail , by
telephone or door to door is often the approach of choice market with
insufficient or underdeveloped distribution systems. The approach of course
also works well in the most affluent market.
• Resistance to Change :- effort to improve the efficiency of the distribution
system new types of middlemen and other attempts to change traditional ways
as typically viewed as threatening and are thus resisted .
• Alternative Middleman Choices :- A marketers options range from
assuming the entire distribution activity to depending on intermediaries for
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distribution of the product . channel selection must be given considerable
thought because once initiated it is difficult to change and if proves
inappropriate , future growth of market share may be affected
a) Agent middlemen ;- represent the principal rather than themselves
b) merchant middlemen:- take title to the goods and buy and sell on their own
account.
• International retailing shows even greater diversity in its structure than does
wholesaling
Some general retailing patterns include:
Home-Country Middlemen :- located in the producing firms country provide
marketing services from a domestic base. By selecting domestic middlemen as
intermediaries in the distribution process , companies relegate foreign market
distribution to others.
 Manufacturers’ Retail Stores :- An important channel of distribution for a
large number of manufacture is the owned or perhaps franchised.
 Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , Toys
“R” Us and Wall–mart expand their global coverage , they are becoming a
major domestic middlemen for international markets.
 Export Management Companies :- is an important middlemen for firms
with relatively small international volume or for those unwilling to involve
their own personnel in the international function.
 Trading Companies:- trading companies have a long and honorable history
as important intermediaries in the development of trade between nation.
Trading companies accumulate , transport and distribute goods from many
countries .
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 U.S. Export Trading Companies :-the ETC act allows producers of similar
products to form export trading companies .A major goal of the ETC Act was
to increase U.S exports by encouraging more efficient export trade services to
producers and suppliers in order to improve the availability of trade finance
and to remove antitrust disincentives to export activities.
 Complementary Marketers :-companies with marketing facilities or
contacts in different countries with excess marketing capacity or a desire for a
broader product line sometimes take on additional lines for international
distribution although the formal name for such activities is complementary
marketing.
 Manufacturer’s Export Agent :- is an individual agent middlemen or an
agent middlemen firm providing a selling service for manufactures.
 Home-country middlemen, or domestic middlemen, provide marketing
services from a domestic base and find foreign markets for products for local
manufacturers
Frequently used types of domestic intermediaries include:
Home-Country Brokers:- the term broker is a catchall for a variety of
middlemen performing low cost agent services.
Buying Offices :- a variety of agent middlemen may be classified simply as
buyers or buyer for export. Their common denominator is a primary function of
seeking and purchasing merchandise on request from principals as such they
do not provide a selling service
Selling Groups:- several types of arrangement have developed in which
various manufactures or producer cooperate in a joint attempt to sell their
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merchandise abroad. This may take the form of complementary exporting or of
selling to a combined business such a Webb –Pomerene export association.
Webb-Pomerene Export Associations:-are another major form of group
exporting. WPEAs Act of 1918 made it possible for American business firms to
join forces in export activities without being subject to the Sherman antitrust .
WPEAs cannot participate in cartesl or other international agreement that
would reduce competition in the united states but can offer four major benefits
1. reduction of export costs
2. demand expansion through promotion
3. trade barriers reductions
4. improvement of trade terms through bilateral bargaining .
Foreign Sales Corporation :- is a sales corporation set up in a foreign country or
U.S possession that can obtain a corporate tax exemption on a portion of the
earnings generated by the sale or lease of export property.
Export Merchants :- are essentially domestic merchants operating in foreign
market . as such they operate much like the domestic wholesaler . specifically
they purchase goods from a large number of manufacturers , ship them to
foreign countries and take full responsibility for their marketing .
Export Jobbers:- deal mostly in commodities they do not take physically
possession of goods but assume responsibility for arranging transportation.
Foreign-Country Middlemen :- using foreign country middlemen moves the
manufacturers closer to the market and involves the company more closely with
problems of language , physical distribution , communications and financing .
foreign middlemen may be agents or merchants , they may be associated with
the parent company to varying degrees or they may be temporarily hired for
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special purposes. Some of the more important foreign country middlemen are
manufacturers representatives and foreign distributors.
Manufacturer’s Representatives:- are agent middlemen who take responsibility
for a producers goods in a city , regional market area entire country or several
adjacent countries . when responsible for an entire country the middlemen is
often called a sole agent.
Distributors :- A foreign distributor is a merchant middleman. This intermediary
often has exclusive sales right in a specific country and works in close co-
operation with the manufacturer . the distributor has a relatively high degree of
dependence on the supplier companies and arrangements are likely to be on a
long run continuous basis.
Foreign-Country Brokers:- are agents who deal largely in commodities and
food products . the foreign brokers are typically part of small brokerage firms
operating in one country or in a few contiguous countries.
Managing Agents and Compradors :- A managing agent conducts business
within a foreign nation under an exclusive contract arrangement with the parent
company. The managing agent in some cases invests in the operation and in
most instances operates under as contract with the parent company.
Dealers :- generally speaking anyone who has a continuing relationship with a
supplier in buying and selling goods is considered a dealer . more specifically
dealers are middlemen selling industrial goods or durable consumer goods
direct to customers they are the last step in the channel of distribution.
Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goods
directly from the manufacturers and sell to wholesalers and retailers and to
industrial customers . large and small wholesalers and retailers engage in direct
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importing for their own outlets and for redistribution to smaller middlemen . the
combination retailer wholesaler is more important in foreign countries than in
the united states. It is not uncommon to find large retailers wholesaling goods to
local shops and dealers.
• Some of the more important foreign-country middlemen, who find markets
for foreign manufacturers include:
Factors Affecting Choice of Channels
The international marketers needs clear understanding of market characteristic
and must have established operating policies before beginning the selection of
channel distribution . the following points should be addressed prior to the
selection process
• Identify specific target markets within and across countries.
• Specify marketing goals in terms of volume, market share, and profit margin
requirements.
• Specify financial and personnel commitments to the development of
international distribution.
• Identify control, length of channels, terms of sale, and channel ownership
Once these points are established , selecting among alternatives middlemen
choices to forge the best channel can begin . marketers must get their goods
into the hands of consumers and must choose between handling all
distribution or turning part or all of it over to various middlemen . Distribution
channels vary depending on target market ,competition and available
distribution intermediaries.
1. Cost :- There are two kinds of channel cost
a. The capital or investment cost of developing the channel and
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b. The continuing cost of maintaining it.
The later can be in the form of direct expenditure for the maintenance of the
company selling force or in the form of margins , markup or commissions of
various middlemen handling the goods.
2. Capital requirement :- the financial ramifications of a distribution policy are
often overlooked .critical element are capital requirement and cash flow
patterns associated with using a particular type of middlemen .
3. Control ;- the more involved a company is with the distribution , the more
control its exerts . A company own sales force affords the most control , but
often at a cost that is not practical.
4. Coverage :- another major goal is full market coverage to gain the optimum
volume of sales obtainable in each market , secure a reasonable market share.
And attain satisfactory market penetration .coverage may be assessed by
geographic or market segments or both .
5. Character :- the channel of distribution system selected must fit the character
of the company and the markets in which it is doing business. Some obvious
product requirement often the first considered relate to perishability or bulk of
the product , complexity of sale , sales service required and value of the
product.
6.Continuity :- channel of distribution often pose longevity problems . most
agent middlemen firms tend to be small institution when one individual retires
or moves out of a line of business the company may find it has lost its
distribution in that area. Wholesaler and especially retailers are not noted for
their continuity in business either. Most middlemen have little loyalty to their
vendors.
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Warehousing
The borrowing of funds by a retail lender on a short-term basis using permanent
mortgage loans as collateral. This form of interim financing, called a warehouse
loan, is used to raise funds to make home mortgages and carry them until the
mortgages are packaged and sold "out of the warehouse" to an investor. Proceeds
from the sale are used to reduce the warehouse loan.
Warehousing constitutes an important segment of the physical distribution
management . the need for warehousing in a corporate unit may arise for the
following reasons
 Seasonality :- certain products , especially agro- based items , are produced
with in a limited season , while these are sold throughout the year.
 Variation in demand :- there are items for which very high demand is
experienced during a short period e.g demand for sugar during dewali in India .
To meet additional demand , stocks will to have to be built up and stored over
a period of time.
 Speculation :- companies tend to maintain a large inventory of items
whose prices are highly volatile . this practice is essentially followed as a
hedge against price variations.
 Product conditioning :- some products are to be stored in order to attain
the required level of quality . for example ripening of bananas is carried out
under controlled temperature conditions after they are picked.
Necessity of warehousing for export marketing
Ware housing operations become necessary especially for two reasons so far
as export marketing is concerned .these are
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• Break bulk:- break bulk operations are called for where the manufacture
ships the goods in bulk and then repacks them into small consignment
according to the orders received form individuals customers . In export
operations this system may prove to be a cost saving device especially when
individual orders are so small that the minimum space stipulation of the
shipping lines cannot be fulfilled . shipping lines generally indicate the
minimum space that must be booked if the shippers requirements is smaller
than the minimum , he has to pay the freight as fixed for the minimum space.
• Re – assembly:- re assembly operations are also critically important for
many export items , especially for engineering goods . in order to save
shipping space ,many items are exported on completely knocked down
condition .in fact there are certain countries where the government insist that
the goods must be imported in CKD conditions where ever shipment s are made
on this basis the exporter will need warehousing facility in the importing
country where the goods can be re- assembled.
Air transportation
Air transportation provide only world wide transportation network which make
the essential for global business tourism .it play vital role in facilitating economic
growth particularly in developing country.
Air transport provides significant social benefits
• Air transport improves quality of life by broadening people’s leisure and cultural
experiences. It provides a wide choice of holiday destinations around the world
and an affordable means to visit distant friends and relatives.
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• Air transport helps to improve living standards and alleviate poverty, for
instance, through tourism.
• Air transport may provide the only transportation means in remote areas,
thus promoting social inclusion.
• Air transport contributes to sustainable development. By facilitating tourism and
trade, it generates economic growth, provides jobs, increases revenues from taxes,
and fosters the conservation of protected areas.
• The air transport network facilitates the delivery of emergency and humanitarian
aid relief anywhere on earth, and ensures the swift delivery of medical supplies
and organs for transplantation.
Surface V/s air transport
The choice regarding modes of transport in relation to export marketing
revolves around the appropriateness of transporting goods by ship or by air
,assuming that both types of transport systems are available to the shipper , the
choice should depend on the estimates he makes as to the total costs of
distribution by ship and air .it is found that the important elements of costs
behave in the following fashion for ocean and air transport.
Cost of element air
transport
Surface transport
Freight High Low
Depot costs Low High
Fixed inventory Low High
Packaging Low High
Insurance Low High
Advantages of air transport
• Low inventory carrying costs
• Decreased capital costs of goods in transit
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• less packing lowers cost and reduces chargeable weight
• related surface transport costs are reduced
• the loss due to rough handling and pilferage is reduced to the minimum
• breakage is negligible
• deterioration is avoided
• obsolescence is eliminated
• insurance premium is reduced.
• Costs related to administration ,ordering etc are minimized.
INTERNATIONAL ADVERTISING
1. Global Mass Media Advertising is a powerful tool for any business .
2. Advertising function is to interpret or translate the qualities of products & Services in
terms of consumer wants, needs, desires and aspirations the emotional appeals, symbols,
persuasive approaches and other characteristics of an advertising must coincide with cultural
norms if the ad is to be effective.
3. Of all the elements of the Marketing Mix, decisions involving Advertising are those most
often affected by cultural differences among country Markets.
EFFECTS OF GLOBAL ADVERTISING ON ECONOMY
1. Global Advertising expenditures has slowed with the global economy.
2. Estimates in 2003 in neighboring countries was $400 to $500 billion. A 4% annual growth
rate is predicted through 2006.
3. Some of the biggest companies doing Global Advertising
a) P&G g) Daimler Chrysler
b) GE h) Volkswagen
c) Unilever i) L’Oreal
d) Ford Motor Co. j) Walt Disney Co.
e) Toyota Motor Co. k) Honda Motor Co.
f) AOL Time Warner l) Sony Corp.
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4. There are seven steps involved in Marketing Research. They are:
a) Performing Marketing Research
b) Specify the goals of the communication
c) Develop the most effective message for the market segments selected.
d) Select effective media
e) Compose And secure a budget.
f) Execute the campaign
g) Evaluate the campaign relative to the goals specified.
5. Advertising involves Integrated Marketing communications. It is totally composed of :
a) Advertising e) Direct Selling
b) Sales Promotion f) Public Relations
c) Trade Shows
d) Personal Selling
SALES PROMOTIONS IN INTERNATIONAL MARKETS
1. Sales Promotions are marketing activities that stimulate consumer purchases and
improve retailer or middlemen effectiveness and co-operation.
2. sales promotion devices are
a) Cents off f) Product tie-ins
b) In Store Demos g) Contests
c) Samples h) Sweepstakes
d) Coupons i) Sponsership of Special Events such as
e) Gifts Concerts & Fairs
3. Sales Promotions are short term efforts directed to the consumer or retailer to
achieve such Objectives as Consumer-Product trial or immediate purchase, Consumer
Introduction to the store, gaining retail Point-of-Purchase displays etc.
4. Sales Promotions constitute the major portion of the promotional effort in rural & less
accessible parts of the market
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E.g. In parts of Latin America, a portion of the Advertising-Sales Budget for both Pepsi-Cola &
Coca-Cola is spent on carnival trucks which makes frequent trips to outlaying villages to
promote their products.
5. The success of Sales Promotion depends on local Adaptation.
6. Responses to Promotions can vary across Promotional types & culture.
7. Effective Sales Promotion can enhance the Advertising & Personal Selling efforts
And in some instances, may be effective substitutes when environmental
Constraints prevent full utilization and advertising.
8. Major constraints are imposed by local laws, which may not permit premiums
or free gifts to be given.
INTERNATIONAL PUBLIC RELATIONS
1. Creating good relationships with the popular press & other media to help companies
communicate messages to their publics- customers, the general public & government regulators
is the role of Public Relations(PR).
2. The job consists of not only encouraging the press to cover positive stories about
companies, but also of managing unfavorable rumours, stories & Events.
GLOBAL ADVERTISING & THE COMMUNICATION PROCESS
Creative Challenges
1. A message may not get through because of media inadequacy, the message may not be
received by the intended audience but not be understood because of cultural interpretations, or
the message may reach the intended audience & be understood but have no effect because the
marketer did not correctly assess the needs & wants or the thinking process of target market.
2. communication process consists of
a) Source
b) Encoding
c) A message Channel
d) Decoding
e) Receiver
f) Feedback
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g) Noise
3. Communication process is not simple because- a different cultural context can increase the
probability of misunderstanding, psychological overlap between the sender & the receiver.
4. Legal constraints
5. Legal Limitations
6. Cultural Diversity
7. Media Limitations
8. Production & cost Limitations
SPECIFIC MEDIA INFORMATION
1. Newspaper
2. Magazines
3. Radio & Television
4. Satellite & Cable T V
5. Direct Mail
6. The Internet
7. Other Media
PERSONAL SELLING
1. Happens via Sales Person
2. In the eyes of most of the customer, the sales person is the company
3. The sales Representative is the final link in the culmination of a company’s marketing &
Sales effort.
4. Growing global competition coupled with the dynamic & complex Nature of international
business increases both the need & the means for closer ties with the both customers &
suppliers. Relationship marketing built on effective communication between the seller & the
buyer, focuses on building long term alliances rather than treating each sales as a one time
event.
5. Advances in IT are changing the nature of personnel selling & sales management
6. Following are the steps to manage the sales force:
a) Designing the Sales Force
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b) Recruiting Marketing & Sales Personnel( Sales Personnel include Expatriates, Local
Nationals & Third Country Nationals. Virtual Expatriates are the new breed of Expatriates
developed through Internet)
c) Selecting Sales & Marketing Personnel
d) Training for International Marketing
e) Motivating Sales Personnel.
f) Evaluating & Controlling Sales representatives.
Module 7- Institutional Infrastructure for Export Promotion in India
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1. Explain about institutional infrastructure for export promotion in India?
The Government of India has set up several institutions whose main functions are
to help an exporter in his work. It would be advisable for an exporter to acquaint himself
with these institutions and nature of help that they can render to him so that he can
initially contact them and have a clear picture of what help he can expect of the
organized sources in his export effort.
Institutions engaged in export effort fall in six distinct tiers.
1. Department of Commerce of the Ministry of Commerce and Industry
2. Deliberative and consultative organizations
3. Commodity specific organizations
4. Service Institutions
5. Government trading organizations
6. Agencies for export promotion at the State Level
Export Promotion Board
There is an export promotion board under the Chairmanship of the cabinet
secretary to provide policy and infrastructural support through greater coordination
among ministries concerned for boosting the growth of exports. All ministries directly
connected with facilitating foreign trade are represented on this board by their
secretaries.
Export Promotion Council
There are 19 Export Promotion Councils covering a number of products. These
councils advice the government regarding current developments in the export sector and
measures necessary to facilitate future growth in exports, assist manufactures and
exporters to overcome the various constraints and extend to them the full range of
services for the development of market overseas. The councils also perform certain
regulatory functions as they have the power to de – register errant or defaulting
exporters.
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