INTRODUCTION –

INTERNATIONAL
MARKETING

UNIT - 1
 Meaning & Definition

 International marketing is the marketing of products or services outside of your brand's domestic audience. Think of
it as a type of international trade. By expanding into foreign territories, brands are able to increase their brand
awareness, develop a global audience, and of course, grow their business.

 In recent times, companies are not restricted to their national borders, but are open for international marketing. With
the increasing change in customers’ demands, choices, preferences and tastes, the economies are expanding and
giving way to more competitive marketing. Thus, organizations need to respond rapidly to the demands of the
customers with well-defined marketing strategies.

 The word ‘International Marketing’ is defined as the exchange of goods and services across national borders to meet
the requirements of the customers. It includes customer analysis in foreign countries and identifying the target
market.
There must be at least three major dimensions to the spills of international marketing:

1. Competence in marketing, with a sound grasp of marketing concepts, tools and techniques.

2. Ability to perceive patterns of consumer behaviour in different countries and the ability to evaluate the essential
differences and similarities between markets.

3. Management skill to organise, plan, co-ordinate and control an operation of considerably greater complexity
particularly in its human relationships – than that involved in the home market.
The major participants in international marketing are as follows −

• Multinational Corporations (MNCs) − A multinational corporation (MNC) is an organization that ensures the production of goods and
services in one or more countries other than its home country. Such organizations have their offices, help desks or industrial set-up
across nations and usually have a centralized head office where they co-ordinate global management.

• Exporters − They are the overseas sellers who sell products, and provide services across their home country by following the necessary
jurisdiction.

• Importers − They are the overseas buyers who buy products and services from exporters by complying with the jurisdiction. An import
by one nation is an export from the other nation.

• Service companies − A service company generates revenue by trading on services and not on physical commodities. A public accounting
company is the best example of a service company. Revenue here is generated by preparing returns of income tax, performing audit
Example

Global Marketing:
Let us take the case of Apple; the brand maintains a uniformity in handset’s design and features
while targeting the consumers in various countries. Walmart is another example of global
marketing.

International Marketing:
Dunkin’ Donuts adopted international marketing strategy by selling the products according to the
consumer’s liking and preference across the worldwide target markets. It sold Grapefruit Coolatta
Donuts in South Korea, while Seaweed Donuts in China.
Scope of International Marketing
Export
 This is the most common and traditional example of international marketing. Here businesses can enter the
international market through direct or indirect export. Export involves shipping products to another country.
Export has a lower risk than other forms of business as it does not impact other countries politically.
 In indirect marketing, businesses can enter through distributors or local trading agents who get buyers and
facilitate sales.
 In direct marketing, businesses market their product directly to the international market. They do so through:
• Setting up local units
• Shipping directly
• Appointing local sales agents
• And other strategies.
Import
 Importers are opposite to exporters. They buy products or services from across the border and sell them in
their country. In this arrangement, the exporter has no or little liability. The importer has to take care of the
legal liability in their country.
 An import to a country is an export from the other country.

Online Strategy
 These days, businesses are adopting online strategies for global web presence. Here, they don’t need to be
physically present in any country. They can launch the website and accept orders globally.
 Once the order is placed, they can ship products from their warehouse.
Licensing
 In licensing, businesses permit the use of their intellectual property to a third party for a fixed period and receive
a royalty in return. Licensing can include copyrights, production process, using trade names, patents, etc.
 Licensing is mostly used in manufacturing industries. (Macdonald)

Franchising
 In franchising, the company gives licenses and helps local units develop businesses meeting the organization’s
quality standards. Here profit is shared and the local unit manages and runs the business with the continuous
support of the organization.
 Franchising terms and conditions are tougher than licensing, and parent organizations keep control of the local
functioning. This marketing is used in service industries such as hotels, restaurants, etc.
Partnership
 In partnership, a business partners with another company and they jointly market the product. This is also known as a joint venture.
In partnership, generally, both parties have the same status.
 A joint venture is a good strategy as both parties share the risk and responsibilities and use their unique capabilities to gain market
share. (Ex- Starbucks –Tata)

Direct Investment
 Here businesses establish their operations in foreign countries. This strategy requires a lot of funding, understanding of local laws,
and local support.

Takeover
 Here businesses buy a controlling stake in local companies or take over the company completely and modify operations as per their
requirements.
 Usually, big businesses use this strategy to quickly gain technology, skills, and market share.
 Features/ Characteristics of International
Marketing

 Broader market is available

A wide platform is available for marketing and advertising products and services. The market is not limited to some precise local market or for
people residing in a particular place, region or country but is free for all. People from different nations sharing different cultures and traditions
can actively participate in it.

 Requires broader competence

International market requires more expertise and special management skills and wider competence to deal with various circumstances and
handle different situations like changes in the strategies of the government, the mindset of the people and many other such factors.

 Involves at least two set of uncontrollable variables

The uncontrollable variables, like geographical factors, political factors prevailing in different countries. At the global level, all the companies
have to face uncontrollable variables from different countries. While establishing business globally, a company has to learn to deal with these
variables.
 Requires broader competence
International market requires more expertise and special management skills and wider competence to deal with various
circumstances and handle different situations like changes in the strategies of the government, the mindset of the people and
many other such factors.

 Competition is intense
Competition is very tough in international market, as the organizations at the global level have to compete with both
competitors in their home countries and also in the foreign lands. Competition is high because the clash is between developed
& developing countries and both have different standards and are unequal partners.

 Large-scale operation
Large-scale operations involve relative amount of labor and capital to cater to the needs such as transportation, and
warehousing.
 Involves high risk and challenges
International marketing with its own advantages is also prone to different and tangible risks and challenges. These
challenges come in the form of political factors, regional and cultural differences, changing fashion trends, sudden war
situation, revision in government rules and regulations and communication barriers.

The nature of international marketing is dependent on various factors and conditions and above all, it is dependent on the
policies framed by different countries which are active participants in international marketing. International marketing tends
to ensure balanced import and export to all countries big or small, rich or poor, developed or developing.

Management of international market is tough and requires thorough market research. It is a predefined process which is
directed towards designing and delivering products based on the demands from the overseas customers. Proper
management also helps the company attain its objectives.
 Domination of multinationals and developed countries
International marketing is highly dominated by multinational corporations due to their worldwide reach. These organizations apply
efficient and effective business practices to all their business operations. They have a stable position and with their global approach find
themselves fitting into the arena of international marketing.

 International restrictions
The international market needs to abide by different tariff and non-tariff constraints. These constraints are regulated because different
countries follow different regulations. All nations tend to rationally abide by tariff barriers. All the imports and exports between the
nations participating in international marketing follow some restrictions in foreign exchange.

 Sensitive character
International marketing is highly sensitive and flexible. The demand for a product in a market is highly influenced by political and
economic factors. These factors can create as well as decrease the demand for a product. In fact, use of advanced technology by a
 Importance of Advanced Technology
International market is dominated by developed countries like the USA, Japan, and Germany as they use highly advanced
technology in production, marketing, advertising and establishing a brand name. They provide admirable quality of products at
reasonable prices. Presently, Japanese products have got substantial existence in markets around the world. The Japanese could
achieve this only because of automation and effective use of advanced computer technology.

 Need for specialized institutions

Marketing at global level is highly prone to risks & is very complex and knotty. It undergoes lengthy and time taking procedures &
formalities. Competent expertise is required for handling various sections of international marketing.

 Need for long term planning

International marketing calls for long term planning. Marketing practices differ from nation to nation influenced by social,
economic & political factors.
 Lengthy & Time Consuming
The activities in international marketing are very time-consuming and knotty or complex. The main cause of these
difficulties are the local laws and policies enforced on different nations, issues in payment as different countries use
different currencies, distance between the participating nations and time taking formalities involved therein.

The current trend of globalization does not limit companies to their national borders and invites them for marketing on a
higher platform, i.e., international platform. Every nation is free to trade with any nation. New markets are indicating signs
of growth and are marking signs of development in economies like China, Indonesia, India, Korea, Mexico, Chile, Brazil,
Argentina, and many other economies all over the world.
 Problems in International Marketing

1. Political and Legal Differences: The political and legal environment of foreign markets are different from that of the
domestic. The complexity generally increases as the number of countries in which a company does business increases. It
should also be noted that the political and legal environment is not the same in all provinces of many home markets. For
instance, the political and legal environment is not exactly the same in all the States of India.

2. Cultural Differences: The cultural differences is one of the most difficult problems in international marketing, as explained
in the next chapter. Many domestic markets, however, are also not free from cultural diversity.

3. Economic Differences: As described in a following chapter, the economic environment may vary from country to country.
4. Differences in the Currency Unit: The currency unit varies from nation to nation. This may sometimes cause problems of
currency convertibility, besides the problems of exchange rate fluctuations. The monetary system and regulations may also
vary.

5. Differences in the Language: An international marketer often encounters problems arising out of the differences in the
language. Even when the same language is used in different countries, the same words or terms may have different meanings
or connotations. The language problem, however, is not something peculiar to the international marketing. The multiplicity of
languages in India is an example.

6. Differences in the Marketing Infrastructure: The availability and nature of the marketing facilities available in different
countries may vary widely. For example, an advertising medium very effective in one market may not be available or may be
underdeveloped in another market.
7. Trade Restrictions: Trade restrictions, particularly import controls, is a very important problem which an international
marketer faces.

8. High Costs of Distance: When the markets are far removed by distance, the transport cost becomes high and the time
required for effecting the delivery tends to become longer. Distance tends to increase certain other costs also.

9. Differences in Trade Practices: Trade practices and customs may differ between countries.
 Reasons/ Motives of International
Marketing

 INCREASE REVENUE POTENTIAL

When businesses have exhausted growth opportunities at home, they turn to global expansion to help grow their business.
For many companies, international expansion offers a chance to explore markets and gain access to millions of customers,
thus increasing sales.

 ENTRY TO NEW MARKETS

Once your company has been successful in your home country, it’s time to look at markets overseas. However, before you
enter the new market, it’s vital to do research. Whether it’s looking at emerging markets in South America, advanced
technology hubs in Asia or exploring developed markets in Europe, each region offers plenty of opportunities for expansion
success.
 NEW CUSTOMER BASE
Another benefit of expanding abroad is that it gives the opportunity to not only sell your current product or service to a new
customer base but also to invest and introduce new products/services. With a much broader customer base, you can
generate more business and increase sales.

 EXPANSION ALLOWS YOU TO DIVERSIFY

Keeping your business in the home market can limit potential for profit. One of the downsides companies face when they
operate in only one country is the exposure to market changes. Taking your business international allows you the opportunity
to diversify your markets, so your revenue is more stable. If your domestic market is slowing down, having the advantage of a
global market will help cushion the company during slower economic times.
 GREATER ACCESS TO TALENT
Another excellent benefit of taking your business global is that you get access to a much greater pool of talent. Hiring international talent
can bring many advantages including advanced language skills and diverse educational backgrounds. In addition, expanding globally also
allows companies to employ local workers who have the expertise to communicate and serve your clients (within the same time zone)
without any complications.

 GAIN COMPETITIVE ADVANTAGE

Go to market before your competitors do. Expanding abroad allows you to get out of a saturated market. Expanding abroad gives you
access to new customers and in a market where your competitors do not operate.

 GOVERNMENT POLICIES & REGULATIONS

Government policies & regulations also motivate internationalism. Many government offer a number of incentives and other positive
support in order to encourage foreign investments. A restrictive domestic government policy which limits the scope of business
expansion in domestic country and undermines their competitiveness is also an important factor for entering overseas markets.
 IMPROVE YOUR COMPANY'S REPUTATION
One of the reasons why businesses expand globally is to be able to provide a reliable service to their international clients. A
good global reputation will attract new customers. Expanding abroad allows a company to build name brand recognition
and establish credibility internationally.

 COST SAVINGS
By setting up in a new country, a business will be able to lower their operational costs and save money. Many companies
have found its advantageous to move some of their manufacturing operations to other markets due to cheaper labour
costs and more affordable talent.
 Stages of Internationalization

Domestic Company
 First Stages of Internationalization: Most international companies have their origin as domestic companies. The
orientation of a domestic company essentially is ethnocentric. A purely domestic company operates domestically
because it never considers the alternative of going international.
 The growing stage-one company, when it reaches growth limits in its primary market, diversifies into new markets, and
product technologies instead of focusing on penetrating international markets. However, if factors like domestic market
constraints, foreign market prospects, increasing competition, etc.
 make the company reorient its strategies to tap foreign market potential, it would be moving to the next stage in the
evolution. A domestic company may extend its products to foreign markets by exporting, licensing, and franchising.
 The company, however, is primarily domestic and the orientation essentially is ethnocentric. In many instances, at the
beginning exporting is indirect.
 The company may develop a more serious attitude towards foreign business and move to the next stage of
development, i.e., international company.
International Company
 Second Stages of Internationalization: International company is normally the second stage in the development of a company towards the
transitional corporation. The orientation of the company is basically ethnocentric and the marketing strategy is an extension.
 the marketing mix developed for the home market is extended into foreign markets. International companies normally rely on international
business.

Multinational Company
 Third Stages of Internationalization: When the orientation shifts from ethnocentric to polycentric, the international company becomes
multinational. In other words, when a company decides to respond to market differences, it evolves into a stage three multinational that
pursues a multi-domestic strategy.
 The focus of the stage three company is multinational that pursues a multinational or, in strategic terms, multi-domestic. The marketing
strategy of the multidimensional company is adaptation. In multinational companies, each foreign subsidiary is managed as if it were an
independent city-state.
 The subsidiaries are part of an area structure in which each country is part of a regional organization that reports to the world headquarters.
Transitional Corporation
 Fifth Stages of Internationalization: The transitional corporation is much more than a company with sales, investments, and operations in many countries.
This company, which is increasingly dominating markets and industries around the world, is an integrated world enterprise that links global resources with
global markets at a profit. (Microsoft, Google)

Characteristics of a Transnational Corporation

1. Geocentric orientation.
2. Thinks globally and acts locally.
3. Global strategy but allows value addition to the customer.
4. Allows adaptation to add value to its global offer.
5. Assets are distributed throughout the world.
6. Independent and specialized
7. R&D integrated.
8. Production spread but specialized and integrated.
 International Marketing Decisions

 International Business Decision: The first decision a company has to make, of course, is whether to take up international
business or not. This decision is based on a serious consideration of a number of important factors, such as the present
and future overseas opportunities, present and future domestic market opportunities, the resources of the company
(particularly skill, experience, production and marketing capabilities and finance), company objectives, etc.

 Market Selection Decision: Once it has been decided to go international, the next important step is the selection of the
most appropriate market. For this purpose, a thorough analysis of the potentials of the various overseas markets and
their respective marketing environments is essential. Company resources and objectives may not permit a company to do
business in all the overseas markets. Further, some markets are not potentially good, and it may be suicidal to waste
company resources in such markets. A proper selection of the overseas market(s), therefore, is very important.
 Entry and Operating Decisions: Once the market selection decision has been made, the next important task is to
determine the appropriate mode of entering the foreign market. The important modes of entering the foreign market are
discussed in a subsequent chapter.

 Marketing Mix Decision: The foreign market is characterised by a number of uncontrollable variables. The marketing mix
consists of internal factors which are controllable. The success of international marketing, therefore, depends to a large
extent on the appropriateness of the marketing mix. The elements of the marketing mix — product, promotion, price and
physical distribution — should be suitably designed so that they may be adapted to the characteristics of the overseas
market. More details are given in some of the following chapters.
• International Organisation Decision: A company which
wants to do direct exporting has also to decide about its
organisational structure, so that the exporting function may
be properly performed. This decision should necessarily be
based on a careful consideration of such factors as the
expected volume of export business, the nature of the
overseas market, the nature of the product, the size and
resources of the company, and the length of its export
experience. The nature of the organisation structure of the
company will depend on a number of factors like its
international orientation, nature of business, size of
business, future plans etc.
 Trends/ Future of International
Marketing

1. Globalization of supply chain and operations management. The growing trend towards globalization of supply chain and
operations management will increase the importance of international marketing. This will help the businesses to reach global
consumer in a very efficient manner.
2. International investments. The continuing high levels of international investments and increasing international production
tend to increase the importance of international marketing.
3. Information surge and consumer choice. Because of the information surge, consumers are fairly well aware of the galaxy
different categories of products available across the world. The consumer affluence make consumers more demanding,
generating cross boarder demand.
4. World growth. World economy would grow fairly fast. The developing countries have been growing much faster than the
developed ones and this trend would continue.
5. Domination of the world economy. One of the major changes is the emergence of the world economy as the dominant
economic unit and the resultant decline of the power of nations like the United States to pressurize policies and behaviours of
other nations.

6. Trade cycle decision rule. The old trade cycle model, which implied that as a product matures the location of production
must shift to low-wage countries, has been clarified. Keegan points out that the location of production is not dictated
exclusively by wage levels. For any product in which labour is less than, say, 15 per cent to 20 per cent of total costs, the
location of production of mature products may be anywhere in the world. Factors such as transportation costs, availability of
skilled labour, market responsiveness, and market access and high levels of innovation in product design and manufacturability
may all indicate that the best location for production is a high-income, high-wage country. It may be pointed out that, as
against the above observations, that shift of production location happens in case of many products even now. Although
Keegan has taken automobile as an example to support his point, it should be noted that the production of low end models
has been shifting to developing countries like India. This trend increases the scope of international marketing.
7. Pervasiveness of free markets. The fall of communism and socialism and the resultant ubiquitous market economy and
globalization are stupendously expanding the scope of international marketing.

8. Accelerating growth of global markets. Global markets would grow at rates that were once thought impossible, driven by
the high rate of growth in both the high- and low-income countries.

9. The rise of the Internet and information technology. International marketing is boosted by such factors as the advances in
information technology and the rise of the internet.

There are also some factors which tend to hamper international marketing, like the restraining forces like internal (discourage
globalization within the company, Management’s near-sightedness, Organization’s culture) & external (government policies and
controls) factors. Policies of domestic protection could restrain the growth of international marketing. For example, countries
like the US, which were champions of free trade, are increasing domestic protection when they see that their interests are
adversely affected by free trade.
THANK YOU…..