International Marketing

- By Amit Seth
 Meaning of International Marketing

Definition adopted by AMA (American Marketing

Association) “International marketing is the
multifunctional process of planning and executing
the conception, pricing, promotion and distribution
of ideas, goods and services to create exchanges that
satisfy individual and organizational objectives.”
Examples:
• Two businessmen of small village
• Korean Country example
• Example of Arvind Mills
 Birth Control
Marketing of Polio Eradication
• Concept Swan Flue Eradication
Religion

• Product should be in accordance to local needs

Scope of International Marketing
• Example of TV industry, Inspite of 30% growth,
how LG & Samsung grown
• Same with Refrigerators – Kelvinator lost the
business, Voltas an Godrej are also on loosing
grounds.
• Six out of the 100 largest US MNC’s made more
than 100% of the total profits from outside the U.S.
40 of them earned more than half of the total profits
from the foreign markets.
• Economic barriers are either withdrawn or relaxed.
• Welcome to foreign investments.
• Transfer of technologies are allowed.
Infosys Chairman-Mr. Narayan Murthy says “Marketing
is nothing but to manufacture goods/services where
the cost is low and sell/trade it to the
place/countries where you get the better realization.”
Examples of
• Multinational Corporations (MNC’s)-Nokia, Sony, L.G.
Samsung, General Electric, General Motors, KFC’s
Macdonald,
• Indian MNC’s- TATA, Hero, ICICI, Aditya Birla Group,
Infosys, Wipro & Ranbaxy
MNC’s are big by

• Sizes
• Structure (Singer selling Machines in 181 countries)
• Performance (Parker pen 80% sales from overseas)
• Behavior (Example of Bridge Stone Tyres)
Growth of Overseas Survival Sales & Profits
markets • IBM and Compaq sell
• Collaborate,
• Even American trade with others more computers abroad
markets can not where you are that at U.S.
ignore the vast weak. • Coca Cola,
potential of International sales
international markets, account 80% of the firm
The world market is Benefits of operating profits.
more than four times
larger than U.S. International Inflation & Price
market. Marketing Moderation
• Lack of imported
Diversification
Employment products forces
• Demand for the most consumer to pay more.
products affected by Foreign ownership
• Trade restrictions
cyclical factors, can provide benefits,
seasonal / climatic more investments, depress, price
factors. Foreign more employment, competition in the short
markets are solution for profits are run; but they can
variable Markets redeployed. adversly affect demand
for years to come
 Scope of International Marketing
• Exporting- Selling to foreign markets
• Importing- Buying from abroad
• Re-Exporting- Importing semi-finished goods &exporting
finished goods.
• Management of International Operations
– Operating Mktng/Sales abroad
– Prodn./assembling facilities in foreign countries
– Formation of trade blocks, settlement of external payment
– Licensing/joint ventures
– Foreign Exchange Management
– Promotion & Development role
– National Global policies for International marketing
 Differences between Domestic and
International Marketing
• Difference in national environment (language, customs,
traditions)
• Difference in the organization culture and operation systems.
• Regulation and laws of the land.
• Restrictions such as trade quotas and exchange control.
• Differences in the type and characteristics of the domestic
and international currencies (Exchange rates).
• Government institution and banking systems vary widely from
country to country.
• The method of credit extensions and method of financing are
extremely different
 Domestic Marketing International Marketing

1. One nation, same language & 1. Many nations, many languages and
culture cultures
2. Transport cost is major marketing 2. Transport cost influences only some
expense extent
3. One currency 3. Different currencies
4. Political Environment & factors are 4. Different political factors in different
the same countries
5. Market is relatively homogeneous 5. Markets are diverse & highly
6. No problem of exchange control & heterogeneous
tariffs 6. Problems of exchange controls &
7. Data available usually accurate and tariffs, they act as obstacles
relatively easily collected at less 7. Data collection a formidable task
cost. requiring higher budgets.
8. Relative freedom from Govt. 8. Govt Influences business decisions
interference 9. “Gravitational” distortion by large
9. Individual company has little effect companies
on environment
 Domestic Marketing
10. Chauvinism helps
11. Relatively stable business
environment
12. Uniform financial climate
13. ‘Business” rules of the game are
mature and understood.
International Marketing
10. Chauvinism hinders
11. Multiple environments, many of
which are highly unstable
12. Variety of financial climates
ranging from over conservative
to widely inflationary
13. Rules diverse, changeable and
un-clear
 Intrafirm and
Huge Foreign Indebtness
Environmental
Factor ●

●
High Inflation
High Unemployment
Hesitation of foreign investment

Corruption
Unstable Govt.
Language, Caste, Religion, Culture, ●
Currency to depreciate
Literacy level ●

●
Foreign Investment hesitation
This limits trade

Technological Pirating Exchange Instability

International Code of Conduct ●

More regulation on foreign firms, like joint ventures
(WTO)

Foreign Govt. Entry Requirement

Govt rules, laws and taxation
●
Unreasonable high tariffs
●
Withholding or slowing down import approval

Tariffs & other trade barriers

 Global Integration
Driving Forces Restraining Forces

• Culture
• Technology
• Market Differences
• Culture
• Costs
• Market Needs
• National Controls
• Cost
• Nationalism
• Free Markets
• War
• Economic Integration
• Management Myopia
• Peace
• Organization History
• Management Vision
• Domestic Forces
• Strategic Intent
• Global Strategy & Action
 Benefit / Leverage of Global
Company

1. Experience Transfer-L.N. Mittal

2. Scale Economies-Coca Cola
3. Resource Utilization-Tata/LG/Samsung
4. Global Strategy-ICICI
 Policy Framework-Indian Trade Policy

Rapid &
Sustained
Long Term Sustainability
Export of the balance of
payments
Growth
Stability of Capital
Flows
Key to
long term Reduction of
viability Foreign Debts
High Export possible:
High Tariffs to be eliminated

Fiscal distortion must be removed

A world class infrastructure & financial sector has to be built

Technical/Marketing Management Skills to be upgraded

Labour laws must be changed to give greater flexibility

 International Marketing Tactics
• International outlook, broader approach
• Realistic business target with focused & selective
segment of International Mkt.
• Relevant environmental factors must be analyzed
• Factors for consideration for evolving right
marketing strategy
– Size & extent of International market
– Foreign competition must be evaluated
– Legal, Political & business factors may be examined
– Cost must be calculated to arrive final
landing price
– Shipping Time
– ‘After-Sales-Service’ Arrangement
– Credit & Term payment
– Financing, including exchange involving &
collection
 Market Selection Criteria

1. Market Potential
2. Market Access
3. Shipping Cost
4. Potential Competition
5. Service Requirement
6. Product Fit
International Economic Environment
• Hundreds of cases of market failures emanating from the failure to
properly understand the market characteristics and their implications for
marketing and the resultant ill conceived marketing efforts.
• The outstanding marketer is keenly aware of the variations from one
market to another. He never thinks solely in terms of ‘The common
market’, he knows that countries, and even sections of countries, differ
enormously in almost every factor critical to his market planning .
• P&G stormed into Japanese Market with American sales methods and
promotion strategies.. The result was disastrous until company learned
how to adapt products and marketing style to japanese culture. Entered
in Japan in 1973 lost money untill 1987 but by 1991 Japan became its
second largest foreign market.
• American Company Texas Instruments which started making semi-
conductors in Japan in 1961 took an American approach to hiring , pay and
benefits, dismissing the japanese system of offering bonuses two times a
year as impractical. Workers disagreed. Morale crumbled and the company
had trouble recruiting employees. Later when the company adopted the
Japanese methods of recruiting and reward including bonuses and a
promotion system based on seniority, the satisfaction vastly changed and
in 1985 vit won Deming prize for quality control, in Japan.
• ‘The Borderless World’ Keichi Ohmae- “When global success rests on
market-by-market functional strength, you have to play a series of
domestic games against well defined competitors. You have to become
true insider in the market. If the market requires a first class sales force,
you have to have one. If competition turns on dealer support programs,
that’s where you have to excel. Some occasions do exist when doing more
better is the right, the necessary course to follow, still there are usually
opportunities to redefine these domestic games to your own advantage.”
 Economic Environment
• More than three-forth of the total number of over 200 nations of the
world are developing countries, inhabited by about 80% of the world
population.
• Of the 211 economies listed by the World Development Report,
1999/2000, 54 were high income economies and all the remaining were
developing countries.
• Developing countries fall into two categories, low income countries and
middle income countries. The developed countries are high income
countries.
• Within the group of the low income economies, the United Nations has
identified a special category, namely least developed countries, most of
whom suffer from one or more constraints, whereby there is low per
capita income, land locked, remote insularity, desertification and
exposure to natural disasters
• Low cost models without the frills may be appropriate for markets
with low income; but high value item has significant market also as
the quantity of high income countries are higher even than the total
combined sales of developed countries.
Social Environment
Encompassing
• Religious aspects
• Social Satisfaction
• Language
• Social Institutions
• Customs
• Buying habits
• Traditions
• Beliefs
• Tastes
• Preferences
• Failure of number of companies in foreign markets is their failure to
understand the cultural environment of these markets and to suitably
formulate their business strategy.
• Companies modify their products & strategies to suit the tastes and
preferences or other
• In Thailand, Helene Curtis switched to black shampoo because Thai
woman felt that it made their hair look glossier.
• Nestle today brews a large number of varieties of instant coffee to
satisfy different national tastes.
• Even when people of different cultures use the same basic product,
the mode of consumption, conditions of use or the perceptions of the
product attributes may vary so much so that the product attributes
method of presentation, positioning, or method of promoting the
product may have to be varied to suit the characteristics of different
markets
• Language problem sometimes necessitating a change in the brand
name. Chevrolet’s brand name Nova in Spanish means ‘’ It does not
go”. In Japanese 3M’s slogan “Sticks like crazy” translates as “sticks
foolishly”. In some languages, Pepsi-Cola’s slogan “Come Alive”
translates as “Come out of grave”
• The values and beliefs associated with colour vary significantly
between different cultures. Blue, considered feminine and warm in
Holland, is regarded as masculine and cold in Sweden. Green is a
favourite colour in the Muslim world; but in Malaysia, it is associated
with illness. White indicates death and mourning in China, Korea and
In India; but in some countries it express happiness and is the colour
of the bridal dress.
• Social inertia and associated factors come in the way of the
promotion of certain products, services or ideas. We come across
such social stigmas in the marketing of family planning ideas, use of
bio-gas for cooking etc.
• Number of other demographic factors, such as the age and sex
composition of population, family size, habitat, religion, etc. which
influence the business.
• Societal responsibilities are getting different.
• Literacy level makes a difference.
• Proportion of working woman makes difference. The rise in the
number of double income households increases the demand for a
number of products like house hold appliances, electronic gadgets,
packaged food products etc.
 Demographic Environment
• Demographic factors which have very significant
implications in any business
– Size of the population
– Population growth rates
– Age composition
– Family size
– Nature of the family
– Income level etc
• According to the World Development Report 1996,
there were 58 countries with a a population of less
than million while India has several multi-million cities.
• Advance countries with large population are
attractive & potential markets; but competition
is also strong in them.
• High income nations, poses threats to some
business. Decline in the birth rates, prompted
some companies to reposition their products.
• However declining birth rate has been boon to
certain industries such as hotels, airlines and
restaurants as couples have more time and
income for travel and dining out.
• When the population is very large, even if the country is
generally poor, there could be a sizable market even for
those goods and services which are regarded luxuries in
these countries.
• High Population implies:
– Enormous increase in the labour supply, availability of cheap
labour encouraged many MNCs to invest and relocate their
plants in developing countries.
• If the labour is highly heterogeneous in respect of
language, religion and caste,

• personnel management is likely to become more

complex task.
 Political & Govt. Environment
• Political environment includes:
– The characteristics and policies of the political parties,
– the nature of the constitution and government system
– Government environment encompassing the economic and
business policies and regulations are among the factors of
utmost importance in the market selection and business
strategy formulation.
– Several countries which are making rapid economic
progress and having liberal policies toward foreign capital
and technology, is not very democratic. Procedures are
simpler and decisions are quicker.
• Public sector played significant role in many non-
communist, particularly the developing countries,
In India too before 1991, 17 of the most important
industries were exclusively reserved for the public
sector.
• The industrial policy of India which wanted the
Public Sector to gain control over the commanding
heights of the economy limited the scope of the
private enterprise, both domestic and foreign.
• Even after the policy liberalization in India the
foreign equity participation is restricted to 51%
• More than 8500 state owned enterprise in over 80
countries were privatized in the 12 years
• Hostilities between some countries affect business of
firms.
• Some countries also demand a certificate of origin of the
imports to the country.
• Many governments specify standards for products to be
marketed in the country. Marketing of certain products
are even banned in some countries. Policy or regulations
regarding quality control and inspection vary considerably
between the nations.
• In most of the countries, product promotion is subject to
various types of control.
 Technological Environment
• In a fast changing environment, Adoption of new
technologies provide basis for product/services with
better features.
• Labour abundant countries have a preference for labour
intensive technology.
• The time lags in the introduction of technologies may
even result in some products not being able to reap the
market.
• Many companies in advanced countries have considered
the developing countries as a market for their obsolete
technology. Several developing countries even import
second hand plant and machinery.
• The concept of appropriate technology became
popular in the developing world. Intermediate
technology, which often means a technology
which combines elements of traditional
technology, gained importance in the developing
countries.
• The sophisticated capital intensive technologies
in use in the developed countries are not
acceptable in some sectors in the several
developing countries