288 33 Powerpoint Slides Chapter 14 International Marketing

Copyright @ Oxford University Press Copyright @ Oxford University Press International Business R. M. JoshiInternational Business R. M. Joshi

Chapter 14: International Chapter 14: International MarketingMarketing

International BusinessInternational Business

Rakesh Mohan Joshi Rakesh Mohan Joshi

Professor & Chairperson, IIFT New DelhiProfessor & Chairperson, IIFT New Delhi

1



INTERNATIONAL INTERNATIONAL

MARKETINGMARKETING

Chapter 14



Learning ObjectivesLearning Objectives

To explain the concept and framework of To explain the concept and framework of international marketinginternational marketing

To discuss market identification, To discuss market identification, segmentation, and targetingsegmentation, and targeting

To elucidate international marketing mix To elucidate international marketing mix decisionsdecisions

To examine the framework for To examine the framework for international product-promotion strategyinternational product-promotion strategy



Growing Significance of International Growing Significance of International Marketing Marketing

As a strategic response to globalization of As a strategic response to globalization of markets, business enterprises need to adopt markets, business enterprises need to adopt a proactive approach and learn to transform a proactive approach and learn to transform emerging marketing threats and challenges emerging marketing threats and challenges into viable business opportunities. Therefore, into viable business opportunities. Therefore, developing a thorough understanding of developing a thorough understanding of international marketing has become international marketing has become inevitable not only for operating in inevitable not only for operating in international markets but also a pre-condition international markets but also a pre-condition for success even for operating domestically.for success even for operating domestically.



International MarketingInternational Marketing

Marketing carried out across national Marketing carried out across national boundaries. boundaries.



Framework for International Framework for International Marketing Marketing



Setting Marketing ObjectivesSetting Marketing Objectives

Once a firm decides to enter international Once a firm decides to enter international

markets, it needs to set objectives, as to markets, it needs to set objectives, as to

what it aspires to achieve, both in the what it aspires to achieve, both in the

short- as well as the long-term. short- as well as the long-term.



Market Identification, Segmentation, and Market Identification, Segmentation, and TargetingTargeting

A firm has to identity countries, which A firm has to identity countries, which

offer relatively higher opportunities to offer relatively higher opportunities to

market its products. The approaches used market its products. The approaches used

may be either: may be either:

Reactive approach orReactive approach or

Pro-active approach Pro-active approach



Market SizeMarket Size

A cross-country comparison of market size A cross-country comparison of market size and its growth rate are the key indicators and its growth rate are the key indicators that determine market potential for that determine market potential for targeting the markettargeting the market..

Market Size Market Size = = (production) (production)

+ (Value of imports of goods and + (Value of imports of goods and services) services)

– – (value of exports of goods and (value of exports of goods and services).services).



Entry Mode DecisionsEntry Mode Decisions

Entry modeEntry mode: The institutional mechanism : The institutional mechanism

so as to make the company’s products and so as to make the company’s products and

services available in international markets. services available in international markets.

The entry mode may vary from simple The entry mode may vary from simple

indirect exports through a merchant indirect exports through a merchant

intermediary to owning overseas operations. intermediary to owning overseas operations.



International Marketing Mix DecisionsInternational Marketing Mix Decisions

Marketing mixMarketing mix:: The set of marketing tools a The set of marketing tools a

firm uses to pursue its marketing objectives in a firm uses to pursue its marketing objectives in a

target market. These may be classified into the target market. These may be classified into the

four Ps of marketing: four Ps of marketing: productproduct price price place and place and promotionpromotion..



Product DecisionsProduct DecisionsProductProduct: Anything that can be offered to : Anything that can be offered to a market to satisfy a want or need. a market to satisfy a want or need. Products that are marketed include Products that are marketed include physical goods, services, experiences, physical goods, services, experiences, events, persons, places, properties, events, persons, places, properties, organizations,organizations, information, and ideas. information, and ideas.

Perceptions and expectations about the Perceptions and expectations about the products differ to a varied extent across products differ to a varied extent across countries which makes decision-making countries which makes decision-making about products much more complex for about products much more complex for international markets. international markets.



Product Standardization vs. AdaptationProduct Standardization vs. Adaptation

A firm operating in international markets A firm operating in international markets has to make a crucial decision whether to has to make a crucial decision whether to sell a uniform product across countries or sell a uniform product across countries or customize products in view of individual customize products in view of individual market requirements. market requirements.

Although no readymade solution can be Although no readymade solution can be prescribed for the decision to standardize prescribed for the decision to standardize or adapt the product in international or adapt the product in international markets, firms are required to carry out a markets, firms are required to carry out a careful cost-benefit analysis before careful cost-benefit analysis before arriving at a decision. arriving at a decision.



Product StandardizationProduct Standardization

Product standardizationProduct standardization: Marketing a product in : Marketing a product in

the overseas markets with little change except the overseas markets with little change except

for some cosmetic changes such as modifying for some cosmetic changes such as modifying

packaging and labelling. packaging and labelling.



Major Factors Favouring Product StandardizationMajor Factors Favouring Product Standardization

High level of technology-intensityHigh level of technology-intensity

Formidable adaptation costsFormidable adaptation costs

Convergence of customer needs worldwideConvergence of customer needs worldwide

Country of origin impactCountry of origin impact



Product AdaptationProduct Adaptation

Making changes in the product in response Making changes in the product in response

to the needs of the target market. to the needs of the target market.

Adaptation of a product may vary from Adaptation of a product may vary from

major modifications in the product itself to major modifications in the product itself to

minor alterations in its packaging, logo, or minor alterations in its packaging, logo, or

brand name. brand name.



Mandatory Factors Influencing Product AdaptationMandatory Factors Influencing Product Adaptation

Government regulationsGovernment regulations

Standards for electric currentStandards for electric current

Operating systemsOperating systems

Measurement systemsMeasurement systems

Packaging and labelling regulationsPackaging and labelling regulations



Voluntary Factors Influencing Product AdaptationVoluntary Factors Influencing Product Adaptation

Consumer demographicsConsumer demographics

CultureCulture

Conditions of useConditions of use

Price Price



Trade-off Strategy between Trade-off Strategy between Product Standardization and AdaptationProduct Standardization and Adaptation

A firm operating in international markets has A firm operating in international markets has

to carefully carry out the cost-benefit to carefully carry out the cost-benefit

analysis of the decision to market the analysis of the decision to market the

standardized product across countries or standardized product across countries or

customize it, depending upon the market customize it, depending upon the market

requirements. requirements.



New Product Launch for International New Product Launch for International MarketsMarkets



‘‘Waterfall’ ApproachWaterfall’ Approach

Under the Under the ‘waterfall approach’‘waterfall approach’ a product a product trickles down in the international markets in trickles down in the international markets in a cascade manner and are launched a cascade manner and are launched sequentially.sequentially.



‘‘Sprinkler’ ApproachSprinkler’ Approach

Under this approach, the product is Under this approach, the product is simultaneously launched in various simultaneously launched in various countriescountries. .



Branding Decisions in International Branding Decisions in International MarketsMarkets

BrandBrand:: A name, term, sign, symbol or design, or a A name, term, sign, symbol or design, or a

combination of these, intended to identify the goods or combination of these, intended to identify the goods or

services of one seller or group of sellers and to services of one seller or group of sellers and to

differentiate them from those of competitors.differentiate them from those of competitors.

AA global brand global brand should have a minimum level of should have a minimum level of

geographical spread and turnover in various markets geographical spread and turnover in various markets

worldwide. worldwide.



Top 10 Global Brands Top 10 Global Brands



International Pricing DecisionsInternational Pricing Decisions

Price:Price: The sum of values exchanged from The sum of values exchanged from

the customer for the product or service. the customer for the product or service.

Price is generally referred to the in terms of Price is generally referred to the in terms of

amount of money but it may also include amount of money but it may also include

other tangible and intangible items of utility.other tangible and intangible items of utility.



Pricing Approaches for International MarketsPricing Approaches for International Markets

Cost-based pricingCost-based pricing

Full cost pricingFull cost pricing

Marginal cost pricingMarginal cost pricing

Market-based pricing Market-based pricing



Factors Influencing Pricing DecisionsFactors Influencing Pricing Decisions

CostCost

CompetitionCompetition

Purchasing powerPurchasing power

Buyers’ behaviourBuyers’ behaviour

Foreign exchange fluctuationsForeign exchange fluctuations



International Distribution ChannelsInternational Distribution Channels

Set of interdependent organizations Set of interdependent organizations

networked together to make the product or networked together to make the product or

services available to the end consumer in services available to the end consumer in

international markets. international markets.



Types of International Distribution Types of International Distribution ChannelsChannels

IndirectIndirectAgentsAgentsMerchant IntermediaryMerchant Intermediary

Direct Direct AgentsAgentsMerchant IntermediaryMerchant Intermediary

e- channelse- channels



International RetailingInternational Retailing

The retailer buys the goods from The retailer buys the goods from

wholesalers or distributors and sells it to wholesalers or distributors and sells it to

the ultimate customers in the the ultimate customers in the

international market. The retailers serve international market. The retailers serve

the important function of carrying the important function of carrying

inventories, displaying products at sales inventories, displaying products at sales

outlets, providing points for purchase outlets, providing points for purchase

promotions, and extending credit. The promotions, and extending credit. The

retailing system varies widely among retailing system varies widely among

various countries. various countries.



Communication Decisions for Communication Decisions for International MarketsInternational Markets

Communication is crucial to a firm’s success Communication is crucial to a firm’s success

in international markets. While marketing in international markets. While marketing

across countries, a firm has to communicate across countries, a firm has to communicate

to the customers and the channel to the customers and the channel

intermediaries located in overseas markets intermediaries located in overseas markets

that considerably differ in terms of the that considerably differ in terms of the

characteristics of their marketing characteristics of their marketing

environments. environments.



Tools for International Marketing Tools for International Marketing CommunicationCommunication



AdvertisingAdvertising

Any paid form of non-personal Any paid form of non-personal

communication by an identified sponsor. It communication by an identified sponsor. It

can be for a product, service, an idea, or can be for a product, service, an idea, or

organization. organization.



Advertising: Standardization vs. AdaptationAdvertising: Standardization vs. Adaptation

An international marketing firm may either An international marketing firm may either

use a standardized advertising strategy or use a standardized advertising strategy or

customize it, depending upon the needs of customize it, depending upon the needs of

the target markets. the target markets.



AdvertisingAdvertising StandardizationStandardization

Using the same advertising strategy Using the same advertising strategy across countries. Reasons for advertising across countries. Reasons for advertising standardization: standardization:

Increasing homogenous consumer preferences and Increasing homogenous consumer preferences and

lifestyleslifestyles

Increasing similar consumer behaviour among city Increasing similar consumer behaviour among city

dwellersdwellers

Rapid rise in international travelRapid rise in international travel

International reach of media International reach of media

Contributes to a uniform corporate imageContributes to a uniform corporate image

Economies of scale Economies of scale



Advertising AdaptationAdvertising Adaptation

Modifications in the advertisement’s message, copy, Modifications in the advertisement’s message, copy, or content. or content. Reasons for advertising adaptation: Reasons for advertising adaptation:

Difference in cultural values among countriesDifference in cultural values among countries

Difficulties in language translationDifficulties in language translation

Variations in level of education of the target Variations in level of education of the target

groupsgroups

Media availabilityMedia availability

Social attitudes towards advertising Social attitudes towards advertising

Regulatory framework of the target marketRegulatory framework of the target market



Direct MarketingDirect Marketing

Selling products and services to customers, Selling products and services to customers,

without using any market intermediary. It without using any market intermediary. It

deals with customers on a one-to-one basis deals with customers on a one-to-one basis

directly, unlike conventional mass marketing.directly, unlike conventional mass marketing.



Types of Direct MarketingTypes of Direct Marketing

Direct mailingDirect mailing

Door-to-door marketingDoor-to-door marketing

Multi-level marketingMulti-level marketing



Personal SellingPersonal Selling

It involves a firm’s representatives It involves a firm’s representatives personally meeting with customers. personally meeting with customers.

Personal selling is widely used for selling Personal selling is widely used for selling plants and machinery, heavy equipment, or plants and machinery, heavy equipment, or high-value products to institutional buyers. high-value products to institutional buyers.

As languages, customs, and the business As languages, customs, and the business culture differ across international markets, culture differ across international markets, personal selling becomes more complex. personal selling becomes more complex.



International Trade Fairs and ExhibitionsInternational Trade Fairs and Exhibitions

Trade fairs are organized gatherings wherein Trade fairs are organized gatherings wherein

the buyers and sellers come into contact the buyers and sellers come into contact

and establish communication These are the and establish communication These are the

oldest and most effective tools to explore oldest and most effective tools to explore

marketing opportunities.. marketing opportunities..



Sales PromotionSales Promotion

Various tools are used as short-term Various tools are used as short-term

incentives in order to induce a purchase incentives in order to induce a purchase

decision. It includes both trade promotion decision. It includes both trade promotion

and consumer promotion.and consumer promotion.



Public RelationsPublic Relations

It aims at building a corporate image and It aims at building a corporate image and

influencing media and other target groups to influencing media and other target groups to

garner favourable publicity. garner favourable publicity.



Factors Influencing International Factors Influencing International Communication DecisionsCommunication Decisions

Culture Culture

LanguageLanguage

Level of educationLevel of education

Media infrastructureMedia infrastructure

Government regulationsGovernment regulations



Framework for International Framework for International Product-Promotion StrategiesProduct-Promotion Strategies



Straight AdaptationStraight Adaptation

In cases, when the need satisfied and the In cases, when the need satisfied and the

conditions of product use is the same, the conditions of product use is the same, the

product as well as the marketing product as well as the marketing

communication is extended across markets. communication is extended across markets.



ProductProduct Extension–Promotion Extension–Promotion AdaptationAdaptation

When the condition of product use remains When the condition of product use remains

the same whereas the needs satisfied or the the same whereas the needs satisfied or the

product function is different, the product is product function is different, the product is

extended as such but the promotion extended as such but the promotion

strategy is adapted. strategy is adapted.



Product Adaptation–Promotion Product Adaptation–Promotion ExtensionExtension

In markets where the condition of product In markets where the condition of product

use is different but the product performs the use is different but the product performs the

same function or satisfies the same needs, same function or satisfies the same needs,

the strategy of product adaptation–the strategy of product adaptation–

promotion extension is employedpromotion extension is employed. .



Dual AdaptationDual Adaptation

In countries where the functions of the In countries where the functions of the

product and need satisfied are different and product and need satisfied are different and

the conditions for the product use is also the conditions for the product use is also

different, a firm has to customize both the different, a firm has to customize both the

product and the promotional strategies.product and the promotional strategies.



Developing New ProductDeveloping New Product

In markets where the product function and In markets where the product function and

need satisfied remain the same, but the need satisfied remain the same, but the

conditions of product use differ and also the conditions of product use differ and also the

consumers do not necessarily possess the consumers do not necessarily possess the

ability to pay for the product, it requires ability to pay for the product, it requires

product invention and developing new product invention and developing new

marketing communication. marketing communication.



Reviewing Performance and Reviewing Performance and Consolidating International Marketing Consolidating International Marketing

OperationsOperationsOnce a business enterprise implements Once a business enterprise implements international marketing decisions, it needs international marketing decisions, it needs to periodically review the performance to to periodically review the performance to assess whether the desired marketing assess whether the desired marketing objectives are met. objectives are met.

The reasons for the performance gaps need The reasons for the performance gaps need to be identified and remedial actions to be identified and remedial actions initiated which include modification in initiated which include modification in various components of marketing mix. various components of marketing mix.

288 33 Powerpoint Slides Chapter 14 International Marketing

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