1. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418INTERNATIONAL MARKETING MANAGEMENTRAGHAVENDRA.K.AAsst. Professor, SJBIT 1 | P a g e

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INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418MODULE 1Framework of international marketingGlobal Business Trends The rapid growth of the World Trade Organization and regional free tradeareas, e.g., NAFTA and the European Union General acceptance of the free market system among developing countries in LatinAmerica, Asia, and Eastern Europe Impact of the Internet and other global media on the dissolution of nationalborders, and Managing global environmental resourcesInternational Marketing: A DefinitionInternational marketing is defined as the performance of business activities designed to plan,price, promote, and direct the flow of a companys goods and services to consumers or users inmore than one nation for a profitMarketing concepts, processes, and principles are universally applicable all over the worldEnvironmental Adaptation NeededDifferences are in the uncontrollable environment of international marketingFirms must adapt to uncontrollable environment of international marketing by adjusting themarketing mix (product, price, promotion, and distribution)Developing a Global AwarenessTo be globally aware is to have:1. Tolerant of Cultural Differences, and2. Knowledgeable of:(a) Culture, (b) History, (c) World Market Potential,RAGHAVENDRA.K.AAsst. Professor, SJBIT 2 | P a g eAdaptation(of Marketing Mix)Standardization(of Marketing Mix)ContinuumINFLUENCED BY 7 ENVIRONMENTAL FACTORS 3. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418(d) Global Economic, Social and Political TrendsStages of International Marketing InvolvementRAGHAVENDRA.K.AAsst. Professor, SJBIT 3 | P a g eIn general, firms go through five different phases in goinginternational:In general, firms go through five different phases in goinginternational:Infrequent Foreign MarketingInfrequent Foreign MarketingNo Direct Foreign MarketingNo Direct Foreign MarketingInternational MarketingInternational MarketingRegular Foreign MarketingRegular Foreign MarketingGlobal MarketingGlobal MarketingStrategic Orientation: EPRGSchemaOrientation EPRG SchemaDomesticMarketingExtensionMulti-DomesticMarketingGlobal Marketing(Ethnocentric)(Polycentric)(Regio/Geocentric) 4. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Generally, 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 operationsPolycentric or Multi-Domestic Marketing Concept:Opposite of ethnocentrism Management of these multinational firms place importance oninternational operations as a source for profits Management believes that each country is uniqueand allows each to develop own marketing strategies locallyRegiocentric:Sees the world as one market and develops a standardized marketing strategy for the entireworldGeocentric:Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where auniform, standardized marketing strategy is used for several countries, countries in a region, orthe entire worldImportance of International Marketing International expansion helps firm: Keep pace with competition Reach a larger market Reap higher profits Prolong the lifecycle of their productsRAGHAVENDRA.K.AAsst. Professor, SJBIT 4 | P a g e 5. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Levels of International MarketingDomesticMarketingExport Marketing InternationalMarketingGlobalMarketing Leastinternationalcommitment Domesticfocus Limitedinternationalcommitment Involvesdirect or indirectexport Ethnocentric Substantialinternationalcommitment Focus onindividual countriesor regions Polycentric orRegiocentric Extensiveinternationalcommitment Focus onsegments, ratherthan countries orregions GeocentricDrivers of International Expansion Competition Regional Economic and Political Integration Technology Improvements in Transportation and Telecommunication Economic Growth Transition to Market Economy Converging Consumer NeedsFirm-Specific DriversProduct Life Cycle Considerations: opportunity to prolong product lifecycle by enteringgrowth markets.RAGHAVENDRA.K.AAsst. Professor, SJBIT 5 | P a g eSalesIntro Growth Maturity DeclineProfitsSales 6. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418International Marketing Vs Domestic Marketing Sovereign political entitiesI. Tariffs Or Customs DutiesII. Quantitative RestrictionsIII. Exchange ControlsIV. 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 RiskTransition From Domestic To International Business Pre Export Behaviour1. Firm Characteristics2. Perceived External Export Stimuli3. Perceived Internal Export StimuliRAGHAVENDRA.K.AAsst. Professor, SJBIT 6 | P a g eThe International Marketing Environment73. ECONOMYEnvironmentaluncontrollablescountry market AEnvironmentaluncontrollablescountrymarket BEnvironmentaluncontrollablescountrymarket C1. Competition1. Competition2. TechnologyPrice ProductPromotion Place orDistribution6. Geography andInfrastructureForeign Environment(Uncontrollables)7. Structure ofDistribution3. Economy5. Political-LegalDomestic environment(Uncontrollables)(Controllables)2 .Technology4.Culture5. Political-Legal4. CultureTargetMarket 7. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. Level Of Organizational Commitment Motivation To Exporta. Bulk Salesb. Relative Profitabilityc. Insufficiency Of Domestic Demandd. Reducing Business Riskse. Legal Restrictionsf. Obtaining Imported Inputsg. Social Responsibilityh. Increased Productivityi. Technological Improvements How Much Commitmenta) No Involvementb) Temporary Involvementc) Continued Involvementd) Global Involvemente) Producing For ExportBalance of Payments1. When countries trade there are financial transactions among businesses or consumers ofdifferent nations2. Money constantly flows into and out of a country3. The system of accounts that records a nations international financial transactions is calledits balance of payments (BP)4. It records all financial transactions between a countrys firms, and residents, and the restof the world usually over a year5. The BP is maintained on a double-entry bookkeeping systemRAGHAVENDRA.K.AAsst. Professor, SJBIT 7 | P a g e 8. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418(1) current accounta record of all merchandise exports, imports, and services plusunilateral transfers of funds;(2) The capital accounta record of direct investment, portfolio investment, and short-term capital movements to and from countries;(3) The official reserves accounta record of exports and imports of gold, increases ordecreases in foreign exchange, and increases or decreases in liabilities to foreign centralbanks;Changing Balance Of Payments1. If a countrys expenditures consistently exceed its income, its standard of living falls2. Its exchange rate vis--vis foreign monies declines3. When foreign currencies can be traded for more dollars, U.S. products are less expensivefor foreign customers and exports increase4. Simultaneously foreign products are more expensive for U.S. buyers and the demand forimported goods is reducedBalance Of Payments EquilibriumA nations balance of payments is said to be in equilibrium when it is neither drawing upon itsinternational reserves to make excess payments nor accumulating such reserves as a result of itsreceipts. 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 nations economy to othernations economy. They result from changes in the forces which govern the kinds or amounts ofa countrys exports and its imports, its position as a long-term debtor or creditor or the characterRAGHAVENDRA.K.AAsst. Professor, SJBIT 8 | P a g emerchandise export sales.money spent by foreign tourists.transportation.payments of dividends and interest from FDIabroad.new foreign investments in the U.S.BP Receiptscosts of goods imported.spending by U.S. tourists overseas.new overseas investments.cost of foreign military and economicaid.BP Payments 9. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418of the international services it renders. Each such disturbance upsets the pre-existing stability inthe balance of payments and sets in motion a number of consequences which bring it to a stableposition again.The Impact of Tariff (Tax) BarriersTariff Barriers tend to Increase:1. Inflationary pressures2. Special interests privileges3. Government control and political considerations in economic matters4. The number of tariffs they beget via reciprocityTariff Barriers tend to Weaken:1. Balance-of-payments positions2. Supply-and-demand patterns3. International relations (they can start trade wars)Tariff Barriers tend to Restrict:1. Manufacturer supply sources2. Choices available to consumers3. CompetitionSix Types of Non-Tariff Barriers(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to domestic goods (local content requirements)4. Minimum import price limits5. Embargoes(2) Customs and Administrative Entry Procedures:1. Valuation systems2. Antidumping practicesRAGHAVENDRA.K.AAsst. Professor, SJBIT 9 | P a g e 10. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183. Tariff classifications4. Documentation requirements5. Fees(3) Standards:1. Standard disparities2. Intergovernmental acceptances of testing methods and standards3. Packaging, labeling, and marking(4) Government Participation in Trade:1. Government procurement policies2. Export subsidies3. Countervailing duties4. Domestic assistance programs(5) Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies6. Border taxes(6) Others:1. Voluntary export restraints2. Orderly marketing agreementsMonetary BarriersThree types of monetary barriers include:1. Blocked currency: Blockage is accomplished by refusing to allow importers to exchangeits national currency for the sellers currency.RAGHAVENDRA.K.AAsst. Professor, SJBIT 10 | P a g e 11. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4182. Differential exchange rates: It encourages the importation of goods the governmentdeems desirable and discourages importation of goods the government does not want byadjusting the exchange rate. The exchange rate for importation of a desirable product isfavorable and vice-versa3. Government approval: In countries where there is a severe shortage of foreign exchange,an exchange permit to import foreign goods is required from the governmentArguments for Protectionism Excess productive capacity Excess labor Infant industry argument and industrialization Natural resources conservation and environmental protection Consumer protection National defenseLicenses 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 shipmentsVoluntary Expansion and Restraints Voluntary import expansion Governments agree to allow imports from a particular country as result of pressurefrom another country Increases foreign access to a domestic marketRAGHAVENDRA.K.AAsst. Professor, SJBIT 11 | P a g e 12. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Increases competition and reduces local prices Voluntary export restraints Self-imposed export quotasimposed to avoid a greater penalty Used by the importing country to protect local industriesStandards Environmental, performance, manufacturing and other standards used as barriers toimports; primarily imposed by highly industrialized countries Excessive standards can help local and international industry alike, by deterring graymarketsPercentage 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 importingcountry, usually in a foreign trade zone Favoring local contribution and labor Alternatively, limiting foreign ownership to a certain percentageBoycotts, Embargos, Sanctions Boycotts Action group calling for a ban on all goods associated with a particular companyand/or country Target company may be representative of, or even synonymous with, its country oforigin 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 fornoncomplianceCurrency Controls Blocked currencyRAGHAVENDRA.K.AAsst. Professor, SJBIT 12 | P a g e 13. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Does not allow importers to exchange of local currency for currency a seller is willingto accept as payment Differential exchange rates Favorable and less favorable exchange rates imposed on imports, based on the extentto 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 essentialHierarchy of international marketing for a companyRAGHAVENDRA.K.AAsst. Professor, SJBIT 13 | P a g eCOMMITMENT TOEXPORTANALYSEDECIDEEXPORTSETIMPLEMENTINTERNAL FACTORSPRODUCTRESOURCESTARGET MARKETMARKET SEGMENTENTRY METHODMARKETING STRATEGYEXTERNAL FACTORSMARKET ENVIRONMENTCOMPETITIVE PROFILEORGANISEDEPARTMENTSUBSIDIARYJOINT VENTUREEXPORT HOUSEALLOCATERESOURCESBUDGETARRANGERESOURCESTARGET REVIEW MODIFY SET NEW TARGETS 14. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Module-2 Global vision through marketing researchIntroductionMarketing research is traditionally defined as the systematic gathering, recording, andanalyzing 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 inChicago must be able to translate their research questions into terms that consumers inGuanszhou, China can understand.(ii) The environment within which the research tools are applied are often different in foreignmarkets. Rather that acquire new and exotic method of research, the international marketingresearch must develop the ability for imaginative and deft application of tried and testedtechniques in sometimes totally strange milieus.BREDTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCHThe basic difference between domestic and foreign market research is the broader scopeneeded for foreign research, necessitates by higher levels of uncertainty. Research can bedivided 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 pricedecisions and to develop marketing plans.A countrys political stability, culture attributes and geographical characteristics are someof the kind of information not ordinarily gathered by domestic marketing research.RAGHAVENDRA.K.AAsst. Professor, SJBIT 14 | P a g e 15. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418THE RESEARCH PROBLEMA marketing research study is always a compromise dictated by limits of time, cost, and thepresent state of the art. The research must strive for the most accurate and reliable informationwithin existing constraints. A key to successful research is a systematic and orderly approachto 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 OBJECTIVESThe research process should being with a definition of the research problem and theestablishment of specific research objectives. the major difficulty here is converting a series ofoften 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 dataon population and income. Most countries simply do not have governmental agencies thatcollect 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 forconfident 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 ofthe tax collector often adversely affect data.(iii) Comparability of data:- Comparability of available data is the third shortcoming faced byforeign marketers. In United States, current sources of reliable and valid estimates ofRAGHAVENDRA.K.AAsst. Professor, SJBIT 15 | P a g e 16. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418socioeconomic 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 beencollected on an infrequent and unpredictable in many of these countries makes the problem ofcurrency a vital one.(iv) Validating secondary data:- many countries have similarly high standard for thecollection and preparation of data as those generally found in the United States, but secondarydata from any source, including the United States must be checked carefully and interpretedcarefully..GATHERING PRIMARY DATA: QUANTITATIVE AND QUALITATIVE RESEARCH:- If, after seeking all reasonable secondary data sources, research questions are still notadequately answered, the market research must collect primary data.- that is , data collectedspecially for the particular research project at hand.In most primary data collection. The researchers questions respondents to determine whatthey think about some topic or how they might behave under certain conditions. Marketingresearch methods, can be grouped into two basic types: quantitative and qualitative research. Inboth methods, the marketer is interested in gaining knowledge about the market.(i) Quantitative research:- in quantitative research, usually a large number of respondents areasked to reply either verbally or in writing to structure questions using a specific responseformat or to select a response from a set of choices. Questions are designed to obtain specificresponses regarding aspects of the respondents behavior, intentions, attitudes, motives anddemographic characteristics. Quantitative research provide the marketer with responses that canbe presented with precise estimations.(ii) Qualitative research:- In qualitative research, if questions are asked they are almost alwaysopen-ended or in-depth, and unstructured responses that reflect the persons thoughts andfeelings on the subjects are sought. Direct observation of consumers in choice or product usagesituations in another important qualitative approach to marketing research.Qualitative research is used in international marketing research to formulate anddefine a problem more clearly and to determine relevant questions to be examined inRAGHAVENDRA.K.AAsst. Professor, SJBIT 16 | P a g e 17. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418subsequent research. It is also used where interest is centered on gaining an understanding ofa market, rather the quantifying relevant aspects.Qualitative research is also helpful in revealing the impact of socio-cultural factors onbehavior patterns and in developing research hypotheses that can be tested in subsequent studiesdesigned to quantify the concepts and relevant relationship uncovered in qualitative datacollection.PROBLEMS OF GATHERING PRIMARY DATAMost problem in collecting primary data in international marketing research stem fromcultural differences among countries, and range from the inability of respondents tocommunicate their opinions to inadequacies in questionnaire translation.(i) Ability to communicate opinions:- The ability to express attributes and opinions about aproduct or concept depends on the respondents ability to recognize the usefulness and value ofsuch a product or concept.(ii) Willingness to respond;- Cultural differences offer the best explanation for theunwillingness or the inability of many to respond to research surveys. The role of the male, thesuitability of personal gender-based inquiries, and other gender-related issues can affectwillingness to respond.(iii) Sampling in Field Surveys:- The greater problem in sampling stems the lack ofdemographic 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 maynot exist in all language.MULTICULTURAL RESEARCHAs companies become global marketers and seek to standardize various parts of themarketing mix across several countries, multicultural studies become more important. Acompany need to determine to what extent adaptation of the marketing mix is appropriate. ThusRAGHAVENDRA.K.AAsst. Professor, SJBIT 17 | P a g e 18. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418market characteristics across diverse culture must be compared for similarities and differencebefore 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 differencesbe taken into account.RESEARCH ON THE INTERNETFor many countries the internet provides a new and increasingly important medium forconducting a variety of international marketing research. Indeed, a survey of marketing researchprofessionals suggests that the most important influences on the industry are the internet andglobalization. It has been suggested that there are at least seven different uses for the internet ininternational 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 aboutprivacy and the enlistment of cooperative consumer and customer group. As more of the generalpopulation in countries gain access to the internet. This tool will be all can be used one ofseveral methods of collecting data offering more flexibility across countries. Today the realpower of the internet for international marketing research is the ability to easily access volumesof secondary data.There are volumes of good secondary data that can be accessed from your computer thatwill make international marketing research much easier and more efficient that it has ever been.ESTIMATING MARKET DEMANDIn assessing current product demand and forecasting future demand reliable historical dataare required. Despite of limitations, there are approaches to demand estimation that are usablewith minimum information. The success of these approaches relies on the ability of theresearcher to find meaningful substitute or approximations for the needed economic,geographic, and demographic relationships.RAGHAVENDRA.K.AAsst. Professor, SJBIT 18 | P a g e 19. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418When the desired figures are not available, a close approximation can be madeusing local production figure plus imports, with adjustments for exports and current inventorylevels. In a rapidly developing economy, extrapolated figures may not reflect rapid growth andmust be adjusted accordingly. Given the greater uncertainties and data limitations associatedwith foreign markets, two methods of forecasting demand are particularly suitable forinternational marketers:(i) Expert Opinion: - for many market estimation problems, particularly in foreign countriesthat are new to the marketer, expert opinion is advisable. In this method, expert are polled fortheir opinion about market size and growth rates. Such expert may be companies, own salesmanagers or outside consultants and government officers. the key in using expert opinion tohelp in forecasting demand is triangulation, that is, comparing estimates produced by differentsources.(ii) Analogy: - This assumes that demand for a product develops in much the same way in allcountries as comparable economic development occurs in each country.A relationship must be established between the item to be estimated and a measurablevariable. Once a know relationship is established, the estimator then attempt to draw an analogybetween the known situation and the country in question.PROBLEM IN ANALYZING AND INTERPRETING RESEARCH INFORMATIONAfter data are collected, the final steps in the research process are the analysis andinterpreting of findings in light of the stated marketing problem. There are so many factors, theresearchers must take consideration these factors and, despite their limitations, producemeaningful guides for management decisions.Accepting information at face value in foreign market is imprudent:- The meanings ofwords, the consumers attitude toward a product, the interviewers attitude, or the interviewsituation can distort research findings. Just as culture and tradition influence the willingness togive information, so they also influence the information, so they also influence the informationgiven. News paper circulation figures Readership and listener ship studies Retail outlet figures Sales volume can all be distorted through local business practice.RAGHAVENDRA.K.AAsst. Professor, SJBIT 19 | P a g e 20. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418To cope with such disparities, the foreign marketing researcher must possess three talented togenerate meaningful marketing information. First, the researcher must possess a high degree of cultural understanding of the market inwhich research is being conducted. Second, a creative talent for adapting research methods is necessary. A researcher in foreignmarkets often is called on to produce result under most difficult circumstances and shortdeadlines. Third, a skeptical attitude in handling both primary and secondary data is helpful.RESPONSIBILITY FOR CONDUCTING MARKETING RESEARCHDepending on the size and degree of involvement in foreign marketing, a company inneed of foreign market research can rely on an outside foreign-based agency or on a domesticcompany with a branch within the country in question. It can conduct using its own facilities oremploy 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 foreignoperations;Other companies maintain separate research department for foreign operations or assign afull-time research analyst to this activityA trend toward decentralization of the research function is apparent. In terms ofefficiency, it appears that local analysts are able to provide information more rapidly andaccurately than a staff research department.A comprehensive review of the different approaches to multi-country research suggeststhat the ideal approach is ti have local research in each country, with close coordination betweenthe client company and the local research companies.COMMUNICATING WITH DECISION MAKERSAs concert with the decision maker, it should be clearly recognized, however that gettingthe information is only half problem/job. That information must also be given to decisionmakers in a timely manner. High-quality international information system design will be anincreasingly important competitive tool as commerce continues to globalize, and resources mustRAGHAVENDRA.K.AAsst. Professor, SJBIT 20 | P a g e 21. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418be invested accordingly. At the most basic level, marketing research is mostly a matter oftalking to customers. Marketing decisions makers have questions about how best to servecustomers, and those questions are posed and answered often through the media ofquestionnaires and research agencies. Even when both managers and customers speak the samelanguage 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 overcomingthe cultural barriersRAGHAVENDRA.K.AAsst. Professor, SJBIT 21 | P a g e 22. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418MODULE 3GLOBAL MARKETING MANAGEMENTPlanning and OrganizationIntroductionConfronted with increasing global competition for expanding markets, multinational companiesare changing their marketing strategies and altering their organizational structures. Their goalsare enhance their competitiveness and to ensure proper positioning in order to capitalize onopportunities in the global marketplace.In fact, the flexibility of a smaller company may enable it to reflect the demands of globalmarkets and redefine its program more quickly than larger multinationals. Acquiring a globalperspective is easy, but the execution requires planning, organizations, and a willingness to trynew approaches-from engaging in collaborative relationships to redefining the scope ofcompany 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 globalstandardization of the marketing mixGLOBAL MARKETINGDefinition:marketing on a worldwide scale reconciling or taking commercial advantage of globaloperational differences, similarities and opportunities in order to meet global objectives.Why global marketing?Here are three reasons for the shift from domestic to global marketingRAGHAVENDRA.K.AAsst. Professor, SJBIT 22 | P a g e 23. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Saturation of Domestic MarketsFor a company to keep growing, it must increase sales. Industrialized nations have, in manyproduct and service categories, saturated their domestic markets and have turned to other countriesfor new marketing opportunities. Companies in some developing economies have foundprofitability by exporting products that are too expensive for locals but are considered inexpensivein wealthier countries. World Wide CompetitionOne 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, andChrysler. 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-CommerceWith the proliferation of the Internet and e-commerce (electronic commerce), if a business isonline, it is a global business. With more people becoming Internet users daily, this market isconstantly growing. Customers can come from anywhere. According to the book, GlobalMarketing Management, business-to-business (B2B) e-commerce is larger, growing faster, andhas fewer geographical distribution obstacles than even business-to-consumer (B2C) e-commerce.GLOBAL MARKETING EVOLUTIONRAGHAVENDRA.K.AAsst. Professor, SJBIT 23 | P a g ePHASE 1Leverage of domestic capabilities:Foreign market entryObjective:- Economies of scalePHASE 2Expansion of foreign market presenceObjective :-Economies of ScopePHASE 3Coordination of global operationsObjective :-Exploit synergiesthroughout network 24. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Benefits Of Global Marketing: Economies of scale in production and marketing can be important competitive advantages forglobal companies Unifying product development, purchasing, and supply activities across several countries itcan save costs Transfer of experience and know-how across countries through improved coordination andintegration of marketing activities Diversity of markets by spreading the portfolio of markets served brings an important stabilityof 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 homemarket Differences in the institutions available, some of which may call for the creation of entirely newones (e.g. infrastructure) Differences in administrative procedures Differences in product placement.PLANNING FOR GLOBAL MARKETSPlanning is a systematized way of relating to the future. It is an attempt to manage theeffects of external, uncontrollable factors on the firms strengths, weakness, objectives andgoals to attain a desired end. Planning is the job of making things happen that might nototherwise occur.RAGHAVENDRA.K.AAsst. Professor, SJBIT 24 | P a g e 25. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418The difference between planning for a domestic company and for an international companyDomestic Planning International Planning1. Single language and nationality 1. Multilingual/multinational/multicultural factors2. Relatively homogeneous market 2. Fragmented and diverse markets3. Data available, usually accurateand collection easy3. Data collection a large task requiring significantlyhigher budgets and personnel allocation4. Political factors relativelyunimportant4. Political factors frequently vital5. Relative freedom fromgovernment interference5. Involvement in national economic plans;government influences business decisions6. Individual corporation has littleeffect on environment6. "Gravitational" distortion by large companies7. Chauvinism helps 7. Chauvinism hinders8. Relatively stable businessenvironment8. Multiple environments, many of which are highlyunstable (but may be highly profitable)9. Uniform financial climate 9. Variety of financial climates ranging from over-conservative to wildly inflationary10 Single currency 10. Currencies differing in stability and real value11 Business "rules of the game"mature and understood11. Rules diverse, changeable and unclear12 Management generallyaccustomed to sharingresponsibilities and usingfinancial controls12. Management frequently unautonomous andunfamiliar with budgets and controlsRAGHAVENDRA.K.AAsst. Professor, SJBIT 25 | P a g e 26. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Planning allows for rapid growth of the international function, changing markets, increasingcompetition, and the turbulent challenges of different national markets. The plan must be blendthe changing parameters of external country environments with corporate objectives andcapabilities to develop a sound, workable marketing program.Planning relates to the formulation of goals and methods of accomplishing them, so it is both aprocess and a philosophy. Structurally, planning may be viewed as corporate, strategic, ortactical. International Corporate Planning is essentially long term, incorporating generalizedgoals for the enterprise as a whole. Strategic planning is conducted at the highest levels ofmanagement and deals with products, capital, and research, and long and short-term goals of thecompany. Tactical planning or market planning, pertains to specific and to the allocation ofresources used to implement strategic planning goals in specific markets.The Key success of planning is evaluating company objectives, including managementscommitment and philosophical orientation to international business.THE PLANNING PROCESSGuidelines and systematic procedures are necessary for evaluating international opportunitiesand risks and for developing strategic plans :International planning process includes 4 phases:RAGHAVENDRA.K.AAsst. Professor, SJBIT 26 | P a g e 27. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418TPhase 1: Preliminary Analysis and Screening-Matching Comapany and Country NeedsA critical first step in the international planning process is deciding in which existing countrymarket to make a market investment. A companys strengths and weakness, products,philosophies, and objectives must be matched with a countrys constraining factors and marketpotential. In the first part of the planning process, countries are analyzed and screened toeliminate those that do not offer sufficient potential for further considerations. The next step isto establish screening criteria against which prospective countries can be evaluated. Thesecriteria are ascertained by an analysis of company objectives, resources, and other corporatecapabilities and limitations. It is important to determine the reasons for enetering a foreignmarket 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 datagenerated in the phase 1. Incorrect decisions at this point lead to products inappropriate for theintended market or to costly mistakes in pricing, advertising, and promotion. The primary goalof phase 2 is to decide on am marketing mix adjusted to the cultural constraints imposed by theuncontrollable elements of the environment that effectively achieves corporate objectives andgoals. Phase 2 also permits the marketer to determine possibilities for applying marketingtactics across national markets.//Phase 3: Developing the Marketing PlanAt 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 asituation analysis and culminates in the selection of an entry mode and a specific actionprogram for the market. The specific plan establishes what is to be done, by whom, how it is tobe done, and when. Included are budgets and sales and profit expectations.RAGHAVENDRA.K.AAsst. Professor, SJBIT 27 | P a g e 28. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Phase 4: Implementation and ControlA go decision in phase 3 triggers implementation of specific plans and anticipation ofsuccessful marketing. However, the planning process does not end at this point. All marketingplans require coordination and control during the period of implementation. An evaluation andcontrol system requires performance-objective action, that is, bringing the plan back on trackshould standards of perrformances fall short. A global orientation facilities the difficult butextremely important management tasks of coordinating and controlling the complexities ofinternational marketing.FOREIGN MARKET ENTRY STRATEGIESWhen 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 capabilitiesand characteristics, including the degree of near-market knowledge, marketing involvement,and commitment that management is prepared to make.Alternative Market-Entry StrategiesImport regulations may be imposed to protect health, conserve foreign exchange, serve aseconomic 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 investmentRAGHAVENDRA.K.AAsst. Professor, SJBIT 28 | P a g e 29. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418EXPORTINGExporting can be either direct or indirect. In direct exporting the company sells to a customer inanother 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 isbecoming increasingly important as a foreign market entry method. Direct sales, particularly forhigh technology and big ticket industrial products a direct sales force may be required in a foreigncountry. This may mean establishing an office with localor expatriate managers and staffdepending of course on the size of the market and potential sales revenues.CONTRACTUAL AGREEMENTSContractual agreements are long term, noneqauity associations between a company and anotherin 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 capitaloutlays 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 personalinvolvement in management.STRATEGIC INTERNATIONAL ALLIANCESStrategic alliances have grown in importance over the last few decades as a competitivestrategy in global marketing management. A strategic international alliance (SIA) is a businessrelationship established by two or more companies to cooperate out of mutual need and to shareRAGHAVENDRA.K.AAsst. Professor, SJBIT 29 | P a g e 30. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418risk in achieving a common objective.. SIAs are sought as a way to shore up weaknesses andincrease competitive strengths. SIAs offer opportunities for rapid expansion into new markets, access tonew technology, more efficient production and marketing costs.An example of SIAs in the airlines industry is that of the Oneworld alliance partners made up ofAmerican Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and Qantas .INTERNATIONAL JOINT VENTURESInternational joint ventures (IJVs) have been increasingly used since 1970s.JVs are used as ameans of lessening political and economic risks by the amount of the partners contribution to theventure. JVs provide a less risky way to enter markets that pose legal and cultural barriers thanwould be the case in an acquisition of an existing company. A joint venture is different fromstrategic alliances or collaborative relationships in that a joint venture is a partnership of two ormore participating companies that have joined forces to create a separate legal entity. Jointventures 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 entities2. 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, charteredorganizations, or governments, and not between indiciduals4. Equity positions are held by each of the partners.CONSORTIAConsortia are similar to joint ventures and could be classified as such except for two uniquecharacteristics.(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 currentlyactive.Consortia are developed to pool financial and managerial resources and to lessen risksRAGHAVENDRA.K.AAsst. Professor, SJBIT 30 | P a g e 31. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418DIRECT FOREIGN INVESTMENTA 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 ameans of gaining market entry. Firms may either invest in or buy local companies or establishnew operations facilities.Comparision of Market Entry OptionsThe following table provides a summary of the possible modes of foreign market entry:Comparison of Foreign Market Entry ModesModeConditions Favoring thisModeAdvantages DisadvantagesExportingLimited sales potential in targetcountry; little product adaptationrequiredDistribution channels close toplantsHigh target country productioncostsLiberal import policiesHigh political riskMinimizes risk andinvestment.Speed of entryMaximizes scale; usesexisting facilities.Trade barriers & tariffsadd to costs.Transport costsLimits access to localinformationCompany viewed as anoutsiderLicensing Import and investment barriersLegal protection possible intarget environment.Low sales potential in targetcountry.Large cultural distanceMinimizes risk andinvestment.Speed of entryAble to circumvent tradebarriersHigh ROILack of control over useof assets.Licensee may becomecompetitor.Knowledge spilloversLicense period is limitedRAGHAVENDRA.K.AAsst. Professor, SJBIT 31 | P a g e 32. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Licensee lacks ability to becomea competitor.JointVenturesImport barriersLarge cultural distanceAssets cannot be fairly pricedHigh sales potentialSome political riskGovernment restrictions onforeign ownershipLocal company can provideskills, resources, distributionnetwork, brand name, etc.Overcomes ownershiprestrictions and culturaldistanceCombines resources of 2companies.Potential for learningViewed as insiderLess investment requiredDifficult to manageDilution of controlGreater risk than exportinga & licensingKnowledge spilloversPartner may become acompetitor.DirectInvestmentImport barriersSmall cultural distanceAssets cannot be fairly pricedHigh sales potentialLow political riskGreater knowledge oflocal marketCan better applyspecialized skillsMinimizes knowledgespilloverCan be viewed as aninsiderHigher risk than othermodesRequires more resourcesand commitmentMay be difficult tomanage the localresources.ORGANIZING FOR GLOBAL COMPETITIONAn international marketing plan should optimize the resources committed to companyobjectives. 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 ofthree alternatives:1. Global product divisions responsible for product sales throughout the world;RAGHAVENDRA.K.AAsst. Professor, SJBIT 32 | P a g e 33. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4182. Geographical divisions responsible for all products and functions within a given geographicalarea; or3. A matrix organization consisting of either of these arrangements with centralized sales andmarketing run by a centralized functional staff, or a combination of area operations and globalproduct management.PRODUCTS FOR CONSUMERS IN GLOBAL MARKETSPRODUCT DEVELOPMENTProduct planning, broadly defined, refers to the process of determining the length and depthof the product line to be offered in the target export markets. The length is the number ofproducts to be offered and the depth relates to the variations of a product.RAGHAVENDRA.K.AAsst. Professor, SJBIT 33 | P a g e 34. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418PRODUCT ADAPTATIONA product that is perfectly good for one market may have to be adapted for another. Therecan be many reasons for this. Physical conditions may be different. Functional requirementsmay vary from market to market. People in different places may use products differently or fordifferent type of finish than furniture used indoors. Finally tastes, levels of skill and technicaldevelopment may be different and may dictate changes in products.Adaptation may pertain to size, functions, materials, design, style, colour, tastes andstandards. 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 change1. Level of technical skills product simplification2. Level of labour cost Automation or manulization of product3. 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 tolerance7. Climatic differences Product adaptation8. Isolation improvement9. 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.RAGHAVENDRA.K.AAsst. Professor, SJBIT 34 | P a g e 35. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418PRODUCT STANDARDISATIONEven though product adaptation becomes inevitable in the case of certain products, it shouldbe realized that there is sound economics logic behind a product policy which suggestsuniformity in all markets. Terpstra has identified six factors which may favour internationalproduct standardization.1. Economies of Scale in Production: When only one standard version is marketed in all theareas, it will be possible to have larger production runs, which will result in lowermanufacturing costs.2. Economies in Product Research and development: Similarly, product standardizationwill allow recovery of all costs incurred in product research and development from theentire 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 beavoided.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, inventorymanagement, 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 andtranscontinental travel in now fairly common. A consumer who is loyal to a particularbrand in his home market is more likely to remain loyal in a foreign country as well whenthe product in question is the same.2. Made-in Image: When the name of a country is associated with a high standard of qualityin the minds of the consumers, a product manufactured in that country may enjoy apsychological premium in the foreign markets.RAGHAVENDRA.K.AAsst. Professor, SJBIT 35 | P a g e 36. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183. Impact of Technology: Industrial products generally tend to have standard andspecifications and do not require much adaptation for foreign markets unless climatic andsimilar considerations call for it.GREEN MARKETINGAt the forefront of the green movement, with strong public opinion and specific legislationfavoring environmentally friendly marketing and products.Green marketing is a term used to identify concern with the environmental consequences of avariety of marketing activities.The designation that a product is environmentally friendly is voluntary, and environmentalsuccess depends on the consumer selecting the eco-friendly productIn some countries each level of the distribution chain is responsible for returning all packaging,packing, and other waste materials up the chainMARKETING OF SERVICEAdvice regarding adapting products for international consumer markets also applies to adaptingservices or intangible productsHowever, many consumer services are distinguished by four unique characteistics:1.intangibility,2.inseparability,3.heterogeneity, and4.perishabilityMost services are inseparable and require production and consumption to occur almostsimultaneously; 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,RAGHAVENDRA.K.AAsst. Professor, SJBIT 36 | P a g e 37. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418protection of intellectual property, andcultural requirements for adaptationMODULE 4- PRODUCTS AND SERVICES FOR CONSUMERSQUALITY:The ability of a product or service to meet customer needs. It can be defined on 2dimensions, Market perceived quality Performance qualityBoth are important but consumer perception of a quality product often has to do more withmarket 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 atperformance 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 mandatoryrequirements of a new market, ranging from simple package changes to total redesign of thephysical core product.Green marketing is a term used to identify concern with the environmental consequencesof a variety of marketing activities.RAGHAVENDRA.K.AAsst. Professor, SJBIT 37 | P a g e 38. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Quality is associated with customer satisfaction. It is a means to an end.Q: QUEST FOR EXCELLENCE.U: UNDERSTANDING CUSTOMERS NEEDS.A: ACTION TO ACHIEVE CUSTOMERS 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. Aproduct is more than a physical item. It is a bundle of satisfaction that the buyer receives. Aproducts physical attributes generally are required to create its primary function. The meaningand value imputed to the psychological attributes of a product can vary among cultures and areperceived as negative or positive.To maximize the bundle of satisfaction received and to create positive product attributesrather than negative ones, adaptation of the nonphysical features of a product. The adoption ofsome products by consumers can be affected as much by how the product concept conforms tonorms, 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 degreeof newness as perceived by the intended market. Any idea perceived as new by a group ofpeople is an innovation. Product diffusion is the process by which innovation spreads. A criticalfactor in the newness of a product is its effect on established patterns of consumption andbehavior.RAGHAVENDRA.K.AAsst. Professor, SJBIT 38 | P a g e 39. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Analyzing the 5 characteristics of an innovation can assist in determining the rate ofacceptance or resistance of the market to a product. A products, 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 ofsatisfactions received by the consumer.RAGHAVENDRA.K.AAsst. Professor, SJBIT 39 | P a g e 40. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Core Component:It consists of the physical product, the platform that contains the essential technology andall its design and functional features. It is on the product platform that product variations can beadded 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 addedor eliminated depending on the market.Packaging Component:Includes style features, packaging, labeling, trademarks, brand name, quality, price of aproducts package. Packaging component frequently require both discretionary and mandatorychanges. Care must be taken to ensure that corporate trademarks and other parts of thepackaging component do not have unacceptable symbolic meanings. Labeling law create aspecial problem for companies selling products in various markets with different labeling lawsand small initial demand in each.RAGHAVENDRA.K.AAsst. Professor, SJBIT 40 | P a g e 41. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Support Services Component:Includes repair and maintenance, instructions, installations, warranties, deliveries and theavailability of spare parts. Repair and maintenance are difficult in developing countries.The product component model can be a useful guide in examining adaptationrequirements of products destined for foreign markets. A product should be carefully evaluatedon 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 intangibilityof services results in characteristics unique to a services. It is inseparable, heterogeneous, andperishable. A service can be marketed as a B2B or consumer service.There are various barriers to entering global markets for consumer services:- ProtectionismRAGHAVENDRA.K.AAsst. Professor, SJBIT 41 | P a g e 42. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Restrictions on Transborder data flows Protection of Intellectual Property Cultural Barriers and AdaptationBRANDS IN INTERNATIONAL MARKETS:A GLOBAL BRAND is defined as the worldwide use of a name, term, symbol, design orcombination thereof intended to identify goods or services of one seller and to differentiatethem from those of competitors. A successful brand is the most valuable resource a companyhas. Brand image is at the very core of business identity and strategy.The brands are Kodak, Sony, Coca-cola, Toyota, Marlboro, Kellogg, Levis, Caterpillar, Nestle,Mars, P&G, Gillette, and BMW.A global brand gives a company a uniform worldwide image that enhances efficiency andcost savings when introducing other products associated with the brand name, but not allcompanies believe a single global approach is the best.Country of origin (COE) can be defined as any influence that the country ofmanufacture, assembly or design has on a consumers positive or negative perception of aproduct.PRODUCTS AND SERVICES FOR BUSINESS:B2B marketing requires close attention to the exact needs of customers. Basic differencesacross various markets are less than for consumer goods, but the motives behind purchasesdiffer enough to require a special approach. Global competition has risen to the point thatindustrial goods marketers must pay close attention to the level of economic and technologicaldevelopment of each market to determine the buyers assessment of quality. Companies thatadapt their products to these needs are the ones that should be the most effective in the marketplace.The demand for products and services in B2B markets is by nature more volatile than inmost common markets. The demand also varies by level of economic development and thequality of educational systems across countries. Ultimately, product or service quality is definedby customers, but global quality standards such as ISO 9000 are being developed that provideRAGHAVENDRA.K.AAsst. Professor, SJBIT 42 | P a g e 43. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418information about companys attention to matters of quality. After sale services are hugelyimportant aspect of industrial sales. The demand for other kinds of business services isburgeoning around the world. Trade shows are an especially important promotional medium inB2B marketing.Stages of Economic Development:TOP 20 GLOBAL BRANDS:1. COCA-COLA2. MICROSOFT3. IBMRAGHAVENDRA.K.AAsst. Professor, SJBIT 43 | P a g eThe age of massconsumptionDrive tomaturity Take offPreconditionsfor take offThe traditionalsocietyStages ofEconomicDevelopment 44. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. GE5. INTEL6. NOKIA7. DISNEY8. MC DONALDS9. MARLBORO10. MERCEDES11. FORD12. TOYOTA13. CITIBANK14. HP15. AMERICAN EXPRESS16. CISCO17. AT&T18. HONDA19. GILLETTE20. BMWModule 5IntroductionRAGHAVENDRA.K.AAsst. Professor, SJBIT 44 | P a g e 45. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418DIRECT AND INDIRECT EXPORTINGExporting can be either direct or indirect:Direct exporting:The company sells to a customer in another county. This is the most commonapproach employed by companies taking their international step because the risksof loss can be minimized. In contrast,In direct exporting:Usually means that the company sells to buyer in the home country who inturn exports the product. Customer include large retailers such as wal mart orsears, wholesaler supply houses, trading companies, and other that buy to supplycustomers abroadex: Americas largest exporterLICENCING:A means of establishing a foothold in foreign markets without large capitaloutlays is licensing patent right, trademarks right, and the rights to usetechnological processes are granted in foreign licensing. It is a favorite strategyfor small and medium sized companies, although it is by no means. Commonexamples of industries that use licensing arrangements in foreign markets aretelevision programming and pharmaceuticals. Not many confine their foreignoperation to licensing alone it is generally viewed as a supplement to exporting ormanufacturing rather than the only mans of entry into foreign market.Although licensing may be the least profitable way of entering a market, therisks and headaches are fewer than for direct investments. It is a legitimate meansRAGHAVENDRA.K.AAsst. Professor, SJBIT 45 | P a g e 46. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418of capitalizing on intellectual property in a foreign market, and such agreementscan also benefit the economies of target countries.FRANCHISING:Is a rapidly growing form of licensing in which the franchising provides astandard package of products, systems, and management services, and thefranchisee provides market knowledge, capital and personal involvement inmanagement. The combination of skills permits flexibility in dealing with localmarket conditions and yet provides the parent firm with a reasonable degree ofcontrol. The franchisor can follow through on marketing of the products to thepoint of final sale.INTERNATIONAL JOINT VENTURE:International joint ventures as a means of foreign market entry haveaccelerated sharply since the 1970s. Besides serving as a means of lesseningpolitical and economic risk by the amount of the partners contribution to theventure. IJV provide a less risk way to enter markets that pose and culturalbarriers 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 mostcritical and challenging task facing the international firms Each market contains a distribution network with many channel choices whosestructures are In some markets the distribution structure is multi-layered, complex, inefficient,even strangeRAGHAVENDRA.K.AAsst. Professor, SJBIT 46 | P a g e 47. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Competitive advantage will reside with the marketer best able to build the mostefficient channelChannel of distribution or marketing channels is defined as the whole set ofinterrelated marketing agencies which are involved in making the goodsavailable form the producer to the consumers.Channel of distribution structures The distribution process includes the physical handling and distribution ofgoods, the passage of ownership (title), and the buying and selling negotiationsbetween producers and middlemen and between middlemen and customers Each country market has a distribution structure through which goods passfrom 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 marketinginfrastructure such as those found in many emerging markets to the highlycomplex, multi-layered system found in JapanJapanese distribution structure a structure dominated by many small middlemen dealing with many smallretailershigh density of middlemen, channel control by manufacturers, a business philosophy shaped by a unique culture, and laws that protect the foundation of the systemthe small retailerRAGHAVENDRA.K.AAsst. Professor, SJBIT 47 | P a g e 48. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Distribution in Japan has long been considered the most effective non-tariffbarrier to the Japanese market .The Japanese distribution structure is differentenough from its U.S. or European counterpartsIt has four distinguishing features: a structure dominated by many small middlemen dealing with many smallretailers 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 othermembers of the distribution network. Financing , physical distribution ,warehousing , inventory , promotion and payment collection are provided toother channel members by wholesalers . the system works becausewholesalers and all other middlemen downstream are tied to manufacturers bya set of practices and incentives designed to ensure strong marketing supportfor their product and to exclude rival competitors from the channel .wholesalertypically act as agent middlemen and extend the manufacturers controlthrough the channel the following element1. Inventory financing :- sales are made on consignment with credit extendingfor several months .2.Cumulative rebates :- rebates are given annually for any number of reasonsincluding quantity purchases , early payments , achieving sales target ,performing services , maintaining specific inventory levels , participating inRAGHAVENDRA.K.AAsst. Professor, SJBIT 48 | P a g e 49. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418sales promotions , remaining loyal to suppliers , maintaining manufacturersprice policies , cooperating and contributing to overall success.3. Merchandise returns :- all unsold merchandise may be returned to themanufacturers.4. Promotional support :- intermediaries receive a host of displays ,advertising layouts , management educations programs , in store demonstrationsand other dealer aids that strengthen the relationship between the middlemenand the manufacturer.Distribution patternsEven though patterns of distribution are in a state of change and newpatterns are developing , international marketers need a general awareness ofthe traditional distribution base . The traditional system will not changeovernight and vestiges of it will remain for years to come .Nearly everyinternational firm is forced by the structure of the market to use at least somemiddlemen in the distribution arrangement.The following description should convey a sense of the variety of distributionpatterns.General patterns : generalizing about internal distribution channel patterns ofvarious countries is almost as difficult as generalizing about behaviors patternsof people. Despite similarities , marketing channels are not the samethroughout the world . marketing methods taken for granted in the united statesare rare in many countries. Middlemen Services:- The service attitudes of people in trade vary sharplyat both the retail and whole sale levels from country to country .RAGHAVENDRA.K.AAsst. Professor, SJBIT 49 | P a g e 50. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Line Breadth:- every nation has a distinct pattern relative to the breadth ofline carried by wholesalers and retailers . The distribution system of somecountries is characterized by middlemen who carry or can get everything inother every middlemen is a specialist dealing only in extremely narrow lines.Government regulation in some countries limit the breadth of line that can becarried by middlemen and licensing requirement to handle certainmerchandise are not uncommon. Costs and Margins :- cost levels and middlemen margins vary widelyfrom country to country depending on the level of competition , service offered, efficiencies for inefficiencies of scale and geographic and turnover factorsrelated to market size ,purchasing power , tradition and other basicdeterminants. Channel Length :-some correlation may be found between the stage ofeconomic development and the length of marketing channels . In everycountry , channels are likely to be shorter for industrial goods and high pricedconsumer goods than for low priced products. In general , there is an inverserelationship between channel length and the size of the purchase .combinationswholesaler retailer or semi wholesaler exist in many countries adding one ortwo link to the length of the distribution chain. Nonexistent Channels : one of the things companies discover aboutinternational channel of distribution patterns is that in many countries adequatemarket 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 thechannel of their choice. Blockage can result from competitors alreadyestablished lines in the various channel or from trade associations or cartelshaving closed certain channels. Stocking :- the high cost of credit , the danger of loss through inflation , a lackof capital and other concerns cause foreign middlemen in many countries toRAGHAVENDRA.K.AAsst. Professor, SJBIT 50 | P a g e 51. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418limit inventories this often results in out of stock conditions and sales lost tocompetitors. Power and Competition :-distribution power tends to concentrate in countrieswhere a few large wholesalers distribute to a mass of small middlemen . largewholesalers generally finance middlemen downstream . the strong allegiancesthey command from their customers enables them to effectively blockexisting channels and force an outsiders to rely on less effective and morecostly distribution . Distribution patterns are always evolving and new patterns are developing andmarketing channels are not the same throughout the worldSome general distribution patterns that are similar globally include:Retail Patterns Retail Size Patterns :- the extremes in size in retailing are similar to thosethat predominate in wholesaling. The retail structure and the problem itengenders cause real difficulties afro the international marketing firm sellingconsumer goods .large dominant retailers can be sold direct , but there is noadequate way to directly reach small retailers who in the aggregate handle agreat volume of sales. Direct Marketing :-selling directly to the consumer through the mail , bytelephone or door to door is often the approach of choice market withinsufficient or underdeveloped distribution systems. The approach of coursealso works well in the most affluent market. Resistance to Change :- effort to improve the efficiency of the distributionsystem new types of middlemen and other attempts to change traditional waysas typically viewed as threatening and are thus resisted . Alternative Middleman Choices :- A marketers options range fromassuming the entire distribution activity to depending on intermediaries forRAGHAVENDRA.K.AAsst. Professor, SJBIT 51 | P a g e 52. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418distribution of the product . channel selection must be given considerablethought because once initiated it is difficult to change and if provesinappropriate , future growth of market share may be affecteda) Agent middlemen ;- represent the principal rather than themselvesb) merchant middlemen:- take title to the goods and buy and sell on their ownaccount. International retailing shows even greater diversity in its structure than doeswholesalingSome general retailing patterns include:Home-Country Middlemen :- located in the producing firms country providemarketing services from a domestic base. By selecting domestic middlemen asintermediaries in the distribution process , companies relegate foreign marketdistribution to others. Manufacturers Retail Stores :- An important channel of distribution for alarge number of manufacture is the owned or perhaps franchised. Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , ToysR Us and Wallmart expand their global coverage , they are becoming amajor domestic middlemen for international markets. Export Management Companies :- is an important middlemen for firmswith relatively small international volume or for those unwilling to involvetheir own personnel in the international function. Trading Companies:- trading companies have a long and honorable historyas important intermediaries in the development of trade between nation.Trading companies accumulate , transport and distribute goods from manycountries .RAGHAVENDRA.K.AAsst. Professor, SJBIT 52 | P a g e 53. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 U.S. Export Trading Companies :-the ETC act allows producers of similarproducts to form export trading companies .A major goal of the ETC Act wasto increase U.S exports by encouraging more efficient export trade services toproducers and suppliers in order to improve the availability of trade financeand to remove antitrust disincentives to export activities. Complementary Marketers :-companies with marketing facilities orcontacts in different countries with excess marketing capacity or a desire for abroader product line sometimes take on additional lines for internationaldistribution although the formal name for such activities is complementarymarketing. Manufacturers Export Agent :- is an individual agent middlemen or anagent middlemen firm providing a selling service for manufactures. Home-country middlemen, or domestic middlemen, provide marketingservices from a domestic base and find foreign markets for products for localmanufacturersFrequently used types of domestic intermediaries include:Home-Country Brokers:- the term broker is a catchall for a variety ofmiddlemen performing low cost agent services.Buying Offices :- a variety of agent middlemen may be classified simply asbuyers or buyer for export. Their common denominator is a primary function ofseeking and purchasing merchandise on request from principals as such theydo not provide a selling serviceSelling Groups:- several types of arrangement have developed in whichvarious manufactures or producer cooperate in a joint attempt to sell theirRAGHAVENDRA.K.AAsst. Professor, SJBIT 53 | P a g e 54. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418merchandise abroad. This may take the form of complementary exporting or ofselling to a combined business such a Webb Pomerene export association.Webb-Pomerene Export Associations:-are another major form of groupexporting. WPEAs Act of 1918 made it possible for American business firms tojoin forces in export activities without being subject to the Sherman antitrust .WPEAs cannot participate in cartesl or other international agreement thatwould reduce competition in the united states but can offer four major benefits1. reduction of export costs2. demand expansion through promotion3. trade barriers reductions4. improvement of trade terms through bilateral bargaining .Foreign Sales Corporation :- is a sales corporation set up in a foreign country orU.S possession that can obtain a corporate tax exemption on a portion of theearnings generated by the sale or lease of export property.Export Merchants :- are essentially domestic merchants operating in foreignmarket . as such they operate much like the domestic wholesaler . specificallythey purchase goods from a large number of manufacturers , ship them toforeign countries and take full responsibility for their marketing .Export Jobbers:- deal mostly in commodities they do not take physicallypossession of goods but assume responsibility for arranging transportation.Foreign-Country Middlemen :- using foreign country middlemen moves themanufacturers closer to the market and involves the company more closely withproblems of language , physical distribution , communications and financing .foreign middlemen may be agents or merchants , they may be associated withthe parent company to varying degrees or they may be temporarily hired forRAGHAVENDRA.K.AAsst. Professor, SJBIT 54 | P a g e 55. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418special purposes. Some of the more important foreign country middlemen aremanufacturers representatives and foreign distributors.Manufacturers Representatives:- are agent middlemen who take responsibilityfor a producers goods in a city , regional market area entire country or severaladjacent countries . when responsible for an entire country the middlemen isoften called a sole agent.Distributors :- A foreign distributor is a merchant middleman. This intermediaryoften has exclusive sales right in a specific country and works in close co-operation with the manufacturer . the distributor has a relatively high degree ofdependence on the supplier companies and arrangements are likely to be on along run continuous basis.Foreign-Country Brokers:- are agents who deal largely in commodities andfood products . the foreign brokers are typically part of small brokerage firmsoperating in one country or in a few contiguous countries.Managing Agents and Compradors :- A managing agent conducts businesswithin a foreign nation under an exclusive contract arrangement with the parentcompany. The managing agent in some cases invests in the operation and inmost instances operates under as contract with the parent company.Dealers :- generally speaking anyone who has a continuing relationship with asupplier in buying and selling goods is considered a dealer . more specificallydealers are middlemen selling industrial goods or durable consumer goodsdirect to customers they are the last step in the channel of distribution.Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goodsdirectly from the manufacturers and sell to wholesalers and retailers and toindustrial customers . large and small wholesalers and retailers engage in directRAGHAVENDRA.K.AAsst. Professor, SJBIT 55 | P a g e 56. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418importing for their own outlets and for redistribution to smaller middlemen . thecombination retailer wholesaler is more important in foreign countries than inthe united states. It is not uncommon to find large retailers wholesaling goods tolocal shops and dealers. Some of the more important foreign-country middlemen, who find marketsfor foreign manufacturers include:Factors Affecting Choice of ChannelsThe international marketers needs clear understanding of market characteristicand must have established operating policies before beginning the selection ofchannel distribution . the following points should be addressed prior to theselection process Identify specific target markets within and across countries. Specify marketing goals in terms of volume, market share, and profit marginrequirements. Specify financial and personnel commitments to the development ofinternational distribution. Identify control, length of channels, terms of sale, and channel ownershipOnce these points are established , selecting among alternatives middlemenchoices to forge the best channel can begin . marketers must get their goodsinto the hands of consumers and must choose between handling alldistribution or turning part or all of it over to various middlemen . Distributionchannels vary depending on target market ,competition and availabledistribution intermediaries.1. Cost :- There are two kinds of channel costa. The capital or investment cost of developing the channel andRAGHAVENDRA.K.AAsst. Professor, SJBIT 56 | P a g e 57. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418b. The continuing cost of maintaining it.The later can be in the form of direct expenditure for the maintenance of thecompany selling force or in the form of margins , markup or commissions ofvarious middlemen handling the goods.2. Capital requirement :- the financial ramifications of a distribution policy areoften overlooked .critical element are capital requirement and cash flowpatterns associated with using a particular type of middlemen .3. Control ;- the more involved a company is with the distribution , the morecontrol its exerts . A company own sales force affords the most control , butoften at a cost that is not practical.4. Coverage :- another major goal is full market coverage to gain the optimumvolume of sales obtainable in each market , secure a reasonable market share.And attain satisfactory market penetration .coverage may be assessed bygeographic or market segments or both .5. Character :- the channel of distribution system selected must fit the characterof the company and the markets in which it is doing business. Some obviousproduct requirement often the first considered relate to perishability or bulk ofthe product , complexity of sale , sales service required and value of theproduct.6.Continuity :- channel of distribution often pose longevity problems . mostagent middlemen firms tend to be small institution when one individual retiresor moves out of a line of business the company may find it has lost itsdistribution in that area. Wholesaler and especially retailers are not noted fortheir continuity in business either. Most middlemen have little loyalty to theirvendors.RAGHAVENDRA.K.AAsst. Professor, SJBIT 57 | P a g e 58. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418WarehousingThe borrowing of funds by a retail lender on a short-term basis using permanentmortgage loans as collateral. This form of interim financing, called a warehouseloan, is used to raise funds to make home mortgages and carry them until themortgages are packaged and sold "out of the warehouse" to an investor. Proceedsfrom the sale are used to reduce the warehouse loan.Warehousing constitutes an important segment of the physical distributionmanagement . the need for warehousing in a corporate unit may arise for thefollowing reasons Seasonality :- certain products , especially agro- based items , are producedwith in a limited season , while these are sold throughout the year. Variation in demand :- there are items for which very high demand isexperienced 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 overa period of time. Speculation :- companies tend to maintain a large inventory of itemswhose prices are highly volatile . this practice is essentially followed as ahedge against price variations. Product conditioning :- some products are to be stored in order to attainthe required level of quality . for example ripening of bananas is carried outunder controlled temperature conditions after they are picked.Necessity of warehousing for export marketingWare housing operations become necessary especially for two reasons so faras export marketing is concerned .these areRAGHAVENDRA.K.AAsst. Professor, SJBIT 58 | P a g e 59. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Break bulk:- break bulk operations are called for where the manufactureships the goods in bulk and then repacks them into small consignmentaccording to the orders received form individuals customers . In exportoperations this system may prove to be a cost saving device especially whenindividual orders are so small that the minimum space stipulation of theshipping lines cannot be fulfilled . shipping lines generally indicate theminimum space that must be booked if the shippers requirements is smallerthan the minimum , he has to pay the freight as fixed for the minimum space. Re assembly:- re assembly operations are also critically important formany export items , especially for engineering goods . in order to saveshipping space ,many items are exported on completely knocked downcondition .in fact there are certain countries where the government insist thatthe goods must be imported in CKD conditions where ever shipment s are madeon this basis the exporter will need warehousing facility in the importingcountry where the goods can be re- assembled.Air transportationAir transportation provide only world wide transportation network which makethe essential for global business tourism .it play vital role in facilitating economicgrowth particularly in developing country.Air transport provides significant social benefits Air transport improves quality of life by broadening peoples leisure and culturalexperiences. It provides a wide choice of holiday destinations around the worldand an affordable means to visit distant friends and relatives.RAGHAVENDRA.K.AAsst. Professor, SJBIT 59 | P a g e 60. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Air transport helps to improve living standards and alleviate poverty, forinstance, 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 andtrade, 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 humanitarianaid relief anywhere on earth, and ensures the swift delivery of medical suppliesand organs for transplantation.Surface V/s air transportThe choice regarding modes of transport in relation to export marketingrevolves around the appropriateness of transporting goods by ship or by air,assuming that both types of transport systems are available to the shipper , thechoice should depend on the estimates he makes as to the total costs ofdistribution by ship and air .it is found that the important elements of costsbehave in the following fashion for ocean and air transport.Cost of element airtransportSurface transportFreight High LowDepot costs Low HighFixed inventory Low HighPackaging Low HighInsurance Low HighAdvantages of air transport Low inventory carrying costs Decreased capital costs of goods in transitRAGHAVENDRA.K.AAsst. Professor, SJBIT 60 | P a g e 61. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 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 ADVERTISING1. Global Mass Media Advertising is a powerful tool for any business .2. Advertising function is to interpret or translate the qualities of products & Services interms of consumer wants, needs, desires and aspirations the emotional appeals, symbols,persuasive approaches and other characteristics of an advertising must coincide with culturalnorms if the ad is to be effective.3. Of all the elements of the Marketing Mix, decisions involving Advertising are those mostoften affected by cultural differences among country Markets.EFFECTS OF GLOBAL ADVERTISING ON ECONOMY1. Global Advertising expenditures has slowed with the global economy.2. Estimates in 2003 in neighboring countries was $400 to $500 billion. A 4% annual growthrate is predicted through 2006.3. Some of the biggest companies doing Global Advertisinga) P&G g) Daimler Chryslerb) GE h) Volkswagenc) Unilever i) LOreald) Ford Motor Co. j) Walt Disney Co.e) Toyota Motor Co. k) Honda Motor Co.f) AOL Time Warner l) Sony Corp.RAGHAVENDRA.K.AAsst. Professor, SJBIT 61 | P a g e 62. INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. There are seven steps involved in Marketing Research. They are:a) Performing Marketing Researchb) Specify the goals of the communicationc) Develop the most effective message for the market segments selected.d) Select effective mediae) Compose And secure a budget.f) Execute the campaigng) Evaluate the campaign relative to the goals specified.5. Advertising involves Integrated Mar