International Marketing Management

By Nagendra RCIT, Gubbi

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Meaning & Definition of International marketing

• Marketing activity carried on across the nation boundaries.

• According to AMA: “International Marketing is the multinational process of planning, executing, conception, pricing, promotion and distribution of ideas, goods and services create exchanges that satisfy individual and organizational objectives.”

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International Marketing involves:

• Identifying the needs and wants of the customers in international markets.

• To take market mix decisions keeping in the view the diverse customers and market behavior.

• Penetrating into International Markets using the various modes

• Decisions in view of IBE

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Characteristics Of International Marketing

• Dominance of Multinationals• Large Scale Operations• Boundary Restrictions & Trade Blocks• Marketing Research• Importance of Advanced Technology• Precise competition• Sensitive character.• Want for Specialized institutions• Long term planning• Cultural relations

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Scope of International Marketing

• Exporting– Establishing– JV & Collaborations– Licensing– Consultancy– Know-how(Technical & Managerial)

• Importing• Managing of international operations• Re-exporting

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Objective of International Marketing

• To develop skills, creating marketing challenges & Opportunities.

• To gain experience in developing marketing strategies.

• To gain verbal, written skills for communication• To have decision making ability• To be ethical in practice and urge to learn more

on marketing management.

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Why Firms go international

• Reasons for the firms going international• Profitability• Growth• Economies of Scale• Access to imported inputs/Resources• Marketing Opportunities• USP of product & services• R& D Costs.

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Challenges in International Marketing

• Self- reference• Political & Legal Difference• Cultural Difference• Economic Difference• Difference in the currency unit• Differences in the language.• Difference in Marketing Infrastructure• Trade restrictions• High cost of distance• Difference in trade practices

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Difference B/w Domestic and InternationalDifference Point Domestic Marketing International Marketing

Operation Conditions One nation language & culture

Many Nations, Languages & Culture

Transportation cost Major extent Some Extent

Currency One Multiple

Political Same Differ

Nature of market Relatively homogenous Diverse & Heterogeneous

Change control & Tariffs No Problems Obstacles

Data Availability Accurate Formidable, But doubted

Government interferences Relative free Influences

Environmental Effects Little effect Distortion by large companies

Business Environment Stable Unstable

Climate & Nature of Business

Uniform & Understood Varies & Unclear

Differences between domestic and international marketing

Domestic InternationalResearch data is available in a single language and is usually easily accessed

Research data is generally in foreign languages and may be extremely difficult to obtain and interpret

Business is transacted in a single currency

Many currencies are involved, with wide exchange rate fluctuations

Head office employees will normally possess detailed knowledge of the home market

Head office employees might only possess and outline knowledge of the characteristic foreign markets

Promotional messages need to consider just a single national culture

Numerous cultural differences must be taken into account

Market segmentation occurs within a single country

Market segments might be defined across the same type of consumer in many different countries.

Differences between domestic and international marketing (continued)

Domestic InternationalCommunication and control are immediate and direct

International communication and control might be difficult

Business laws and regulations are clearly understood

Foreign laws and regulations might not be clear

Business is conducted in a single language

Multilingual communication is requires

Business risks can usually identified and assessed

Environments may be so unstable that it is extremely difficult to identify and assess risks

Planning and organizational control systems can be simple and direct

The complexity of international trade often necessitates the adoption of complex and sophisticated planning, organization and control systems

Differences between domestic and international marketing (continued)Domestic International

Functional specialization within a marketing department is possible

International marketing managers require a wide range og marketing skills

Distribution and credit control are straightforward

Distribution and credit control may be extremely complex

Selling and delivery documentation is routine and easy to understand

Documentation is often diverse and complicated due to meeting different border regulations

Distribution channels are easy to monitor and control

Distribution is often carried out by intermediaries, so is much harder to monitor

Competitors’ behavior is easily predicted

Competitors’ behavior is harder to observe, therefore less predictable

New product development can be geared to the needs of the home

New product development must take account of all the markets the product is sold in.

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International Expansion Drivers

Business Environment Drivers

Firm specific Drivers

CompetitionRegional Economic and Political IntegrationTechnologyImprovements in Transportation and TelecommunicationEconomic GrowthTransition to Market EconomyConverging Consumer Needs

Product Life CycleHigh New Product Development CostsStandardizationEconomies of ScaleCheap LaborExperience Transfers

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Process of Internationalization

License

Export Via Agent/ Distributor

Export through own sales representative/ Sales Subsidiary

Local Packaging/ Assembly

FDI

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Transition from Domestic to International Markets

• Pre-Export Behavior• Company characteristics• Perceived Export• Perceived Import• Organizational commitment

• Economic Reasons• Relative profitability• Insufficiency of domestic demand• Reduce Business risks• Legal restrictions• Obtaining Imported inputs• Social Responsibility• Increased Productivity• Technological Improvement

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Process of International Marketing

Growth Profitability Risk Spread

Access to imported inputs

USP of product/Services

Marketing Opportunities

Spreading R & D Costs SWOT Analysis

Decision to Enter into International

Markets

Motivation for International Marketing

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Orientation of management

• ETHNOCENTRIC• POLYCENTRIC• REGIOCENTRIC• GEOCENTRIC

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Ethno centric approach

• Guided by domestic market extension concept• Domestic strategies, techniques, and

personnel are perceived as superior.• International markets are secondary, regarded

primarily as outlets for surplus domestic production.

• International marketing plans are developed in-house by the international division.

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Poly centric approach• Guided by the multi-domestic marketing concept• Focuses on the importance and uniqueness of each

international market• Firms establish independent businesses in each target

country.• Fully decentralized, minimal coordination with

headquarters• Marketing strategies are specific to each country.• Outcomes:

– No economies of scale– Duplicated functions– Higher final product costs

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Regio centric approach

• Guided by the global marketing concept• World regions that share economic, political, and/or

cultural traits are perceived as distinct markets. (e.g. EU, NAFTA*)

• Divisions are organized based on location.• Regional offices coordinate marketing activities.

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Geo centric approach

• Guided by the global marketing concept• Marketing strategies aimed at market segments,

rather than geographic locations• Maximizes efficiencies worldwide and provides

standardized product or service throughout the world

• E.g. McDonalds

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Stages of International Marketing Involvement

• No Direct Foreign Marketing• Infrequent Foreign Marketing• Regular Foreign Marketing• International Marketing• Global Marketing

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Trade in International Marketing

• International Trade is exchange of capital, goods and services across international borders or territories.

TRADEDOMESTIC TRADE

INTERNATIONAL TRADE

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Need for international trade

• Large scale production• Degree of self- sufficiency• Geographic Factors• Occupational Distribution• Means of Transportation• Compensating the production

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Dynamic Environment of International Trade

• Comparative Advantages• Impact of National Policies• Impact of Countries

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Global e-Marketing

• Search of convenience• Internet into purchase process.• Shift loyalties.• Future buying plans.

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Death of distance

• Potential of e-commerce• Lower transactions costs• Reduce inventory costs• Competitive business advantage• Expands market• Reduce the supply chain management.

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Major benefits of e-Marketing• Global reach

– No physical limitations– Access to unknown buyers– Own virtual office– Always accessible

• Easy marketing– Classified information on competitive products– Acquire product knowledge– Compare product & service

• Economics– Cost effective strategy– Saves money on customer interaction

• Updates– Easy to change content– Addition of product– Updated communication to customers

• More attractive presentation– GUI

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Communications

• Building relationships,• Individual attention• Instant , cheap• Easy transactions

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Targeting an Individual customers

• Customer access• Insight• Dialogue• Emotions• Customers transactions

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Relationship marketing

• It is the process of building the long term, trusting, win-win relationships with customers, distributors, retailers and suppliers.– Key elements are

• Interactions between suppliers and customers• Maximizing life time value Customers segments to

customers satisfaction• Working , developing and enhancing relationship in

internal markets and building strong external markets