International Marketing Research Notes

8/13/2019 International Marketing Research Notes

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Advantages of International Marketing

(1) Better standard of living: International marketing provides abetter standard of living to people in different countries and

raises their welfare. It provides goods which cannot be produced in their country. It helps in large scale production and generates

employment opportunities in different countries. It brings income to the people and thereby provides a higher standard of living.

2) Quick industrial development: International marketing helps in quick industrial development of developed and developing

countries. The developed countries give aid, capital goods and technology to the developing countries. The developing countries

supply raw materials and labour to the developed countries. Industrial development gives huge job opportunities to the people.

3) Raises the real income and national well-being: In international marketing, every country specializes in the production of that

commodity to which it is best suited to produce, export its surplus produce and import those commodities which it can get

cheaper from other countries. Thus, the real income and national well being of all the participating countries increases.

4) Lower Prices: International marketing decreases the price of goods and services, all over the world, due to specialization. The

comparative cost advantage which a country has in a particular product can be shared by the other participating countries.

5) Technological development: International marketing through specialization, decreases the prices of goods and services,

increases their demand, thereby consumption, which helps in further specialization and technological developments.

6) No Monopolistic exploitation: due to international marketing, there is any monopolistic exploitation of consumers by the

home producers. Due to the presence of many sellers in international markets, it is difficult to exploit one country by another

country.

7) Availability of foreign exchange:A country earns foreign exchange due to exports and uses it for paying essential imports.

International marketing helps in easy availability of foreign exchange for import of capital goods, modern technology and other

essential requirements.

8) International co-operation and world peace: Due to traderelations, international marketing brings countries closer, which

leads to co-operation among the countries. Developed countries help the developing countries in their developmental activities.

Cordial relations are maintained by countries due to interdependence of countries and this brings peace in the world. It bridges

the technological gap between countries.

9) Build cultural relations: International marketing alters the quality of life of people. It exchanges goods and services among

countries and develops closer social and cultural relations between various countries.

10) Expansion of tertiary sector: International marketing increases exports, thereby industrial development. Expansion is there in

the tertiary sector i.e. transport, insurance, banking and shipping activities.

11) Special benefits during emergency: When natural calamities like floods, earthquakes occur, international marketing gives

special benefits. To meet urgent needs, emergency supply of goods is required. This is possible because of large scale imports.

Countries give co-operative to countries facing difficulties, by supplying essential goods and services.

12) Research and Development: International marketing is very competitive. In order to survive severe international

competition, every firm operating at the international level has to undertake continuous research and development. This leads to

technology development in developing and backward countries.13) Removal of deficit: International marketing helps in the

removal of deficit in the balance of trade and payments of participating countries through exports promotion and import

substitution


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SPECIAL PROBLEMS IN INTERNATIONAL MARKETING

(1) Political and Legal Differences: The political and legal environment of foreign markets is different. The

complexity generally increases as the number of countries in which a company does business increases. The political

and legal environment is not the same in all provinces of many home markets. For example, the political and legal

environment is not exactly the same in all the states of India.

(2) Cultural differences: Cultural differences pose one of the most difficult problems in international marketing.

It is essential to understand cultural differences to formulate successful marketing strategies. However, many

domestic markets, are also not free from cultural diversity.

(3) Currency unit differences: The currency unit differs from nation to nation. This may sometimes causeproblems of currency convertibility, besides the problems of exchange rate fluctuations. There may be differences

also in the monetary system and regulations.

(4) Language differences: An international marketer often faces problems due to language differences. Even

when the same language is used in different countries, the same words or terms may have different meanings.

However, the language problem is not something peculiar to international marketing. For example, the multiple

languages in India.

(5) Marketing Infrastructure Differences: The availability and nature of marketing facilities available in

different countries may differ widely. For example, an advertising medium very effective in one market may not be

available, or may be underdeveloped, in another market.

(6) High Costs of Distance: When the markets are far removed by distance, the transport cost becomes high and

the time required for the delivery tends to become longer. Distance tends to increase certain other costs also.

Scope of International Marketing

International Marketing constitutes the following areas of business:-

Exports and Imports: International trade can be a good beginning to venture into international marketing. By

developing international markets for domestically produced goods and services a company can reduce the risk of

operating internationally, gain adequate experience and then go on to set up manufacturing and marketing facilities

abroad.

Contractual Agreements: Patent licensing, turn key operations, coproduction, technical and managerial know

how and licensing agreements are all a part of international marketing. Licensing includes a number of contractual

agreements whereby intangible assets such as patents, trade secrets, knowhow, trade marks and brand names are

made available to foreign firms in return for a fee.

Joint Ventures: A form of collaborative association for a considerable period is known as joint venture. A joint

venture comes into existence when a foreign investor acquires interest in a local company and vice versa or when

overseas and local firms jointly form a new firm. In countries where fully owned firms are not allowed to operate,

joint venture is the alternative.

Wholly owned manufacturing: A company with long term interest in a foreign market may establish fully owned

manufacturing facilities. Factors like trade barriers, cost differences, government policies etc. encourage the setting

up of production facilities in foreign markets. Manufacturing abroad provides the firm with total control over quality

and production.


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Contract manufacturing:When a firm enters into a contract with other firm in foreign country to manufacture

assembles the products and retains product marketing with itself, it is known as contract manufacturing. Contract

manufacturing has important advantages such as low risk, low cost and easy exit.

Management contracting:Under a management contract the supplier brings a package of skills that will provide an

integrated service to the client without incurring the risk and benefit of ownership.

Third country location:When there is no commercial transactions between two countries due to various reasons,

firm which wants to enter into the market of another nation, will have to operate from a third country base. For

instance, Taiwansentry into china through bases in Hong Kong.

Mergers and Acquisitions:Mergers and Acquisitions provide access to markets, distribution network, new

technology and patent rights. It also reduces the level of competition for firms which either merge or acquires.

Strategic alliances: A firm is able to improve the long term competitive advantage by forming a strategic alliance

with its competitors. The objective of a strategic alliance is to leverage critical

Important F eatures of I nternational Marketing:

Large Scale Operations: International marketing is always conducted on a large scale. It is done on a wholesale basis

and not on a retail basis, to get the advantage of large scale operations regarding transportation, handling and

warehousing.

Dominance of MNCs and Developed countries: MNCs having world wide contacts dominate the scene of

international marketing. MNCs conduct business more efficiently and economically. MNCs adopt global approach

which is needed in international marketing.

International Restrictions: In domestic marketing, there are no restrictions. In international marketing, there are

various trade restrictions (tariff and non-tariff) due to the protective policies followed by different countries. Trade

barriers are adopted practically by all countries.

Presence of Trading Blocs: Certain nations of a region have come together to form trading bloc for and their mutual

benefit, economic development and to reduce or eliminate trade barriers among member nations. International

marketing is influenced by the presence of such trading blocs. The most powerful trading blocs are NAFTA (North

American Free Trade Area) and EU (European Union).

Three-faced competition: Suppliers have to face competition from three angles in international marketing. They

have to face competition from the other suppliers of the exporters country, from the local producers of importing

country and from the exporters of competing nations.

International Forums: International trade is regulated by international forums like WTO and UNCTAD.

International marketers should have a deep knowledge of the forums rules and regulations.

International Marketing Research: In international markets, it is required to know about customers, dealers and

competitors. In international marketing, marketing research is a must due to different social, cultural, economic and

political environment of far off markets.

Sensitive and Flexible: International marketing is very sensitive and flexible in character. Due to political and

economic reasons, a product may suddenly become unpopular or market may come down quickly. The sale at the

international level may be affected by competitors or due to the introduction of a new product by a competitor.

Advanced Technology: International marketing is very dynamic and competitive. Thus, an organization must be

able to sell goods of the best quality, at competitive prices. Advanced countries like U.S.A., Japan and Germany

dominate in international marketing because they use advanced or sophisticated technology in production and

marketing of goods.


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Lengthy and Time-consuming: International marketing is lengthy and time consuming due to long distances,

restrictions imposed by different countries, payment difficulties because of the use of different currencies, and

lengthy procedural formalities.

Wide Scope: International marketing has a wide scope. The important areas covered by international marketing are

product planning, product development, pricing, packaging, branding, advertising, marking, labeling,

communication, procedural formalities, sales promotion, international marketing research etc.

Long term marketing planning: International marketing needs long term marketing planning. The need for long term

planning in international markets is because the marketing situation in different countries changes due to social,

economic and political factors.

Advantages to all participating countries: International marketing is advantageous to all the countries participating

in international marketing. It helps in having smooth and good relations between countries and thereby ensures

world peace. But, the advantages of international marketing are not shared in a fair proportion by all participating

countries rich and poor countries. But, some benefits are availed by all participating countries.

Need for International Marketing:

(1) International interdependence of countries and growing world population: Self-sufficiency in all respects is not

attained by any country in the world. Due to geographical and other factors, no country can produce all its

requirements. There is international interdependence due to which every country has to import certain goods and

export goods, in order to pay for imports. The awareness of mutual dependence favors the growth of international

marketing.

(2) No uniform geographic and climatic conditions: there is any uniformity of geographic and climatic conditions

in all countries. A country does not have the capacity to produce all the goods required by it. Due to natural and

other economic factors, a country can import the goods, which it is not in a position to produce.

(3) No uniform production cost:International marketing is needed because the production cost in all countries is not

the same. Every country can produce certain commodities with low production cost because of some favourable

factors. Exchange of goods on the basis of comparative cost is beneficial to all countries.

(4) Increasing needs and better standard of living:International marketing is needed to fulfill the increasing needs

of consumers for production and improved products and for providing good standard of living to the people.

(5) Need of developing closer economic and cultural cooperationInternational marketing is needed for developing

closer economic and cultural co-operation between different countries. Thus, the global resources can be used fully

at the global level. International marketing is required for economic integration among the countries of the world.

(6) Problem of surplus production and scarce production in some countries:International marketing is needed

because ofsurplus production in some countries and scarce production in some other countries. Some countries have

huge unutilized production capacity. Some countries have no capacity to fulfill even their domestic requirements.This problem can be solved by international marketing which helps in exchange of goods according to the

requirements of different countries.

(7) Bridging gap between developed and developing nations: International marketing is needed to bridge the gap

between developed and developing nations. International marketing helps in exchange of goods and services and

helps in transfer of technical know-how and skills, thereby accelerating the development of developing countries.


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(8) Economic growth of developing countries and peace in the world:International marketing is needed for quick

economic growth of developed and developing countries. It helps in transfer of technology and quick industrial

development in developing countries. The developed countries provide help to developing countries. International

marketing develops co-operation among countries and thereby world peace and prosperity.

International Marketing Research Notes

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