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- 1. Notes For MBA Search Friday, 3 June 2011 DEFINITION OF INTERNATIONAL MARKETING DEFINITION OF INTERNATIONAL MARKETING International Marketing can be defined as exchange of goods and services between different national markets involving buyers and sellers. According to the American Marketing Association, International Marketing is the multi-national process of planning and executing the conception, prices, promotion and distribution of ideal goods and services to create exchanges that satisfy the individual and organizational objectives. CONCEPTS OF INTERNATIONAL MARKETING Domestic Marketing: Domestic Marketing is concerned with marketing practices within the marketers home country. II. Foreign Marketing: It refers to domestic marketing within the foreign country.
- 2. III. Comparative Marketing: when two or more marketing systems are studied, the subject of study is known as comparative marketing. In such a study, both similarities and dis-similarities are identified. It involves an analytical comparison of marketing methods practiced in different countries. IV. International Marketing: It is concerned with the micro aspects of a market and takes the company as a unit of analysis. The purpose is to find out as to why and how a product succeeds or fails in a foreign country and how marketing efforts influence the results of international marketing. V. International Trade: International Trade is concerned with flow of goods and services between the countries. The purpose is to study how monetary and commercial conditions influence balance of payments and resource transfer of countries involved. It provides a macro view of the market, national and international. VI. Global Marketing: Global Marketing consider the world as a whole as the theatre of operation. The purpose of global marketing is to learn to recognize the extent to which marketing plans and programmes can be extended world wide and the extent to which they must be adopted. DIFFERENCE BETWEEN DOMESTIC MARKETING AND INTERNATIONAL MARKETING Marketing is the process of focusing the resources and objectives of an organisation on environmental opportunities and needs. It is a universal discipline. However, markets and customers are different and hence
- 3. the practice of marketing should be fine tuned and adjusted to the local conditions of a given country. The marketing man must understand that each person is different and so also each country which means that both experience and techniques obtained and successful in one country or countries. Every country has a different set of customers and even within a country there are different sub-sets of customers, distribution channels and media are different. If that is so, for each country there must be a unique marketing plan. For instance, nestle tried to transfer its successful four flavour coffee from Europe to the united states lost a 1% market share in the us. It is important in international marketing to recognize the extent to which marketing plans and programmes can be extended to the world and the extent to which marketing plans must be adapted. Prof.Theodore Levitt thought that the global village or the world as a whole was a homogeneous entity from the marketing point of view. He advocated organisation to develop standardized high quality word products and market them around the world using standardized advertising, pricing and distribution. The companies who followed Prof. Levitts prescription had to fail and a notable failure amongst them was Parker pen. Carl Spiel Vogel, Chairman and CEO of the Backer Spiel Vogel Bates worldwide advertising agency expressed his view that Levitts idea of a homogeneous world is non sensible and the global success of Coca Cola proved that Prof. Levitt was wrong. The success of Coca Cola was not based on total standardization of marketing mix. According to Kenichi Ohmae, Coke succeeded in Japan because the company spent a huge
- 4. amount of time and money in Japan to become an insider. Coca Cola build a complete local infrastructure with its sales force and vending machine operations. According to Ohmae, Cokes success in Japan was due to the ability of the company to achieve global localisation or Glocalisation i.e. the ability to be an insider or a local company and still reap the benefits of global operations. Think global and act local is the meaning of Glocalisation and to be successful in international marketing, companies must have the ability to think global and act local. International marketing requires managers to behave both globally and locally simultaneously by responding to similarities and dissimilarities in international markets. Glocalisation can be a source of competitive advantage. By adapting sales promotion, distribution and customer service to local needs, Coke capture 78% of soft drink market share in Japan. Apart from the flagship brand Coca Cola, the company produces 200 other non- alcoholic beverages to suit local beverages. There are other companies who have created strong international brands through international marketing. For instance, Philip Morris has made Marlboro the number one cigarette brand in the world. In automobiles, Daimler Chrysler gained global recognition for its Mercedes brand like his competitor Bayerische. Mc Donalds has designed a restaurant system that can be set up anywhere in the world. Mc Donalds customizes its menu in accordance with local eating habits.
- 5. 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, co production, 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, know how, 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.
- 6. Manufacturing abroad provides the firm with total control over quality and production. 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, Taiwans entry 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 capabilities, increase the flow of innovation and increase flexibility in responding to market and technological changes. Strategic alliance differs according to purpose and structure. On the basis of
- 7. purpose, strategic alliance can be classified as follows: i. Technology developed alliances like research consortia, simultaneous engineering agreements, licensing or joint development agreements. ii. Marketing, sales and services alliances in which a company makes use of the marketing infrastructure of another company in the foreign market for its products. iii. Multiple activity alliance involves the combining of two or more types of alliances. For instance technology development and operations alliances are generally multi- country alliances. On the basis of structure, strategic alliance can