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hklSubject:- International Marketing(MBA-III Sem.

)
Faculty:-Ms. Parul Gupta

 Definition of international marketing

“The process of planning and conducting transactions across national borders to create
exchanges that satisfy the objectives of individuals and organizations”.

 Key international marketing questions faced by a firm

1. How will my product or service fit into the international market?


2. What marketing adjustments are or will be necessary?
3. What global competitive threats should I expect?
4. How can I work with these threats and turn them into opportunities?
5. What are my strategic global alternatives?
6. Trade = Exports + Imports of all goods and services between countries
7. If exports from a country are greater than imports, it results in trade surplus
8. If exports from a country are lower than imports, it results in trade deficit
9. Monthly trade statistics influence stock market fluctuations.
10. One billion $ exports create over 20,000 jobs in any year

 Opportunities And Challenges In International Marketing

1. International environment is dynamic and each of the changes require active response.
2. International activity may be crucial to a firm’s survival and growth.
3. Firms and individuals must be capable of adapting to the environment.
4. Countries are interdependent and isolation is impossible today.
5. Interdependence and the global economy

 Approaches to Internationalisation

1. Stages approaches
2. Learning approaches
3. Contingency approaches
4. Network approaches

Stages Approaches
The earliest group of theories to explain this process were the so-called ‘stages approaches’ – firms started
with the mode of entry which required the least commitment of resources, and with experience gradually
increased their commitment of resources to international activities.

Learning Approaches
The Learning Approaches theories recognise that internationalisation is a dynamic process. They focus
more on evolutionary, sequential build up of foreign commitments over time and recognise the role that
psychic distance can play in the process.

Contingency Approaches

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Theories of internationalisation are based on contingency theory, whereby the firm evaluates and responds
to an opportunity as it occurs, regardless of whether the market is close in psychic distance terms or whether
an advanced mode of entry is required.

Network Approaches
The network paradigm emphasises the role of linkages and relationships in the internationalisation process.
Using this approach, Johanson and Mattsson describe modes of entry in terms of position:

• International extension
• International penetration
• International integration

Global Firm
A firm that, by operating in more than one country, gains R&D, production, marketing, and financial
advantages in its costs and reputation that are not available to purely domestic competitors.

Levels of involvement in Global marketing

The Importance of Global Marketing

Global marketing is rapidly becoming a necessity the Internet makes it possible for every marketer to
become an international marketer
Exporting: Marketing domestically produced goods and services abroad
Importing: Purchasing foreign goods, services, and raw materials

 Global Marketing in the 21st Century & Marketing Decisions

1. Looking at the global environment


2. Deciding whether to go international
3. Deciding which markets to enter
4. Deciding how to enter the markets
5. Deciding on the global marketing problem
6. Deciding on the global marketing organization

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 Why Global Marketing?
1. Exploiting Firm-Specific Capabilities
2. Technological innovations
3. Strong Trade Names
4. Lowering Cost Structure
5. Outsourcing
6. Hub and spokes model
7. Diversification and competitiveness
8. Product/market portfolio
9. Cross-subsidization
10. Country market attractiveness
11. Income
12. Consumer preference
13. Technology and market globalization
14. Saturation of domestic markets: Domestic market saturation in the industrialized countries and
growing marketing opportunities overseas.
15. Global competition: Competition around the world and proliferation of the Internet.
16. Need for global cooperation: Global competition brings global cooperation.

Looking at the Global Marketing Environment


1. The International Trade System
2. Tariffs, quotas, embargos, exchange controls, nontariff trade barriers
3. World Trade Organization and GATT
4. Regional free trade zones
5. European Union
6. North American Free Trade Agreement
7. Other free trade areas

Restraining
Driving Forces
Technology GLOBAL INTEGRATION Forces
Culture
Market Needs Culture
Cost Market
Free Markets Differences
Economic Costs
Integration National
Peace Controls
Management Nationalism
Vision War
Strategic Intent Management
Global Strategy Myopia
and Action Organization
History
Domestic
Focus

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 Characteristics of globalization
a. New regimes of regulation (WTO, NAFTA, etc.)World wide growth of market oriented societies
b. Greater role for private sector
c. Changing nature of the state
d. Growing inequality
e. Increased exchange of goods, values, symbols
f. Compression of time and space--speeding up of change
g. Impacts on both social and cultural homogenization and differentiation.
h. The centrality of migration to global change

A Comparison of Assumptions About Global and International Companies


Application International Companies Global Companies

Competition Ability to compete in national markets is Domestic/national competitive relationships.


affected by a firm’s global position.
Production Globally standardized production. Standardization limited by requirements to
Adaptations are handled through adapt products to national tastes.
modular designs.

The Consumer Global convergence of consumer wants Preferences reflect national differences.
and needs.

Product Emphasis on value-enhancing Products differentiated on the basis of


distinction. design, features, functions, style, and image.

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Price Consumers prefer a globally Consumers willing to pay more for a
standardized good if it carries a lower customized product.
price.

Product Life Global product life cycles. All Products are in different stages of the
Cycle consumers want the most advanced product life cycle in each nation.
products.

Design International performance criteria Adjustments to products initially designed


considered during design stage. for domestic markets.

Adaptation Products are adapted to global wants Product adaptation is necessary in markets
and needs. Restrained concern for characterized by national differences.
product suitability.

Market Segments reflect group similarities. Segments reflect differences.


Segmentation Group similar segments together. Customized products for each segments.

Fewer standardized markets. Many customized markets.


Expansion of segments into worldwide
proportions. Acceptance of regional/national differences.

Promotion Global product image, sensitive to National product image, sensitive to


national differences and global needs. national needs.

Place Global standardization of distribution. National distribution channels.

 Benefits of Going Global


a. Additional revenues
b. New insights into consumer behavior
c. Alternative distribution strategies
d. Advance notice of new products
e. Positioned well to compete effectively with foreign competitors
 International Planning Process

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Information derived from each phase, market research, and evaluation
of program performance

Phase 1 Phase 2 Phase 3 Phase 4


Preliminary analysis and Adapting the Developing the Implemen-
screening: Matching marketing mix to marketing tation and
company/country needs target markets plan control

Environmental uncontrol- Matching mix Marketing plan Implementation,


lables, company character, requirements development evaluation, and
and screening criteria control

Strategic Orientation: EPRG Schema


Orientation EPRG Schema

Domestic (Ethnocentric)
Marketing
Extension

Multi-Domestic (Polycentric)
Marketing

(Regio/Geocentric)
Global Marketing

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Strategic Orientation: EPRG Schema

1. Ethnocentric or Domestic Marketing Extension Concept:

Home country marketing practices will succeed elsewhere


without adaptation; however, international marketing is
viewed as secondary to domestic operations
Generally, four distinctive approaches dominate strategic thinking
in
international marketing:
2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally

 Self Reference Criterion

 SRC is an unconscious reference to one’s own cultural values, experiences, and


knowledge as a basis for decisions
 Ethnocentrism refers to the notion that one’s own culture or company knows best
how to do things
 Both the SRC and ethnocentrism impede the ability to assess a foreign market in its
true light
 Reactions to meanings, values, symbols, and behavior relevant to our own culture are
different from those of foreign
 Relying on one’s SRC could produce an unsuccessful marketing program

 Avoiding Self Reference Criterion :

1: Define the business problem or goal in home-country cultural traits, habits, or norms
2: Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value
judgments
3: Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem
4: Redefine the problem without the SRC influence and solve for the optimum business goal situation

Stages of domestic to global evolution


Management Stage one Stage two International Stage three Stage four Global
emphasis Domestic Multinational
Focus Domestic Ethnocentric Polycentric Geocentric
Marketing strategy Domestic Extension Adaption Extension
Structure Domestic International Worldwide area Adaption creation
matrix/mixed
Management style Domestic Centralised top down Decentralised bottom up Integrated

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Manufacturing stance Mainly domestic Mainly domestic Host country Lowest cost worldwide
Investment policy Domestic Domestic used worldwide Mainly in each host Cross subsidization
country
Performance Domestic market Against home country Each host country market Worldwide
evaluation share market share share

Stages of International Marketing Involvement

In
Ingeneral,
general,firms
firmsgo
gothrough
throughfive
fivedifferent
differentphases
phasesin
in
going international:
going international:

No
NoDirect
DirectForeign
ForeignMarketing
Marketing

Infrequent
InfrequentForeign
Foreignmarketing
marketing

Regular
RegularForeign
ForeignMarketing
Marketing

International
InternationalMarketing
Marketing

Global
GlobalMarketing
Marketing

Case 1.1 Kenya Off Season Vegetables

Kenya's export of off season and speciality vegetables has been such that from 1957 to the early 1990s exports
had grown to 26 000 tonnes per annum. Kenya took advantage of:

a) increased health consciousness, increased affluence and foreign travel of West European consumers;

b) improved technologies and distribution arrangements for fresh products in Western Europe;

c) the emergence of large immigrant populations in several European countries:

d) programmes of diversification by agricultural export countries and

e) increased uplift facilities and cold store technologies between Europe and Kenya.

Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the European "off season"
trade by sending small consignments of green beans, sweet peppers, chillies and other commodities to a London
based broker who sold them to up market hotels, restaurants and department stores. From these beginnings
Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the
colonialists, production remained small, under the misguided reasoning that Kenya was too far from major
markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya
itseff.
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The 1970s saw an increased trade as private investment in irrigation expanded, and air freight space increased,
the introduction of wide bodied aircraft, and trading relationships grew with European distributors. Kenya,
emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of
"Asian" vegetables (okra, chillies etc.) to the UK growing immigrant population. Kenya was favoured because
of its ability to supply all year round - a competitive edge over other suppliers. Whilst the UK dominated,
Kenya began supplying to other European markets.

Kenya's comparative advantage was based on its low labour costs, the country's location and its diverse agro-
ecological conditions. These facilitated the development of a diversified product range, all year round supply
and better qualities due to labour intensity at harvest time. Kenya's airfreight costs were kept low due to
government intervention, but lower costs of production were not its strength.

This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European
immigrant population. Kenya's rapidly growing tourist trade also accelerated its canning industry and was able
to take surplus production.

In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables (courgettes etc) to
lower cost Mediterranean countries, it increased its share in French beans and other speciality vegetables
significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut
flowers - a major success. With the development and organisation or many small "outgrowers", channelled into
the export market and thus widening the export base, the industry now provides an important source of income
and employment. It also has a highly developed information system, coordinated though the Kenya
Horticultural Crops Development Authority.

Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces.
However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers
and vegetables, particularly the former.