International Marketing

Syllabus:

01. Introduction to International Marketing:

02. International Market Research

03. Market Selection & Entry

04. Int’l organization

05. Market Coverage

06. International Product decisions

07. International Pricing

08. International Distribution

09. International Promotion

10. International Advertising

Books recommended: 01. International Marketing – Chirunilam,

02. Global Marketing Management – Keegan
03. International Marketing – Cateora, Graham
I. International Marketing:
Introduction:
For several decades now, global trade has exceeded global GDP. A growing
foreign trade: GDP ratio for many countries means higher %ages of national
output is being sold in foreign countries, for both products & services.
Thus whether a country likes or not, they become an international market if
they deal with the world & want to improve their economies. (Chinese
exports were 6% of GDP in 1980, they climbed to 25% by early 2000s).
Indian foreign trade: GDP ratio was around 15% for 40 years till 1991. With
liberalization in 1991, this improved to 20% by 1998 and is growing further. In
1991, Indian forex reserves were sufficient to meet only two weeks imports, now
India is flushed with forex (to the extent that RBI does not want to get involved in
following bills <$25000/-). The FTP (which used to be called the Red book)
actively envisages promoting exports to balance growing imports and ultimately
gains a trade surplus.

The world export of merchandise stood at $ 55bn in 1950, $1846 in 1980, $ 3311
in 1990, $ 6350 in 2000 & $ 10120 in 2005.

Multiple country presence for mfg and services (BPOs, coca cola, pepsi,
Unilver, P&G, Honda, Toyota, Whirlpool, LG, Samsung, GM, Skoda VW Renault
in India, Bharat Forge, Mittal, Pharma co.s, Tata Daewoo, Leyland Iveco, Hero
Honda etc for India) has also changed the face of global markets including
domestic market. A study in IB is therefore a matter of survival in the
present & future.

Today, in the global village, companies can truly become successful by:
Sourcing raw matls where they are cheapest,
Manufacture anywhere in the world where it is most cost effective,
Sell in those markets where margins are highest
Raise finance where it is the most advantageous,
Forge int’l strategic alliances,
Take the best talent available on board to manage the business.

To achieve this, international presence is necessary and Int’l marketing assumes

a pivotal role as a driving vehicle in the process.

Driving forces for Int’l business:

Liberalization (reduced barriers)
Transportation & communication revolution
MNCs
Competition
Technology,
Need to distribute product development cost
Cost reduction & product quality improvement (bench marking)
Resource utilization
Govt strategy

Restraining forces against Int’l business:

Nearsightedness of company management
Local govt restrictions,
Social & political opposition (Coca Cola in Kerala, expulsion of Coke & Pepsi
from India in 1970s)
Tariff barriers
Non tariff barriers (NTBs): Import licensing, canalization of import, quotas, VERs,
localization, Administered barriers- consular formalities, safeguards, health /
Environ protection / technical standards, customs procedure, forex remittance
laws), trade blocs (Caricom, Nafta, PTA, Ecowas, Asean, Saarc)

International Environment:

Economic,
Social,
Demographic,
Political / govt,
Technological

GATT (1948), WTO (1995):

GATT WTO
Ad hoc & provisional Permanent agreements
Contracting parties Members
Existing domestic legislations WTO agreement is binding on
superceded GATT members
Redressals slow / less efficient Redressal are faster / effective

TRIMS (Trade Related Investment Measures):

WTO articles reg local content, trade balancing, forex balancing)

TRIPS (Trade Related Aspects of Intellectual Property Rights):

Patents, Copyrights, Trademarks

International Marketing:

Marketing is meeting a customer need through provision of products &

services at an affordable price. It also helps create perceived needs.
Int’l marketing is marketing in a global market place, in an internationally
competitive environment, where one competes with multinational players
on their home turf as well as in conditions alien to both. It also includes
fending off int’l competition in the domestic market. (Nirma/ P&G Unilever,
Godrej/ Whirlpool, Samsung, Dabur/Colgate)

7 Ps= Product, Packaging, Price, Place, Promotion, Process, People

Major differences in the int’l markets & the domestic market:

1. Political, (Iraq, Pakistan, Afghanistan, formerely RSA)
2. Cultural (selling ladies fashion clothing to Saudi
3. Geographical (selling 2 wheelers to Alaska, Scandinavia)
4. Economical, (Iraq, Ghana, Zambia, Zaire, Mali)
5. Legal, (China)
6. Currency, (Tanzania, Turkey)
7. Language, (South America, Francophone Africa)
8. Trade & investment restrictions, (Pakistan, US quota on textiles)
9. Distance & resultant costs, (South America, West Africa)
10. Marketing infra / distribution channels, (Japan, Some African countries
where middlemen are a must)
11. Trade practices (1 year credit in Iran for non-priority items).

Motives for Int’l Marketing:

1. Profit (including monopolistic products -hi tech & culture specific),
2. Growth,
3. Domestic market constraints (saturation / some products are obsolete or
alien to domestic culture),
4. Competition,
5. Govt policies,
6. Spin off on domestic product (EU/ homo rules in autos, forex for imports),
7. Strategic vision (bajaj)

Orientation of firms (to international business):

Ethnocentrism (home country orientation): Total concentration on home
market, only surplus production is offered for export. Same product mix as in
domestic market is also offered for export. Heavy reliance on overseas
distributors / agents.E.g. Domestic Companies.
Polycentrism (host country orientation): Importance of each market is
understood & marketing is tailored to suit local needs. Local subsidiaries are
promoted. E.g. Int’l companies (majority sales domestic, but also sizeable
exports: GM, MTV, Suzuki & Ford cairs).
Regiocentrism (regional orientation): Different regions are treated as different
markets with a degree of commonality for product mix & marketing strategy. E.g.
Multinational Companies (Tata, Bharat Forge)
Geocentrism (global orientation): World is treated as a single market,
standardized marketing mix & branding, aims at meeting cost & customer
pressures thru sourcing from lowest cost base and learning across organization.
E.g. Global / MNC companies (Unilever, P&G,Coca Cola, Pepsi).

Decisions involved in Int’l marketing:

1. Int’l business decision
2. Market selection,
3. Entry Mode
4. Marketing mix (product, price, promotion, physical distribution)
5. Organisation

II. International Market Research:

Information needs & hence areas of research / intelligence:
1. Market profile: SPELT (Social, political, economic, legal, and technical)
analysis is necessary in choosing potential markets.
a. Forex environment: BoP, interest rates, forex rate trends
b. Perspective information: Laws pertaining to patents, contracts, taxes,
dividends, minimum standards, tariff / non tariff barriers
c. Resource information: availability of human, financial & physical information
sources.
2. Market selection / prioritization: (market size, usage pattern, product
suitability, consumption frequency)
3. Competition: (Extent of competition, major competitors, their relative SWOT,
corporate behaviour, strategies)
4. Product profile :( consumer preferences- power/style, fuel economy, spares
commonality in autos, colour, shape, and packaging)
5. Price Profile: (prevailing price range / competition prices, trends / practices,
distribution mark ups, govt policies / levies, price as a strategic marketing tool)
6. Promotion: (media availability / effectiveness, govt regulations, competitive
behaviour)
7. Distribution :( Sales / Service, Pattern, channels availability / length)

Information sources:
Sources of market info:
Human:
a. Data available with company, its overseas offices / associates,
b. Employees joining from other firms (Lopez – GM to VW case),
c. Personal contacts
d. Direct perception: (monitoring actual usage by customers, finding their
reactions first hand with a direct relatively longer term interaction (Unilever Persil
Power detergent story in UK, Toyota’s pre Lexus LS 400 survey in USA, Fair &
Lovely sampling during Kumbh mela).

Documentary:
a. Published (print / internet)
b. Unpublished (private circulation)

External sources:
In India: Export Promotion Councils / Commodity Boards, India Trade Promotion
Organisation (ITPO), Director General of Commercial Intelligence (DGCIS), State
Trading Corporation (STC), Confederation of Indian Industry (CII), Federation of
Indian Exporters Organisation (FIEO), Chambers of Commerce, Society of Indian
Automobile Manufacturers (SIAM), Export Inspection Agency / Council (EIA/EIC),
Indian Institute of Packaging, Exim Bank, ECGC, Consular / Commercial
sections of foreign embassies in India Educational & research organizations,
Trade fairs / exhibitions. Internet, Competition.

Outside India: ITC Geneva, Commercial sections of Indian missions abroad,

Local govt publications, UN & other int’l publications, Trade fairs & exhibitions,
Competition.

Objectives of Market research / intelligence (Market Information System):

1. Tracking competition
2. Tracking technological developments,
3. Tracking changing customer attitudes, tastes & requirements and consequent
existing / emerging opportunities (Benetton example).
4. Identifying deficiencies in firm’s product mix (product, price, promotion,
distribution) & relative strengths & weaknesses.

Major areas of market information system:

Markets, Product, Pricing, Distribution, Promotion, Consumer behaviour,
Marketing environment & trends, Marketing efficiency.

a. Existing market: Requires secondary research or survey of customers

b. Potential market:
i. Latent demand survey: A latent demand is a demand which will be generated
if an appropriate product is made available (finding niches). Initial demand is zero
for a new product to be offered to meet latent demand. (Digital camera, fax
machine, metal racquet for tennis)
ii. Incipient demand survey: An incipient demand is demand which will emerge
if a particular economic / technological / political situation arises. (Demand for
entry level cars, sedans is dependant on economy growth, disposable income).

Types of Research:
Exploratory: Investigative in nature. Usually it is based on secondary data,
selected samples / cases.
Conclusive: Helps decision making from choices available. It can be either
Descriptive (case studies, Statistical) or Experimental (in simulated or real
conditions).

Formal Market research:

1. Identifying the research problem / objective: A problem well defined is a
problem half solved.
What info do I need? Why do I need this info?

2. Conducting a situational analysis: is necessary to familiarize an external

research agency with the company / environment and achieve clarity of the
research problem / objective.

3. Conducting an informal study: Expansion of info from situational analysis by

adding info from related associates (customers, dealers, competitors).

4. Developing a research plan:

Evaluate cost benefit analysis of the proposed research (monetary & managerial
time costs of the research, expected gains out of research, cost of not getting the
data if research is not conducted)
Decide the methodology, time & budget for the research

5. Data Collection:
Identify sources of info.

Secondary data: Desk research of already published info from various sources-
company info, libraries, commercial federations, customs, internet.

Primary data & survey research: When published data is unavailable, direct
collection of info is necessary through individual or group interviews by trained
moderators. The questionnaire should be:
Simple,
Easy for respondents to answer & the interviewer to record,
Keeps the interview to the point & obtains the desired info

Methods of data collection:

1. Observational research: Observing behavioural patterns. This method is
useful for collecting info that potential respondents are unwilling / unable to
provide. It provides info on actual consumer behaviour and a bias can be limited.
However info availability is limited and can usually act as supplementary info.
(Driving habits of an Indian driver)

2. Survey research: Collection of info by direct contact.

a. Personal interviewing: Involves individual or group interviewing. This method
is flexible; enables direct info collection / seeking required clarifications / cross
checking. However it is time consuming, needs trained interviewers & is costly.

b. Telephone interviewing: Easy & quick, saves time / cost. However, required
audience may not be available on phone / may not easily respond on phone.
I/viewer can not observe the respondent while replying.

c. Mail questionnaire: Useful for large number of scattered respondents,

economical. However, this excludes the illiterate, possibility of incomplete info, no
clarifications available. Response rate is low.

Sampling: Selection of a group from a population that is representative of entire

population.
Reasons for sampling: Large population, time & cost of survey, unavailability of
qualified interviewers.
Types of Probability sample: Random, stratified, systematic, cluster, multistage
Types of non probability sample: Convenience, Judgmental, quota, snowball.
The permissible sampling error, desired confidence in the results & standard
deviation are the factors considered while deciding a sample.

6. Analyzing the research data:

Demand pattern analysis: an estimation of growth rates for individual product
sectors. Generally light industries assume importance in the early stage of
economic growth of a country. As the economy grows, heavy industries assume
importance and a further growth shifts the importance to service industry.
Income elasticity measurement: Relationship of income with demand for a
product / service. Necessities such as food have inelastic demand (spending
does not grow much with increases in income). Demand for consumer durables
is more income elastic increases faster than rate of income growth.

Market estimation by analogy: Application of data from an analogous

established market (country) to the target market (another country). If such
analogy is to be applied to a target market which is at a different stage of
development, a displacement time method is applied for estimations.

While deciding on analogy of a market, the following factors must be considered:

Similarities & differences in cultural, economic systems,
Level of technological development,
Differences / similarities in product / service availability, price, quality & other
variables associated with the product / service.

Cluster analysis: Grouping of similarities and differences within a cluster of

markets- national & / or regional. This method helps is identifying clusters of
markets similar in nature.
Analysing results depends on the techniques used and assumptions made.
Hence the conclusions from a survey can differ.

7. Presenting the research findings:

The presented report must relate to the research objective initially identified,
the result should be clearly stated & provide a basis for managerial action.

Advantages of an external research agency: Expertise, Objectivity (no bias),

Knowledge, Familiarity with the business, Cost efficiency.

Factors which affect global marketing research:

Researching different national markets, each of which may have unique
characteristics.
Relatively small market potential (low profit potential) permits modest research
expenditure.
In developing countries, the data may be inflated / deflated due to political / other
expediency.
Data gathering techniques and item classifications may differ from one country to
another resulting in problem of comparability of data.
Too little secondary data / irrelevant info.

Market Intelligence as a strategic asset:

Flow of info within a large organization has a positive effect of marketing
decisions and can change the marketing info system from a support tool to a
strategic asset. Info intensity within a firm can help the firm widen their
intelligence and their marketing areas.

Requirements which dictate the need for organized intelligence:

1. Latest info, published / grapevine, on market / competitive conditions
2. Interdepartmental sharing of intelligence
3. Avoiding surprise developments in the market
4. Assessment of success of decisions taken
5. Measuring competitive pressures
6. Availability of useful data base
7. Need to ensure regular accessing of data base.
III. Market Selection & Entry
Market selection process:

1. Identify the objective: Profit / Growth / domestic market constraints /

saturation / Competition / Govt policies / spin off on domestic product / Strategic
vision.

2. Decide selection parameters:

Considerations:
a. Market potential
b. Market access
c. Shipping cost / time
d. Potential competition
e. Service requirements
f. Product fit
g. Channel availability
h. Labor & other costs, incentives, labor productivity.

3. Preliminary screening: For elimination of the obvious markets/ countries.

General factors:
Economy: population, GDP & it’s sectoral distribution, income distribution, BoP,
per capita income, economic stability, estimated growth rate, stability of local
currency vis a vis hard currency, inflation, govt policy especially regarding trade
& payments.
Economic policy: regarding industry, foreign trade, foreign investment,
monetary policy.
Business regulations: licensing, growth restrictions, FDI controls, forex /
dividend repatriation controls, bureaucracy and procedures, tax structure /
incentives, local content,.
Political environment: political stability, main policy agenda of ruling &
opposition parties.
Ethnic: Ethnic characteristics / differences and their business implications
Infrastructure: port / airport connectivity, power availability, communication
Hub possibility: (S’pore for SE Asia, RSA for Sub Saharan Africa)

4. Short listing: Select a few most attractive markets, based on the objective.

5. Evaluation of short list:

Company related: based on the objective of market entry
Market related:
Specific product related factors (market profiling):
Market trends: Existing domestic production, consumption, growth estimates,
import and export,
Product relevant: Segments, prices, promotion, distribution, govt rules reg
products, import, promotion
Competition: Nature, profile, their strategies / focus areas, SWOT
Consumer characteristics: Tastes, preferences, buying pattern, product usage
Distributions channels: Characteristics, trade practices
Promotion characteristics: Media, type
Industry relevant: Govt policy, infrastructure, raw materials availability,
productivity, Trade practices.

Creation of a Product-Market profile: 9 Ws:

1. Who buys (would buy) our product? (Consumer profile / Potential evaluation /
target audience for promotion)
2. Who does (would) not buy our product? (Niche evaluation)
3. Which is the need served (or would be served) by our product? (Positioning /
promotion)
4. Which problem does our product solve? (Positioning)
5. Which are the products currently being bought to satisfy the need / solve
problem that is intended to be catered to by our product? (Competition)
6. What is the price being paid by the customers for products being bought?
(Price band / Segmentation)
7. When is our product purchased? (Seasonality / Sales frequency / potential
evaluation)
8. Where is the product purchased? (Channels)
9. Why is our (or competing
purchased? (Ascertaining product attributes / USP / segments)

6. Visit to the potential market for first hand info

7. Selection of market segment/s for entry:

Niche: A market segment ignored by major players, which leaves a void to be
filled. Usually smaller firms try to enter thru niches.

Segments: Large / medium / small.

Market Entry Modes:

i. Licensing: An arrangement under which the licensor grants the rights to

intangible property (know-how, designs, formulae, processes, patents,
copyrights, trade marks, brand names) to the licensee for a specified period in
return for a know how fee & a royalty from the licensee.(Adopted by firms which
lack resources or are unwilling to commit resources to unfamiliar markets, but
have a relatively strong brand/ reputation). Mostly pursued by manufacturing
firms.

Advantages:
Firm is not required to undertake the risk & development costs for exploring /
opening a new market,
Making use of intangible property without actually getting involved in production
(lending coca cola name to clothing, celebrity names to perfumes, sportswear).
Entry in markets which do not allow product export,
Host country govt intervention is least likely,
Obsolete technology sold especially to developing countries.
Licensee benefits from ready tested technology / brand name.
Disadvantages:
No control over production / marketing,
No learning experience and economy of scale.
Loss of control over tangible competitive advantage / possibility of creating
competition (Vespa in India) (This aspect is neutralised thru cross licensing
where both firms involved have different intangible properties OR thru formation
of joint ventures with licensee

ii. Franchising= Licensing + franchisee's agreement to abide by franchisor's

dictat on how to do business. Franchisor may also assist franchisee to run
business. Mostly pursued by service sector firms (McDonalds, Pizza Hutt).

Advantages:
Company is not reqd to undertake the risk & development costs for opening a
new market (franchisee assumes these).
Company can quickly build global presence at a relatively low cost (McDonald).
Disadvantages:
Local profits are difficult to be employed in other markets,
Poor quality in one market can affect sales in others (hotel brands- Hilton,
Mariott),
Difficult to detect poor quality unless a subsidiary is established and own
managers are appointed.

iii. Exporting: Most companies start global expansion as exporters. (Overseas

distribution & service network- bajaj example).
Also appropriate when:
Target markets are not large enough for local production / long term presence is
not planned
Higher cost of production at foreign location (raw materials, infrastructure,
productivity)
Political / economic risks / FDI restrictions exist in host country.
Advantages:
Avoids cost of setting up manufacturing in a host country,
Economies of scale are retained especially while catering to smaller markets,
where infrastructure / input supplies / higher cost of production may pose
problems
(Sony TVs, Japanese & Korean cars export to US),
Low resource commitment / risk.
Good for countries which are either risk prone or have unfavourable laws /
conditions for FDI / licensing / contract mfg
Disadvantages:
Home base may not be the lowest cost location (oil extraction),
High Transport cost (esp for bulk products) (Ore export from Goa, crude oil),
Tariff / non tariff barriers which make exporting uneconomical,
Delegation of marketing to country-wise agents / distributors (who may not be
able to do as good a job as the co. does or may have competing products
marketed under his outfit/ divided loyalties).
Remote servicing (spares, technical expertise, warehousing).
Limitations on market intelligence.
Limitation of Network development

iv. Piggyback Marketing:

One manufacturer distributes his products through another manufacturers
distribution channels. (Also use of lines of credit by govt / exim bank)
Advantages:
Active distribution partner makes use of existing channels / idle capacity for extra
revenues
Lower cost of distribution for the manufacturer of product
Disadvantages:
Only complimentary products can do well
Very limited control of product manufacturer on marketing

v. Contract Manufacturing:
The int’l company undertakes marketing function but contracts manufacturing to
local firms.
Advantages:
No commitment of resources for manufacturing,
No risks associated with FDI
Availability of idle manufacturing capacities reduce start up delays
Cost of procurement is likely to be competitive
Lower cost of failure
Host country support due to local contracting
Disadvantages:
Likely loss of manufacturing profits
No control over processes
Builds potential competitors
vi. Management Contracting: Provision of management know how (skills)
without equity participation. (Tata Tea in Sri Lanka, Udipi management of
restaurants owned by non-Udipi owners).
Advantages:
For the management provider
Income begins immediately
Low risk (no equity)
Utilisation of idle management capacity (personnel) (bench capacity in IT biz)
For the client:
Management skills / experience are readily available without time lag /
expenditure of training own employees

Disadvantages:
For the management provider
Acquisition of equity / business may not be possible in contract period
Possibility of more profitable utilization of management talent is limited by
commitments already made under contract
For the client
Over dependence on management provider may result in loss of control / inability
to develop own expertise.

vii. Turnkey Projects: The contractor agrees to handle ALL aspects of a project-
setting up, training, successful implementation. Turnkey projects are usually
undertaken by firms specialising in designs /process & construction know-how &
project setting up (common in metal & petroleum refining, chemicals).
Advantages:
Overcomes FDI barriers / limits (which otherwise would make a market
inaccessible);
Lesser risk compared to FDI (esp if nationalisation / political or economic
collapse is feared later on).
Disadvantages:
Long term presence in a major market (country) is not possible;
Selling process know-how means selling competitive advantage & creating a
possible competitor

viii. Assembly Operations: Owning assembly facilities in host country (as

opposed to owning an integrated manufacturing facility).
Advantages:
Relatively lower investment
Useful when cheaper labour is available in host country
Manufacturing know how is retained
Buy back possible due to lower assembly costs
Eligibility for lower import duties & hence more competitive pricing
Disadvantages:
Logistic management assumes greater importance
Workers do not get to develop manufacturing skills
ix. Wholly Owned Subsidiary: 100% equity of the local firm is held by the
parent firm. The operations can be either green field or by acquisition of an
existing firm.
Advantages:
Technological skills are protected (hence high tech co.s prefer this mode),
Tight control over local & global strategy,
Location & learning experience can be transferred elsewhere.
Disadvantages:
Must bear the full cost & risk of overseas operations.
Acquisitions afford local market knowledge but divergent corporate culture can
be a problem.

Green-field subsidiary: A wholly owned green filed subsidiary is a subsidiary a

firm created by building it up from ground (green field).
Advantages:
Maintenance of home country organizational culture
Disadavantage: Time taken to implement may result in late entry in the market

Acquisition: The firm acquires an established enterprise in the target market.

(80% of world FDI is towards cross border acquisition- Mittal, Thomson
acquisition by Videocon).
Advantages:
Complimentary core competencies,
Brand strength
Knowledge of local conditions
Reduced competition / higher market share
Disadvantages:
Divergent work culture of employees of acquired firm
Over valuation of acquired equity

When a firm is acquired & thus loses its separate existence due to merging
into the acquirer firm, the acquired firm is said to have merged in the
acquirer firm.

x. Joint Ventures: A firm that is jointly owned by two or more otherwise

independent firms (Maruti-Suzuki) Many firms have 50% share each. Operational
control is shared by parties to the venture.
Advantages:
Useful when wholly owned subsidiaries are not allowed / favoured by host
country govt.
Local partner’s knowledge of market & competitive conditions, culture.
If market opening/development costs are high, the same are shared by partner
firms.
Lesser threat of nationalisation / govt intervention (due to local partner).
Disadvantages:
Risk of giving control over technology to the local partner.
This form does not give tight / adequate control on local operations for a
concerted global attack on competition (due to diluted equity).
Possibilty of conflict / battle between partners for control over venture.

xi. Third country location: Basing operation in a third country to overcome

political / commercial (quota, VERs, SEZ benefits, local incentives) / other
barriers against direct dealing. (RSA via Mauritius, Pakistan via UAE, Taiwan to
Mainland China thru HK).
Advantages:
Facilitates trade which is otherwise not possible.
When resorted to due to local incentives, it can improve competitiveness
Disadvantages:
Susceptibility to being alleged as illegitimate / illegal, esp if resorted to for political
reasons.

xii. Strategic Alliance: refers to cooperative agreements between potential or

actual competitors. Such cooperation can be long term, in the form of joint
ventures (equity participation) or short term contractual agreements to perform a
particular task (Tata & Fiat for use of Ranjangao plant, shared cell
phone networks).
Advantages:
Entry in a new market / better access to market potential (in the face of govt
barriers)
Sharing of fixed costs (& risks) in developing a new product (Boeings
development alliance with Japanese co.s for 767)
Bringing together complimentary skills & assets (videocon -Thomson, Birla-
AT&T initially in cell phones)
Help raise technological standards / know how (Bajaj-Kawasaki, Kinetic- Honda).
Disadvantages:
A strategic partner may acquire higher skills / technology thru alliance and
become a competitor in the long term for the other partner (Piaggio-bajaj).
One firm gives away more than it receives in terms of profit / knowledge

xiii. Counter trade: An alternate means of structuring an international sale when

conventional means of payment are difficult, non existent or costly (non
convertible currencies, export credit requirements).

Types of counter trade:

Barter: Exchange of goods / services between two parties without a cash

transaction.
Counter purchase: The exporter commits to use part of the export proceeds to
import (purchase) alternate goods from his importer.
Offset: The exporter commits to use part of the export proceeds to import
(purchase) alternate goods from his importer / other sources in importing country
(flexibility / choice of products to be imported).
Switch Trading: Third party trading of counter purchase credits accrued through
a counter purchase deal. The exporter thus sells the counter purchase credit to a
trading house at a discount. The trading house then sells the credit to another
firm at a profit.
Compensation or Buybacks: When a firm builds a plant in a country (or
supplies know how / equipment / training) and commits to buy back some of the
output of the plant, a compensation or buyback occurs.

Advantages of counter trade:

Counter trade offers a way to finance the export deal when other means are not
available. (Foreign exchange unavailability)
A readiness to offer a counter trade may improve a firm’s usp.
Disadvantages:
Counter trade may result in exchange of unusable / poor quality products being
supplied.
The responsibility of disposing counter traded goods profitably (including addl
staffing at extra cost).
Hampers direct trade avenues.

Selection of an entry mode would be dependant on the degree & type of

core competency (technical know how, management know how) held by the
firm, its local & global objectives, target markets, aimed market share, local
conditions.

IV. International Organisation:

Factors which dictate formation of an organisational back up for international

business:
a. Orientation & Commitment of of the company to int’l business
b. Size of int’l business (related to domestic market size)
c. Expansion plans
d. Number of products lines
e. Number of major markets

Types of organization:
i. Export Section in domestic marketing dept:
Built into the domestic system. All related support functions (service, advt,
finance, credit control, shipping) are handled by related domestic depts.
Advantages:
Helpful when export turnover is small, as costs of common functions are shared
by domestic depts.
Expansion is easier.
Disadvantages:
Due to small size of business, int’l business gets a low priority / lack of
cooperation from other depts.
Lack of knowledge in domestic depts. regarding requirements of int’l markets.

ii. Export department:

A separate dept, having an independent identity in the organization. The
organization of a separate export dept can be tailored to suit marketing / logistics
needs and can be based on functions / products / geographical areas.
Advantages:
It can be largely self sufficient and can handle all int’l business related matters
from resources within the dept without being at the mercy of domestic
counterpart depts.
Can be more efficient than an export section of domestic marketing, as
specialists can be employed.
Can be more focused on the functions, being a separate dept.
No clash of interest / time to be shared between domestic & export functions.
The dept can be located at the most suitable location, other than the H.O. of the
company.

Disadvantages:
May face lower priority from other other depts., if the company is not adequately
oriented towards int’l business.

iii. Export Sales subsidiary:

A separate subsidiary company, which is wholly owned by the parent company,
entrusted with int’l business. It buys parent company’s products and sells
internationally. This option is generally adopted when int’l business is large
enough. Organisation can be similar to an export dept, with larger strength.
Advantages:
Independent and focused effort for development of int’l business
Can be located in a different country.
Can deal in non-competing products.
Can derive cost apportionment due to multi product dealings.
Being a separate company, tax advantages can accrue.
Disadvantages:
The subsidiary must be self sufficient and independently accountable for its
performance.
Multi product dealings can bring disrepute to good products due dented company
image.
iv. International Division:
This mode is often adopted when the function is not only int’l trade but it also
involves managing the non-exporting int’l market entry modes such as local
assly, / manufacture. Its organization can be structured along functions / products
/ areas.
Advantages:
Can manage all types of int’l entry modes.
Concentration on int’l business
Disadvantages:
Coordination with domestic functions (production / R&D)

v. Global Organisation structure:

a. Product based global organization structure:

Responsibilities / reporting are divided based on products / product groups. A
foreign subsidiary / unit reports to multiple product division heads at HQ.
Useful when the company has diverse product lines, each requiring a certain
minimum expertise. (Bayer pharma, agro and engg divisions)

b. Area (geographic) based global organization structure: Head of each

identified geographical area is responsible for all products in the area assigned.
This is generally useful for companies having a narrow product line.

c. Function based global organization structure:

Head of a function (production, finance, personnel, marketing) at HQ is
responsible for worldwide operations of the company and hence employees at
different locations handling those functions report to the functional head at HQ.
(e.g. process based structure in mining).

d. Customer group based global structure: Useful when distinctive

approaches are required for specific customer groups (OEM, defense,
aftermarket). Generally possible for narrow product lines.

e. Global Matrix structure: Aims to combine the advantages and overcome

disadvantages of other structures. Cross functional / dual reporting based on
geographical areas and functional areas.

V. Market Coverage:
From a selected band of countries / markets / segments, the company can
decide to concentrate on either:
One or very few markets / segments
All markets / segments.

Similarly the company may decide to approach all the markets / segments with
the same marketing mix or may offer different marketing mix in each market /
segment.

Based on the above, different coverage strategies may be employed.

Concentrated Marketing strategy:

This strategy aims at achieving maximum penetration in the targeted market /
segment by employing all resources and competencies available.
Advantages:
Concentrated efforts can enable the firm to offer most formidable opposition to
the competition and yield best results possible in the most lucrative market /
segment.
Limited resources may be sufficient to take on the market / segment.
The firm can offer most suitable product to the target market / segment.
The firm can choose markets / segments where domestic products can yield best
results (or minimum product modifications are necessary for success)
A thinly spread effort is avoided.
Disadvantage:
Over-dependence on only a few markets / segments. (Dr Beck’s dependence on
USSR).

Niche Marketing:
Concentrated marketing can sometimes take the form of niche marketing.
While selecting a niche, it is necessary to ensure that
a. The niche is large enough in volume to be profitable
b. It has growth potential
c. Has limited immediate / potential competition.
d. The firm has competencies required to establish an edge over existing
competition and defending its presence, once established.
Advantages:
The firm can exploit the segment which is largely ignored by major market
players.
Minimum or no competition.
No immediate / direct confrontation with major competitors.
Better profit margins because of good value addition perceived by the customers.
A toehold in the niche can be used as a launching pad for a foothold in other
segments (ethnic products, 3W in SL for bajaj, Indian restaurants in UK).

Disadvantages:
A successful, profitable niche operation attracts competition.
Many larger firms are adopting niching as a strategy.

Undifferentiated Marketing strategy:

Treating a whole market as a single unit having homogeneous customer
characteristics. The entire market is sought to be tapped with a single marketing
mix. Works well for basic products (oil, steel, chemicals, minerals).
Advantages:
A single marketing mix / limited product offering serves a large market audience.
Disadvantages:
Can not serve multiple segments.

Differentiated Marketing strategy:

Involves segmentation of the market & designing of the right marketing mix for
each segment. Most suitable for heterogeneous markets.

Market Segmentation: refers to identifying distinct groups of consumers whose

purchasing behavior differs from others in important ways.
Markets can be segmented in numerous ways:
Geography (continents, sub continents, even geographical sub division of large
countries like India, USA),
Demography (population, age groups, sex, religion, income groups)
Social / cultural factors / occasions
Psychography (life style, social class)
Consumer (OEM, after market, defense, industry)

A market segment should be:

a. Measurable (in terms of size / potential)
b. Substantial (large enough to be profitably tapped)
c. Differentiable (in terms of characteristics which demand a separate marketing
mix)
d. Accessible & actionable (through a specific marketing mix)

A firm’s goal should be to optimize the fit between the purchasing behavior
of a segment & the marketing mix so as to maximize sales to that segment.

VI. International Product decisions:

Product strategy involves decisions regarding the product mix, positioning &
communication.
Product planning involves product strategy plus product planning.

Product management involves decisions regarding product planning,

development and strategies during different stages of product cycle.

Product decisions:
1. Market segment decisions: Identifying segments for targeting and
positioning of products
2. Product mix decisions: Types of products and variants for each target
segment.
3. Product specifications: Technical specs, styling, shape, size (aesthetics),
packaging, labeling.
4. Product positioning & communications: Image projection for the product in
consumer’s mind and development of an appropriate communication. (Toilet
soap can be positioned as beauty soap, health soap, skin care soap, deo soap,
baby soap. Beefeater gin as a low cost gin in UK but fetches premium price in
US due to positioning).

Product: A set / bundle of tangible physical attributes assembled in an

identifiable form, with a commonly understood descriptive name (apples,
oranges, fridge, and salt).
A brand name helps a broader recognition as a separate product.

Levels of product:

Core product: Most fundamental level of the product. It refers to the core benefit
derived by the consumer from the product. (A motorized 2 wheeler, fridge).
A core product in one country may assume a different core value in another (beer
is common drink in Australia & Germany but an alcoholic drink in India and
banned in Islamic countries) and hence calls for appropriate modifications in the
product & positioning.

Tangible Product: The actual form, with all its attributes, in which a product is
offered to the consumer, with an identifiable brand name, specs, features,
packaging. (Honda, Toyota, Mercedes, BMW for cars, Sony, Onida, Videocon,
Samsung for TVs). Modifications are necessitated in the tangible product in many
markets to be acceptable (homologation of vehicles in Europe, US, Australia).

Augmented product: refers to the additional services / benefits offered with the
product (warranty, installation, free service, credit facility).

Product Mix: The entire range of all products offered for sale by a company.
(Commercial vehicles, jeeps, cars by Tata, scooters, m/cycles, 3 wheelers by
Bajaj).
Product line: A group of products which are closely related because they serve
the same segment, are marketed thru the similar outlets or fall within a given
price range. (Mopeds, scooterettes, dirt bikes, SUVs, tractors). A product mix
may consist of one or more product lines.

Width of a product mix refers to the number of product lines in the mix

Depth of a product mix refers to the average number of products by the

company in each product line. (Honda, Yamaha Suzuki m/cycle line up in int’l
markets via avis Indian or Chinese manufacturers)

Consistency of a product mix refers to the extent to which different product

lines of a company are closely related to each other in terms of end use,
production, distribution and any other ways. (Car range of Maruti in India).

Product Life Cycle:

A product normally passes through the stages of Introduction, Growth, Maturity
and Decline. (Mopeds, scooters in India, telex-fax-email, VCP-VCR-DVD)
Introduction stage:
Low sales due to a relatively unknown product
Higher effort / promotion / cost per unit
Low profits / losses due low sales & high per unit costs
Low or no competition for a technically new product
Growth stage:
Fast growing sales due to higher consumer acceptance
Growing profits due economies of scale and lower per unit costs
Increasing competition
Market segmentation and introduction of product variants.
Maturity stage:
Saturation is sales volume
Intense competition
Falling profits due to higher promotional / sales costs per unit.
Decline stage:
Entry of new competing products
Decline in sales and profitability
Exit of some firms

If a product is launched internationally, it may be at different stages of PLC in

each market. Thus, such international deferred launches may actually help derive
incremental export sales for a product and extend its growth & maturity stages in
the domestic production.
Vernon’s PLC theory describes how a new product is initially marketed
domestically, then exported, produced in lower cost bases and ultimately
imported in the country of invention.

New Product Development:

Types of new products

Innovative product: Entirely new to the market (hydrogen fuel vehicle, CNG
vehicle).
Innovative product development involves a lot of expenditure in basic research
and perseverance by the company. It is challenging, expensive and risky but the
rewards are enormous (HP in printing technology, Apple, Microsoft in s/w, Sony
in entertainment electronics)

Significantly modified product: A significant modification in the existing product

available in the market. (digital camera, blue tooth, ipod, blue berry).
Significant product modifications also involve a high expenditure on R&D and
product innovation.

Copy of the existing product: Similar / same type of product currently offered
by competition (cell services offered by idea, airtel, hutch; reverse engineered
products). Copying / reverse engineering is relatively less expensive but can
attract patent & copy right issues.

Stages of new innovative product development:

1. Generation of product idea: through contributions from company’s sales &

marketing staff, researchers, consumers, competition.
2. Evaluation & Selection: of workable product ideas.
3. Concept testing: Conceptualizing the product, it’s suitability to the consumer
and manufacturability.
4. Business feasibility: Commercial feasibility in terms of tooling,
manufacturing, marketing, servicing costs, sales potential and profit potential,
profitability.
5. Product development: Decisions regarding specifications, target costs /
price, proto typing & testing, tooling development.
6. Test marketing: Test marketing in select markets, feedback collection,
debugging.
7. Commercialization: Full scale introduction to the market. Pertinent decisions
are: when to launch, where (places/markets) to launch, whom to target, how to
market (promotion).

Branding:
Brand: A name / sign / term / symbol / design or a combination of some / all of
these intended to identify the goods / service of a seller & to differentiate him
from those of others.
Brand name: Vocalized part of a brand.
Trade mark: Legally protected brand name / symbol.

Branding decisions:
1. Whether to brand: Branding is expensive and risky, although it offers distinct
advantages. Unless a large market presence & identity is aimed at, branding may
not be undertaken by a firm. There is increasing acceptance reported in some
large markets for non-branded goods, in favour of price-quality-utility parameters.

2. Manufacturer’s brand or private brand:

A manufacturer may use his own brand name for his products or may use
another manufacturer’s / distributor’s brand name (private brand). Some
exporters may find it useful to use private brands till their products are
established in a foreign market or the branding cost is justified. (Mitsubishi, bajaj
fans, bicycle brands).

3. Same brands or different brands: The brand used in the domestic market
may or may not be used in foreign markets & vice versa (Zen & Alto). Similarly
branding may have to be differed from one market to another (Pajero & Montero).

4. Global brands: Make it easy to promote products in new markets and

generate revenues / profits at an early stage of business (Nike, Reebok, Pepsi,
coke, McDonalds). Require lower promotional expenditure and provide a
competitive edge over the competition. The products offered under global
brands, however, may be different in various markets.

Problems of branding in int’l marketing:

1. Heavy cost of branding, brand registration and protection.
2. Foreign distributors / collaborators prefer to promote their own brand
locally & are reluctant to use manufacturer’s brand (auteco bajaj) or stipulate a
joint brand name.
3. Cultural / language factors may hinder marketing under a foreign brand (baja
in Spanish speaking countries).
4. Unauthorized brand / trade mark registrations result in recovery / ransom
expenses for the manufacturer.
5. Some countries do not allow foreign brands (unless accompanied by local
brands).

Indian firms may take following routes to branding in overseas markets:

Use Indian brand in niche marketing
Use Indian brand name for export to distributors who do not have their own brand
Simultaneous use of Indian brand name alongwith unbranded exports
Buy foreign brands through acquisition / alliance
Mixed brand names (Tata –Tetley, DHL-Danzas)
Consortium approach (EPC, Commodity board branding).

Packaging & Labeling:

Packing is protective covering of the product for transportation to the consumer.
Packaging includes attractive and adequate presentation to the consumer apart
from adequately covering packing needs. In int’l markets, packaging has to take
into account different tastes, preferences, regulations, practices.

Export packing should be:

Capable of withstanding multiple handling & transport by different modes
Easy to handle with standard equipment
Adequately marked for identity (and contents, if required)
Easy to dispose off
Should meet buyer’s requirements.
Should provide easy access for examination of contents

Functions of packaging:
1. Protection of the product through multiple handling
2. Preservation of quality of product (especially food products, medicines etc)
3. Presentation to the consumer in terms of attractiveness, adequacy of product
and regulations related info, self promotional abilities.

Packaging has assumed increased importance because of increases reliance on

self service by consumers (malls), consumer’s willingness to pay extra for
additional convenience, enhanced appearance / identity and integrated
marketing approach of companies which tries to provide an identity distinction to
their products.

Basic factors which affect packaging decisions:

Product characteristics: Nature, state, weight, volume, fragility, susceptibility to
temperature changes, moisture, chemical changes
Cost of packaging:
Convenience: easy to open /close, identify, recycle, distribute, dispense
Statutory requirements: minimum product specs, minimum packing
requirement

Special packaging considerations in int’l marketing

Regulations: Language, coding, marks, packaging standards.
Buyer’s requirement: (Corona shoes case)
Socio-cultural factors: Colors taboos, signages
Retailing characteristics: distribution through malls / small retailers /
restaurants
Environmental factors: Disposability of packaging, recycling.

There have been several instances where a good or even a better product has
not done well due to less attractive / inconvenient packaging. (USSR electronic
goods in the past, Indian pickles, spices in the past, success of pet bottled soft
drinks with slightly higher quantity than the glass bottle).
Three most important considerations which will continue to dominate
packaging decisions are safety, convenience and environmental impact.

Labeling:
Labeling is considered a part of packaging.
The considerations of designing labeling are:
Statutory requirements such as manufacturing & expiry dates, broad
formulation, bar coding, MRP, warnings (on cigarette packs) (protein, calories, fat
content in food items, constituents and dosage for medicines)
Language (local language for promoting understanding / sales)
Attractiveness & info provision to act as self promotional means (esp. for shelf
sales in malls).

Business environment & product strategies:

A product which is successful in one market may not succeed in another int’l
market because of a different business environmental factor such as:
Usage pattern (tea in Japan, India and Iran, cake as dessert pastry in US but as
a tea accompaniment is UK & India, 2W as means of transport in developing
countries & as a fun vehicle in Europe),
Tastes (pizza toppings in Asia),
Preferences (power & styling for cars & 2W in Europe but fuel efficiency and
spares commonality in India)
Social factors (no ham or beer in Islamic countries, no beef in India, black
colour not preferred in India, requirement of scarf for ladies in Iran, low
requirement of toilet papers in Indian subcontinent).
Infrastructural differences (left hand drive, 110V supply, NTSC system)
Legal requirements (homologation, product liability)

Consequently, product decisions should be based on the target markets and their
specific requirements.

Product strategies:

Product extension: The product marketed domestically is offered in foreign

markets without any significant modifications due to convergence of usage,
preferences and absence of any additional legal / statutory requirements (3W in
SL, B’desh, curry powders to ethnic customers abroad).

Product adaptation: The product marketed domestically is modified for foreign

markets due to differences in:
Consumer tastes & habits
Conditions of use (car for racing, high altitude, gasohol)
Usage (mountain bikes)
Purpose of use (satisfaction of a need) (Maybach, Rolls Royce Phantom for
status statement)
Culture (hamburger in Islamic countries)
Environment (weather, infrastructure)
Regulatory requirements (homologated vehicles; warning labels in local
language)
Positioning (income levels- beefeater gin in USA)
Competition (tall boy design for Zen Estilla)

Product development:

An innovative product: serves an unserved need or serves a need better than

an existing product (digital camera, blue berry cell)
An imitative product: A product similar to the product/s being offered by
competition but with an edge over competition in some ways (features, price,
distribution). (cell ph with a camera, headphones / hands free).
A significantly modified product: which is a major departure from the existing
product/s but may or may not be an innovative product (Zen Estila, Swift as an
European design, initially Santro shape was not liked)

Product Communication strategies:

Straight Extension: One product, one message, worldwide. Same product is
offered in all markets with the same message. (Pepsi, Harley Davidson
m/cycles).
Advantages:
Economies of scale achieved / maintained for the product
No addl R&D expenditure
No addl expenditure on commercials / promotional material
Disadvantages:
Unsuitable when marketing environment is different
Unsuitable when end use of the product is different

Product extension, communication adaptation: Same product offered in all

markets but is positioned differently in different markets with a suitably modified
communication (beefeater gin in USA, pizza as an upmarket item in India, appam
as hoppers of different types).
Advantages:
Economies of scale achieved / maintained for the product
No addl R&D expenditure
Adaptation of communication results in better market yield
Disadvantages:
Cost of communication development

Product adaptation, communication extension: Communication used in

domestic market is extended to other markets but the product is modified for
foreign markets. (McDonald, Hamburger).
Advantages:
Increased product acceptance
Disadvantages:
Cost of R&D, tooling etc for product modifications
Economies of scale may not be achieved, if market volume is not large enough

Dual adaptation: Both the product and communications are adapted for foreign
markets (Indian Cuisine in Europe / USA, dirt bikes, mountain bicycles).
Advantages:
Adaptation of product & communication results in better market yield in each
market (benefits of customization)
Spin off on domestic product in some cases
Disadvantages:
Cost of R&D, tooling etc for product modifications
Economies of scale may not be achieved, if market volume is not large enough
Cost of communication development

Product Invention:
Advantages:
Can open an entirely new segment with market leadership
High profitability due to tech edge, patenting, know how transfers
Disadvantages:
Costs of market research
Costs of R&D and productionisation
Costs of promotion and market development
Risks associated with product failure

Choice of product and communication strategy depends on:

Product defined in terms of needs served
Market defined in terms of conditions of use, consumer preferences and
purchasing power
Costs of product & communication adaptation

Globalisation has caused a certain degree of homogeneity in products thru

convergence of consumer preferences, their willingness to spend for
convenience and also adherence to international product standards.
Therefore, one school of thought proposes standardisation of products &
communication to achieve cost efficiency and meet the consumer’s primary
requirement of 'reliable product at low price'.
However, thoughtless globalisation of product & communication can be
disastrous because despite the recent globalisation, characteristics of
individual markets remain very distinct and unless these are accounted for
through a reasonable measure of localisation, the product may fail (Unilever and
P&G products are formulated and communicated differently in each market).
VII. International Pricing:
Price is the only revenue generating factor in the product mix and can be
effectively used as a marketing tool.
Price is administered based on market forces. It may not always cover costs,
although cost is the most important consideration in pricing.

Exporter’s costs:
Apart from costs involved in domestic marketing, exports need to take into
account additional factors such as addl packing / packaging, documentation,
forwarding, shipping, distribution mark ups etc.

Types of costs: a. Production costs; b. Selling & delivery costs.

Production costs: a. Fixed costs; b. Variable costs.

Fixed costs (indirect costs): Costs which remain fixed irrespective of level of
Plant output (production). Land buildings, machinery, tooling, installations,
security and maintenance are some examples of fixed costs.
Average fixed cost is fixed cost distributed per unit of production. Hence, higher
the output, lower is the average fixed cost.

Variable costs (direct / primary costs): Costs which vary with the level of plant
output (production). Raw materials, labour, consumables like electricity are
examples of variable costs.
Average variable costs may vary with different levels of production.

Total cost= Fixed cost + Variable costs

Selling & delivery costs: Costs incurred for functions other than production
costs, Additional packing, forwarding, transport, documentation, external
inspections, cost of finished goods inventory, insurance, traveling for marketing,
promotional expenditure, in-built mark ups are some examples of selling &
delivery costs.

Pricing objectives:
1. Market penetration
2. Market share
3. Market skimming
4. Fighting competition
5. Preventing new entry
6. Shorten payback (due to uncertain market, short PLC, political situation)
7. Early cash recovery
8. Meeting export obligations
9. Plant capacity utilization
10. Surplus disposal
11. RoI & profit maximization.

Factors which affect int’l pricing:

Marketing objective
Costs
Competition
Product differentiation
Exchange rate
Market profile (demand pattern, disposable incomes, local marks ups, trade
margins)
Image of firm (high end niche, low price product)
Govt policies (floor / ceiling prices, distribution mark ups)
Govt subsidies / incentives, tax exemptions / concessions, tax relief
Govt restrictions (trade agreements, VER / quotas, homologation / safety
standards, pre-shipment inspections)
Import duties in target market

Pricing approaches:

Cost based pricing: Cost plus pricing.

Price= Fixed cost + Variable costs + marketing & distribution costs + any other
costs + desired profit margin – incentives / subsidies.
Advantages:
Covers all costs & ensures desired profit margin
Simple method widely employed.
Disadvantages:
If there is a change in actual variable costs than assumed, the profitability is
affected.
If costs are higher than competitors costs (due to various factors including
inefficient working / lower productivity), the firm is rendered uncompetitive.
With profit level pre-determined, opportunity of higher profit may be lost out
Ignores price elasticity of demand
May not help market penetration
No flexibility.

Market oriented pricing:

Flexible pricing based on market conditions (what the market can bear).
Advantages:
Allows flexibility and is responsive to market conditions
Suitable for short PLC
Disadvantages:
Leaves room for speculation regarding what is the right price in a certain market
condition
Different price levels in different markets can lead to grey market (re-imports).
May not always yield desired profit

Following the market leader:

Setting the price higher / lower / equal to market leader’s / competitor’s price.
Advantages:
Simple method which follows the market trends
Disadvantages:
Competitor’s costs, pricing objectives, reasons for a price changes may be
different / divergent.

Negotiated pricing:
Usual employed for Govt / tender purchases.
Advantages:
Accommodates both the seller & the buyer
Flexible.
Disadvantages:
A weak bargaining seller may not get a good price

Customer determined price:

Customer provides the target price and buys if the seller meets the expectation.
Advantages:
Accommodates both the seller & the buyer
Disadvantages:
No flexibility for the seller, even if variable costs vary.

Break even pricing:

No profit no loss pricing.

Break Even Point (BEP) is derived by appropriating total cost on a

predetermined quantity, without any profit margin. Hence if the price or quantity
are lowered, the seller makes a loss and vice versa.

Calculation of BEP:

1. In terms of units of product:

BEP (units) = FC / (SP - VC).

FC=Fixed cost (total), VC=Variable cost (per unit), SP= Selling price (per unit)
Example:
FC=Rs.200, 000/-, VC=Rs.2/- per unit, SP=Rs.4/- per unit

BEP (units) = 200000 / (4 – 2) = 100,000 units.

2. In terms of sales revenue:

BEP= SP x FC / (SP – VC)

FC=Fixed cost (total), VC=Variable cost (per unit), SP= Selling price (per unit)

Example:
FC=Rs.200, 000/-, VC=Rs.2/- per unit, SP=Rs.4/- per unit

BEP (rev) = 4 x 200000 / (4 – 2) = Rs.400, 000/-

Calculation of break even price for a target quantity:

Break Even price = (FC + VCxQ) / Q

FC=Fixed cost (total), VC=Variable cost (per unit), Q= targeted output in units

Example:
FC=Rs.200, 000/-, VC=Rs.2/- per unit, Q= 100,000 units.

Break Even price = (200,000 + 2 x 100,000) / 100,000 = 4 per unit.

Calculation of price with a predetermined profit over break even price for a
target quantity:

Break Even plus price = (FC + VC x Q + P) / Q

FC=Fixed cost (total), VC=Variable cost (per unit), Q= targeted output in units,
P=desired profit

Example:
FC=Rs.200, 000/-, VC=Rs.2/- per unit, Q= 100,000 units, P= Rs.50, 000/-

Break Even plus price = (200000 + 2 x 100000 + 50000) / 100000 = Rs. 4.50
per unit.

Marginal cost pricing:

This method is adopted at times when there is idle production capacity which is
utilized through an additional order. In this method, the fixed cost is not included
in the pricing for meeting a requirement of quantity (because the fixed cost would
be incurred anyway without that qty or it may be recovered in the domestic
pricing).
If the marginal price is substantially low, it can enable the firm to either adopt an
aggressive pricing vis a vis the competition or spend heavily on promotion.
Advantages:
Marginal pricing makes the firm price competitive, helps in market penetration
and market shares.
Disadvantages:
Can be adopted only when idle capacity exists.
Limitation in case of EOU / SEZs where balancing fixed cost on domestic base is
not possible.
An initial low price may be difficult raise to restore cost plus pricing.

Transfer Pricing: Prices of goods transferred from a company’s unit in one

country to its unit elsewhere (in another country) is known as intra-company of
transfer pricing.
Benefits:
Attracting lower tariff duties in higher tariff countries through minimal pricing
Reducing income tax outgo in high tax countries through overpricing
Facilitating dividend repatriation when it is curtailed by govt policy

Limitations:
Tax / tariff enforcement authorities can impose penalties for lopsided transfer
pricing
Very low transfer prices would affect profitability result of a production unit
Very high transfer price may make a foreign operation look less profitable

Basis of transfer pricing can be:

Local Manufacturing Cost plus standard mark up
Mfg Cost of the most efficient unit in company plus a standard mark up
Negotiated prices
Same price as quoted to independent customers.

Dumping:
Products sold below cost of their production in a foreign market OR selling goods
in a foreign market below the price of same goods in the home market.
If the price is above the home market price, it is referred to as Reverse dumping.

Sporadic dumping: Resorted to occasionally to dispose off excess inventory.

Intermittent dumping: Selective / periodic dumping as a strategic measure to

gain a foothold in a market / drive out (or inflict losses) to competition.

Long period dumping: Resorted to mainly for full capacity utilization and
lowering of average costs.
Dumping is dealt with strongly by govts if it affects local players. However, it
rarely is an issue when world market is strong for a product / commodity.

Retrograde pricing:
Working back from a target price to ascertain profitability.

Pricing process:
1. Define price objective
2. Market analysis (competition, potential)
3. Cost calculation (all costs)
4. Cost relief estimation (incentives, tax benefits, concessional finance)
5. Target price & export feasibility.

Creation of a price structure: Enables visualization of all costs involved and

target price to the customer, comparison with competitor’s comparable costs and
identification of possible areas for cost reduction.

Specimen “Cost plus” export pricing structure for an Indian exporter:

1. Ex-factory cost of the product (inclusive of normally apportioned fixed cost,

variable cost, overheads)

2. Manufacturer’s Profit margin

Serial 1 + 2 = Domestic ex factory price

3. Additional export related costs:

a. Cost of any addl components required for product conformity in foreign

market

b. Additional export packing & marking.

c. Export documentation (consular invoice, legalization charges, cert of origin

fees, proof of export documentation for bond / export obligations discharge,
procurement of import licenses for export related material, membership charges
of EPC)

d. Cost of external inspection, if any

e. Additional financial expenses:

i. Establishment of bid bonds, bank guarantees in case of tenders
ii. Bank’s charges for LC advising / confirmation / negotiation / collection,
iii. Claiming exemptions of excise duty,
iv. Recovery of duty draw back & other applicable incentives
v. Export insurance premium (in case of payment terms other than confirmed LC
at sight)
vi. Cost of credit facility to the buyer, if any
vii. Overseas warrantee, product liability coverage, if any
viii. Forward contract charges, if contemplated
ix. Local insurance premium from ex-factory to FOB point (or any other terms
than ex-factory)
x. Export duty, if any
f. Overseas marketing overheads
i. Cost of sales staff, travel, promotional expenditure not included in domestic
costing.
ii. Cost of registration / protection of trade marks in foreign markets

g. Forwarding Expenses:
i. Loading of export cargo at factory
ii. Empty container pick up and transportation to factory, in case of FCL shipment
iii. Local transportation to CFS / ICD & CFS / ICD to gateway port
iv. CFS / Port charges (including unloading, any detention, demurrage, repacking
of cargo opened for customs exam, any additional handling),
v. THC
vi. CHA fees

4. Cost reductions:
i. Excise & customs duty input recovery through duty draw back
ii. EPCG benefit, if applicable
iii. Duty free imports / DEPB benefits
iv. Income tax benefits on profit as applicable
v. Lower cost of pre & post shipment finance (for export)
vi. MDA / MAI / any other support received from EPC / govt.

Serial 1 + 2 + 3 – 4 = FOB price in Indian Rupees.

(Conversion of Indian Rupee FOB price in hard currency: With a margin for
currency fluctuations based on:
i. Period of validity of quotation for shipments (period over which all committed
shipments will be completed)
ii. Trends in forex markets for the hard currency used for quotation)

5. Ocean / air freight, including BL / AWB issuance charges

FOB price + serial 5 = C&F price

6. Transit insurance

C&F price + serial 6 = CIF price

(Conversion of Indian Rupee C&F or CIF price in hard currency: With a
margin for currency fluctuations based on:
i. Period of validity of quotation for shipments (period over which all committed
shipments will be completed),
ii. Period of validity for the quotations received from the carrier for freight and
insurer for transit insurance,
iii. Trends in forex markets for the hard currency used for quotation)

7. Expenses at destination:
i. Unloading at destination, destination port charges
ii. Import duties, taxes
iii. Foreign CHA’s fees & clearing expenses
iv. Transport to inland ICD, if applicable
v. Transport to importer’s warehouse

Serial 6 + 7 = Landed price

8. Foreign cost additions:

i. Importer’s costs (landed cost, finance, forex fluctuations if applicable,
warehousing, local transportation, repacking if required).
ii. Importer’s mark up
iii. Distribution chain mark up (Wholesaler, Distributor, Dealer, Sub-dealer)

Landed price + serial 8 = Price to end user

Information heads for pricing decisions:

Market:
Major segments
Existence of products identical / similar to company’s product
Significant and smaller competitors
Market potential & growth prospects

Competition:
Products on offer
Needs satisfied / not satisfied by the existing products
Market shares
Financial strength & behavioural pattern

Prices:
Prices of competing products
Price elasticity of demand
Price leader in the market

Govt Policies:
Influence on product
Influence on competition
Influence on prices / profitability

Costs:
Production levels / impact on costs
Comparison with competition

Profitability:
Sales volume – profit relationship
Profit margin of company and competition.

VIII. International Distribution:

Entry into a market may not necessarily assure market penetration. For market
penetration and market shares, an effective distribution channel is necessary.

Distribution channel is the set of firms & individuals that takes title to/ assist
transfer of goods / service as it moves from the producer to the consumer.

Distribution Patterns:

General pattern:

Middlemen services: Service attitudes of wholesalers & retailers vary from

country to country. When margins are low, both try to offer extra services
to attract the consumer. When middlemen are reluctant to promote a
particular product, the producer needs to offer extra inducement to the
middlemen or undertake much of the promotion & selling effort himself.

Line Breadth: is the range of products handled by the distribution line.

Every country has a distinct pattern of line breadth.
In some countries the middlemen can get / carry any product (groceries, general
merchants in India) (broad line) whereas in other countries they carry a much
specialised narrow range (optical shops, surgical supplements, bakery, sweets
shops in India).
Govt regulations can limit the line breadth (arms dealer, liquor shops
requiring licenses, prescription medicines can not be sold except in authorized
medical shops in India).
Costs & Margins: Middlemen margins depend on the level of competition,
services offered, efficiencies / inefficiencies, market size / turnover (bajaj
dealer margin in waiting list days), geographic factors (remote area),
purchasing power of the middleman, tradition. (Low prices & margins in
Indian cities v/s higher of both in rural area).

Channel Length: Usually the channel length is shorter for industrial or high
priced consumer goods than for low priced products (vendors to industries, auto
& white goods dealers). Generally channel length is inversely proportional to
size of purchase.

Informal channels: Channels like street markets (hawkers, pan shops) can offer
much wider market penetration than formal distribution system (they can sell at
lower prices than established retailer). These can be added to the formal
channels, where effective.

Blocked channels: Some channels are blocked for new entrants to the market,
either by competitor’s already established lines, cartels, trade associations.
(Petroleum distribution in India).
Stocking: High cost of credit, loss due to inflation /exchange risk, lack of capital,
lack of floor space for smaller outlets force the foreign middlemen to limit their
inventories. This often results in stock-out and resultant loss of sales to
competition. Physical distribution lags add to this problem. Hence, producers
need to exercise, ingenuity, pressure & provide assistance in terms of credits for
the middlemen to maintain a desired minimum level of inventories.

Power & competition: Strong distributors who supply to a large number of small
middlemen finance downstream and command allegiance of the channel
members to wield considerable power to block the existing channel to outsiders
& make them use less effective channels.

Retail patterns are an important factor in channel selection:

Retailing has a much greater diversity than distribution in terms of Line
breadth. Some outlets are very narrow breadth specialized outlets (boutiques
selling specialty clothes, pan shops in India, home stores in USA, bed & bath,
Toys R us, Babies R us) whereas at the other end of spectrum there are broad
line outlets (like supermarkets, departmental stores general stores in India).

Number of retailers & the average number of customers served by a retailer

varies largely. (702000 outlets in USA with 395 customer/outlet, 21.2 mn outlets
in China with 61cutomers/outlet, 93000 outlets in RSA with 482 customers /
outlet).
While large retailers like supermarkets can be accessed easily, it is difficult
to reach the small retailers without an effective channel. The trend now world
over is to have more broad line, large outlets- departmental stores,
Supermarkets.
Channel levels:
Zero level channel: Direct from producer to consumer (mail order, internet, door
to door, producer's own retail outlets)
One level channel: one intermediary (agent / retailer)
Two level channel: two intermediaries (Wholesaler / distributor, retailer)
Three level channel: three intermediaries (Wholesaler / distributor, dealer,
retailer)

Types of channels in int'l marketing:

International: between / across nations
Intranational: Within a foreign market

Types of middlemen:
1. Those who take title of the goods;
2. Those who assist transfer to the title of goods.

Domestic middlemen:
1. Merchant exports (indirect exports) through transfer of title:
Traders,
Subsidiary company of producer
Global retailers
Piggybackers
Foreign buying offices

2. Without transfer of title:

Domestic agents / brokers
Export Management companies
Cooperative Exporting organisation (piggyback, EPCs, commodity boards, STC)

Foreign middlemen:
1. Agents
2. Manufacturer’s representatives
3. Managing agent / companies
4. Importer
5. Distributor
6. Wholesaler
7. Retailers (malls)
8. Govt depts, State Buyers (STC, MMTC, Avtoexport)
9. Joint venture / licensee / franchisee

Factors which influence channel selection:

1. Product profile (industrial, domestic, perishable, service requirements,
technical complexity)
2. Market & customer profile (mkt size & location, no. of customers & their
geographical spread, purchase pattern, frequency)
3. Middlemen profile (functions undertaken, fin strength, line width, margins,
length of channel, controls, terms of sale, channel ownership)
4. Producer profile: Firm’s size, fin strength, product mix, mktg objectives,
financial commitment to development of distribution
5. Competition profile; Channels employed & their effectiveness, swot
6. Market environment: Economy, govt policies, social / cultural factors

IX. International Promotion

Communications to the target consumer and the distribution channel are

paramount to success of a product / service. Promotion is an effective tool of
communication which is mandated to highlight the reasons for which consumers
should buy a product and channels should distribute the product.

Communications are used to achieve any / all of the following:

Creation of product awareness with potential consumer
Persuasion of consumers by highlighting benefits
Motivation of consumer through incentives
Reassurance of consumer’s post purchase dissonance
Product information to channels
Motivation of channels
Promotion of image of product / company
Promotion of image of country

Stages of communication development for int’l market:

1. Identify the target audience (income group, demographic group) (students,
farmers, celebrities).
2. Identify the objective (consumer education for demand generation, fighting
competition, product resurrection).
3. Finalize the message for:
The content (what is to be conveyed)
Logical sequence (structure)
Presentation (format)
Source (who would generate the message)
4. Budget the expenditure (methods: affordable, as a percentage of sales
revenue, similar to competitors, based on specific objective).
5. Decide the communication mix (advertising, sales promotion, personal
selling, PR).

Advertising: is a non-personal presentation & promotion of ideas, products and

services.
Types of advertising:
Mass media: TV, Radio, theatres, print (newspapers, magazines)
Direct: Mailers, Sales literature, samples, Door to door.

Sales promotion: Concentrated drive (short term) to promote sale of a product /

service. (Trade fairs, exhibitions, discount weeks, gifts).

Public Relations: These exercises are aimed at creating & maintaining company
/ product image / goodwill. (Used by companies, EPCs, commodity boards,
institutes).

Trade Fairs / Exhibitions:

Exhibitions are general exposition for product / company / economic awareness

but may miss the focus required for a category of products / services. Audience
includes people from all walks of life.

Trade Fairs are aimed at promoting business for the targeted categories of
products / services (auto, machinery, textiles, sports goods etc) and mainly
attract audiences with at least primary interest in the types of product on show.

Advantages of specialized (vertical) Trade Fairs in int’l marketing:

Help achieve promotion of products otherwise not permitted to be advertised.
Provide larger audience at a single window.
Create awareness of business opportunities
Facilitate direct contact of potential business partners
Generate business leads, enquiries, sales
Help develop channel members
Locate potential sources of supply
Present opportunity for gathering info on competitors, market trends &
technological advances, local govt policies

Personal selling in Int'l Markets:

Personal selling is the most effective form of communication. It impacts all
important areas of a firm’s operations namely, success of new products,
maintaining market shares of existing products, entry in new markets, business
sustainability, decisions regarding manufacturing levels and locations.

Advantages of personal selling:

Direct dialogue with the consumer (which affords adaptability / flexibility of
approach)
Feedback on product and company
Market intelligence (on competing products / companies)
Better understanding & hence effective redressal of complaints
Provides an alternative to heavy / expensive advertising
Allows focus on appropriate product, personal touch and closure of deals (which
does not happen in advertising).

Limitations of personal selling:

High costs in advanced countries
Success depends on abilities of sales personnel
Requires extensive training of sales personnel
Attrition of sales persons can cause continuity problems with consumers.

Avenues of personal selling:

1. Trade Fairs, exhibitions - domestic and overseas; general / trade specific
2. Buyer - seller meets arranged by EPCs; govt, chambers of commerce
3. Visiting buyers in foreign countries
4. Meeting foreign business visitors in home country (visiting on their own
initiative or by invitation of exporter)

Personal selling options int'l markets:

1. Company's traveling sales personnel attached to HQ of company (useful for
companies which do not have overseas offices / when full time assignments are
not justified)
2. Company’s sales personnel attached to its foreign offices (this provides better
market coverage, allows employing local personnel to enable better market
penetration)
3. Temporarily hired sales personnel (when regular sales force is not required,
e.g. for a particular task, keeps costs lower)

Management of sales force:

Selection:
Creation of job description and listing of qualities required (including
language, communication)
Induction & training- basic and periodic up gradation (company, products,
market environment, local culture)
Supervision and motivation - regular direct interaction / reports to ensure that:
Targets are well understood,
The activities are on track,
Making necessary corrections,
Obtaining feedback,
Motivation to overcome hurdles
Evaluation & control: Measurement of performance vis a vis targets (market
coverage, inventory levels, market share, sales target, maintaining customers,
creating new customers, CRM)
Compensation (apt compensation to appreciate performance)
Compensations can be financial (rewards, commission, paid vacations, pension /
insurance plans) or non-financial (recognition through letters, involvement in
higher profiles / planning, creating a feeling of belonging).

Personal selling process:

Preparation (adequate knowledge of company, products, commercial policies,
market, competition)
Prospecting (creation of profile of prospective customer and his potential)
Pre-approach (collecting all relevant info on target customer, formulation of
approach)
Presentation (orientation to the objective, attractive, arousing interest, holding
attention, creating the right impact towards desired objective)
Follow up (ensure execution of commitments made, minimize customer
dissonance, maintain continuity, build relations)

Problems in intl marketing communications:

Higher cost for a proportionate impact
Differences in regulations
Cultural differences,
Media - availability, costs options
Infrastructure (info, technical back up)
Language
Home country regulations (permissions for forex expenditure)

X. International Advertising

Advertising & publicity are major tools of communication in marketing.

Advertising expenditures are estimated to be in excess of $500 bn p.a.
internationally. High income countries spend 1.5 – 2% of GNP on
advertising.

Advertising may be defined as any paid / sponsored message placed in a

mass medium.

Global / international advertising is making the same appeal to multi

country markets. A firm which can create an effective global campaign can
reap rich dividends in terms of finding new markets and then having a first
mover advantage.

Since ads are often designed to add a psychological value / appeal to a

product / brand, advertising plays a more important communications role in
marketing consumer products than in industrial products. Frequently
purchased, low cost products usually require heavy advertising to remind
consumers about the product. Hence FMCG firms like P&G, Unilver, Pepsi; coca
cola spend over a billion dollars every year outside US in advertising.
Automobile sector tops the ad spend list. High value / low purchase
frequency products require lower ad spend (but higher direct selling costs).

The environment in which communication programs are implemented may differ

from one country to another and cross borders communication poses a larger
problem. Hence many globally present firms are adopting the concept of
Integrated Marketing Communication (IMC), which calls for a coordinated
communications strategy.

Global advertising: Many human needs, wants, desires are very similar the
world over, if presented within recognizable experience situations. People
everywhere want value, quality and latest technology at an affordable price.
Global advertising aims at creating a product culture using this basis (athletic
shoes, soft drinks, MP3, clothing).

Advantages of global advertising:

Economies of scale in creation of ads
Improved access to distribution channels (reassurance to retailers by brand
awareness)
Easier to modify to local cultures
Ad preparation spend allows budgets for best available creativity.

The effectiveness of traditional media is declining steadily. Hence, brand building

locally is becoming more expensive & int’l brand building is becoming more cost
effective. Finding ads which work in different countries & cultures is a big
challenge for advertisers. Simultaneously there is a growing local tendency
which is equally important and it is necessary to understand both. Many
int’l brands consider that there are no fixed national / cultural habits and
existing habits can be changed. However, tastes (as different form habits)
change even within a country and this factor requires a balancing between
globalizing and localizing an ad campaign, which can be called as a
localized int’l ad campaign. (Coca cola has different tastes for different
countries and shoots ads in local languages, back drops, Italian food in Japan &
UK, Chinese food in many countries).

For successful int’l advertising, it is necessary to have a global

commitment to local vision. The question of when to use global or local
campaigns depends on the product involved and company’s objectives in a
given market.

Advertising Content:
Overall requirements of communication for a product do not vary from one
country to another. The same applies to the process of communication.
Communication takes place when the meaning is transferred.
Major hurdles in communication:
1. Message is not delivered to the intended recipient due lack of knowledge of
appropriate media (print i/o TV)
2. Message reaches the target audience but it is not understood (worse yet, it is
misunderstood)
3. Message reaches target audience, may be understood but does not induce the
recipient into desired action (due to cultural differences)
4. Message is impaired by noise (competing messages, confusion due too many
communications on competing products) thus losing effectiveness.

Selecting an ad agency:
Considerations:
1. Global manufacturer’s own organizational set up: a decentralized set up
would leave the local advertising to local arm of the company.
2. Familiarity of the global ad agency with local culture & buying habits in
target market
3. Does the ad agency cover all target countries?
4. If the product needs strong local identification (buyer perception), it would
be beneficial to select a local ad agency

Advertising appeals and product characteristics:

Advertisements must communicate appeals that are most relevant &
effective in the target market / audience. The considerations for this are the
stage of PLC for the product & cultural, social and economic differences in
markets.

For a global ad campaign, the marketer should identify commonalities of

the following in different countries:
a. functional & emotional needs, b. cultural similarities (or insignificant
differences) & c. economies of scale

The usp in each country may differ from one country to another for the same
product and hence a global ad needs to be localized to that extent (attributes of
toothpaste, talc powder, ketchup taste).

Creating ads:
Art Direction: deals with visual presentation of broadcasting / print advt.
Commonizing regional themes may help lower the costs of global campaign.

Copy: Written text of the ad. It should be as short as possible but very effective.
In fact the trend is to rely as much as possible on visuals rather than copy
and invoking company image (cola ad of Aamir khan burping).
Lower literacy, problems encountered in effective translation of copy in
different languages and thus failure to convey full, correct message are some
problems in copy writing. Style & content differences must be considered
while creating ads for specific countries (direct product comparisons in US v/s
sentimental image appeal in Japan)
Cultural considerations: Symbols, colour preferences & meanings, man-
woman relationships, social practices can differ greatly from one country to
another and hence localizing of ads is very important to success.

Global Media considerations: Ads created with substantial expenditure can

result in the desired appeal only through an effective media. Hence knowledge
and choice of media is very important.

Media decisions: The extent of availability and usage of TV, print,

newspapers, electronic media and the internet varies drastically from one
country to another.
Similarly several factors as govt regulations, commercial practices also
affect the efficacy of the media. (one news paper per 2 Japanese, 4
Americans, 10-20 south Americans and 200 Swedes or Nigerians. Similarly time
allowed per hour for TV commercials varies- very limited in Europe, and TV
commercials are subjected to censorship especially in Middle East countries.
Ownership of TV sets , PCs and internet connections is another big variable).
Hence media usage decisions differ from one country to another. Generally
use of TV tops the list of media preferences in developed world, followed
by print media (newspapers / magazines), radio & outdoor.

****************************************************************************************

International Marketing

Unit 1: Nature of international marketing

• Introduction
• Process on international marketing
• International dimensions of marketing
• Domestic marketing VS international marketing
• The applicability of marketing
• Multinational corporations
• The process of internationalization
• Benefits of international marketing

Unit 2: Trade distortions and marketing barriers

• Protection of local industries
• Government: a contribution to protectionism
• Tariff barriers
• Non-tariff barriers
• Private barriers
 • WTO
• Preferential systems

Unit 3: International marketing environment

• Political
• Legal
• Cultural
• Technological environment
• Natural environment etc

Unit 4: Consumer behaviour in the international context

• Perspectives on the consumer behavior
• Motivation
• Learning
• Personality
• Psychographics
• Perception
• Attitudes
• Social class
• Group
• Family
• Opinion leaderships
• Diffusion of innovations

Unit 5: International market research and information system

• Nature of marketing research
• Marketing information sources
• Secondary research
• Primary research
• Sampling
• Basic methods of data collection
• Measurement
• Marketing information system

Unit 6: International market entry strategies

• FDI
• Exporting
• Licensing
• Management contract
• Joint venture
• Manufacturing
• Assembly operations
• Turnkey operations
• Acquisition
• Strategic alliances
• Analysis of entry strategies
• FTZ’s

Unit 7: International Product strategies

• Meaning of product
• New product development
• Market segmentation
• Product adoption
• Theory of international product lifecycle
• Product standardization vs. product adaptation
• Marketing of services
• Branding and packaging decisions

Unit 8: International Channel of distribution

• Direct and indirect selling channels
• Types of intermediaries for direct channels
• Types of intermediaries for indirect channels
• Channel development
• Channel adaptation
• Channel decisions
• Determinants of channel types
• Black market
• Grey market
• Distribution of services
• Physical distribution and documentation
• Modes of transportation
• Cargo or transportation insurance
• Packaging
• Freight forwarder and Customs broker
• Documentation

Unit 9: International promotion strategies

• Promotion and communication
• Promotion mix
• Personal selling
• Publicity
• Sales promotion
• Advertising
• The role of advertising in international market
• Patterns of advertising expenditures
• Advertising and regulations
• Media selection
• Standardized international advertising

Unit 10: International pricing strategies

• The role of price in international markets
• Price standardization
• Pricing decisions
• Alternative pricing strategies
• Dumping
• Price distortions
• Inflation
• Transfer pricing
• Counter trade and terms of sale/payment
- Counter trade
- Price quotation
- Terms of sale
- Methods of financing and means of payment
• Sources of financing and international money markets
• Currencies and foreign exchange