Module 1

Definition
• IMM is defined as the performance of the business
activities designed to plan, price, promote and direct
flow of company’s goods and services to consumers
or users in more than one nation for a profit

• International marketing takes place when

marketing/trade is carried out ‘across the border’ or
between more than one nation
• International marketing would involve:
1. Identifying the needs and wants of customers in
international markets
2. Taking marketing mix decisions related to the
product, pricing, distribution, and communication-
diverse consumer and market behavior- across
different countries
3. Penetrating international markets- various modes of
entry
4. Decision making in view of dynamic international
marketing environment
• Terms in international marketing:
1. Domestic marketing: mktng practices within domestic mkt
2. Foreign marketing: methods and practices used in home
mkt- also applied overseas with little adaptation
3. Comparative marketing: comparative study of 2 or more
marketing systems
4. International marketing: it focuses on the firm level
marketing practices across border- including market
identification, targeting, entry mode, marketing mix,
strategic decisions to compete with international markets
5. Global/world marketing: treats whole world as a single
market- standardize the marketing mix of the companies as
for as possible. Does not differentiate b/w home & foreign
country
Scope of International Marketing

1. Exporting
• Establishing JV & Collaborations
• Licensing
• Consultancy
• Know-how(Technical & Managerial)
2. Importing
3. Managing of international operations
4. Re-exporting
 Challenges in International Marketing
• Political & Legal Difference
• Cultural Difference
• Economic Difference
• Difference in the currency unit
• Differences in the language.
• Difference in Marketing Infrastructure
• Trade restrictions
• High cost of distance
• Difference in trade practices
Domestic environmental challenges

1. Economic environment:
• Domestic tariff structure & various import duty exemption
scheme- offered by the home government- determines
the cost of imported inputs- which contributes to the
final cost of production- affect cost competitiveness
• National policies & FDI schemes for the entry mode fort
he foreign investors- Indian biz environment- friendlier to
foreign investors
• Economic conditions such as state of foreign exchange
reserves and the inflationary conditions- openness of a
country’s trade policies
2. Legal environment:
• Political forces within the country- affects international
marketing decisions. Such as changes in trade policies,
fiscal policies, other matters related to bilateral or multi
lateral made- political priorities of government in power
• Eg: India imposing ban on South Africa & Fiji- protest
against apartheid & uphold human rights
• National government has the rights to impose restrictions
on national security, integrity & preservation of moral &
cultural values
3. Infrastructure:
• Development of physical, financial, human & institutional
infrastructure- positive impact on firm- go international.
• Eg: Dubai, Singapore
3. Overseas environmental challenges:
• Environmental factors- beyond firms control in international
markets- PEST, legal, cultural, competition & marketing channels
• If the firms is operating in multiple markets- severity of marketing
complexity increases
4. Political:
• Political stability of the government and government policies-
affect international markets
5. Economic:
• Economic stability- target market facilitates international
marketer’s task. Economic uncertainties, hyperinflation-
generates severe problem- payment modes
6. Legal:
• well developed, sound & just legal system- helps to reduce
marketing risks- firms can expect unbiased and fair treatment
7. Cultural & social:
• Cultural factors- important role-international marketing
• Target market with countries with cultural similarities- easy to
approach
• Eg: Indian traditional product (dress) & products- exported to
international markets- sizeable ethnic population
• Chinese foodstuffs, worship goods, middle east apparels for ladies
• Social environment- affects the motives to make a buying
decision and communication- customized- various social traits
beliefs & aspirations
• Eg: USA aggressive- result oriented, Japan- polite- long term
relationships, French- more formal
8. Competition:
• Competition in international includes- products imported form
various countries- produced locally and competitors from
exporters own country
9. Marketing channels:
• High income countries- organized large scale retail outlets
• Packaging- seems more important- attention- products-sold in
supermarkets
• Problem arises for the firms- developed countries- large
quantities- than to make the goods move through distribution
channels- than in emerging markets- size is small.
10. Technology:
• Ample opportunities for developing countries like India & China-
export products @ competitive price- least developed countries.
Eg: Bajaj- 85% market share in Bangladesh
• India- turnkey projects- Africa, Middle East etc
 Global Vs Domestic Marketing
Basis Domestic Marketing Global Marketing
Meaning Refers to marketing within The activities of 4P’s
the geographical boundaries distribution, advertising, selling
of the nation extends over geographical limits
of the country
Area served Small Large
Govt interference Less Comparatively high
Business operation Single Country More than one country
Use of technology Limited Sharing and usage of latest
technology
Risk factor Low Very high
Capital requirements Less Huge
Nature of Customers Same Varies from country to country
Research Required but not extensively Extensive research is required
Reasons for entering International Markets

profitability
Achieving
Growth economies of
scale

Why should
Spreading firm enter Risk spread
R & D cost
international
market
Marketing
Access to
opportunities
imported
due to life
inputs
cycle Uniqueness
of products
& services
1. Growth: firms go international- domestic markets saturate- forced
to look for an alternate markets- overseas. Countries like India,
USA, China- few companies choose to internationalize
2. Profitability: Exporters benefit form the higher profit margins in the
foreign markets. Policy incentives such as exemption form indirect
taxes & duties , government incentives for export oriented
production
3. Achieving economies of scale: large scale production capacities-
makes the domestic firms – to dispose the goods in international
markets
4. Risk spread: company operating only in domestic markets-
dependent on economic fluctuations- foreign markets- risk is
spread
5. Access to imported inputs: number of incentive schemes which
provides duty exemption- for import of inputs used for export
production. Helps companies to access imported goods- technical
know how- upgrade operations & competitiveness
6. Uniqueness of product or service: Indian products such as
herbal & medicinal plants, value added BPO services,
software development etc- competitive edge- other
countries- international market
7. Marketing opportunities due to life cycle: when product /
service- saturated in domestic / international markets-
firms convert into marketing opportunities- operating in
international markets
8. Spreading R&D costs: spreading the potential market size-
recovers quickly the cost incurred on R&D. price skimming
strategies (for pharmaceutical products, microprocessors
etc)
Concepts related to the management of International
Marketing Function

Transition from Domestic to International Markets

1. Domestic marketing:

Market focus Domestic

Orientation Ethnocentric
Marketing mix decisions Focused on domestic customers

• Firms will pay little attention to the for changes- international

marketing environment changes
• Ethnocentrism- predisposition of the firm to be concerned only
with the viability & the legitimacy of the home country
2. Export marketing:

Market focus Overseas (targeting and entering

foreign markets)
Orientation Ethnocentric
Marketing mix decisions • Focused mainly on domestic
customers
• Export- extension of the domestic
marketing
• Decision made at headquarters

• Indirect exporting- intermediate trading houses- gradually

firms develop backward linkages & product customization-
foreign market needs
3. International marketing:
Market focus Differentiation in country markets by way of
developing or acquiring new brands
Orientation Polycentric
Marketing mix • Developing local products depending upon
decisions country needs
• Decisions by individual subsidiaries

• Over a period of time- export company- caters to specific needs

of markets in overseas markets
• Coz of growing prominence- company devise fierce strategies-
prominence in the existing market
• Polycentric orientation- predisposition of the firm- differences
among the market-market specific strategies.
• Products are manufactured in the home country- separate
product adaptations
• Extreme focus- international marketing- multi domestic
marketing- company establishes- independent subsidiary-
acts on its own accord
4. Multinational marketing:
Market focus Consolidation of operations on regional basis- gains
from economies of scale
Orientation Regiocentric

Marketing mix Product standardization on regional basis

decisions

• After company establishing- its operations in multiple

markets- consolidate operations for economies of scale-
manufacturing and marketing mix decisions
• Markets are divided into regional sub segments- similarity in
responding to the marketing mix decisions
5. Global marketing:
Market focus Consolidating firm’s operations on global basis
Orientation Geocentric
Marketing mix Globalization of marketing mix with local
decisions variants
Joint decision making across firm’s global
operations

• Single marketing method across international markets with

little adaptations
• Reduction of cost inefficiencies & duplication of effort among
national and regional subsidiaries
 EPRG CONCEPT
• The behavioral attributes of the firm’s management in casual
exports to global markets can be described under EPRG
(Ethnocentric, Polycentric, Regiocentric and Geo
centric)concept
1. Ethnocentric orientation:
• Belief which considers one’s own culture as superior to
others- ethnocentric orientation
• Firms or managers- obsessed with the belief- marketing
strategy- worked in domestic market- would also work for the
international market.
• Ignore environmental factors b/w markets
• Attempt to market their products- similar needs or indigenous
(original) products are acceptable to consumers in those
markets. Eg: Ayurveda products, herbal, Unani, mysore silk,
ancient idols etc
• Ethnocentric orientation may be of following types:
1. Firms are more accustomed- cultural differences is
overlooked. Eg: Indian handicrafts exporters- Small and
medium sized enterprises
2. Environmental differences are recognized- market strategy
focus- more on home country objectives than international
objectives
3. Ethnocentrism considers- overseas operation- means of
disposing the surplus
4. Eg: food items (batter of dosa, idli mix, chutney powders,
sambhar curry)- not only the Indian population, but also in
Dubai, Singapore etc
 2. Polycentric orientation:
• Polycentric approach is highly market oriented. Based on the
belief that there is substantial difference between each
markets- unique
• Each market is unique- in terms of political, cultural, legal,
economic, consumer behavior and market structure
• Needs more corporate resource, little coordination among
various affiliates, duplication of certain activities
• Economies of scale is hardly achieved
3. Regio centric orientation:
• Firm treats a region as a uniform market- similar marketing
strategy- within a region- but not across the region
• Eg: Starbucks- interior works
 4. Geocentric orientation:
• Considers whole world as a single market- formulate
integrated marketing strategies
• Identifies similarities between different markets and
formulate uniform marketing strategy

• SRC (Self Reference Criterion):

• It is an unconscious reference to one own cultural values,
experience and knowledge as a basis for decision making
 Stages of International Marketing Involvement

1. No Direct Foreign Marketing: companies do not actively cultivate

customers outside the national boundaries- products may reach
foreign markets- via domestic wholesalers or distributors-
receive orders from web surfers
2. Infrequent Foreign Marketing: temporary surpluses- variations in
demand and productions- infrequent marketing overseas. Sales
to foreign market are made goods available- no intention of
making continuous market representation
3. Regular Foreign Marketing: firm has permanent productive
capacity- goods to be marketed in foreign markets. May deploy
foreign or domestic intermediaries- own sales force. Primary
focus of operations- domestic needs- demand grows production
is allocated for foreign markets
4. International Marketing: companies fully committed and
involved international marketing activities. Seeks
markets all over the world and sell products- result of
planned production- JV successful
5. Global Marketing: companies treat the world- including
their home market. Market segments are defined-
income levels, usage patterns
Protectionism
• It is the economic policy of restraining trade between states
through methods such as tariffs on imported goods, restrictive
quotas and a variety of government regulations designed to
discourage imports and prevent foreign take over of domestic
markets and companies.
1. Protection logic and illogic:
• Countless reasons to maintain government restrictions on
trade adopted by the protectionist, which can be classified as:
1. Protection of the home market
2. Protection of the infant industry
3. Conservation of natural resources
4. National defense
5. Increase of biz size
• Generally it leads to industrial inefficiency while detracting from
a nation’s a realistic adjustment
• Protectionism popular concept- rarely leads to renewed growth
in a declining industry- maintenance is high- hidden taxes
2. Trade barriers:
• To encourage development of domestic industry and protect the
existing industry- governments may establish trade barriers to
trade as tariffs, quotas, boycotts, and market barriers- against
imports and foreign business
3. Tariffs:
• Tariff is tax imposed by the government on goods entering its
borders
• May be used as revenue generating tax or to discourage the
imports of goods or both.
If tariffs:
Increases Inflation pressures
Government control and political considerations in
economic matters
Weakens Balance of payment positions
Supply demand patterns
International relations (trade wars)
Restrict Manufacturers’ supply sources
Choices available to consumers
Competition

Eg: EU- US dispute- pasta export subsidies- 40% increase in

tariffs on EU- spaghetti and fancy pasta. EU responded- walnuts
and lemons and increased tariffs on fertilizer, paper products etc.
EU and US- banana trade war
 4. Quotas:
• Specific unit or dollar limit applied to particular type of good
• Eg: Great Britain limits imported TV, Germany on Japanese ball
bearings, Italian- Japan motorcycles
• Since 2000 quotas are replaced by tariffs
5. Voluntary Export Restraints:
• Also called as Orderly Market Agreement
• Is an agreement b/w importing and exporting country for a
restrictions on volume of exports
• VER is voluntary coz exporting countries sets limits- generally
imposed under the treat of stiffer quotas and tariffs being set
by the importing country- if VER is not established
• Eg: Japan US TV exports- 1.56 million per year- japan
investing in television manufacturing in US
 6. Boycotts and embargoes:
• Government boycott is an absolute restriction against the
purchase and importation of certain goods from other
countries
• Embargo is a refusal to sell a specific country
• A public boycott either formal and informal and may be
government sponsored
• Eg: US boycotts- which has dispute
7. Monetary barriers:
• Government can effectively regulate its international trade
restrictions
• Such restrictions may be enacted to preserve the BOP
position for the advantage or encouragement of particular
industries
 1. Blocked currency: is accomplished by refusing to allow an
importer to exchange its national currency for the seller’s
currency
2. The differential exchange rate: particularly to control the
imports. Encourages imports- importation of goods the
government wants and discourages if it does not want.
3. Government approval: to secure foreign exchange is often
used by countries experiencing severe shortages of foreign
exchanges.
• Importers who want to buy foreign goods must exchange
permit, ie permission to exchange an amount of local
currency for foreign currency
• Exchange permit- stipulate the amount to be deposited into
the local bank for a set period prior to the transfer of goods.
Eg: brazil 360 days prior
 8. Standards: non tariff barriers- standards to protect
health, safety & product quality. Unduly stringent ways to
restrict trade.
• Different country has different regulations. Eg: size of
knotholes- Japan. US & other countries (Local content)-
automobiles- gain admission into their markets
• NAFTA- 62.5% North American content- deter foreign cars
9. Anti dumping Penalties:
• Designed to prevent foreign producers- “predatory pricing”-
foreign producer intentionally sell pdts- below cost price-
undermine the competition & take control of the market
• Investigations are costly long time to resolve- but still
penalties- keeps some countries out of the markets
 Death of distance
• Referred to falling transport and communication costs- have
made it economical for countries to integrate distant
operations- ship the products and components across the
globe
1. Especially in medical and health sectors. Eg: Medical
transcription US and India. Cost of this work is 30% less in
India compared to US.
2. IT revolution- invention of microprocessor- high power low
cost computing – vast amount of data- processed by
individuals and firms. Satellite, optical fiber, wireless
technologies, internet & World Wide Website. Moore Law-
power of microprocessor doubles & its cost of
microprocessor falls every 18 months
3. Technology revolution in transport and communication-
contribution in reduction of disadvantages of natural barriers like
distance and cost.
• Development of air cargo transportation – quick and safe
transportation of sensitive goods like perishables and goods with
low shelf life
• Developments of containerization, refrigerators- high significance.
• Global village- shrinkage and disappearance of time and borders
4. Internet’s World Wide Web – 1990s- fast wider access- lower
cost- user friendly- new structure of communication-
simultaneous access to information, images, numbers etc
5. Airlines, telecomm charges- fallen steeply. Eg: pulse scheme &
cheap air tickets. High technology products- limited to developed
countries- availability of high level technology- low skilled
workers
Who really benefits from IT and communication
revolution?

1. Financial dealers: instant communications, free flows

of capital, constant updates on share markets in real
time
2. MNC’s: cross border mergers & acquisitions- venture
capitalists and FDI
3. Skilled labours also travels global village- immigrants
Targeting the individual customers

• Market segmentation & targeting- strategy to overcome some

limitations of mass marketing
• Limitations- due to heterogeneity
• Segmentation goal of marketing- difficult to address the individual
customer- tools of internet and IT
• Steady progression form mass marketing- segmented marketing
to niche marketing- individualised marketing
• Communication revolution- expanded the scope of individualised
marketing- database- interest- persuade and sell
• Still strengthened by CRM delivering value to the customers
• Eg: jewellers, birthday anniversary wishes etc
E marketing
• Electronic markets will eliminate the needs for intermediaries
and direct contact b/w manufacturer and customer- bring down
the cost of transaction and cost of the final product
• Customers can meet face to face, transact business at any
point of time, any part of the globe
• E business use of electronic means and platforms to conduct a
company business, Ecommerce- providing information, policies,
products, transact and facilitate- selling of products & service
online.
• E marketing- company efforts to inform, communicate, promote
and sell its products over the internet
• E business and e commerce- B2B,B2C,C2C,C2B
• Benefits of internet to business:
1. Global reach:
2. Enhanced value proposition: wide product assortment, product
recommendation engine, e mail alert technology, product
reviews
3. Improved operational efficiency: virtual teams for customer
service, sales and product development, video conferencing and
teleconferencing- save money and time
4. Streamlined supply chains: improved operational efficiency and
cost reduction
5. Better connectivity: quicker communications among individuals
and companies
6. Making everything faster: data in fingertips
7. Death of distance
Components of the Electronic Value Chain

• Managing supply chain for international business

• Concept of supply chain embraces the following points:
1. Complete process of providing goods and service to the final
user
2. Includes all parties and logistics operations from single
supplier to customer within single system
3. Includes procurement, production and distribution operations
4. Extends across organizational boundaries
5. Primary objective of Supply chain is service to customers
6. Collective performance of the company- effective supply
chain
• Important components of the supply chain are:
1. Context suppliers: also called as portals- supports the use of
electronic channel both for customers and suppliers. Eg: Yahoo,
Google, Internet Explorer
2. Sales agents: those who support suppliers primarily through
offering high quality address banks of potential customers
3. Market makers: auction sites
4. Purchase Agents: helps the internet shoppers to find the
desired goods and service
5. Payment and logistics specialist: facilitate payment for
products ordered online and delivery of the product to the
buyer, digital payment system
 WTO- WORLD TRADE ORGANIZATION
• WTO has 150 member countries- accounting to 97% of
world trade
• It came into existence on 1 January 1995
• Major function is to ensure smooth flow of international
trade between nations
• Basic functions are:
• Facilitates implementation, administration, operation of
trade agreements
• Provides forum for negotiations among member
countries
• Responsible for settlement of differences & disputes
among its member countries
• Responsible for carrying out periodic reviews of trade
policies
• Assist developing countries in trade policy issues
through technical assistance & training programs
• Responsible for carrying out periodic reviews of trade
policies of its member countries
• Assists developing countries in trade policy issues
through technical assistance and training programmes
• Cooperation within International organizations
Principles of Multilateral trading
system under WTO
1. Trade without discrimination:
• A country cannot discriminate between its trading partners
and its own foreign products and services
i. Most Favored Nation (MFN) treatment:
• Under WTO agreements- countries cannot discriminate
between their trading partners
• If a country grants someone a special favor (such as low
custom rates for one of its products), then it has to be
same for all other countries (WTO members)
• This principle is known as Most Favored Nation Treatment
(MFN)
• Exceptions to MFN principle are allowed:
• Countries can give developing countries special access to
their markets
• A country can raise barriers against products that are
considered to be traded unfairly from specific countries
ii. National Treatment:
• WTO agreements stipulate that imported and locally
produced goods should be treated equally- after the
foreign goods have entered the market
• The same should apply for foreign and domestic services
and to foreign and local trademarks, copyrights and
patents
2. Gradual move towards freer markets through
negotiation:
• Lowering the trade barriers such as custom duties,
import bans or quotas that restricts quantities
selectively
3. Increased predictability of International Marketing
Environment:
• Fixing ceilings on tariff rates to ensure stable and
predictable business environment
4. Promoting fair competition in international markets:
• Rules on non discrimination MFN & National
Treatment are designed to secure fair conditions of
trade.
Institutional framework for exports in India
• Exporters & Manufacturers needs guidance and
assistance at different stages of Export.
• For this purpose GOI has set several export promotion
institutions
• Institutional framework for exports in India can be
classified into 6 different divisions
1. Economic division
2. Trade policy division
3. Foreign trade territorial division
4. Export products division
5. Export service division
6. Exports Industries division
• Ministry of Commerce, Government of India-
responsible for countries external and internal trade
• It formulates foreign trade policies in particular export
& import policy of the country
• It guides to export country’s manufactured and value
added products
1. Economic division
• Directly connected to Ministry of commerce, GOI,
• Helps to develop commercial relations with other
countries
• Various trade promotion measures
• Economic adviser- responsible for formulating export
strategy, planning & maintaining & coordination,
provides technical assistance

2. Trade policy division
• Make effective trade
policies
3. Exports products division:
• Pays attention to
production, generation of
surplus, market development
of various products,
specially manufactured
products like engg products,
leather products, marine,
petroleum products
• Takes care of cooperation
dealing
4. Export industry division:
• Responsible for handling
export promotion activities
relating to industry &
maintain cooperation
5. Exports service division:
• Deals with problems like:
• Licensing,
• Export credit
• Market Research &
information
• Transportation
• Quality control
• Joint Venture etc
State Trading Corporation STC
• STC was formed by GOI in 1956
• Main functions are:
• Organize favorable trade relations
• Purchase raw materials and other goods for export promotion
• Provide financial assistance and credit for small producers &
manufacturers
• Provide storage facilities for exporters
• Introduce products according to development & change in
international markets
• Main exported item by STC are Tea, coffee, tobacco, oil, sugar,
cotton raw, spices, pulses, fish crab, transport equipment, ready
made garments
Minerals & Metals trading Corporation (MMTC)
• India is rich in minerals and
metals especially iron &
ore. Set up in Sept 1963
• Export promotion of Indian
goods, service and projects
to maximise foreign
exchange rating
• Export of new
manufactured products to
new markets
• Maximum export of value
added products
• Formulation and
implementation of trade
policies related to minerals and
metals
• Provide technological
assistance to exporters and
quality improvement on
international standards
Indian Institute of Foreign Trade (IIFT)
• In 60’s & 70’s GOI set up IIFT
to meet the requirements of
industries and foreign trade
• This body helps in export
management program, market
research, export credit, export
publicity, collection of market
information, shipment
inspection, quality control etc
• Provides high standard training to
executives and employees in
industries, export houses, govt
departments to specialize in
production, latest techniques etc
• Organizes various research
programs and surveys
• Provides various measures to
increase potential demand of
Indian products
• Provides international trade
information through various
publication “Foreign Trade
Review”
Trade Fair Authority of India (TFAI)
• GOI set up in 1977 to promote industrial trade fairs and
exhibitions
• Main functions:
• TFAI promotes and organise industrial trade fair exhibition
within country and outside country
• Set up shows and shops in India and abroad for export
promotion of Indian products
• Participates in industrial trade fair exhibition within country
and outside country
Federation of Indian Export
Organization (FIEO)
• FIEO was set up in 1965 by
GOI- for coordination and
cooperation between export
promotion council and
commodity boards
• Major functions are:
• FIEO organises meetings,
conferences, seminars and
workshops to provide different
opportunities to export
• FIEO arranges for round table
conferences of trading interest in
India with different countries
• FIEO projecting Indian products &
services abroad, through various
media including films, ads,
publications etc
• FIEO maintains contacts with
various international agencies like
ILO (International Labor org) ,IMF
(International Monetary Fund),
World Bank etc