BIB-302: INTERNATIONAL

MARKETING

BBA Global (IB)

Manav Rachna International
University
PART – A
UNIT 1
CONCEPT OF INTERNATIONAL
MARKETING AND ITS SCOPE
 Meaning of International Marketing

Definition adopted by AMA (American Marketing

Association) “International marketing is the
multifunctional process of planning and executing
the conception, pricing, promotion and distribution
of ideas, goods and services to create exchanges that
satisfy individual and organizational objectives.”
Examples:
• Two businessmen of small village
• Korean Country example
• Example of Arvind Mills
 Birth Control
Marketing of Polio Eradication
• Concept Swan Flue Eradication
Religion
• Product should be in accordance to local needs
Scope of International Marketing
• Example of TV industry, Inspite of 30% growth,
how LG & Samsung grown
• Same with Refrigerators – Kelvinator lost the
business, Voltas an Godrej are also on loosing
grounds.
• Six out of the 100 largest US MNC’s made more
than 100% of the total profits from outside the U.S.
40 of them earned more than half of the total profits
from the foreign markets.
S. Country Growth Rate (%) Annual Share in World Exports (%) Change
NO. in
Share
2005 2006 2007 2001 2005 2006 2007 07/01
1. China 28.5 27.2 27.6 4.3 7.3 8.0 8.4 4.1
2. Hong Kong 11.6 9.7 10.0 3.1 2.8 2.6 2.4 -0.7
3. Malaysia 12.1 14.0 7.7 1.4 1.4 1.3 1.3 -0.1
4. Indonesia 22.9 19.0 13.6 0.9 0.8 0.9 0.8 -0.1
5. Thailand 14.6 19.1 13.7 1.1 1.1 1.1 1.1 0.0
6. Singapore 11.8 14.4 36.2 2.4 2.7 2.7 2.7 0.3
7. India 29.8 21.0 14.5 0.7 1.0 1.0 1.0 0.3
8. Brazil 22.7 16.0 19.6 0.9 1.1 1.1 1.1 0.2
9. Mexico 13.2 16.8 4.3 2.6 2.1 2.0 2.0 -0.6
10. Russia 33.3 25.0 8.4 1.7 2.3 2.5 2.4 0.7
11. Korea 15.6 18.4 -8.7 2.0 2.2 2.3 2.2 0.2

Developing 22 19.7 15.5 36.8 43.8 455.3 45.0 8.2

Countries
WORLD 14.1 15.7 13.8 100 100 100 100
• Economic barriers are either withdrawn or relaxed.
• Welcome to foreign investments.
• Transfer of technologies are allowed.
Infosys Chairman-Mr. Narayan Murthy says “Marketing
is nothing but to manufacture goods/services where
the cost is low and sell/trade it to the
place/countries where you get the better
realization.”
Examples of
• Multinational Corporations (MNC’s)-Nokia, Sony, L.G.
Samsung, General Electric, General Motors, KFC’s
Macdonald,
• Indian MNC’s- TATA, Hero, ICICI, Aditya Birla Group,
Infosys, Wipro & Ranbaxy
MNC’s are big by

• Sizes
• Structure (Singer selling Machines in 181 countries)
• Performance (Parker pen 80% sales from overseas)
• Behavior (Example of Bridge Stone Tyres)
Growth of Overseas Survival Sales & Profits
markets
• Collaborate, trade • IBM and Compaq sell
• Even American with others where more computers abroad
markets can not you are weak. that at U.S.
ignore the vast
• Coca Cola,
potential of
International sales
international markets,
account 80% of the firm
The world market is Benefits of operating profits.
more than four times
larger than U.S. International Inflation & Price
market. Marketing Moderation

Diversification • Lack of imported

Employment products forces
• Demand for the most consumer to pay more.
products affected by Foreign ownership
cyclical factors, can provide benefits, • Trade restrictions
seasonal / climatic more investments, depress, price
factors. Foreign more employment, competition in the short
markets are solution for profits are run; but they can
variable Markets redeployed. adversly affect demand
for years to come
 Scope of International Marketing
• Exporting- Selling to foreign markets
• Importing- Buying from abroad
• Re-Exporting- Importing semi-finished goods &exporting
finished goods.
• Management of International Operations
– Operating Mktng/Sales abroad
– Prodn./assembling facilities in foreign countries
– Formation of trade blocks, settlement of external payment
– Licensing/joint ventures
– Foreign Exchange Management
– Promotion & Development role
– National Global policies for International marketing
OBJECTIVES OF INTERNATIONAL
MARKETING CHALLENGES AND
OPPORTUNITIES IN INTERNATIONAL
MARKETING
• INTERNATIONAL MARKETING
– International marketing is defined as the marketing
activities carried out across national boundaries.
– International marketing objectives are:
1) Identifying needs and wants of customers in
international markets
2) Taking marketing mix decisions related to product,
pricing, distribution and communication keeping in
view the diverse consumer and market behaviour
across different countries on one hand and firm’s
goals towards globalization on the other hand
3)penetrating into international markets using various
mode of entry and taking decisions in view of dynamic
international marketing environment.
 Opportunities

1. Experience Transfer-L.N. Mittal

2. Scale Economies-Coca Cola
3. Resource Utilization-Tata/LG/Samsung
4. Global Strategy-ICICI
 Challenges
• Country Risk
– Competitive
– Political
• Cross Cultural Issues
• Product Acceptance
• Exchange Rate Fluctuation
• Logistic and Supply Chain Management
• Marketing Channel Issues
• Information Unavailability & Costly
• Brand Awareness
• Technical implications
• Market Uncertainty
UNDERLYING FORCES OF
INTERNATIONAL MARKETING, MOTIVES
BEHIND GOING INTERNATIONAL
 Global Integration
Driving Forces Restraining Forces

• Culture
• Technology
• Market Differences
• Culture
• Costs
• Market Needs
• National Controls
• Cost
• Nationalism
• Free Markets
• War
• Economic Integration
• Management Myopia
• Peace
• Organization History
• Management Vision
• Domestic Forces
• Strategic Intent
• Global Strategy & Action
 Benefit / Leverage of Global
Company

1. Experience Transfer-L.N. Mittal

2. Scale Economies-Coca Cola
3. Resource Utilization-Tata/LG/Samsung
4. Global Strategy-ICICI
 Why go International?

Domestic Market
Profit Motive
constraint

Government Policies Spin off benefits

Monopoly Power Competition

18
Motives behind going International
• There are three major objectives that induces any
company for International business:
– To expand sales
– To acquire resources
– To minimize risk
• Globalization an attitude of mind-it is a mind-set
which views the entire world as a single market so
that the corporate strategy is based on the
dynamics of the global business environment.
• Globalization encompasses the following:
– Doing or Planning to expand business globally
– Giving up the distinction between the domestic
market and foreign market and developing a global
outlook of the business.
– Locating the production and other physical facilities on
a consideration of the global business dynamics.
– Product development and production planning on the
global market considerations.
– Global sourcing i.e. raw materials, components,
machinery, technology, finance etc. are obtained from
the best source anywhere in the world.
– Global orientation of organizational structure and
management culture.
• Example: Global vision of Arvind Mills-

– Source Raw materials wherever they are cheapest.

– Manufacture wherever in the world is most cost
effective
– Sell in those global markets where prices are highest
– Raise finances globally.
– Forge international strategic alliances.
– To manage all these, take on the best talent from all
over the world.
• Modes of International Business
1. Trading
2. Manufacturing and Marketing
3. Sourcing and Marketing
4. Global sourcing for production
5. Services
6. Investments
Global marketing environment; EPRG
framework
 Progression to Global Marketing

EPRG FRAMEWORK
Ethnocentric
Polycentrism Regiocentrism Geocentrism
- Home
- Host country - A regional - A world
country
orientation orientation orientation
orientation
 EPRG FRAMEWORK
Ethnocentric Domestic techniques and
Personnel are considered
- Self superior
Reference
Criterion
 Ethnocentric
• Overseas operations are viewed as secondary to
domestic operations
• Considered as a means to dispose of surplus
domestic production
• Plans for overseas market are developed in the
home office, utilizing policies and procedures
identical to those employed in the domestic
market
• Overseas marketing is looked after by home
country nationals
 Ethnocentric continued
• No systematic research is conducted overseas
• No major modifications are made to products sold
in overseas markets
• Prices are calculated on the same basis as in the
home market with the addition of overseas
distribution costs
• Promotion and distribution strategies are similar
to that employed in the home country
• Strong reliance on export agents
 Surf – Super washout in Japan
Unilever enters Japan Detergent Market

• It releases Surf Super concentrate washing powder in

Japan
• Measured sachets for Convenience
• Fresh Smell

WHAT WENT WRONG??

Un explored market
• Washing powder did not dissolve completely
due to weather conditions
• Low agitation washing machines were more
popular in Japan, in which the super
concentrate surf washing powder did not
wash completely
• Fresh smell was not very significant
EPRG FRAMEWORK
Polycentrism Local Personnel and
Techniques are best
- Host
suited to deal with local
country
orientation market conditions
 Polycentric orientation
• Subsidiaries are established in overseas market
• Each subsidiary operates independently with its own
marketing objectives and plans
• Marketing activities are organized on country by
country basis
• Marketing research is conducted independently in each
country
• Separate product lines are developed in each country
• Home country products are modified to meet local
needs.
 Polycentric continued
• Each subsidiary will have its own pricing and
promotion policy
• Sales personnel from those countries
• Traditional channels of distribution of those
countries
Eg. McDonalds – Veg
burgers in India

McDonald’s does not use multiple 4’s in

advertising prices in China; four sounds like the
word death.
EPRG FRAMEWORK
Recognizes
regional
Regiocentrism commonalities
- A regional and leads to
the design of
orientation regional
strategies
EPRG FRAMEWORK
Best man for
the job Geocentrism
irrespective
- A world
of national orientation
origin
 Regiocentric and
Geocentric

• Region or entire world as potential market

• Firm develops policies and organizes activities
on a regional or worldwide basis
• Marketing personnel from the region or from
any country
• Standardized product lines for regional or
worldwide markets
• Regional or Global channels of distribution are
also developed
PART – A
UNIT 2
Global marketing research and
information system
 Importance of Information
• Global marketer is faced with the problem of information
abundance and information scarcity. The global marketer must
know where to go to obtain information the subject areas that
should be covered and the different ways that information can bi
acquired information must be processed in an efficient and useful
way.
• For marketers hoping to achieve success in India and other
emerging markets, information about buyer behavior and the
overall business environment is vital to effective managerial
decision-making. When researching any market, marketers

– must know where to go to obtain information, what subject areas to

investigate and information to look for, the different ways information can
be acquired, and
– the various analytical approaches that will yield important insights and
understanding
• A companies MIS should also cover important aspects of a
companies external environment. For eg: companies in any
industry need to pay close attention to government,
regulation, mergers, acquisition, and alliances.
• Today’s economic and political environments require
worldwide news information on a daily basis. Geocentric
global companies generally have intelligence systems that
meet the challenges.
Six broad information areas:
CATEGORY COVERAGE
1. Markets: Demand estimates, consumers behavior,
products, channels, communication media
availability and cost, and market responsiveness.
2. Competition: Corporate, business and functional strategies
and plans.
3. Foreign exchange: Balance of payment , interest rates,
attractiveness of country currency, expectation
of analysts.
4. Prescriptive information:
Laws, regulations, ruling concerning taxes,
earnings, dividend in both host and home
country.
5. Resource information: Availability of human, financial, information
and
physical resources.
6. General conditions: Overview of socio cultural, political,
technological environments.
International Marketing Research
• International marketing
managers need to
constantly monitor the
different forces
affecting their
international
operations
• International marketing
research is especially
complex
International Marketing Research
International marketing research is the systematic design,
collection, recording, analysis, interpretation, and
reporting of information pertinent to a particular
marketing decision facing a company operating
internationally.
 Research of Industry, Market
Characteristics, and Trends
• Acquisition
analyses
• Diversification
analyses
• Market-share
analyses
• Export research
International Buyer Behavior
Research
• Brand preferences
• Brand attitudes
• Brands awareness
studies
• Purchase behavior
studies
• Consumer
segmentation studies
 International Product Research
• Concept development
and testing studies
• Brand name generation
and testing
• Product testing #1
• Competitive product
studies
• Packaging design studies
• Test marketing
International Distribution Research
• Import/export analyses
• Channel performance and coverage
• Plant/warehouse location studies
 International Promotion Research
• Studies of premiums, coupons, and deals
• Advertising effectiveness research
• Local media research
• Studies pertaining to personal selling activities
– Sales Force Compensation
– Quota
– Territory
 International Pricing Research
• Studies projecting demand
• Currency and counter trade studies
• Studies of inflation rates and pricing
• Studies of negotiation tactics
Challenges in international
marketing
 Secondary Data Constraints
• Conceptual Equivalence
– Concepts have different meanings in different
cultural environments
• Functional Equivalence
– Products themselves may be used for different
purposes in different country environments
Secondary Data Constraints, continued
• Availability, Reliability, and Validity
– Accuracy of secondary data can be questionable:
Published statistics may be unreliable
– Sources of reliable data:
- World Bank
- United Nations Development Program
- Organization of Economic Cooperation and
Development (OECD)
- Euromonitor
 Primary Data
• Information collected for a specific
purpose, to address the problem at
hand.
– The costs of collecting primary data in
foreign markets are likely to be much higher
given the lack of an appropriate marketing
research infrastructure
Primary Data Research Approaches
• Qualitative research has been particularly
useful as a first step in studying
international marketing phenomena.
– Focus Groups
– Observation
• Constraints: Responses can be affected by
culture, individuals may act differently if they
know they are being observed.
 Primary Data Research
Approaches, continued
• Quantitative research are more structured,
involving either descriptive research
approaches, such as survey research, or causal
research approaches, such as experiments.
– Content Analysis
– Survey Research
– Experimental Research
• Constraints: Respondent factors, infrastructure
factors
RESEARCH PROCESS OF
INTERNATIONAL MARKETING
 Steps in the Research Process

● Step I: Define the research problem

8-3 ● Step 2: Developing a research plan
● Step 3: Collecting data
● Step 4: Data Interpretation
● Step 5: Summary of Findings &
Presentation of Report

Irwin/McGraw-Hill
 Research Process in Detail

• 1. Define the problem and establish

objectives
– Critical step because of unfamiliarity with
international markets
– Problems can arise when researchers:
• Fail to recognize or anticipate the influence of the
local culture or fail to identify the SRC effect
– Treats the problem as if it exists in the home country
• Fail to establish problem limits broad enough to
include all relevant data
 Collecting Data

• Primary Data • Secondary Data

– When data is not – When data exists and
available, and must is available through a
be obtained variety of sources (i.e.
through some form internet, publications,
of data collection. government records,
etc.)
Problems with obtaining relevant data
• Secondary Data defined
– Data collected by another agency or
researcher
• Problems with obtaining relevant and accurate
Secondary data
– 1. Availability of Data
– 2. Reliability of Data
– 3. Comparability of Data
– 4. Validating Secondary Data
 Validating Secondary Data
• Who collected the data ? Would there be any reason for
purposely misrepresenting the facts ?

8-5 • For what purpose were the data collected ?

• How were the data collected ? (Methodology)

• Are the data internally consistent and logical in light of known

data sources or market factors ?

Irwin/McGraw-Hill
 Primary & Secondary Data

Secondary Primary
Readily available, used Generated first-hand,
for other purposes tailor made research

Availability Ability to communicate

Relevancy Willingness
Reliability Issues Sampling Plan
Comparability Language/Comprehension
 Gathering Primary Data

8-6
Quantitative Research

Qualitative Research

Irwin/McGraw-Hill
Methods for Developing Primary Data
Focus Groups

Panels

Experiments Data
Qualitative?
Quantitative? Surveys

Observation
Interviews
Focus Group Research
 Problems of Gathering Primary Data
 Ability to Communicate Opinions

8-7
 Willingness to Respond

 Sampling in Field Surveys

 Language and Comprehension

 Back Translation
 Parallel Translation
 Decentering

Irwin/McGraw-Hill
 Uses of Internet in International
Research
o On-Line Surveys and Buyer Panels

8-8 o On-Line Focus Groups

o Web Visitor Tracking

o Advertising Measurement

o Customer Identification Systems

o E-Mail Marketing Lists

o Embedded Research

Irwin/McGraw-Hill Copyright©2002 by The McGraw-Hill Companies, Inc. All rights reserved.

 Talents Required to Analyze and Interpret
Research Information

• Cultural Understanding

8-9
• Creative Talent for Adapting Research Findings

• Skeptical Attitudes when Handling Both Primary and Secondary

Research

Irwin/McGraw-Hill
 Estimating Market Demand

8-10 Historical Data

Local Production Plus Imports

Expert Opinion

Analogy

Irwin/McGraw-Hill
Five Rules of International Research
1. Apply the WHAT, WHY, WHERE and WHEN of
information.
2. Use locally available information first.
3. Identify information sources abroad.
4. Know where to look.
5. Do not assume the information you get is
comparable or accurate.
Problems with Multicultural Research

• Multicultural research defined:

– Conducting research where countries have
difference languages, social structures,
behavior and attitudes.
– Differences need to be considered and used
when conducting research
– Comparability is difficult
 Other important Points
– A. Research on the Internet
• Fastest growing method of conducting research
• Although U.S. hosts 2/3 of the internet usage,
international usage is growing at twice the rate over the
U.S (examples)
– www.stat-usa.gov, (data published by U.S. government)
– www.exporthotline.com (private website that provides
market research for 80 countries)
– B. Estimating market demand where secondary data is
inadequate or not available
• 1. Expert opinion
• 2. Analogy (demand in one country is similar to demand in
another country)
– Can be inaccurate and mistakes are likely to occur
 Other important Points
– C. Communicating with Decision Makers
• Needs to be timely and top managers should be
knowledgeable about all their markets and customers

– D. Problems in Analyzing and Interpreting

Research Information
• Researcher must have the following to avoid
incorrect interpretations of the research data
–Be culturally adept and sensitive to differences
–Be able to adapt research results appropriately
–Be skeptical in handling both primary and
secondary data
 Other Important Points

– D. Who is responsible for conducting

Marketing Research
• Assigned by company (department or division
or agent)
• Local analysts (decentralized)
• Best approach is to have local researchers
with close coordination between local
research company and headquarters.
PART – A
UNIT 3
PRODUCT PLANNING FOR INTERNATIONAL
MARKET: PRODUCT DESIGNING;
STANDARDIZATION VS. ADAPTATION
 Product Decisions
• Product decisions are crucial to a firms success in
international markets.
• In order gain significant percentage of market share,
a firm should address an satisfy customers needs
and expectations of overseas market.
• A firm operating in international markets should
not only identify the products for various markets
but should also evolve suitable marketing strategies
for developing such products.

1-78
 Product Decisions
• Whether a single standardized product can be
offered world wide or a customized product needs
to be developed for each market is the most
significant product decision that a firm, has to make
while operating in international markets.

1-79
 Types of Product Decisions
• Market segment decision
• Product mix decision
• Product specification
• Positioning and communications decisions

1-80
• Product Attributes :
 Cultural Differences:
 Social Structure
 Language
 Religion
 Education

• Hamburger do not sell well in Islamic countries, where the

consumption of ham is forbidden by Islamic law.
• Tradition: In addition to its normal range of products, Coca –Cola in
Japan markets Georgia, a cold coffee in a can, and Aquarius, a
mineral sport drinks, both of which appeal to traditional Japanese
tastes.
• Scent preference differs from one country to another. S.C. Johnson
Wax, a manufacturer of waxes and polishes, encountered resistance
to its lemon-scented Pledge furniture polish among older
consumers in Japan. Careful market research revealed that the
polish smelled similar to a latrine disinfect used widely in Japan in
the 1950s. Sales rose up sharply after scent was adjusted.
• Cheetos cheese taste not liked by Chineese.
 Global Product Strategies
• Companies can pursue three global strategies to
penetrate foreign markets.
1. Companies can Extend their domestic product or
communication strategies to their foreign markets.
2. Companies can Adapt their strategy to the local
market place.
3. Companies can follow invention strategy, where
products are designed for global market.

1-82
 Product Invention
• Company which adopts the product invention
aims at bring out new products that cater to
common needs and opportunities around world.
• In this option companies try to figure out how to
create products with a global scope rather than
just for a single country.

1-83
 Standardization V/s Adaptation

1-84
 Product Standardization
• Process of marketing a product in overseas
markets with little change except for some
changes such as modified packaging and labeling.
• Benefits
 Projecting global market image.
 Catering to customers globally
 Cost savings in-terms of economies of scale.
 Facilitating the development of a product as a
global brand.

1-85
 Product Standardization
• The major factors that favour product
standardization for international market include-
 High level of technological intensity
 High adaptation costs
 Convergence of customers needs
 The country of origin impact

1-86
 Product Adaptation (Customization)

• Making changes in a product response to the

needs of the target market.
• Adaptation of product may vary form major
modifications in the product, packaging, logo or
brand name.
• Benefits
 It helps in gaining market share
 It fulfils needs and expectations of customers in
varied cultures and environments.
 It increases sales, leading to economies of scale.

1-87
 Product Adaptation (Customization)

• The major factors that favour product adaptation

for international markets include-
 Government regulations
 Operating system
 Measurement system
 Environmental changes
 Packing & labeling regulations
 Price sensitivity.

1-88
 Developing New Products for Global
Markets
• If a company find that good opportunity exists for
products it does not manufacture now, to exploit
that opportunity new product development
becomes essential.
• The steps to be followed in the global new product
development process are, by and large similar to
domestic marketing situations – but innovation
efforts are implemented on a global scope

1-89
 New Product Development
Process
Marketing
Strategy Business
Development Analysis

Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
1-90
 Idea Generation

Company Employees

Customers

Competitors

Distributors

1-91
Suppliers
 Idea Screening

• Process to spot good ideas and drop poor

ones.
• Develop system to estimate: market size,
product price, development time and costs,
manufacturing costs, and rate of return.
• Evaluate these findings against set of company
criteria for new products.

1-92
 Concept Development and Testing

• Product Idea: idea for a possible product that

the company can see itself offering.
• Product Concept: detailed version of the idea
stated in meaningful consumer terms.
• Product Image: the way consumers perceive
an actual or potential product.

1-93
 Marketing Strategy Development

Part One Describes:

The Target Market
Planned Product Positioning
Sales, Market Share, & Profit Goals

Part Two Outlines the First-Year’s:

Product’s Planned Price
Distribution
Marketing Budget

Part Three Describes Long-Run:

Sales & Profit Goals
Marketing Mix Strategy
1-94
 Business Analysis

• Involves a review of the

sales, costs,
Competition,
investment and profit
projections to assess fit
with company
objectives.
• If yes, move to the
product development
phase.
1-95
 1-96

Product Development

• Develop concept into

physical product
• Calls for large jump in
investment
• Prototypes are made
• Prototype must have
correct physical
features and convey
psychological
characteristics
 Test Marketing

• Product and program introduced in more

realistic market setting.
• Not needed for all products.
• Can be expensive and time consuming, but
better than making major marketing mistake.

1-97
 Test Marketing

Nokia test-marketed its new cell phone/mobile game player extensively before
introducing
1-98 it worldwide.
 Commercialization

• Must decide on timing (i.e., when to introduce

the product).
• Must decide on where to introduce the
product (e.g., single location, state, region,
nationally, internationally).
• Must develop a market rollout plan.

1-99
 Product Life Cycle in International Market

1-100
 Product Life Cycle in International Market

• International markets follow a cyclical pattern

over a period of time due to a variety of factors.
• Factors like level of innovations and technology,
resources, size of market and competitive
structure influence the market patterns.
• In addition, the ability of the customers in
international markets also determines the stage of
international product life cycle.
• The PLC four international markets has the
following four identifiable stage

1-101
 1. Introduction
• A majority of new product inventions are made in
highly industrialized and developed countries.
• In the initial stages, the price of a new product is
relatively high.
• There fore , a firm find markets for new products
only in developed countries.

1-102
 2. Growth
• The demand in the international markets exhibits
an increasing trend and an innovating firms gets
better opportunities for exports.
• Markets begin to mature in the developed
countries, an innovating firm faces increased
international competition in the target market.
• In order to defend its position in the international
markets, the firm establishes its production
locations in the developed countries.

1-103
 3. Maturity
• As the technical know-how of an innovative
process becomes widely known, a firm begins to
establish its operations in middle and low-in-come
countries in order to take advantage of resources
available at competitive prices.

1-104
 4. Decline
• The major thrust of the marketing strategy at this
stage shifts to price and cost competitiveness, as
technical know-how and skills become widely
available
• There fore, the emphasis of a firm is most on the
cost – effective locations.
• Besides developing countries, production also
intensifies in least developed countries.

1-105
 4. Decline
• As a result, it has been observed that the
innovating country begins to import such goods
from other developing countries. Rather than
manufacturing them itself.

1-106
 Product life cycle theory

1-107
BRANDING AND PACKAGING; LABELING
AND QUALITY ISSUES AFTER SALES
SERVICE
 Brands
• Bundle of images and experiences in the customer’s
mind
• A promise made by a particular company about a
particular product
• A quality certification
• Differentiation between competing products
• The sum of impressions about a brand is the brand
image

10-109
 Brand Equity
• The added value that accrues to a product as a
result of investments in the marketing of the
brand
• An asset that represents the value created by
the relationship between the brand and
customer over time

10-110
 Local Products and Brands
• Brands that have achieved success in a single
national market
• Represent the lifeblood of domestic
companies
• Entrenched local products/brands can be a
significant competitive hurdle to global
companies

10-111
 International Products and Brands

• Offered in several
markets in a
particular region
– Euro brands

The Smart car was developed by

DaimlerChrysler for the European
market.
10-112
 Global Products and Brands
• Global products meet the wants and needs of
a global market and are offered in all world
regions
• Global brands have the same name and
similar image and positioning throughout the
world

10-113
 Global Brand Characteristics
• Quality signal—allows a company to charge a
premium price in a highly competitive market
• Global myth—marketers can use global
consumer culture positioning to link the brand
identity to any part of the world
• Social responsibility—shows how a company
addresses social problems

10-114
 Global Products and Brands
• Global brands are not
the same as global
products
– iPod = brand
– Mp3 player= product

10-115
 Branding Strategies
• Combination or tiered branding allows marketers to
leverage a company’s reputation while developing a
distinctive identity for a line of products
– Sony Walkman
• Co-branding features two or more company or
product brands
– NutraSweet and Coca-Cola
– Intel Inside

10-116
 Brand Extension
• Brand acts as an umbrella for new products
– Ex: The Virgin Group
• Virgin Entertainment: Virgin Mega-stores and MGM Cinemas
• Virgin Trading: Virgin Cola and Virgin Vodka
• Virgin Radio
• Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net
• Virgin Hotels
• Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays

10-117
World’s Most Valuable Brands, 2006
1. Coca-Cola 9. McDonald’s 17. Louis Vuitton
2. Microsoft 10. Mercedes-Benz 18. Cisco
3. IBM 11. Citi 19. Honda
4. GE 12. Marlboro 20. Samsung
5. Intel 13. Hewlett-Packard 21. Merrill-Lynch
6. Nokia 14. American Express 22. Pepsi
7. Toyota 15. BMW 23. Nescafe
8. Disney 16. Gillette 24. Google
25. Dell

10-118
 Global Brand Development
• Questions to ask when management seeks to build a
global brand
– Does this move fit the company and/or its markets?
– Will anticipated scale economies materialize?
– How difficult will it be to develop a global brand team?
– Can a single brand be imposed on all markets successfully?

10-119
 Global Brand Development
• Global brand leadership
– Using organizational structures, processes, and
cultures to allocate brand-building resources
globally, to create global synergies, and to develop
a global brand strategy that coordinates and
leverages country brand strategies

10-120
 Global Brand Development
• Create a compelling value proposition
• Think about all elements of brand identity and select
names, marks, and symbols that have the potential
for globalization
• Research the alternatives of extending a national
brand versus adopting a new brand identity globally
• Develop a company-wide communication system

10-121
 Global Brand Development
• Develop a consistent planning process
• Assign specific responsibility for managing
branding issues
• Execute brand-building strategies
• Harmonize, unravel confusion, and eliminate
complexity

10-122
 This Is Your Brain . . . .

Big brand requires less brain work (top) than weaker one.
10-123
Slide 11-90
Local versus Global Products and Brands: A
Needs-Based Approach

Self-actualization
External/Internal
Esteem
Social

Safety

Physiological
Maslow’s hierarchy of needs
10-124
Asian Hierarchy of Needs

10-125
 Packaging
• Consumer packaged goods refers to products whose
packaging is designed to protect or contain the
product during shipping, at retail, or point of use
• Eco-packaging is key because package designers must
address environmental issues
• Offers communication cues that provide consumers
with a basis for making a purchase decision

10-126
 Labeling
• Provides consumers with various types of
information
• Regulations differ by country regarding various
products
– Health warnings on tobacco products
– American Automobile Labeling Act clarifies the country of
origin and final assembly point
– European Union requires labels on all food products that
include ingredients from genetically modified crops

10-127
 Aesthetics

• Global marketers must understand the

importance of visual aesthetics
• Aesthetic styles (degree of complexity
found on a label) differ around the world
• Aesthetic elements that are deemed
appropriate, attractive, and appealing in
one’s home country may be perceived
differently elsewhere.

10-128
• Red: South Africa = mourning; India =
purity; China = celebration, good luck;
Russia = Bolsheviks, communism; Western
= excitement
• Yellow: China = nourishing; Egypt =
mourning; India = merchants; Western =
hazard, warning, hope

10-129
• Green: China = exorcism; India = Islam;
Ireland = the country; Western = Spring,
rebirth, go, ecology
• Blue: Iran = heaven and spirituality;
Western = depression, sadness, “something
blue” bridal tradition, conservative
• Purple: Thailand = mourning; Western =
royalty

10-130
White: Japan white carnation = death; Eastern =
funerals; Western = brides, angels, good guys,
hospitals, doctors, peace

10-131
 Product Warranties
• Express warranty is a written guarantee that
assures the buyer is getting what he or she
paid for or provides a remedy in case of a
product failure
• Warranties can be used as a competitive tool

10-132
 Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
• Extension—offering product virtually unchanged in
markets outside of home country
• Adaptation—changing elements of design, function,
and packaging according to needs of different
country markets
• Creation—developing new products for the world
market

10-133
PART – B
UNIT 4
International pricing: factors influencing
international price
 Introduction
• Setting the right price for a product or service is
the Key to success or failure
• An offering’s price must reflect the quality and
value the consumer perceives in the product
• Globalization of world markets
– Intensifies competition among multinational and
home-based companies
• The marketing manager’s responsibility
– To set and control the actual price of goods in
different markets in which different sets of
variables are to be found

18-136
 Overview
• Components of pricing as competitive tools in
international marketing
• The pricing pitfalls directly related to
international marketing
• How to control pricing in parallel imports or
gray markets
• Price escalation and how to minimize its effect
• Countertrading and its place in international
marketing practices
• The mechanics of price quotations
18-137
 Global Perspective –
the Price War
• The battle between P&G and Kimberly-Clark is
bringing Pampers and Huggies, respectively, to
places they have never been, forcing down diaper
prices worldwide, and expanding the global
market for disposable diapers
• P&G entered Brazil with Pampers Uni, a non-frill
unisex diaper; Kimberly-Clark entered Brazil
and imported Huggies “push girls” from
Argentina, hurting P&G
• P&G and Kimberly-Clark began a terrible price
war that hurt both of them in the end
Roy Philip 18-138
 Pricing Policy
Pricing Objectives
• Pricing as an active instrument of accomplishing
marketing objectives
– The company uses price to achieve a specific
objective
• Pricing as a static element in a business decision
– Exports only excess inventory
– Places a low priority on foreign business
– Views its export sales as passive contributions to
sales volume

Roy Philip 18-139

 Pricing Policy
Parallel Imports
• Parallel imports
– Develop when importers buy products from
distributors in one country and sell them in
another to distributors who are not part of the
manufacturer’s regular distribution system
• Occur whenever price differences are greater
.
than cost of transportation between two markets
• Major problem for pharmaceutical companies
• Exclusive distribution

Roy Philip 18-140

Pricing process – process and
methods
Approaches to International
Pricing
• Company policy relates to net price received
– Control over end prices
– Control over net prices
• Cost and market considerations
• Employ pricing as part of strategic mix
– Market-oriented pricing factors

Roy Philip 18-142

 Full-Cost Versus
Variable-Cost Pricing
• Variable-cost pricing
– Firm is concerned only with the marginal or
incremental cost of producing goods to be sold in
overseas markets
• Full-cost pricing
– Companies insist that no unit of a similar product
is different
from any other unit in terms of cost
– Each unit must bear full share of the total fixed
and variable cost

Roy Philip 18-143

 Skimming Versus
Penetration Pricing
• Skimming
– Used by a company when the objective is to reach
a segment of the market that is relatively price
insensitive
– Market is willing to pay a premium price for the
value received
• Penetration pricing policy
– Used to stimulate market and sales growth by
deliberately offering products at low prices

Roy Philip 18-144

 Price Escalation (1 of 3)
• Costs of exporting
– Price escalation
• Taxes, tariffs, and administrative costs
– Taxes include tariffs
– Tariff – fee charged when goods are brought into
a country from another country
– Administrative costs
• Include export and import licenses
• Other documents
• Physical arrangements for getting the product
from port of entry to the buyer’s location

Roy Philip 18-145

 Price Escalation (2 of 3)
• Inflation
– In countries with rapid inflation or exchange variation, the
selling price must be related to the cost of goods sold and
the cost of replacing the items
• Deflation
– In a deflationary market, it is essential for a company to
keep prices low and raise brand value to win the trust of
consumers
• Exchange rate fluctuations
– No one is quite sure of the future value of currency
– Transactions are increasingly being written in terms of the
vendor company’s national currency

Roy Philip 18-146

 Price Escalation (3 of 3)
• Varying currency values
– Changing values of a country’s currency relative
to other currencies
– Cost-plus pricing
• Middleman and transportation costs
– Channel diversity
– Underdeveloped marketing and distribution
channel infrastructures

Roy Philip 18-147

 Approaches to Lessening
Price Escalation (1 of 2)
• Lowering cost of goods
– Manufacturing in a third country
– Eliminating costly functional features
– Lowering overall product quality
• Lowering tariffs
– Reclassifying products into a different, and lower
customs classification
– Modify product to qualify for a lower tariff rate
within classification
– Requiring assembly or further processing
– Repackaging

Roy Philip 18-148

 Approaches to Lessening
Price Escalation (2 of 2)
• Lowering distribution costs
– Shorter channels
– Reducing or eliminating middlemen
• Using foreign trade zones to lessen price
escalation
– Establish free trade zones (FTZs) or free ports
• Tax-free enclave not considered part of country
• Postpones payment of duties and tariffs
• Dumping
– Use of marginal (variable) cost pricing
– Selling goods in foreign country below the price of
the same goods in the home market

Roy Philip 18-149

 Leasing in International
Markets(1 of 2)
• Selling technique that alleviates high prices and
capital shortages
• Opens the door to a large segment of nominally
financed foreign firms
– Firms can be sold on a lease option but might be
unable to buy for cash
• Can ease the problems of selling new,
experimental equipment
– Because less risk is involved for the users

Roy Philip 18-150

 Leasing in International
Markets(2 of 2)
• Helps guarantee better maintenance and service
on overseas equipment
• Helps to sell other companies in that country
• Revenue tends to be more stable over a period of
time than direct sales
• Leasing disadvantages
– Inflation may lead to heavy losses at end of
contract period
– Currency devaluation, expropriation and political
risks

Roy Philip 18-151

International price quotation and
payment terms
Countertrade as a Pricing Tool
(1 of 3)

• A tool every international marketer must be

ready to employ
– Often gives company a competitive advantage
• Russia and PepsiCo
– Trading vodka and wine for soft drinks
• Countertrade – part of the market-pricing tool
kit

Roy Philip 18-153

Countertrade as a Pricing Tool
(2 of 3)
• Types of countertrade
– Barter
– Compensation deals
– Counterpurchase or offset trade
– Product buyback agreement

Roy Philip 18-154

Countertrade as a Pricing Tool
(3 of 3)
• Problems of countertrading
– Determining the value of and potential demand
for the goods offered
– Barter houses
• The Internet and countertrading
– Electronic trade dollars
– Universal Currency/IRTA
• Proactive countertrade strategy
– Included as part of an overall market strategy
– Effective for exchange-poor countries
Roy Philip 18-155
 Transfer Pricing Strategy
(1 of 2)
• Prices of goods transferred from a company’s
operations or sales units in one country to its
units elsewhere
– May be adjusted to enhance the ultimate profit of
company
• Benefits
– Lowering duty costs
– Reducing income taxes in high-tax countries
– Facilitating dividend repatriation when dividend
repatriation is curtailed by government policy

Roy Philip 18-156

 Transfer Pricing Strategy
(2 of 2)
• Objectives
– Maximizing profits for corporation
– Facilitating parent-company control
– Providing all levels of management control over profitability
• Arrangements for pricing goods for intracompany transfer
– Sales at the local manufacturing cost plus a standard markup
– Sales at the cost of the most efficient producer in the company
plus a standard markup
– Sales at negotiated prices
– Arm’s-length sales using the same prices as quoted to
independent customers

Roy Philip 18-157

 Price Quotations
• May include specific elements affecting the price
– Credit
– Sales terms
– Transportation
– Currency
– Type of documentation required
• Should define quantity and quality

Roy Philip 18-158

 Administered Pricing
(1 of 2)
• Cartels
– Exist when various companies producing similar products or services
work together
• To control markets for the types of goods and services they produce
– May use formal agreements
• To set prices
• Establish levels of production and sales for participating countries
• Allocate market territories
• Redistribute profits
• May take over entire selling function
– Examples
• OPEC
• The Trans-Atlantic Conference Agreement
• De Beers

Roy Philip 18-159

 Administered Pricing
(2 of 2)
• Government-influenced pricing
– Establishes margins
– Sets prices and floors or ceilings
– Restricts price changes
– Competes in the market
– Grants subsidies
– Acts as a purchasing monopsony or selling
monopoly

Roy Philip 18-160

PART – B
UNIT 5
Promotion of product / services;
methods of international promotion;
direct mail and sales literature;
advertising, personal selling; trade
fairs and exhibitions
 Introduction
• The salesperson is a company’s most direct tie to the
customer; in the eyes of most customers, the
salesperson is the company
• Growing global competition, coupled with the
dynamic and complex nature of international
business, increases both the need and the means for
closer ties with both customers and suppliers
• In the ever-changing environment of international
business, the tasks of designing, building, training,
motivating, and compensation an international sales
group generate unique problems at every stage of
management and development

Roy Philip 17-164

 Overview
• Designing the sales force
• Recruiting marketing and sales personnel
• Selecting sales and marketing personnel
• Training for international marketing
• Motivating sales personnel
• Designing compensation systems
• Evaluating and controlling sales representatives
• Developing cultural awareness
• The changing profile of the global manager
• Foreign-language skills

Roy Philip 17-165

 Global Perspective
International Assignments are Glamorous,
Right?

• Job security (returning home to find your

position at your work place has been eliminated
because of restructuring)
• Readjustment upon return
• Adjustment to other cultures (eating late in
Spain)
• Will an international assignment really help your
career?

Roy Philip 17-166

Designing the Sales Force
• Relationship marketing and customer
relationship management
• Decisions must be made regarding the numbers,
characteristics, and assignments of sales
personnel
• Different market requirements regarding direct
sales and customer approach
• Territory allocation
• Customer call plans

Roy Philip 17-167

 Recruiting Marketing
and Sales Personnel (1 of 2)
• The largest personnel requirement abroad for most
companies is the sales force
• Expatriates
– Numbers are declining
– Important for highly technical or involved products
– High cost
– Cultural and legal barriers
– Limited number of high-caliber personnel willing to
live abroad
• Virtual expatriates
– Manage operations in other countries but don’t live
there

Roy Philip 17-168

 Recruiting Marketing
and Sales Personnel (2 of 2)
• Local nationals
– Transcend both cultural and legal barriers
– Familiar with distribution systems and referral
networks
– Headquarters personnel may ignore their advice
– Lack of availability
– Sales positions viewed negatively
• Third-country nationals
– Expatriates working for a foreign company
• Host-country nationals
– Work restrictions

Roy Philip 17-169

 Selecting Sales
and Marketing Personnel
• Management must define precisely what is expected of
people
• Prime requisites
– Maturity
– Emotional stability
– Breadth of knowledge
– Positive outlook
– Flexibility
– Cultural empathy
– Energetic and enjoy travel
• Mistakes can be costly
• A manager’s culture affects personnel decisions
Roy Philip 17-170
 Training for
International Marketing
• The nature of the training program depends on:
– The home culture of the sales person
– The culture of the business system and foreign
market
• Continual training is important in foreign
markets
• Companies should provide home-office
personnel with cross-cultural training
• The Internet now makes some kinds of sales
training much more efficient
Roy Philip 17-171
Motivating Sales Personnel
• National differences must always be considered
when motivating the marketing force
• Individual incentives that work effectively in the
U.S. can fail completely in other cultures
• Communications are important in maintaining
high levels of motivation
• A company needs to make clear the
opportunities for growth within the firm

Roy Philip 17-172

 Designing Compensation
Systems for Expatriates
• Fringe benefits
• Compensations comparisons between the home
office and abroad
• Short-term assignment compensation
• Using a compensation program to recruit,
develop, motivate, or retain personnel

Roy Philip 17-173

 Evaluating and Controlling
Sales Representatives
• In the U.S., emphasis is placed on individual
performance; it can easily be measured by sales
revenues generated
• In many countries evaluation is more complex
where teamwork is favored over individual effort
• In the U.S., the primary tool used by sales
managers is the incentive system
• In other countries, corporate control and
frequent interactions with peers and supervisors
are the means of motivation and control

Roy Philip 17-174

 Developing
Cultural Awareness
• Expatriate failures
– Caused by lack of an understanding of cultural
differences and their effect on management skills
• Cultural skills
– Can be learned and developed
– Provide the individual with the ability to relate to
a different culture even when the individual is
unfamiliar with the details of that particular
culture

Roy Philip 17-175

 The Changing Profile
of the Global Manager
• Fewer companies today limit their search
for senior-level executive talent to their home
countries
• Some companies believe
– It is important to have international assignments
early in
a person’s career
– International training is an integral part of their
entry-level development programs
• Many companies are active in making the foreign
experience an integrated part of a successful
corporate career

Roy Philip 17-176

 Foreign-Language Skills
• Many believe:
– Learning a language improves cultural
understanding and business relationships
– To be taken seriously in the business community,
the expatriate must be at least conversational in
the host language
• Many companies are making stronger efforts to
recruit people who are bilingual or multilingual

Roy Philip 17-177

 Introduction
• Integrated marketing communications (IMC) are
composed of advertising, sales promotions, trade shows,
personal selling, direct selling, and public relations
• All these mutually reinforcing elements of the marketing
mix have as their common objective the successful sale of
a product or service
• For most companies, advertising and personal selling are
the major components in the marketing communications
mix
• The goal of most companies, large and small, is to
achieve the synergies possible when sales promotions,
public relations efforts, and advertising are used in
concert

Roy Philip 16-179

 Overview
• Sales promotions in international markets
• International public relations
• International advertising
• Advertising strategy and goals
• The message: creative challenges
• International control of advertising: broader
issues

Roy Philip 16-180

 Global Perspective
Barbie Versus Mulan
• Integrated marketing communications (IMC)
– Advertising
– Sales promotions
– Trade shows
– Personal selling
– Direct selling
– Public relations
• Objective: successful sale of a product or service
• Availability of appropriate communication
channels can determine entry decisions

Roy Philip 16-181

 Sales Promotions
in International Markets
• Sales promotions
– Marketing activities that stimulate consumer
purchases and improve retailer or middlemen
effectiveness and cooperation
– Short-term efforts directed to the consumer or
retailer to achieve specific objectives
• In markets with media limitations the
percentage of the promotional budget allocated
to sales promotions may have to be increased
• Product sampling

Roy Philip 16-182

 International
Public Relations
• Public relations (PR) is creating good
relationships with the popular press and other
media
– To help companies communicate messages to
customers, the general public, and governmental
regulators
• Bridgestone/Firestone Tires safety recall
• Global workplace standards
• Building an international profile
• Corporate sponsorships
Roy Philip 16-183
International Advertising
1. Perform marketing research
2. Specify the goals of the communication
3. Develop the most effective message(s) for the
market segments selected
4. Select effective media
5. Compose and secure a budget
6. Execute the campaign
7. Evaluate the campaign relative to the goals
specified

Roy Philip 16-184

Advertising Strategy and Goals
• Marketing problems
– Require careful marketing research
– Thoughtful and creative advertising campaigns
• In country, regional, and global markets
• Increased need for more sophisticated
advertising strategies
• Balance between standardization of advertising
themes and customization
• Consumer cultures

Roy Philip 16-185

 Legal Constraints
• Comparative advertising
• Advertising of specific products
• Control of advertising on television
• Accessibility to broadcast media
• Limitations on length and number of
commercials
• Internet services
• Special taxes that apply to advertising

Roy Philip 16-186

Cross cultural communication;
standardization vs. adaptation
 Linguistic Limitations

• Language is one of the major barriers to effective

communication through advertising
• Translation challenges
• Low literacy in many countries
• Multiple languages within a country
• In-country testing with the target consumer
group avoids problems caused by linguistic
differences

Roy Philip 16-188

 Cultural Diversity

• Knowledge of cultural diversity must encompass

the total advertising project
• Existing perceptions based on tradition and
heritages are often hard to overcome
• Subcultures
• Changing traditions

Roy Philip 16-189

 Media Limitations
and Production and Cost Limitations

• Media limitations may diminish the role of

advertising in the promotional program
• Examples of production limitations:
– Poor-quality printing
– Lack of high-grade paper
• Low-cost reproduction in small markets poses a
problem in many countries

Roy Philip 16-190

 Media Planning and Analysis –
Tactical Considerations (1 of 2)
• Availability
• Cost
• Coverage
• Lack of market data
• Newspapers
• Magazines
• Radio and television
• Satellite and cable TV

Roy Philip 16-191

Media Planning and Analysis –
Tactical Considerations (2 of 2)
• Direct mail
• The Internet
• Social Media
• Mobile phone applications
• Other media

Roy Philip 16-192

 International Control
of Advertising – Broader Issues
• Consumer criticism
• Deceptive advertising
• Decency and blatant use of sex
• Self-regulation
• Government regulations

Roy Philip 16-193

PART – B
UNIT 6
International Distribution: Distribution
channels and logistics decisions;
selection and appointment of foreign
sales agents
 Introduction
• A product must be made accessible to the target
market at an affordable price
• Getting the product to the target market can be a
costly process
• Forging an aggressive and reliable channel of
distribution is the most critical and challenging
task facing the international marketer
• Competitive advantage goes to the marketer best
able to build the most efficient channel from
among the alternatives available

Roy Philip 15-196

 Overview
• Channel-of-distribution structures
– Import-oriented distribution structure, Japanese
distribution structure, and trends from traditional
to modern channel structures
• Distribution patterns
• Alternative Middlemen choices
• Factors affecting choice of channels
• Channel management

Roy Philip 15-197

 Global Perspective
Central Perk in Beijing
• All 4Ps of marketing – product, price,
promotion, and place- are important for
retailers, particularly the last
• IKEA opened its store in Beijing in 1999 and a
decade later, the Beijingers have embraced
IKEA’s European brand of minimalism
• IKEA offers affordable, modern furniture to an
emerging middle class clamoring to be the
“white collar”
• The promise of China’s middle class have girded
their investment in IKEA

Roy Philip 15-198

• Differences between Countries
 Retail Concentration: fragmented/ concentrated.
• Japanese legal system protects small retailers. Small retailers can block the
establishment of a large retail outlet by positioning their local government.
• Developed countries tend toward greater retail concentration
• Retail systems are very fragmented in many developing countries.

 Channel Length: refers to the number of intermediaries between the producer

( or manufacturer) and the consumer.
• The more fragmented the retail system, the more expensive it is for a firm to
make contacts, hence some times better to have whole sellers selling similar
product range.
• When the retail sector is very concentrated, it makes sense for the firm to deal
directly with retailers, cutting out whole sellers.
• The rapid development of the internet in recent years has helped to shorten
channel length.
• Another factor that is something channel length in some countries is the entry
of large discount superstores, such as Carrefour, Walmart etc.
 Channel Exclusivity
• It is often difficult for a new firm to get access to shelf space in super
markets. This occurs because retailers prefer to carry the products of
established manufacturers.
• Manufacturer-Wholesaler-retailer relationships are based on the
understanding that distributors will not carry the products of competing
firm.
 Channel Quality
• Channel Quality refers to the expertise, competencies, and skills of
established retailers in a nation, and their ability to sell and support the
products of international businesses
• When channel quality is poor, an international business may have to
devote considerable attention to upgrading the channel by providing
extensive education and support to existing retailers, and in extreme
cases, by establishing its own channel.
 Choosing Distribution Strategy Determines which channel the firm will
use to reach potential consumers
• Determined by the relative costs and benefits of each alternative
• The relative costs and benefits of each alternative vary from country to
country, depending on the factors Retail Concentration, Channel Length,
Channel Exclusivity and channel quality.
 Channel Control
• Inventory financing
• Cumulative rebates
• Merchandise returns
• Promotional support

Roy Philip 15-201

 Trends: From Traditional
to Modern Channel Structures
• European retailers merging with former competitors
and other countries to form Europe-wide enterprises
• Foreign retailers attracted by high margins and prices
• The Internet may be most important distribution
trend
• Covisint
• GlobalNetXchange
• E-commerce
• 7-Eleven competes with FedEx and UPS

Roy Philip 15-202

 Uniliver-Selling to India’s Poor
• Uniliver-One of the world’s largest and oldest consumer products
companies.
• Challenges faced in India
– Large rural population is dispersed among some 6,00,000 villages.
More than 5,00,000 0f which cannot be reached by motor vehicle.
– Some 91 percent of the rural population lives in villages of fewer than
2,000 people
– Rural retail stores are very small and carry limited and necessity stock.
– Population is desperately poor, making perhaps a dollar per day, two-
third of that income is spent on food and leaving one-third a day for
other items.
– Literacy levels are low, and TVs are rare, making traditional media
ineffective.
 Distribution Patterns
• Even though patterns of distribution are in a
state of change and new patterns are developing,
international marketers need a general
awareness of the traditional distribution base
• Nearly every international firm is forced by the
structure of the market to use at least some
middlemen in the distribution arrangement
• Only when the varied intricacies of actual
distribution patterns are understood can the
complexity of the distribution task be
appreciated

Roy Philip 15-204

 Retail Patterns
• Size patterns
• Direct marketing
• Resistance to change

Roy Philip 15-205

 International
Channel-of-Distribution Alternatives

Exhibit 15.3

Roy Philip 15-206

Home-Country Middlemen
• Manufacturer’s retail stores
• Global retailers
• Export management companies (EMC)
• Trading companies
• U.S. export trading companies
• Complementary marketers
• Manufacturer’s export agent

Roy Philip 15-207

Foreign-Country Middlemen
• Dealing directly with middlemen in the foreign
market gives international organizations the
advantage of shorter channels and deal with
middlemen in constant contact with the market
• Some of the more important foreign-country
middlemen are:
– Manufacturer’s representatives
– Foreign Distributors

Roy Philip 15-208

 Government-Affiliated
Middlemen
• Marketers must deal with governments in every
country of the world
• Government purchasing offices
– Procure products, services, and commodities for
the government’s own use
– Work at federal, regional, and local levels
• Efficiency of public sector versus the private
sector
– Wal-Mart did better than FEMA after Hurricane
Katrina

Roy Philip 15-209

 Factors Affecting
Choice of Channels
• Cost
• Capital requirements
• Control
• Coverage
• Character
• Continuity

Roy Philip 15-210

 Channel Management

• Locating middlemen
• Selecting middlemen
– Screening
– The agreement
• Motivating middlemen
• Terminating middlemen
• Controlling middlemen

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 The Internet (1 of 2)
• E-commerce
– Business-to-business (BSB) services
– Consumer services
– Consumer and industrial products
• E-commerce is more developed in U.S.
than in rest of world
• B2B enables companies to cut costs
– Reduces procurement costs
– Allows better supply-chain management
– Makes possible tighter inventory control
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 The Internet (2 of 2)
• Concern for E-vendors:
– Culture
– Adaptation
– Local contact
– Payment
– Delivery
– Promotion

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 Logistics (1 of 2)
• Logistics management is a total systems approach
to the management of the distribution process that
includes all activities involved in physically
moving raw material, in-process inventory, and
finished goods inventory from the point of origin
to the point of use or consumption
• The physical distribution system involves more
than the physical movement in goods; it includes
the location of plants and warehousing,
transportation mode, inventory quantities, and
packing

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 Logistics (2 of 2)
• Substantial savings can result from the systematic
examination of logistics costs and the calculation
of total physical distribution costs
• The concept behind physical distribution is the
achievement of the optimum (lowest) system cost,
consistent with customer service objectives of the
firm
• One of the major benefits of the European Union’s
unification is the elimination of transportation
barriers among member countries

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Export Policy and Practices in India
Exim policy – an overview; trends in
India’s foreign trade
 What is Exim Policy?

• It contains policies in the sphere of Foreign

trade i.e. with respect to import & export from
the country and more especially export
promotion measures, policies and procedure
related there to.
• Export means selling abroad and import as
bringing into India, any goods and services
 Objective of Exim Policy
• Accelerating the country’s transition to a globally
oriented vibrant economy with a view to derive
maximum benefits from expanding global market
opportunities;
• Stimulating sustained economic growth
• Enhancing the technological strength and
efficiency
• Encouraging the attainment of internationally
accepted standards of quality
• Providing consumers with good quality products
and services at reasonable prices.
Policy Framework-Indian Trade Policy

Rapid & Sustained

Export Growth
Long Term
Sustainability of the
balance of payments

Stability of Capital
Key to long term Flows
viability Reduction of Foreign
Debts
High Export possible:

High Tariffs to be eliminated

Fiscal distortion must be removed

A world class infrastructure & financial

sector has to be built

Technical/Marketing Management
Skills to be upgraded

Labour laws must be changed to give

greater flexibility
Main Provisions
Foreign Trade Policy 2004-09 as modified on April 19,2007 are as follows:
• Stability of Policy (10th five yr plan)
• Liberalization of Export & Imports
• Import of Capital Goods
• Export Promotion Capital Goods Scheme
• Duty Exemption Scheme (Advance authorization/Duty Free)
• Duty Remission Scheme
• Import of Replacement of Goods
• Export & Import of Free Trade Samples
• Free Trade Samples
• Brand Promotion Quality
• Replacement of defective goods
Main Provisions

• Export of goods after repair

• Export of Imported Goods
• Private bonded warehouses for exports
• Private bonded warehouses for imports
• Free of Cost Exports
• Transfer of Imported Goods
 Export Promotion Organizations
• The Principle objectives of Export
promotion measures in India are to:
– Compensate the exporters for the high
domestic cost of production.
– Provide necessary assistance to the new and
infant exporters to develop the export
business.
– Increase the relative profitability of the export
business vis-à-vis the domestic business.
 Export Incentives
• Main aim of these incentives is to increase
the profitability of export business.
Important export incentives include:
– Rebate of duties
– Cash compensatory support
– Income tax concession
– Interest subsidies
– Freight subsidy etc.
 India’s Trade Performance
• India’s merchandise exports reached a level of US $
251.14 billion during 2010-11 registering a growth of
40.49 percent as compared to a negative growth of
3.53 percent during the previous year. India’s export
sector has exhibited remarkable resilience and
dynamism in the recent years.
• Despite the recent setback faced by India’s export
sector due to global slowdown, merchandise exports
recorded a Compound Annual Growth Rate (CAGR) of
20.0 per cent from 2004-05 to 2010-11.
 Strategy for Doubling Exports
• Global economic outlook is a major determinant of
export performance of any country. Export growth
cannot, therefore, be viewed in isolation from
economic outlook in the world economy.
• Keeping in view the urgency of managing the growing
trade deficit and uncertain global economic scenario,
Department of Commerce, in May 2011 finalized a
Strategy Paper for doubling merchandise exports in
three years from US $ 246.00 billion in 2010-11 to US $
500 billion in 2013-14.
• Exports were envisaged to increase at compounded
average growth of 26.7% per annum.
Major Destinations of India’s Exports for 2011-12 (April-October)