Discuss the international marketing strategies. How is it different from domestic marketing strategies?

Ans:- International marketing can be defined as marketing of goods and services outside the firm’s home country. International marketing has the following two forms of marketing: • ? Multinational marketing. ? Global marketing. Multinational marketing is very complex as a firm engages in marketing operations in many countries. In multinational marketing, a firm visualises different countries as one market and build their brand or service according to the business environment of the foreign countries. Global marketing indicates the integrated and coordinated marketing activities across many different markets. Taking into account the various conditions on which markets vary and depend, appropriate marketing strategies should be devised and adopted. Like, some countries prevent foreign firms from entering into its market space through protective legislation. Protectionism on the long run results in inefficiency of local firms as it is inept towards competition from foreign firms and other technological advancements. It also increases the living costs and protects inefficient domestic firms. The decision of a firm to compete internationally is strategic; it will have an effect on the firm, including its management and operations locally. The decision of a firm to compete in foreign markets has many reasons. Some firms go abroad as the result of potential opportunities to exploit the market and to grow globally. And for some it is a policy driven decision to globalise and to take advantage by pressurising competitors. 

ADVANTAGES:

Segmentation Firms that serve global markets can be segregated into several clusters based on their similarities. Each such cluster is termed as a segment. Segmentation helps the firms to serve the markets in an improved way. Markets can be segmented into nine categories, but the most common method of segmentation is on the basis of individual characteristics, which include the behavioral, psychographic, and demographic segmentations. The basis of behavioral segmentation is the general behavioral aspects of the customers. Demographic segmentation considers the factors like age, culture, income, education and gender. Psychographic segmentation takes into account: beliefs, values, attitudes, personalities, opinions, lifestyles and so on. 

2. Market positioning The next step in the marketing process is, the firms should position their product in the global market. Product positioning is the process of creating a favorable image of the product against the competitor’s products. In global markets product positioning is categorised as high-tech or high–touch positioning. The classification of high-tech and high-touch products. One challenge that firms face is to make a trade-off between adjusting their products to the specific demands of a country and gaining advantage of standardization such as the maintenance of a consistent global brand image and cost savings. 

3. International product policy 

Some thinkers of the industry tend to draw a distinction between conventional products and services, stressing on service characteristics such as heterogeneity, inseparability from consumption, intangibility, and perishability. Typically, products are composed of some service component like, documentation, a warranty, and distribution. These service components are an integral part of the product and its positioning. Thus, it is important to consider the findings of marketing research and determine customer’s desires, motives, and expectations in buying a product. Firms have a choice in marketing their products across markets. Many a times, firms opt for a strategy which involves customisation, through which the firm introduces a unique product in each country, believing that tastes differ so much between countries that it is necessary to create a new product for each market. Standardization proposes the marketing of one global product, with the belief that the same product can be sold in different countries without significant changes. Finally, in most cases firms will go for some kind of adaptation. Here, when moving a product between markets minor modifications are made to the product. 

4. International pricing decisions Pricing is the process of ascertaining the value for the product or service that will be offered for sale. In international markets, making pricing decisions is entangled in difficulties as it involves trade barriers, multiple currencies, additional cost considerations, and longer distribution channels. Before establishing the prices, the firm must know its target market well because when the firm is clear about the market it is serving, then it can determine the price appropriately. The pricing policy must be consistent with the firms overall objectives. Some common pricing objectives are: profit, return on investment, survival, market share, status quo, and product quality. The strategies for international pricing can be classified into the following three types:• 

Market penetration: It is the technique of selling a new product at a lower price than the current market price. Market holding: It is a strategy to maintain buy orders in order to maintain stability in a downward trend.• Market skimming: It is a pricing strategy where price of the goods are set high initially to skim the revenue from the market layer by layer. The factors that influence pricing decisions are inflation, devaluation and revaluation, nature of product or industry and competitive behaviour, market demand, and transfer pricing. 

5. International advertising International advertising is usually associated with using the same brand name all over the world. However, a firm can use different brand names for historic reasons. The acquisition of local firms by global players has resulted in a number of local brands. A firm may find it unfavorable to change those names as these local brands have their own distinctive market. Therefore, the company may want to come-up with a certain advertising approach or theme that has been developed as a result of extensive global customer research. Global advertising 

themes are advisable for marketing across the world with customers having similar tastes. The purpose of international advertising is to reach and communicate to target audiences in more than one country. The target audience differs from country to country in terms of the response towards humour or emotional appeals, perception or interpretation of symbols and stimuli and level of literacy. Standardization is required for products by some firms. Standardization helps to achieve economies of scale and a consistent image can be established across markets.Standardisation also assists in utilising creative talent across markets, and facilitates good ideas to be transplanted from one market to other. International advertising can be thought of as communication process that transpires in multiple cultures that vary in terms of communication styles, values, and consumption patterns. International advertising is a business activity and not just a communication process. It involves advertisers and advertising agencies that create ads and buy media in different countries. International advertising is also reckoned as a major force that mirrors both social values, and propagates certain values worldwide. 6. International promotion and distribution Distribution of goods from manufacturer to the end user is an important aspect of business. Companies have their own ways of distribution. Some companies directly perform the distribution service by contacting others whereas a few companies take help from other companies who perform the distribution services. The distribution services include:• The purchase of goods.• The assembly of an attractive assortment of goods.• Holding stocks.• Promoting sale of goods to the customer.

INTERNATIONAL MARKET SEGMENTATION

Market segmentation is the process in marketing of dividing a market into distinct subsets (segments)that behave in the same way or have similar needs. Because each segment is fairly homogeneous in theirneeds and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they arelikely to have similar feelings and ideas about a marketing mix comprised of a given product or service,sold at a given price, distributed in a certain way, and promoted in a certain way.Broadly, markets can be divided according to a number of general criteria, such as by industry or publicversus private sector. Small segments are often termed niche markets or specialty markets. However, allsegments fall into either consumer or industrial markets. Although it has similar objectives and itoverlaps with consumer markets in many ways, the process of Industrial market segmentation is quitedifferent. The process of segmentation is distinct from targeting (choosing which segments to address) andpositioning (designing an appropriate marketing mix for each segment). The overall intent is to identifygroups of similar customers and potential customers; to prioritise the groups to address; to understandtheir behaviour; and to respond with appropriate marketing strategies that satisfy the differentpreferences of each chosen segment.

Improved segmentation can lead to significantly improved marketing effectiveness. With the rightsegmentation, the right lists can be purchased, advertising results can be improved and customersatisfaction can be increased.

DEFINATION:

The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.

Few companies are big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle.

Four basic factors that affect market segmentation are

clear identification of the segment,

measurability of its effective size,

its accessibility through promotional efforts, and

its appropriateness to the policies and resources of the company.

The four basic market segmentation-strategies are based on

behavioral,

demographic,

psychographic, and

geographical differences.

International Marketing Communications (Promotion)

Media Choices for International Marketing

Marketing communications in international markets needs to be conducted with care. This lesson will consider some of the key issues that you need to take into account when promoting products or services in overseas markets. There will be influences upon your media choice, cultural issues to be considered, as well as the media choices themselves – personal selling, advertising, and others.

Other factors that need to be considered in relation to international marketing communications (Promotion) include:

The work ethic of employees and customers to be targeted by media.

Levels of literacy and the availability of education for the national population.

The similarity or diversity of beliefs, religion, morality and values in the target nation.

The similarity or diversity of beliefs, religion, morality and values in the target nation.

The family and the roles of those within it are factors to take into account.

Factors Influencing Pricing Strategy in International Marketing

Some of the most important factors influencing pricing strategy in international marketing are as follows:

Pricing decisions are complex in international marketing. A firm may have to follow different pricing strategies in different markets. Whatever might be the strategy followed, pricing has to reflect the proper value in the eyes of the consumer. Pricing is an important strategic and tactical competitive weapon that can be used by a firm in international marketing.

It represents that element of the marketing mix, which is controllable by the firm to a large extent. A firm should integrate pricing strategies with the other elements of the international marketing mix.

Choice of a pricing strategy is dependent on:

Choice of a pricing strategy is dependent on:

1) Corporate goals and objectives

2) Customer characteristics

3) Intensity of inter-firm rivalry

4) Phase of the product life cycle

Having considered the factors influencing the choice of

strategy, let us now turn specifically to different

strategies:1) Skimming Strategies:One of the most commonly discussed strategies is the

skimming strategy. This strategy refers to the firm’s desire

to skim the market, by selling at a premium price. Skimming

refers to the objective of achieving highest possible

contribution in a short time. To use this approach, the

product has to be unique and the target market should be

willing to pay the high price. Success of this strategy

depends on the ability and speed of competitive reaction. A

firm with a small market share can face aggressive local

competition when using skimming. Maintenance of high

quality requires lot of resources. If the product is sold

cheaply at home, then the problems of gray market can

surface.

This strategy delivers results in the following

situations:

i) When the target market associates quality of the product

with its price, and high price is perceived to mean high

quality of the product.

ii) When the customer is aware and is willing to buy the

product at a higher price just to be an opinion leader.

iii) When the product is perceived as enhancing the

customer’s status in society.

iv) When competition is non-existent or the threat from

potential competition exists in the industry because of low

entry and exist barriers.

v) When the product represents significant technological

breakthroughs and is perceived as a ‘high technology’

product.

In adopting the skimming strategy the firm’s objective is to

achieve an early break-even point and to maximize profits in

a shorter time span or seek profits from a niche.

2) Penetration Pricing Strategies:As opposed to the skimming strategy, the objective of

penetration price strategy is to gain a foothold in a highly

competitive market. The objective of this strategy is market

share or market penetration. Here, the firm prices its

product lower than the others do in competition. Penetration

pricing uses deliberate low prices to stimulate market

growth and capture market share. It can be useful when

there is a mass market and price sensitive customers.

Japanese companies increasingly resort to penetrative

pricing due to intense local competition.

This strategy delivers results in the following

situations:

i) When the size of the market is large and it is a growing

market.

ii) When customer loyalty is not high customers have been

buying the existing brands more because of habit rather

than any specific preferences for it.

iii) When the market is characterized by intensive

competition

iv) When the firm uses it as an entry strategy

v) Where price-quality association is weak.

3) Differential Pricing Strategies:This strategy involves a firm differentiating its price across

different market segments. The assumption in this strategy

is that different market segments do not communicate or

have different search costs and value perceptions of the

product. In other words heterogeneity in the market

motivates a firm to adopt this strategy.

4) Geographic Pricing Strategies:This strategy seeks to exploit economies of scale by pricing

the product below the competitor’s in one market and

adopting a penetration strategy in the other. The former is

termed as second market discounting. This second market

discounting is a part of the differential pricing strategy

where the firm either dumps or sells below its cost in the

market to utilize its existing surplus capacity. So, in

geographic pricing strategy, a firm may charge a premium in

one market, penetration price in another market and a

discounted price in the third.

5) Product Line Pricing Strategies:These are a set of price strategies, which a multi-product

firm can usefully adopt. An important fact to be noted is that

these products have to be related, in other words belonging

to the same product family. Faced with multi-products and

fluctuating demand, the firm may adopt a combination of the

following strategies to effectively manage its product line or

maximize its profits across the product line.

i) Price Bundling:

This strategy is used by a firm to even out the demand for its

product. This is useful strategy for perishable; time-bound

products like food, hotel room or a seat on a flight and for

products cannot be substituted, like the package of stereo

music system. Off-season discounts and, season tickets for

music festivals are examples of price bundling strategy. This

is a passive strategy aimed at correctly bundling the prices

of related items so that the firm is able to maximize its

profits.

ii) Premium Pricing:

This strategy is used by a firm that has heterogeneity of

demand for substitute products with joint economies of

scale. Consider the example of a colour television set. There

are different models available with different features, like

the one with a remote control and another without it. Both

are substitutable and satisfy the customer needs. But the

firm may opt to premium price the first model and position it

as the top of the product line for high income or upper

income group of customers or for whom communicating that

“they have arrived” is important,

iii) Image Pricing:

This strategy is used when consumers infer quality from the

prices of substitute models or competing products. The firm

varies its prices over different brands of the same product

line. This strategy is commonly used in textiles, cosmetics,

toilet soaps and perfumes.

iv) Complementary Pricing:

This strategy is used by a firm that has customers with high

transaction costs for one or more of its products.

Transaction costs are all those costs that a customer has to

incur to buy the product, like the registration fees that a flat

buyer has to pay in order to be a legal owner or the

processing fees that the bank may charge to give a credit

card to the customer.

v) Captive Pricing Strategy:

Here a special price deal is offered to loyal customers or

those who are regularly buying one of the products of the

firm. A typical example is the Gillette shaving system, which

offers two twin blades free with its razor to induce the buyer

to purchase its blades. Kodak adopted this strategy, when it

offered a film roll free to all buyers who bought its camera.

As may be observed this is a strategy aimed at building

customer loyalty.

vi) Loss Leader Strategy:

This is another example of complementary pricing strategy.

This strategy involves dropping the price on a well-known

brand to generate demand or traffic at the retail outlet.

vii) Two-Part Pricing:

This strategy is used by products that can be divided into

two distinct parts. For example, membership of a video

library has two parts – one is the membership fee, which is

annual and the other is rent for each time frame for which a

videocassette is rented. As may be observed the price has

two components, the fixed fees and the variables usag

Choice of a pricing strategy is dependent on:

1) Corporate goals and objectives

2) Customer characteristics

3) Intensity of inter-firm rivalry

4) Phase of the product life cycle

Having considered the factors influencing the choice of

strategy, let us now turn specifically to different

strategies:1) Skimming Strategies:One of the most commonly discussed strategies is the

skimming strategy. This strategy refers to the firm’s desire

to skim the market, by selling at a premium price. Skimming

refers to the objective of achieving highest possible

contribution in a short time. To use this approach, the

product has to be unique and the target market should be

willing to pay the high price. Success of this strategy

depends on the ability and speed of competitive reaction. A

firm with a small market share can face aggressive local

competition when using skimming. Maintenance of high

quality requires lot of resources. If the product is sold

cheaply at home, then the problems of gray market can

surface.

This strategy delivers results in the following

situations:

i) When the target market associates quality of the product

with its price, and high price is perceived to mean high

quality of the product.

ii) When the customer is aware and is willing to buy the

product at a higher price just to be an opinion leader.

iii) When the product is perceived as enhancing the

customer’s status in society.

iv) When competition is non-existent or the threat from

potential competition exists in the industry because of low

entry and exist barriers.

v) When the product represents significant technological

breakthroughs and is perceived as a ‘high technology’

product.

In adopting the skimming strategy the firm’s objective is to

achieve an early break-even point and to maximize profits in

a shorter time span or seek profits from a niche.

2) Penetration Pricing Strategies:As opposed to the skimming strategy, the objective of

penetration price strategy is to gain a foothold in a highly

competitive market. The objective of this strategy is market

share or market penetration. Here, the firm prices its

product lower than the others do in competition. Penetration

pricing uses deliberate low prices to stimulate market

growth and capture market share. It can be useful when

there is a mass market and price sensitive customers.

Japanese companies increasingly resort to penetrative

pricing due to intense local competition.

This strategy delivers results in the following

situations:

i) When the size of the market is large and it is a growing

market.

ii) When customer loyalty is not high customers have been

buying the existing brands more because of habit rather

than any specific preferences for it.

iii) When the market is characterized by intensive

competition

iv) When the firm uses it as an entry strategy

v) Where price-quality association is weak.

3) Differential Pricing Strategies:This strategy involves a firm differentiating its price across

different market segments. The assumption in this strategy

is that different market segments do not communicate or

have different search costs and value perceptions of the

product. In other words heterogeneity in the market

motivates a firm to adopt this strategy.

4) Geographic Pricing Strategies:This strategy seeks to exploit economies of scale by pricing

the product below the competitor’s in one market and

adopting a penetration strategy in the other. The former is

termed as second market discounting. This second market

discounting is a part of the differential pricing strategy

where the firm either dumps or sells below its cost in the

market to utilize its existing surplus capacity. So, in

geographic pricing strategy, a firm may charge a premium in

one market, penetration price in another market and a

discounted price in the third.

5) Product Line Pricing Strategies:These are a set of price strategies, which a multi-product

firm can usefully adopt. An important fact to be noted is that

these products have to be related, in other words belonging

to the same product family. Faced with multi-products and

fluctuating demand, the firm may adopt a combination of the

following strategies to effectively manage its product line or

maximize its profits across the product line.

i) Price Bundling:

This strategy is used by a firm to even out the demand for its

product. This is useful strategy for perishable; time-bound

products like food, hotel room or a seat on a flight and for

products cannot be substituted, like the package of stereo

music system. Off-season discounts and, season tickets for

music festivals are examples of price bundling strategy. This

is a passive strategy aimed at correctly bundling the prices

of related items so that the firm is able to maximize its

profits.

ii) Premium Pricing:

This strategy is used by a firm that has heterogeneity of

demand for substitute products with joint economies of

scale. Consider the example of a colour television set. There

are different models available with different features, like

the one with a remote control and another without it. Both

are substitutable and satisfy the customer needs. But the

firm may opt to premium price the first model and position it

as the top of the product line for high income or upper

income group of customers or for whom communicating that

“they have arrived” is important,

iii) Image Pricing:

This strategy is used when consumers infer quality from the

prices of substitute models or competing products. The firm

varies its prices over different brands of the same product

line. This strategy is commonly used in textiles, cosmetics,

toilet soaps and perfumes.

iv) Complementary Pricing:

This strategy is used by a firm that has customers with high

transaction costs for one or more of its products.

Transaction costs are all those costs that a customer has to

incur to buy the product, like the registration fees that a flat

buyer has to pay in order to be a legal owner or the

processing fees that the bank may charge to give a credit

card to the customer.

v) Captive Pricing Strategy:

Here a special price deal is offered to loyal customers or

those who are regularly buying one of the products of the

firm. A typical example is the Gillette shaving system, which

offers two twin blades free with its razor to induce the buyer

to purchase its blades. Kodak adopted this strategy, when it

offered a film roll free to all buyers who bought its camera.

As may be observed this is a strategy aimed at building

customer loyalty. complementary pricing strategy. This

strategy involves dropping the price on a well-known brand

to generate demand or traffic at the retail outlet.

vii) Two-Part Pricing:

This strategy is used by products that can be divided into

two distinct parts. For example, membership of a video

library has two parts – one is the membership fee, which is

annual and the other is rent for each time frame for which a

videocassette is rented. As may be observed the price has

two components, the fixed fees and the variables usage fees

vi) Loss Leader Strategy:

This is another example of

.