Im Notes Unit1

International Marketing

Unit - I


International marketing can be defined as "marketing carried on across national

boundaries"

International marketing has also been defined as ' the performance of business

activities that direct the flow of goods and services to consumers or users in

more than in one nation'. It is different from domestic marketing in as much as

the exchange takes place beyond the frontiers, thereby involving different

markets and consumers who might have different needs, wants and behavioral

attributes

48 SYED MD FAISAL ALI KHAN

Jazan University, Jazan Kingdom of Saudi Arabia


Scope of International Marketing:

Though international marketing is in essence export marketing, it has a

broader connotation in marketing literature. It also means entry into

international markets by: Opening a branch/ subsidiary abroad for

processing, packaging, assembly or even complete manufacturing through

direct investment.

Negotiating licensing/ franchising arrangements whereby foreign

enterprises are granted the right to use the exporting company's know-

how's, viz., patents, processes or trademarks with or without financial

investment.




Establishing joint ventures in foreign countries for manufacturing and or

marketing and offering consultancy services and undertaking turnkey

projects broad. Depending upon the degree of firm’s involvement, there

may be several variations of these arrangements.

International Marketing vs. Domestic Marketing:

There are a number of similarities and differences between international and

domestic marketing.

1. Both in domestic marketing and international marketing success depend upon

satisfying the basic requirements of consumers. This necessarily involves finding

out what the buyers want and meeting their needs accordingly.

2. It is necessary to build goodwill both in the domestic market and international

market. If a firm is able to develop goodwill of consumers or customers, its

tasks will be simpler than the one, which has not been able to do so.

3. Research and development for product development and modification is

necessary both for international marketing and domestic marketing. However,

there are some salient features of difference between international marketing and

domestic marketing. They are as follows:




1 . S o v e r e i g n P o l i t i c a l E n t i t i e s :

Each country has is a sovereign political entity and goods and services had to

move across national boundaries. S a result, they may have to face a number of

restrictions. This my fall in any of the following categories; Tariffs and customs

duties Quantitative restrictions Exchange controls Local Taxes.

2 . D i f f e r e n t L e g a l S y s t e m s :

Each country has its own legal system and it differs from country to country. The

existence of different legal systems makes the task of businessmen more difficult

as they are not sure as to which particular system will apply to their transactions.

In the case of domestic marketing the buyers are aware of the legal systems in

their country.

3 . C u l t u r a l D i f f e r e n c e s

: In domestic marketing there is only one nation, same language and culture

where as at international marketing many languages and different cultures.

4 . D i f f e r e n t M o n e t a r y S y s t e m s :

Each country has its own monetary system and the exchange value of each

country's currency is different from that of the other. The exchange rates between

currencies fluctuate every day. In case of domestic marketing there is only one

currency prevailing in the country.

5 . D i f f e r e n c e s i n t h e M a r k e t i n g i n f r a s t r u c t u r e :

The availability of the marketing facilities available in different countries may vary

widely. For example, an advertisement medium very effective in one market may

not be available or may be under developed in another market.




6. Trade Restr ic t ions:

Trade restrictions, particularly import controls are a very important problem which

an international marketer faces.

7 . Transpor t Cost :

In International trade, transport cost is a major marketing expense whereas in

domestic trade transport cost influences only to certain extent.

8 . P rocedures and Documenta t ions :

Each country has its own procedures and documentary requirements and traders

have to comply with these regulations if they want to export or import goods from

foreign countries.

9. Degree of R isk:

There is a greater degree of risk involved in international marketing than in

domestic marketing due to

Large volume of transactions

Higher value of transaction

Longer time period

More time of transit

Longer credit period

Comparatively less knowledge

Exchange fluctuations.

1 0 . S t a b i l i t y i n B u s i n e s s E n v i r o n m e n t :

In domestic marketing there is relatively stable business environment. At

international marketing multiple environments, many of which




are likely instable.

TRANSITION FROM DOMESTIC TO INTERNATIONAL MARKET

The Decision to enter foreign markets must be based on strong economic

factors. Temperamental decision to export is transient in character and totally

unsuitable for export marketing. Success in exporting requires total involvement

and determination, which can come only out of basic economic necessity as

perceived by the corporate unit. They grouped as Pre-export behavior and

Motivation to Export.

1. Pre-Export Behavior:

Every firm at some point of time starts as a non-exporter. The point to be studied

is what made some of these firms get involved in export business. This must give

a clue to the question as to whether a present non-exporter will become an

exporter and if so why and when. The factors, which influence a non-exporting

firm's decision to go in for export business, can be classified under the following

categories:

(a) Firm characteristics: Firm characteristics include product

characteristics; size and growth of the domestic market, optimum scale of

production, and potential export markets. If the firm is manufacturing a product,

which is internationally marketable, and the present and future market prospects

in the domestic market are not much encouraging, the motivation of the firm to

get involved in export business will be considerable.




(b) Perceived External Export Stimuli: This will include fortuitous order, market

opportunity and government's stimulation in the form of incentives and assistance

(c)Perceived Internal Export Stimuli: This refer to the management's

expectations about the effects of exports on the firm's business. This covers the

level of capacity utilization, the higher level of profits and the growth objectives of

the firm.

(d) Level of Organizational commitment: The decision makers must agree on

the level of commitment. This is crucial because it will determine whether

adequate resources will be made available for embarking on international

marketing. Resources will be required for hiring new staff specialized in

international marketing, hiring of consultants for carrying out overseas market

potential studies etc.,

2.Motivation to Export: (Economic reasons)

There are some basic economic reasons which might influence a firm decision

regarding export business: These are under:

Relative Profitability: The rate of profit to be earned from export business

may be higher than the corresponding rate on the domestic sales.

Insufficiency of Domestic Demand: The level of domestic demand may be

insufficient for utilizing the installed capacity in full. Export business offers




a suitable mechanism for utilizing the unused capacity. This will reduce

costs and improve the overall profitability of the firm. Recession in

the domestic market often serves as a stimulus to export ventures.

Reducing business risks: When a firm is selling in a number of markets,

the downward fluctuations in sales in one market, which may be the

domestic market, may be fully or partly counter balanced by a rise in the

sales in other markets. Secondly, geographic diversification also provides

the momentum to growth in as much as a single or few markets will have

only limited absortive capacity.

Legal restrictions: Governments may impose certain restrictions on further

growth and capacity expansion of some firms within the domestic market

in order to achieve certain social objectives. But there may not be any

such restrictions, if the additional capacity is utilized for exports. Then the

firm may be tempted to export its products abroad.

Obtaining imported inputs: Nations have to pay for imports of materials,

technology or processes not available within their national boundaries.

Governments, therefore, may be compelled to impose export obligations

on the firms, especially those in need of imported inputs. In other words,

in order to import, the firms will have to export.




Social responsibility: Sometimes businessmen themselves feel

a sense of responsibility and contribute towards the national exchequer by

increasing their exports. They also build up their image in domestic

marketing by their export activities. They also look at exporting to attain

status and prestige.

Increased productivity: Increased productivity is necessary for ultimate

survival of a firm. This will lead the firm to increase production and then

move to export business. To meet the increased costs of Research and

Development, larger markets become a necessity and exports become

unavoidable.

Technological improvement: Entry to export market may enable a firm to

pick up new produce ideas and to add to product line, improve its product,

reduce costs




S P E C I A L D I F F I C U L T I E S I N

I N T E R N A T I O N A L M A R K E T I N G

There are a number of difficulties in undertaking international business. Some

of them the special difficulties are as follows:

Quantitative restrictions to protect local industries.

Government regulations restricting imports by way of import licenses, etc.

Exchange controls.

Local taxes like sales taxes on imported goods.

Different monetary systems like Dollars in USA, Sterling in UK, YEN in

Japan.

Different legal system regarding import and export of goods.

Differences in procedures and documentation.

Differences in market characteristics.

Lower mobility of factors of production.

Cultural dimensions of international marketing.

Economic Unions.

Trade barriers - Tariff and non tariff barriers.

Lack of export incentives to exporters.

Lack of adequate export financing especially for small scale industries.

Complications of Exporting.

Paper work is more in export business.




Competition from local exporters, competition from exporters from other

countries and competition from producers of goods in the importing

countries.

Shipping and freight problems.

Non-availability of latest information about the market conditions, etc

International Marketing Environment

Uncontrollable Factors:

There are some factors on which the company can not have any control. Such

uncontrollable factors in international marketing are described here.

SOCIAL FACTORS:




The social/cultural environment of a nation/market may profoundly influence

business in different ways and dimensions. The attitude of workers, lab our-

management relations, government-business relations, entrepreneurial nature

and attitude, political philosophies and systems, legal environment, business

ethics, governance, government policies etc. could have a social influence of

them Management may undergo a social transformation, for example , a number

of family owned business groups in India have ushered in professional

management. The need for good corporate governance is getting more and more

recognition .In short, the type of products to be manufactured and marketed, the

marketing strategies to be employed, the way the business should be organized

and governed, the values and norms it should adhere to, are all influenced by

social structure and the culture of a society. The tastes and preferences, purpose

of consumption, method of consumption, occasion of consumption, quantity of

consumption, values associated with consumption, etc of a product may show

wide variations between cultures. Because of cultural differences, a promotion

strategy that is very effective in one market may utterly fail in another, or may

even result in social or legal reprisals. Etiquettes differ from culture to

culture. The ways of meeting and greeting people, expression of appreciation or

disapproval, methods of showing respect, ways of conducting meetings and




functions, table manners etc. vary quite widely between cultures. So

familiarity with cultural is necessary for success. The other social factors which

influences the international marketing inclusive of

National legal regime

Political and Financial system

Marketing infrastructure

Language, Religion and Climate

POLITICAL and GOVERNMENT FACTORS:

The following political and government factors must be taken into consideration

by an international marketer while planning to entry any market abroad:

Consistency of government policies.

The nature of political relationship between the target country and

exporter's country. The presence or absence of controls on foreign

exchange, imports, prices, etc. ,in the target country.




Legal restrictions on foreign investments and the patent ability of the

product in the target market .The company has no control over all the

above factors mentioned and hence the exporter has to adjust him to

these factors.

ECONOMIC FACTORS:

I. Commercial policy variables e.g. tariffs, quotas, licensing or any other non-tariff

barriers.

II. Currency restrictions - depending on the policy of the central bank of the

country.

III. Internal demand management policies and instruments followed by the

country. The exporters have to be thorough with the above policies and adjust

them accordingly.

DEMOGRAPHIC FACTORS:




Demographic factors such as size of the population, population growth rates, age

composition, ethic composition, family size, family life cycle, income levels, have

very significant implications for business. The demographic environment differs

from country to country and from place to place within the same country or

region. Further, it may change significantly over time. Because of the diversity of

the demographic environment companies are sometimes compelled to adopt

different strategies within the same market

COMPETITON:

Competition will also influence the international marketing. As like domestic

marketing the trader always aware of his competitors. But the quantum of

competitors is more in international marketing than domestic marketing.

Normally by the following ways the international merchant will face the

competitors.

Competition vis-à-vis producers in the importing country.

Competition vis-à-vis exporter from the competing countries.




Competition vis-à-vis other exporters from one's own country. The

exporters have no control over these types of competition and hence they

have to compete with all the three types of competitions.

LOGISTICS:

Logistics is that part of the supply chain process that plans, implements, and

controls the efficient, effective forward and reverses flow and storage of goods,

services, and related information between the point of origin and the point of

consumption in order to meet customers' requirements. The concept of logistics

play vital role in international marketing by the ways sense.

The merchant has to seek the availability of required type of transport

such as sea, air freezer space, etc.

Cost of transportation. Unless the exporters are in a position to meet the

above requirements of transport facilities and costs they cannot export

their products to the target markets.

RISKS:




There is a greater degree of risk involved in international marketing than in

domestic marketing due to

Large volume of transactions

Higher value of transaction

Longer time period

More time of transit

Longer credit period

Comparatively less knowledge

Exchange fluctuations.

Political risks

Commercial risks

Act of nature

Act of enemies The exporters have to face these risks in the international

markets.

FEATURES OF GLOBALIZATION

Operating and planning to expand business throughout the world.

Erasing the differences between domestic market and foreign market.

Buying and selling goods and services from/to any country in the world.

Establishing manufacturing and distribution facilities in any part of the

world based on the feasibility and viability rather than national

consideration.

Product planning and development are based on market consideration of

the entire world.




Sourcing of factors of production and inputs like raw materials, machinery,

finance, technology, human resources, managerial skills from the entire

globe.

Global orientation in strategies, organizational structure, organizational

culture and managerial expertise.

Setting the mind and attitude to view the entire globe as a single market.

Essential Conditions for International Marketing/ Globalization

BUSINESS FREEDOM:

There should not be unnecessary government restrictions which come in the way

of globalization, like import restriction restrictions on sourcing finance or other

factors fro broad foreign investments etc.

FACILITIES:

The extent to which an enterprise can develop globally from home country base

depends on the facilities available like the infrastructural facilities.

GOVERNMENT SUPPORT:

Although unnecessary government interference is a hindrance to globalization,

government support can encourage globalization. Government support may take

the form of policy and procedural reforms, development of common facilities like

infrastructural facilities, R and D support, financial market reforms and so on.

RESOURCES:




Resources is one of the important factors which often decides the ability of a firm

to globalize. Resourceful companies may find it easier to thrust ahead in the

global market.

COMPETITIVENESS:

The competitive advantage of the company is a very important determinant of

success in global business. A firm may derive competitive advantage from any

one or more of the factors such as low costs and price, product quality product,

product differentiation, technological superiority, after sales service, marketing

strength etc.

ORIENTATION:

A global orientation on the part of the business firms and suitable globalization

strategies are essential for globalization.

Pros and Cons of Globalization / International

Marketing

Advantages

Free Flow of Capital: Globalization helps for free the flow of capital from one

country to the other. It helps the investors to get a fair interest rate or dividend

and the global companies to acquire finance at lower cost of capital. Further

Globalization increases capital flows from surplus countries to the needy

countries, which in turn increases the global investment. Free flow




of Technology: Globalization helps for the flow of technology from advanced

countries to the developing countries. It helps the developing countries

to implement new technology. Increase in Industrialization: Free flow of capital

along with the technology enables the developing countries to boost-up

industrialization in their countries.

Spread up Production facilities throughout the Globe: Globalization of production,

leadsto spread up manufacturing facilities in all the global countries depending

upon the locational various favorable production factors. Balanced development

of world economies: With the flow of capital, technology and locating

manufacturing facilities in developing countries, the developing countries

industrialize their economies. This in turn leads to the balanced development

of all the countries. Increase in Production and Consumption: Increased

industrialization in the globe leads increase in production and thus results in

balanced industrial development along with increase in income which enhances

the levels of consumption. Lower prices with high quality: Indian consumers have

already been getting the products of high quality at lower prices. Increased

industrialization spread up of technology, increased production and consumption

level enable the companies to produce and sell the products of high quality t

lower prices. Cultural exchange and demand for variety of

products: Globalization reduces the physical distance among the countries and

enables people of different countries to acquire the culture of




other countries. The cultural exchange, in turn makes the people to demand for a

variety of products which are being consumed in other countries. For example,

demand for American Pizza in India and Masala dosa and Hyderabad Briyani

and Indian styled garments in USA and Europe. Increase in Employment and

Income: Globalization results in shift of manufacturing facilities to the low wage

developing countries. As such, it reduces job opportunities in advanced countries

and alternatively creates job opportunities in developing countries. Higher

Standards of Living: Further, globalization reduces prices and thereby enhances

consumption and living standards of people in all the countries of the world.

Balanced Human Development: Increase in industrialization on balanced lines in

the globe, improves the skills of the people of developing countries. Further, the

increased economic development of the country enables the government to

provide welfare facilities like hospitals educational institutes etc. which in turn

contributes for the balanced human development across the globe.

Increase in the Welfare and Prosperity: The balanced industrial, social and

economic development of the world nations consequent upon the globalization

along with the welfare measures provided by the governments lead to increase in

the welfare of the people and prosperity of the world countries.

DISADVANTAGES:

Globalization kills Domestic Business: The MNCs from advanced countries utilize

the opportunities created by globalization, establish manufacturing and marketing




facilities in developing countries. The domestic business of the developing

countries fails to compete with the MNCs on the technology and quality front.

Exploits Human Resources: The foreign companies which are located in

developing countries invariably violate the labor and environmental laws in order

to have the cost advantage. These companies employ child labor, pollute

environment, and ignore workplace safety and health issues. However, it is

viewed that, globalization enables the developing countries to become rich and

enforce the labor and environmental regulations. Leads to Unemployment and

Underemployment: MNCs produce the products in their home countries or in

some other foreign countries and market in developing countries. Therefore, the

domestic country’s operations are to be reduced. This in term leads to reduction

in employment opportunities particularly in less developed countries. Decline in

demand for domestic products: Selling of high quality foreign products at low

prices by MNCs reduces the demand for the domestic products. Decline in

Income: Unemployment and decline in demand for domestic products of both

industrial agricultural goods leads to reduction in income of the people. Widening

gap between rich and poor: Globalization not only results in decline in income but

widens the gap between rich and poor. This is because, competent people,

people with innovative skills, efficiency etc., get abnormal income, while other

average people have to strive for even a minimum wage. This results in widening

the gap between have and the have-nots, Transfer of natural resources:

MNCs establish their manufacturing facilities in developing countries exploit their

natural resources and sell the products in other




countries. Through these means, the natural resources of developing

countries are transferred to other countries.

Analyzing International Opportunities




Identify Basic Appeal Basic demand & Available resources

Cultural Forces

Market selection

Global product Tailored product

Site selection

Education level Technical skills Work ethic

Political and Legal ForcesGovernment regulation




Investment barriers Profit repatriation

Government bureaucracy Administrative delays

Political stability Unforeseen changes

Political Risk Social unrest can drive out international companies

Economic Forces Country finances Currency and liquidity

Other Forces Logistics Country image

Industrialized Markets Potential Demographics Competitor market shares Import/Export volumes Distribution network Marketing approaches Retail sales levels Income elasticity

Measuring Site Potential Labor and management Productivity Wage levels Training needs Local infrastructure

Market Research Difficulties




Secondary Data Sources

International organizations Government agencies Industry/Trade associations Service organizations Internet and World Wide Web

Methods of Primary Research Interview Questionnaires Observation

Unit - II



AvailabilityAvailabilityof dataof data

ComparabilityComparabilityof dataof data

CulturalCulturaldifferencesdifferences


International Market Segmentation

The process of identifying countries and/or consumers that are similar with

regard to key traits, such as product-related needs and wants, that would

respond well to a product and related marketing mix.

Requirements for Effective International Segmentation

• Measurability

• Substantiality

• Stability over time

• Accessibility

• Actionability

• Differential response

• Basis for Segmentation

• Demographic

• Age

• Occupation

• Education

• Income

• Ethnicity

• Race

• Nationality




International Market Entry Strategies

1. Exporting

Exporting is the most traditional and well established form of operating in foreign

markets. Exporting can be defined as the marketing of goods produced in one

country into another. Whilst no direct manufacturing is required in an overseas

country, significant investments in marketing are required.

The advantages of exporting are:

manufacturing is home based thus, it is less risky than overseas based

gives an opportunity to "learn" overseas markets before investing in bricks and

mortar

reduces the potential risks of operating overseas.

2. Piggybacking

Piggybacking is an interesting development. The method means that

organisations with little exporting skill may use the services of one that has.

Another form is the consolidation of orders by a number of companies in order to

take advantage of bulk buying. Normally these would be geographically adjacent or

able to be served, say, on an air route. The fertilizer manufacturers of Zimbabwe, for

example, could piggyback with the South Africans who both import potassium from

outside their respective countries.

3. Countertrade48

SYED MD FAISAL ALI KHANJazan University, Jazan

Kingdom of Saudi Arabia


By far the largest indirect method of exporting is countertrade. Competitive intensity

means more and more investment in marketing. In this situation the organisation

may expand operations by operating in markets where competition is less intense

but currency based exchange is not possible. Also, countries may wish to trade in

spite of the degree of competition, but currency again is a problem. Countertrade can

also be used to stimulate home industries or where raw materials are in short supply.

It can, also, give a basis for reciprocal trade.

4. Foreign production

Besides exporting, other market entry strategies include licensing, joint ventures,

contract manufacture, ownership and participation in export processing zones or free

trade zones

5. Licensing:

Licensing is defined as "the method of foreign operation whereby a firm in one

country agrees to permit a company in another country to use the manufacturing,

processing, trademark, know-how or some other skill provided by the licensor".

It is quite similar to the "franchise" operation. Coca Cola is an excellent example of

licensing. In Zimbabwe, United Bottlers have the licence to make Coke.

Licensing gives the following advantages:

Good way to start in foreign operations and open the door to low risk

manufacturing relationships




Linkage of parent and receiving partner interests means both get most out of

marketing effort

Capital not tied up in foreign operation and

Options to buy into partner exist or provision to take royalties in stock.

The disadvantages are:

Limited form of participation - to length of agreement, specific product, process or

trademark

Potential returns from marketing and manufacturing may be lost

Partner develops know-how and so licence is short

Licensees become competitors - overcome by having cross technology transfer

deals and

Requires considerable fact finding, planning, investigation and interpretation.

Those who decide to license ought to keep the options open for extending market

participation. This can be done through joint ventures with the licensee.

7. Joint ventures

Joint ventures can be defined as "an enterprise in which two or more investors

share ownership and control over property rights and operation".

Joint ventures are a more extensive form of participation than either exporting or

licensing. In Zimbabwe, Olivine industries has a joint venture agreement with HJ

Heinz in food processing.

Joint ventures give the following advantages:48




Sharing of risk and ability to combine the local in-depth knowledge with a

foreign partner with know-how in technology or process

Joint financial strength

May be only means of entry and

May be the source of supply for a third country.

They also have disadvantages:

Partners do not have full control of management

May be impossible to recover capital if need be

Disagreement on third party markets to serve and

Partners may have different views on expected benefits.

If the partners carefully map out in advance what they expect to achieve and

how, then many problems can be overcome.

8. Ownership:

The most extensive form of participation is 100% ownership and this involves the

greatest commitment in capital and managerial effort. The ability to communicate

and control 100% may outweigh any of the disadvantages of joint ventures and

licensing. However, as mentioned earlier, repatriation of earnings and capital has to

be carefully monitored. The more unstable the environment the less likely is the

ownership pathway an option.




Unit – III

International Product Policies




Product: In marketing, a product is anything that can be offered to

a market that might satisfy a want or need.

A product can be classified as tangible or intangible. A tangible product is

a physical object that can be perceived by touch such as a building,

vehicle, gadget, or clothing. An intangible product is a product that can

only be perceived indirectly such as an insurance policy.

The Components of International Product Offer :

1. For what purpose the product is been developed for?

2. What are distinct properties a product have?



http://en.wikipedia.org/wiki/Intangible

http://en.wikipedia.org/wiki/Tangibility

http://en.wikipedia.org/wiki/Market

http://en.wikipedia.org/wiki/Marketing


3. What benefits a consumer expect?

4. How is product positioned and what image do consumer perceive?

5. Which consumer segment of the total market are expected to buy.

6. How does the product fit into total market.

Factors Affecting International Product and Service Management

There are numbers of factors which affect the international products and

services including – Cultural factors

- Usage factors

- Legal factors

- Product accessibility and ethical issues

- Green environment issues

- Shortening product life cycles

- The effect of different market entry methods

- Change in marketing management

Towards Standardization – The product should be standardized enough

to meet the demand internationally. No impurities to mixed.

Cultural Factors – The product should be made keeping in mind of the

cultural requirement of the people.

Eg. KFC generally use pork in burger but when it was launched in Saudi

Arabia it replaced Pork with chicken.




Usage Factors – The product should be designed (made) in the manner

to suit the requirement of the consumer. Eg. In Saudia Arabia due to

extreme hot whether condition air conditioner is being launched.

Legal Factors – Legal factors are very important as the standards of

products and services can be significantly affected by legalization. Legal

standards are country specific. As consumption of alcohol is allowed in

products in Europe but same is forbidden in Saudi Arabia

Product accessibility and ethical issues – Consumer have more

expectation of the product they have and manufacturer must take care of

pre and post purchase activities of the product. Warranties must be taken

care of the manufacturer.

Green Environment Issues – The product should take care of the

environment. No environmental harmful product should be launched in the

market. Environmental harmful product must replaced with environmental

friendly products. Eg. In earlier period refrigerator uses CFC as a cooling

agent but as CFC is harmful to the environment it was later being relaced

by HFC which is environmental friendly element.




Shortening product life cycles – To capture market improvements are

done frequently in the product.

The effect of different market entry methods – With the use of new and

more advance technologies keeping in mind of local and international

consumer the products are more customized in accordance with the

consumer with greater satisfying capability.

New Product Development

1. Idea generation

2. Idea screening

3. Business Analysis

4. Product Development

5. Market Testing

6. Commercialization and Launch

Factors Affecting International Pricing Decisions




A firm exporting for first time with little knowledge of the market environment that it is

entering is likely to set a price based largely on company and product factors. Because

of restriction of resources the company set at least to such level as to incur profit.

Factors influencing the pricing strategy

Company And Product Factors

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Ref Book:

Unit – III




International Advertising Strategy

Advertising

A non personal communication by an identified sponsor across international borders,

using broadcast, print, and/or interactive media.

Media Infrastructure

• Availability

• Reliability

• Restrictions

• Costs48




Media Reliability

• Extent to which the existing media reliably reach the target consumer

Print lag times

Poor quality

Off-air Television

Media Restrictions

• Limitations imposed by existing media

Limiting the number and types of advertisements

Cultural differences

Clustered ads

Media scheduling

Media Costs

• Differ greatly between countries, and even within a particular country

Income per capita of target market

Competition for media

Firm status

Translation costs

Various International Formats, Features, and Trends

• Posters on Kiosks and Fences

• Advertising on the Sides of Private Homes

• Advertising on Plastic Shopping Bags

• Advertising on Outdoor Umbrellas




• Billboards

Global Media

• Television

CNN, Bloomberg, MTV

Tonight Show, Disney

Fox Broadcasting, 20th Century Fox, 20th Century Television

Infomercials & TV Shopping

• Shopping

QVC, Home Shopping Network

Home Order Television

Using English In Local Advertisements

• English:

Requires less space in print and broadcasting time

Conveys a cosmopolitan attitude

Endows a product or service with status

Product Placement




Placing brands in movies and television programming with the purpose of promoting

the products to viewers

• U.S. movies’ box-office receipts are steadily increasing

• U.S. films are very successful abroad

Advertising Regulations

• Comparative Advertising

• Advertising to Children

• Advertising Vice Products

• Other Regulations:

Vary by country; examples:

- France: Requirement to keep the French language pure

International Advertising Infrastructure

• Develop ads in-house

• Local advertising agencies

• Home-country agencies

• International agencies

Top agencies are:

- Omnicom Group

- Interpublic Group

- Young & Rubicam (U.S.)




- WPP Group (U.K.)

- Dentsu, Inc. (Japan)

International Advertising Strategy

• Standardization vs. Adaptation

Standardization reduces costs: No duplication of effort for each market

Individual campaigns delay product launches

Consumers increasingly share similar frames of references with regard to

products and consumption

Barriers to Standardization

• Communication infrastructure

• Agencies might not serve a particular market

• Consumer literacy

• Legal restrictions and self-regulation

• Differing values and purchase motivations

• Attitudes toward product country of origin

• Promotional mix elements

Budgeting Decisions

• Objective-and-Task Method

1. Identify advertising goals

2. Conduct research

3. Determine cost of achieving goals

4. Allocate the necessary sum




• Percent-of-Sales Method

1. Base budget on past or projected sales

• Historical Method

1. Base budget on past expenditures giving more weight to recent

expenditures

• Competitive Parity

1. Use international competitors’ budgets as benchmark

• Executive-judgment method

1. Use collective executive opinion

• All-you-can-afford

1. Best suits small and medium firms

Chapter Summary

• Addressed the international promotional mix and the international

communication process

• Explored international advertising formats and practices around the world

• Described international advertising and media infrastructure, and infrastructure-

related challenges in different markets

• Addressed advertising strategies and budgeting decisions




Unit - IV

Technology Marketing

The action of combining technology with business processes to promote the selling of products or

services.

Applied information technology sciences to the benefit sales and marketing efforts associated

with advancing organizational goals

The Enabling Technologies

Advance technologies enable to redesign product and identify consumer need more

appropriately. The internet has served as a purpose of minimizing the time and distance.

Information can be shared in less time and at the same time core banking concept has helped net

banking as well as enabled ATM’ s to come into function.

We call it as enabling technologies as no single technology is associated but there are many

technologies associated with it as internet communication, mobile communication, information

management, computer aided design, inventory management etc. So enabling technologies in




international marketing provide the solutions to old problems such as how a customer at remote

location can be reached or how a far customer can order its products.

Technological Innovation

Technological innovation is generating new ideas and implementing new ideas in technology. Eg.

Earlier banking was done manually but with the updating technology placed computers in the

bank. This computer further added ATM’s and internet banking. The development of new idea

further developed to mobile banking.

Same as in railways the booking were earlier done in the railway station only but now a days

tickets can be purchased from to any station irrespective of the location. Eg. Even a person in

Saudi Arabia can purchase ticket for a train traveling between New Delhi to Mumbai.

Products are customized in accordance with the consumer need. Eg. Cars are being launched

which have automatic gear in it. Traditional TV is replaced by LCD and now LCD is being

replaced by LED.

Technology served a purpose in two ways

1. Disruptive Technologies: Some time technological advances make existing product or

business obsolete (dead) unless they do not react the change.

Eg. Traditional photo camera got obsolete when digital camera launched and companies like Fuji

which was dealing in rolled camera incurred great loss.

2. Convergent Technologies: This is the technological advancement where

existing product is modified. Eg. In earlier time mobile phone were only used to

talk and sent messages but now mobile phone serve many purpose like camera,

computer, gaming, downloading, GPS, alarm clock etc.

The Prevalence of Information and Communication Technology

in Developing Countries




The Internet and E – Business

Internet has changed the structure of traditional business today everything is being

electrified starting from the manufacturing to storing. Data about the demand of

product is taken from marketing research process. The demand of product is then send

to the manufacturing unit. The manufacturing unit produces the product in accordance

with the demand. With the computerization the products are produce with

automatically which again reduce time. The products are then supplied to the location in

accordance with the demand. Once the product reaches the market it get sold.

The sales figure is being kept by the store and the inventory data based is being sent to

the company regularly and in accordance with that products are again resend.

The Purpose of Websites

Websites are created by individual or organization as a shop for activities. There are four

mail categories of website.

1. Organizational Sites:

Many organization use there websites to provide information to there stake

holders. Websites also serve a way for online purchase of products directly from

the company.

2. Service:

Many organization put most of there services online for the convenience of the

consumer. Like many banks put there online services like fund transfer, online

payment etc.




3. Information Online: Organizations in the business of providing information such

as the financial times provides websites that enable consumer to access current

and achieved past files.

4. Business Transaction online:

Here information is exchanged to conduct the activity of business more

efficiently.

Counter Trade

International trade in which goods are exchanged for other goods, rather than for hard

currency. Counter trade can be classified into three broad categories –

1. Barter

2. Counter purchase and

3. offset.

1. Barter: Barter forms the oldest counter trade arrangement, and essentially

involves the direct exchange of goods and services having an equivalent

value, but with no cash settlement

2. Counter Purchase: In a counter purchase, the overseas seller agrees to buy

goods or services sourced from the buyer's country up to a defined amount.




3. Offset: an offset arrangement, the seller assists in marketing products

manufactured by the buying country or allows part of the assembly of the

exported product to be carried out by manufacturers in the buying country;

this practice is often found in the aerospace and defense industries.



Im Notes Unit1

Documents

Transcript of Im Notes Unit1