International MarketInternational Market

Marketing means working with Marketing means working with markets, which in turn means markets, which in turn means attempting to actualize potential attempting to actualize potential exchanges for the purpose of exchanges for the purpose of satisfying human needs and wants.satisfying human needs and wants.

International Marketing – marketing International Marketing – marketing carried on across national boundariescarried on across national boundaries

Difference from domestic marketing Difference from domestic marketing is as much as exchange takes place is as much as exchange takes place beyond the frontiers.beyond the frontiers.

Involving different marketing and Involving different marketing and consumers who might have different consumers who might have different needs, wants and behaviourial needs, wants and behaviourial attributesattributes

Existence of mopre than one market Existence of mopre than one market necessarily complicates the necessarily complicates the marketing process.marketing process.

Since the countries are sovereign Since the countries are sovereign and dependent, the respective and dependent, the respective Governments enact legislations for Governments enact legislations for the control of foreign trade.the control of foreign trade.

International marketing, essentially International marketing, essentially similar to domestic marketingsimilar to domestic marketing

Marketing can be conceived as an Marketing can be conceived as an integral part of two processes: integral part of two processes:

TechnicalTechnical

SocialSocial Technically both domestic and Technically both domestic and

international markets are identical.international markets are identical. Tech includes non-human factors Tech includes non-human factors

such as Product, Price, Cost, Brands such as Product, Price, Cost, Brands etc.etc.

Social aspect is unique in any given Social aspect is unique in any given stratum (level), because it involves stratum (level), because it involves human element namely the behaviour human element namely the behaviour pattern of consumers and the given pattern of consumers and the given characteristics of a society, such as characteristics of a society, such as customs, attitudes, values etc. Hence it customs, attitudes, values etc. Hence it is obvious that marketing to the extent is obvious that marketing to the extent it is visualized as a social process, will it is visualized as a social process, will be different from domestic marketing.be different from domestic marketing.

The barriers imposed by Govt are The barriers imposed by Govt are both visible and invisible.both visible and invisible.

So it is important to make trade free So it is important to make trade free from those barriers.from those barriers.

Even if there is complete free trade, Even if there is complete free trade, logistic may create problems totally logistic may create problems totally different from those experienced in different from those experienced in domestic operations.domestic operations.

Foreign Exchange Regulation which Foreign Exchange Regulation which does not effect domestic sales, have does not effect domestic sales, have considerable impact on financing of considerable impact on financing of overseas Sales and Operations.overseas Sales and Operations.

As human needs and wants have As human needs and wants have different attributes in foreign different attributes in foreign markets, perception of those needs markets, perception of those needs will require an overall appreciation of will require an overall appreciation of the environment, and the social & the environment, and the social & individual value systems.individual value systems.

It is necessary to introduce the It is necessary to introduce the concept of controllable and concept of controllable and uncontrollable factors in international uncontrollable factors in international marketing from company’s point and marketing from company’s point and others.others.

ProductProduct PricePrice Place Place Promotion is in a position of Promotion is in a position of

company’s control.company’s control.

But total environment in which the But total environment in which the market functions/mix elements will market functions/mix elements will operate is beyond the control of the operate is beyond the control of the company.company.

Meidan has identified 13 Meidan has identified 13 uncontrollable factors which can be uncontrollable factors which can be classified under following heads:classified under following heads:

1.1. AnthrolopologicalAnthrolopological2.2. Economical Economical

33 Competitive Competitive

44 Risk and Risk and

55 Distance factorsDistance factors

A slightly modified listing is relevant A slightly modified listing is relevant to international marketingto international marketing

Social factors:Social factors:

National legal regimeNational legal regime Political situation Political situation Financial systemFinancial system Marketing infrastructures Marketing infrastructures CultureCulture LanguageLanguage climateclimate

Economic factorsEconomic factorsCommercial polcy variables e.g. tariffs, quotas, licensing, non-tariff barriers

Currency restrictions

Internal demand management policies and instruments

CompetitionsCompetitions

Competitions vis a vis products in the Competitions vis a vis products in the importing countryimporting country

Vis a vis exports from the competing Vis a vis exports from the competing countries vis a vis other exporters countries vis a vis other exporters from one’s own country.from one’s own country.

LogisticsLogistics

Availablity of required types of Availablity of required types of transport (Sea, Air, Freezer space transport (Sea, Air, Freezer space etc)etc)

Cost of transportationCost of transportation

RisksRisks

Political risksPolitical risks Commercialo risksCommercialo risks Acts of GodActs of God Acts of enemies, pirates, thieves etc.Acts of enemies, pirates, thieves etc.

Scope of International MarketingScope of International Marketing

Sovereign political entities: each country Sovereign political entities: each country is a sovereign political entity and goods is a sovereign political entity and goods & services have to move across national & services have to move across national boundaries. As a result., they may have boundaries. As a result., they may have to face a number of restrictions.to face a number of restrictions.

1.1. Tariffs or Customs Duties:Tariffs or Customs Duties: make goods expensivemake goods expensive Intended to ban entry of foreign goodsIntended to ban entry of foreign goods Reduction due to GATTReduction due to GATT

Quantitative Restrictions :Quantitative Restrictions :

To restrict trade of specific To restrict trade of specific commodity. To protect domestic commodity. To protect domestic industryindustry

Exchange Control: Exchange Control:

Though not banned, import may Though not banned, import may not be allowednot be allowed

Import LicenceImport Licence

Local Taxes :Local Taxes :

Objective is to make the foreign Objective is to make the foreign goods comparatively costlier than goods comparatively costlier than domestic goodsdomestic goods

Different Legal System in different Different Legal System in different countries make the businessman countries make the businessman task more difficult as they are not task more difficult as they are not sure to which particular system will sure to which particular system will apply to their transactions:apply to their transactions: Uniformity is being saught forUniformity is being saught for Incoterms Uniform Customs and Incoterms Uniform Customs and

practice of documentary credit practice of documentary credit developed by the international chamber developed by the international chamber of commerce are examplesof commerce are examples

Different Monetary SystemsDifferent Monetary Systems Each country has their own monetary Each country has their own monetary

system and exchange value differsystem and exchange value differ Exchange rates since 1973 are Exchange rates since 1973 are

fluctuating and are determined by fluctuating and are determined by forces of supply & demandforces of supply & demand

Some also operate on multiple exchange Some also operate on multiple exchange rates and each exchange rates is rates and each exchange rates is applicable on certain set of transactions.applicable on certain set of transactions.

LOWER MOBILITY OF FACTORS LOWER MOBILITY OF FACTORS OF:PRODUICTIONS:OF:PRODUICTIONS: Factors of productions are less mobile as Factors of productions are less mobile as

between nations than in the country between nations than in the country itself.itself.

However due to advent of Air transport, However due to advent of Air transport, mobility of labour is now increasingmobility of labour is now increasing

Due to development of international Due to development of international banking and removal of restrictions on banking and removal of restrictions on capital movements, capital is also capital movements, capital is also becoming more mobile.becoming more mobile.

Difference in market characteristics:Difference in market characteristics: Each country is separate market having Each country is separate market having

its own demand patternits own demand pattern Channels of distributionsChannels of distributions Methods of promotionsMethods of promotions These difference are accentuated due to These difference are accentuated due to

the existence of Government control the existence of Government control and regulations.and regulations.

Difference in Procedures and Difference in Procedures and DocumentationDocumentation

Greater degree of risks involved in Greater degree of risks involved in international marketing than international marketing than domestic due todomestic due to Larger volumes of transactions and the Larger volumes of transactions and the

higher values of these transactionshigher values of these transactions Longer period involved in these Longer period involved in these

transaction due to longer time in transit transaction due to longer time in transit and long credit period involved and …….and long credit period involved and …….

Comparatively less knowledge about the Comparatively less knowledge about the parties’ reputation and credibilityparties’ reputation and credibility

In addition – exchange fluctuation risksIn addition – exchange fluctuation risks

Cultural Dimensions of International Cultural Dimensions of International MarketingMarketing

Cross cultural environment Cross cultural environment Making task of marketing more complexMaking task of marketing more complex How different is the foreign cultural from How different is the foreign cultural from

his own, this market must appreciate.his own, this market must appreciate.

How this must be reflected in shaping How this must be reflected in shaping his behaviour pattern as well as his his behaviour pattern as well as his export marketing strategyexport marketing strategy

Culture though very commonly used Culture though very commonly used term, is not, however, easy to defineterm, is not, however, easy to define

3 major characterstics of culture 3 major characterstics of culture It’s not inborn, but learned and passed on to It’s not inborn, but learned and passed on to

new generationsnew generations It’s all pervasive and interrelatedIt’s all pervasive and interrelated It is shared by all members of the groupIt is shared by all members of the group

Synonymous with political boundary Synonymous with political boundary of nation-Chinese culture, British of nation-Chinese culture, British culture or Japanese cultureculture or Japanese culture Each culture has sub-cultureEach culture has sub-culture