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UNIT1

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INTERNATIONAL MARKETING

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

It is an approach of a company
with truly global outlook, seeking
its profit impartially around the
world, on a planned and
systematic basis
...
The entire world
is open for them
...
In today’s global market opportunities are on a par with the expansion of economies,
with the increasing purchasing power, and with the changing consumer taste and preferences
...

The objective of this post is to make you understand the term ‘International Marketing’ and
nature and scope of international marketing
...
"
International marketing is different from domestic marketing not only in scope but also in nature
...

Nature of International Marketing
1
...
Population of other countries can also be targeted in international marketing
...
Involves at least two set of uncontrollable variables – In domestic marketing the marketers
have to interact with only one set of uncontrollable variables
...

3
...

4
...
Hence, the competition is intense in
international marketing
...
Involve high risk and challenges – International marketing is prove to various kinds of risk
and challenge like – political risk, cultural differences, changes in fashion and style of foreign
customers, sudden war, changes in government rules and regulations, communication challenges
due to language and cultural barriers, etc,
...
Export – It is a function of international business whereby goods produced in one country are
shipped to another country for further sale or trade
...
Import – Goods or services brought into one country from another for use or sale
...
Re-export – Import of semi-finished goods, further processing, and export of finished goods
...
Management of international operations




Operating marketing and sales facilities abroad,
Establishing production or assembly facilities in foreign countries, and
Monitoring the operations and practices of other MNCs and agencies
...
By developing international markets for domestically produced goods and services a
company can reduce the risk of operating internationally, gain adequate experience and then go
on to set up manufacturing and marketing facilities abroad
...

Licensing includes a number of contractual agreements whereby intangible assets such as
patents, trade secrets, know – how, trademarks and brand names are made available to foreign
firms in return for a fee
...
A joint venture comes into existence when a foreign investor acquires interest in a local
company and vice versa or when overseas and local firms jointly form a new firm
...

Wholly owned manufacturing: A company with long term interest in a foreign market may
establish fully owned manufacturing facilities
...
encourage the setting up of production facilities in foreign markets
...

Contract manufacturing: When a firm enters into a contract with other firm in foreign country
to manufacture assembles the products and retains product marketing with itself, it is known as
contract manufacturing
...

Management contracting: Under a management contract the supplier brings a package of skills
that will provide an integrated service to the client without incurring the risk and benefit of
ownership
...
For instance, Taiwan’s entry into china through bases in Hong
Kong
...
It also reduces the level of competition for firms
which either merge or acquires
...
The objective of a
strategic alliance is to leverage critical capabilities, increase the flow of innovation and increase

flexibility in responding to market and technological changes
...


Importance of International Marketing
1
...
When an organisation thinks globally, it looks
for overseas opportunities to increase its market share and customer base
...
Important to boost brand reputation – International marketing may give boost to a brand’s
reputation
...
People like to purchase products that are widely available
...

3
...

Apple - the tech giant designs its iPhone in California; outsources its manufacturing jobs to
different countries like - Mongolia, China, Korea, and Taiwan; and markets them across the
world
...
The opportunities for networking internationally are limitless
...

4
...
International marketing not only increases market share
and customer base, it also helps the business to connect to new vendors, a larger workforce and
new technologies and ways of doing business
...


International Marketing Orientations
Different attitudes towards company’s involvement with international marketing process are
called international marketing orientations
...
In this statement Paul and Kapoor talk about the
EPRG framework introduced by Wind, Douglas and Perlmutter, who stress that “the key
assumption underlying the EPRG framework is that the degree of internalization to which
management is committed affects the specific international strategies and decision rules of the
firm”
...
The EPRG framework includes:

1
...
Polycentric approach;
3
...
Geocentric approach;
Ethnocentric Approach
Ethnocentric approach underlines host countries superiority
...
Overseas operations are considered only as an
additional
extension of the local market
...
Companies oriented on ethnocentric
approach are distinct with their complex structure in home country, while structure in other
countries stays very simple
...
Ranchhod and Marandi (2006) come up with a
good summary of ethnocentric approach, saying that this international marketing orientation
“tends to ignore much of the opportunities outside the domestic market while those that venture
outside tend to operate on the basis of “standardized” or “extension approach” marketing and do
not engage in adaptation of any noticeable degree”
...
On the other hand, the company may
experience a lot of difficulties to survive in foreign markets as its brands will not be accepted by
consumers of that country due to cultural differences as they are completely ignored by the
headquarters
...
The example of
such change is NISSAN which in the first years of its existence on international arena was
following ethnocentric approach by selling its cars abroad exactly as they were sold in their
domestic market in Japan, after several years of its international trading the company realized
that ethnocentric international marketing orientation is no longer relevant for some industries
including automobile industry in which they were operating and changed its approach to
polycentric (see 2:1:5:2)
...


Ethnocentric
Management orientation – Home country orientation
Perception about market –
Domestic market is superior
Focuses on similarities between home and foreign
market
 Considers foreign market secondary to an extension
of domestic market
Marketing strategy –
foreign market

Extension of domestic strategy to

Companies basic objective – Profitability
Type of governance – Top-down

Culture -

Home country

Technology - Mass production
HRM practices – Overseas operations are managed by
people from home country
Managerial predisposition - Manager/MNC rely On
values &interests of parent company in formulating and
implementing strategic plan

Characteristics –
 Overseas operations viewed as secondary & primary means of disposing the surplus
production
 Domestic techniques &personnel superior to foreign & most effective in overseas
market
 Domestic marketing mix is employed without major modifications in overseas market
 All foreign marketing operations are planned & carried out from home base &
overseas marketing administered by export department
Merits –
 No cost & efforts needed for adaptation/localization
 It easy route to internationalization when foreign market exists with similar domestic
characteristics
Demerits –
 No full utilisation of IB opportunities worldwide
 Main focus on domestic market

Examples Nissan in 1st years exported cars in US markets, sold cars without change then sold
car in Japan

Polycentric Approach
A company following this orientation gives an equal importance to every country’s domestic
market, as there is a belief in uniqueness of every market and its need to be addressed in an
individual way
...
e
...
When following this approach a company has to be a leader in
technological leadership, produce high quality products or its production costs should be very
low
...
Among disadvantages of this orientation is low
possibility of the economies of scale, high prices of products due to high investments in the
research of foreign markets and adaptation of products to the needs and wants of particular
countries
...
– all these companies adapt their brands to
specific needs of each country’s consumer
...
A company finds economic, cultural or political similarities among regions in order to
cover the similar needs of potential consumers
...
The same products and strategies can be used in
such set of countries like Denmark, Norway, Finland and Sweden or Pakistan, Bangladesh and
India as they possess a strong regional identity and belong to the same cultural dimensions
...


Regiocentric
Management orientation – Regional orientation
Perception
about
market
differentiated
on
the
basis
characteristics

Marketing
strategy
–
standardization & localization

–
of

Markets
common

Trade-

off

can
be
regional

between

Companies basic objective – Both profitability & public
acceptance

Type of governance – Mutually negotiated between
region & its subsidiaries
Culture-Regional
Technology - Flexible manufacturing
HRM practices – Regional people are developed for
key managerial positions anywhere in region

Managerial predisposition - MNC use a strategy that
addresses both local & regional needs

Characteristics –
 Treat different regions as different market
 Regions with similarity of marketing characteristics treated as separate market

Merits - Advantages of both localization &standardization
Demerits – Lack of attention to inter regional differences
Examples Punjab (paneer products more)

Geocentric Approach
This orientation favours neither home country nor foreign countries where the company operates
...
The main idea of this orientation is to borrow from every country what is
best
...
This approach is for companies with an impressive capital that want
“to become world leaders”… , in this quest “…manufacturers offer homogeneous, identifiable
and often interchangeable services and products in order to integrate them for worldwide
operational efficiency” (Paul, 2008)
...


Geocentric
Management orientation – Global orientation
Perception about market – Entire world is a single market
that can be effectively tapped by standardized marketing
strategy
Marketing strategy – Global standardization

Companies basic objective –
acceptance

Both profitability & public

Type of governance – Mutually negotiated at all level of
organization

Culture- Global
Technology - Flexible manufacturing
HRM practices – Best people anywhere in the world are developed for key managerial positions
everywhere in the world
Managerial predisposition - MNC constructs its strategic plan with a global view of operations
Characteristics –
 Entire world is treated as single market
 Standardized marketing mix, to give uniform image of product & company for global market
 Worldwide approach to marketing & its operations
Merits –
 Economies of large scale production
 Lower costs advantage of pace
Demerits –
 Not successful in many cases
 Uniform /standard marketing mix not guarantees for sure success in every situation
Examples Microsoft & Nokia standardized products world wide

Progression to Global Marketing

EPRG FRAMEWORK
Ethnocentric

Polycentrism

- Home
country
orientation

- Host
country
orientation

Regiocentrism

Geocentrism

- A regional
orientation

- A world
orientation

Process of International Marketing
International Marketing Process comprises of following five steps:1
...
Research and Analysis – Market research is done to Analyse the organization’s strength and
weakness, opportunities available in international markets, and threats in international markets
...
Decision to Enter International Markets – After identification of potential opportunities in
international market decisions are taken to enter international market
...

4
...

Marketing mix identifies four key areas – Product, Price, Place, and Promotion for developing a
well coordinated marketing strategy
...
Consolidate Marketing Efforts - Developing a good marketing program is not enough a
marketing organisation need to manage the international marketing effort properly
...


International Marketing Environment
Meaning
International Marketing Environment is the combination of various factors external to an
organisation that can affect the international marketing decisions of the organisation in
international market
...
For example, Apple cannot control population trends, economic conditions, or
laws once passed, but it can have some influence on relations with stakeholders, technological
developments, and competitive situations
...

Internal factors are controllable which includes - organisational structure, productivity, relations
with stakeholders, organisational policies and rules
...
Domestic marketing
factors include – availability of raw material, availability of infrastructure, legal system, and
technological factors
...
The main global marketing factors
are – Political and legal factors, economic factors, social factors, technological factors,
demographic factors, cultural factors, competitive factors, and institutional factors
...
The process of environmental
scanning is consisting of identifying relevant environmental factors and trends and assessing
their potential impact on the organization’s markets and marketing activities
...

If the trend poses marketing threat decisions are taken to minimise the threat
...


Organisational Internal Environment










Goals and objectives of organisation,
Managerial philosophy of organisation,
Personal factors related to management,
Managerial attitudes toward other nations, customers, social welfare, etc
...


Factors of International Marketing Environment:
Political factors:
The region where a business is expanding has a political background that can influence the desire
of a company to expand their operations within a particular country (Luo & Tung, 2007)
...
Political stability of a region can also influence the success of international
business in a particular country (Barkema, Bell, & Pennings, 1996)
...
For instance, marketing campaigns of Nike
promote the fight for freedom and, in areas where political freedom is a sensitive subject; Nike’s

intended message might be interpreted in the wrong way given the political background of the
region (Moth, 2013)
...
In order to combat this barrier in the global expansion, MNCs must demonstrate through
their marketing tactics that their efforts to sustain local economy and the labour market within a
foreign market makes them a valuable contributor to the prosperity of the region (Young, Hood,
& Peters, 1994)
...
Customer behaviour and their purchase intention are often linked to the
consumers’ financial status, their emotional relationship with certain products and the ability to
preserve or build upon their social status (Solomon, Russell-Bennett, & Previte, 2013)
...
Luxury brands, from apparel to automobile or cosmetics firms, design their
marketing to appeal to financially potent target audiences (Kapferer & Bastien, 2009)
...
In affluent countries,
these brands rarely advertise their products relying instead on their well-established name and
loyal customers, whilst in emerging markets the need to invest in the marketing and advertising
techniques increases, as the potential target audience for these brands are less brand-conscious
(Wang, Siu, & Hui, 2004)
...

On the other hand, marketing price competitiveness of a brand may have a greater impact in
particular regions where customers are concerned with savings costs and finding cheaper
alternatives to what local brands are offering (Prahalad & Doz, 1987)
...
However, to succeed in these markets, the chain supermarkets had to ensure
that local produce is introduced in their range, to increase their relevance to the customer base
targeted
...
Demographics, the level of education

and the age distribution all contribute to the marketing initiatives carried out by individual MNCs
into any particular region (Steenkamp, 2001)
...
Customers’ motivation for purchases
of products and services often stems from the perceived importance of a product for their
lifestyle (Arnould & Thompson, 2005)
...
If a customer cannot identify the perceived benefits of a product or service
promoted by a company, the chances are that they will not purchase those particular goods
(Zeithaml, 1988)
...

One dimension highlighted by Hofstede is the importance associated with the gender roles within
cultures and how the masculine and feminine cultures have distinct perspectives on the role of
men and women in society and business (Hofstede, Hofstede, & Minkov, 1997)
...
At the same time, individuals
identify themselves with those with whom they share a cultural background; so featuring
celebrities from the Western world in other regions where the magazine is published may lead to
a lack of success of an international magazine
...
That demonstrates how
the socio-cultural factors contribute to the potential impact that an international brand can have
in a new region
...


Technological Factors:
As mentioned previously, marketing efforts must take into account not only the general market
trends for a particular industry, but also the extent to which the targeted audience has access to
certain technologies (Dunning, 2013)
...
Enabling customers to make purchases via their smartphone contributes to the success and
profits of businesses in the UK or US, but this is not the result of the number of users of
smartphones, but also the level of confidence of customers in these regions in online payment
systems (Miyazaki & Fernandez, 2001)
...
Access to
modern technologies, as well as the degree of trust in using these technologies must precede the
marketing efforts of international companies in new regions in order to guarantee success
(Grabner-Kraeuter, 2002)
...
Research abilities of a marketing department should inform the strategy and
tactics of an MNC in a specific region (Deshpande & Webster Jr
...
If technology is an
important element of the marketing efforts of a business, their focus should instead be on
educating the potential customer base, rather than taking knowledge for granted, and based on
the response of clients in an existing region
...
To start with
an example; L’Oreal, the well-established global cosmetics brand, must censor the marketing and
packaging of their products to comply with the rules and regulations present in the Middle
Eastern regions
...
Altering their marketing tactics
in these regions is, therefore, a prerequisite for MNCs penetrating this market from a legal
perspective
...
Monopoly of an industry is a threat to customers at large, as the leader of
the trade can set their prices and, without any competition; they can decrease the quality of the
services or products offered (Kessides, 2004)
...
e
...
The
ability to communicate, through marketing messages, that the pricing strategies and level of
customer services offered by a company is maintained even after mergers and acquisitions
ensures that the customers can continue to perceive a company as ethical
...
The level of education and awareness of local consumers in relation to the
importance of firms’ corporate social responsibility (CSR) contributes to the extent to which
companies should be focusing on promoting their ethical behaviour in a particular region
...
In other words, whilst focusing the marketing efforts to
change the branding tactics of a company to reflect a more environmentally friendly strategy
may lead to success in some countries, it may well be an ineffective tactic in others
...
This is yet another piece of evidence which
proves that the standardisation of marketing strategies can be counter-productive in the long run
for any global business, as the awareness of what the local customer desires to see and hear in
the marketing messages precedes any other previous research findings that set the foundation for
the marketing strategy and tactics
...
The influence of each
of the factors listed in relation to the specifics of the region where a firm aims to globalise their
operations must be incorporated into any marketing related efforts of the company in order to
ensure success in the market entry and survival of a multinational in relation to its local
competitors
...

Standardised global marketing initiatives may also prove detrimental to the company from a cost
perspective due to the fact that, though research and country specific marketing departments
require a financial effort, this can prove to be less costly to the business in the long-run, as the
local marketing department can uncover how to cut costs based on the most relevant marketing
initiatives unique to the region
...

Showing a willingness to understand the culture of the area and then apply any specific
differences in the operations and marketing initiatives of the firm proves that a multinational is
interested in understanding their consumer base
...
The latter approach often leads to resistance of the new

customer base to any marketing initiatives of the firm, which in turn leads to failure in
conquering a new market
...
All in all, international marketing efforts of brands
tailored to each culture in particular ensure that multinationals can compete with the local
business an efficient manner, building the reputation of the company in the region and increasing
the brands’ profits
...


MUST BE performed at country level AND at
consumer level
...
”
- Robert Benett
ESSENTIAL CHARACTERISTICS OF MARKET SEGMENTS

•

Measurability

•

Substantial

•

Accessible

•

Actionable

•

Differentiable

BASIS FOR MARKET SEGMENTATION
Geographic Segmentation

•
•
•
•

Nations
States
Regions
Cities

Demographic Segmentation
•
•
•
•
•

Age
Life Stage
Gender
Income
Social Class

Psychographic Segmentation
•
•
•

Personality traits
Lifestyle
Values

Behavioral Segmentation

•
•
•
•
•
•
•

Occasions
Benefits
Usage Status
Usage Rate
Buyer Readiness Stage
Loyalty Stage
Attitude

Level Of Market Segmentation
• Mass Marketing (undifferentiated marketing) –appealing the
whole market with one offer or one strategy

• Segment Marketing
• Diffused Preference (differentiated marketing) – i
...
here
variations in the market in terms of needs, preferences,
location , lifestyle etc of the buyers
...
ie here
product features aimed at satisfying specific markets needs
...


Positioning the Brand
1) Identify competitors
2) Determine how they are perceived by consumers

3)
4)
5)
6)

Determine positioning in consumer’s minds
Analyze customers
Select positioning
Monitor position






Attribute/Benefit
Price/Quality
Uses or Application
Product Class

Global, Foreign, and Local Consumer Culture Positioning
 Global consumer culture positioning (GCCP): brand managers can position
their brand as a symbolic of a global consumer culture, a “foreign” culture,
or a local culture
...
(Some brands have
achieved a multilocal culture
...
(e
...
Swiss for watches,
Germany for household appliances…etc)
...
It is one of the most commonly applied marketing models in practice
...
This popularity is relatively recent since previously,
marketing approaches were based more around products rather than customers
...

The STP model is useful when creating marketing communications plans since it helps marketers
to prioritise propositions and then develop and deliver personalised and relevant messages to
engage with different audiences
...
The diagram below shows how
plans can have the flow from
Audience options > Audience selection > Production positioning

STP is relevant to digital marketing too, where applying marketing personas can help develop
more relevant digital communications as shown by these alternative tactical customer
segmentation approaches
...


How to use STP?
Through segmentation,you can identify niches with specific needs, mature markets to find new
customers, deliver more focused and effective marketing messages
...
This approach is more efficient, delivering the right mix to the same group of
people, rather than a scattergun approach
...
Demographics

Breakdown by any combination: age, gender, income, education, ethnicity, marital status,
education, household (or business), size, length of residence, type of residence or even
profession/Occupation
...
Though, Moshi
Monsters, however, is targeted to parents with fun, safe and educational space for younger
audience
...
Psychographics

This refers to 'personality and emotions' based on behaviour, linked to purchase choices,
including attitudes, lifestyle, hobbies, risk aversion, personality and leadership traits
...
While demographics explain 'who' your buyer is, psychographics inform you 'why'
your customer buys
...

1
...
Indepth interviews let you gather useful qualitative data to really understand what makes your
customers tick
...

2
...

3
...
You can use this data to generate insights into what kind of products your
customers are interested in and what is likely to make them purchase
...


An example is Virgin Holidays who segment holidays into 6 groups
...
Lifestyle

This refers to Hobbies, recreational pursuits, entertainment, vacations, and other non-work time
pursuits
...
e
...

Some hobbies are large and well established, and thus relatively easy to target, such as the
football fan example
...
A great example is the explosion in 'prepping' related businesses, which
has gone from a little heard of fringe activity to a billion dollar industry in recent years
...
7 million American's think of themselves as preppers or survivalists
...



4
...

The Islamic Bank of Britain offers Sharia-compliant banking which meets specific religious
requirements
...
They're far more
likely to be engaged in the practice than any other US group
...
For example, did you know 55-64-year-olds are the most likely age group to buy a new
car? But you don't tend to see them in the car ads
...
Life Stages

Life Stages is the Chronological benchmarking of people’s lives at different stages
...
They claim a large
enough segment to focus on this life stage
...
Geography

Drill down by Country, region, area, metropolitan or rural location, population density or even
climate
...



7
...

In a B2B environment, the benefits sought are often about ‘how soon can it be delivered?’ which
includes the ‘last minute’ segment - the planning in advance segment
...
co
...



8
...

Smythson Stationary offer similar products to other stationery companies, but their clients want
the benefit of their signature packaging: tissue-lined Nile Blue boxes and tied with navy ribbon!

Market targeting
The list below refers to what’s needed to evaluate the potential and commercial attractiveness of
each segment
...
If the market is small, it
may make it smaller
...

Money: Anticipated profits must exceed the costs of additional marketing plans and other
changes
...


Product positioning
Positioning maps are the last element of the STP process
...

In the example here, I’ve taken some cars available in the UK
...
If there were no cars in one segment it could indicate a
market opportunity
...


This chart is not meant to be any kind of accurate representation of the car market, but rather just
illustrate how you could use a product positioning map to analyze your own businesses current
position in the market, and identify opportunities
...


We're not saying this gap actually exists, I'm sure you could think of cars that fit this category, as
the car market is an extremely developed and competitive market
...


An example of a company using STP?
Any time you suspect there are significant, measurable differences in your market, you should
consider STP
...


A good example of segmentation is BT Plc, the UK’s largest telecoms company
...
The global
market, made up of well over 200 independent nations with their own distinctive characteristics
is too vast indeed
...
There are barriers which
make entry to a number of markets impossible or very difficult
...
Further, there may be markets which are very risky due to
political or other reasons
...

There are of course companies which operate in majority of the countries of the world
...
It has been a gradual
expansion achieved over a long period
...

A company which wants to enter many markets should do it systematically
...
The Bulova Watch Company expanded into one hundred countries
...

All these factors highlight the need for market selection
...

Market selection is based on a thorough evaluation of the different markets with reference to
certain well defined criteria, given the company resources and objectives
...


It is also necessary to prepare a profile of the selected markets to help the company to formulate
the marketing strategy
...


International Marketing Objectives:
The first step in any management decision making process is to determine/ ascertain the
objectives
...
Various markets may
have different degrees of attractiveness from the point of view of different objectives
...
The International Marketing Entry Evaluation Process is a five stage process, and its
purpose is to gauge which international market or markets offer the best opportunities for our
products or services to succeed
...
Let’s take a look at each
step in turn
...
You can choose any country to go into
...

There might be a simple match – for example two countries might share a similar heritage e
...

the United Kingdom and Australia, a similar language e
...
the United States and Australia, or
even a similar culture, political ideology or religion e
...
China and Cuba
...
For example a country is nearby e
...
Canada and the United
States
...
g
...

Again at this point it is very early days and potential export markets could be included or
discarded for any number of reasons
...
Now you begin to score, weight and rank nations based upon macroeconomic factors such as currency stability, exchange rates, level of domestiv consumption and
so on
...
Some
countries such as China require that some fraction of the company entering the market is owned
domestically – this would need to be taken into account
...
At this point the marketing manager could decide
upon a shorter list of countries that he or she would wish to enter
...

Step Three – In-Depth Screening
The countries that make it to stage three would all be considered feasible for market entry
...
Now one can deal with not only micro-economic factors but also local
conditions such as marketing research in relation to the marketing mix i
...
what prices can be
charged in the nation? – How does one distribute a product or service such as ours in the nation?
How should we communicate with are target segments in the nation? How does our product or
service need to be adapted for the nation? All of this will information will for the basis of
segmentation, targeting and positioning
...

Step Four – Final Selection
Now a final shortlist of potential nations is decided upon
...
The company could look at close competitors
or similar domestic companies that have already entered the market to get firmer costs in relation
to market entry
...
A
final scoring, ranking and weighting can be undertaken based upon more focused criteria
...

Step Five – Direct Experience
Personal experience is important
...
On a first
impressions basis at least one can ascertain in what ways the nation is similar or dissimilar to
your own domestic market or the others in which your company already trades
...
Remember that your experience to date is based
upon your life mainly in your own nation and your expectations will be based upon what your
already know
...




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