04.international marketing

8/12/2019 04.International Marketing

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International marketing

Definition

1. Global industry - It is an industry in which

strategic position of competitors in major

geographic or national markets are

fundamentally affected by their overall global

position.


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2. Global firmIt is a firm that operates in more

than one country & captures R&D, production

logistical, marketing & financial advantages in

its cost & reputation that are not available to

purely domestic competitors.


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Economic Comparison 2000

USA 9,646 1 9,646 1 34,260 34,260

Japan 4,337 2 3,354 3 34,210 26,460

Germany 2,058 3 2,054 5 25,050 25,010

UK 1,464 5 1,407 7 24,500 23,500

France 1,429 4 1,440 6 23,670 24,470

Italy 1,154 6 1,348 8 20,010 23,370

China 1,065 7 4,966 2 840 3,940

Canada 647 8 840 11 21,050 27,330

Brazil 607 9 1,245 9 3,570 7,320

Spain 590 10 757 12 14,960 19,180

Mexico 498 11 864 10 5,080 8,810

India 471 12 2,432 4 460 2,390

World 31,171 -- 44,506 -- 5,150 7,350

GNP$Billion Rank

GNP(PPP)$Billion Rank

GNPper Capita

GNP(PPP)per CapitaCountry


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Global Markets.

Regional market.

1. Western Europe.o 23 countries.

o 460 million population.

o Physically less than size of Australia.

o 32% of world income by 2000.

2. Eastern & central Europe.

o 338 million population.o 5.5% of world population.

o 2.5% of world GNP.


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3. North America.


o $9,254 billion GNP.

4. Asia Pacific.

o 30 countries.

o 52% of world population.o 25% of global income.

o 58% income by Japan.

5. Latin America.

o 7% of world wealth.

o 9.5% of population.



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6. Middle East.

o 16 countries.

o 1.9% of world GNP.


7. Africa.o 730 million population.

o 1.3% of world wealth.

o 11.9% of world population.


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Five questions to be answered.

1. Deciding whether to go abroad?

2. Deciding which market to enter?

3. Deciding how to enter the market?

4. Deciding on the marketing program?

5. Deciding on the marketing organization?


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I. Deciding whether to go abroad?

Reasons

1. Counter attack the competitors.

2. Higher profit opportunities.

3. To achieve economies of scale.

4. Reduce dependence on one market.

5. Customers go abroad requires international

servicing.


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Challenges

1. Difficulty in understanding consumer

psychology.

2. Huge foreign indebt ness.

3. Unstable government.

4. Foreign exchange problem.

5. Government regulations.6. Tariff & other trade barriers.

7. Corruption.

8. Technological pirating.9. High cost of production & communication

adaptation.

10. Shifting borders.


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II. Deciding which market to enter?

Market in few or many countries

1. Few markets - Reasons.

a. Market entry & control costs are high.

b. Product & communication adaptation costs

are high.

c. Population income size & growth are high.

d. Dominant foreign firms can establish high

barriers to entry.


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Types of countries to consider

1. Attractiveness is influenced by product,

geography, income, population, political

climate.

2. Neighboring countries.

3. Low risk.

4. High competitive advantage.


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III. Deciding how to enter the market?

Indirect exporting.

Direct export.

Licensing.

Joint ventures.

Direct investment.


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Indirect exporting

Occasional exporting.

Active exporting.

- Types of intermediaries

1. Domestic based export merchant.

2. Domestic based export agent.

3. Co-operative organization.

4. Export management companies.


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Advantages

1. Less investment.

2. Does not require export department.


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Direct exporting

Domestic based export department or division.

Overseas sales branch or subsidiary.

Traveling export sales representatives.

Foreign based distributor or agent.


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Licensing

For use of manufacturing process, trade mark,patent, trade secret or other item of value for afee or royalty.

Disadvantages1. Less control of licensor over licensee.

2. Creation of new competitors.

Types1. Management contract.

2. contract manufacturing.

3. franchising.


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Joint ventures

Share of ownership & control

Reasons

1. Necessary or desirable for economic &

political reason.2. Lack of financial, physical or managerial

resources.

3. Government may keep the condition for entry.Drawback

Partners may disagree over investment,marketing or other policies.


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Direct investment

Foreign based assembly or manufacturingfacility.

Advantages

1. Secure cost economies.2. Image building by creating jobs.

3. Close relationships with government,

customers, local supplier or distributor.4. Fully control over its investment.

5. Locally purchased goods have domestic

contents.


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The internationalization process

No regular export.

Export via independent representatives.

Establishment of one or more sales subsidiaries.

Establishing production facilities abroad.


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Deciding on the marketing program?

Globally standardized marketing mix.Adapted marketing mix.

Marketing mix elements

1. Product

- Straight extension.

- Product adaptation.

a. Regional b. Country.

c. City d. Retailer- Product invention.

a. Backward b. Forward


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3. Prices- Three choices

a. Setting uniform prices everywhere.

b. Setting market based price in eachcountry.

c. Setting cost based pricing in each country.


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- Problems in pricing

a. Price escalation.

b. Transfer pricing.

c. Dumping charges.

d. Gray market.

e. Devaluation of currency.


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4. Place ( Distributive channels )- Sellers international marketing headquarter.

a. Export department.

b. International division.- Channels between nations.

a. Agents.

b. Trading companies.

- Channels within foreign nations.


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Deciding on the marketing organization?

Export department

1. Corporate organization.

2. Geographic organization.

3. World product groups.

4. International subsidiaries.

Global organization.


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Organizational strategies

1. A global strategy treats the world as a single

market.

2. A multinational strategy treats the world asportfolio of national opportunities.

3. A glocal strategy standardizes certain coreelements & localizes other elements.

04.international marketing

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