hklSubject:- International Marketing(MBA-III Sem.)Faculty:-Ms. Parul Gupta

Definition of international marketing

“The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations”.

Key international marketing questions faced by a firm

1. How will my product or service fit into the international market? 2. What marketing adjustments are or will be necessary?3. What global competitive threats should I expect?4. How can I work with these threats and turn them into opportunities?5. What are my strategic global alternatives?6. Trade = Exports + Imports of all goods and services between countries7. If exports from a country are greater than imports, it results in trade surplus8. If exports from a country are lower than imports, it results in trade deficit9. Monthly trade statistics influence stock market fluctuations.10. One billion $ exports create over 20,000 jobs in any year

Opportunities And Challenges In International Marketing

1. International environment is dynamic and each of the changes require active response.2. International activity may be crucial to a firm’s survival and growth. 3. Firms and individuals must be capable of adapting to the environment.4. Countries are interdependent and isolation is impossible today. 5. Interdependence and the global economy

Approaches to Internationalisation

1. Stages approaches2. Learning approaches3. Contingency approaches4. Network approaches

Stages ApproachesThe earliest group of theories to explain this process were the so-called ‘stages approaches’ – firms started with the mode of entry which required the least commitment of resources, and with experience gradually increased their commitment of resources to international activities.

Learning ApproachesThe Learning Approaches theories recognise that internationalisation is a dynamic process. They focus more on evolutionary, sequential build up of foreign commitments over time and recognise the role that psychic distance can play in the process.

Contingency Approaches

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Theories of internationalisation are based on contingency theory, whereby the firm evaluates and responds to an opportunity as it occurs, regardless of whether the market is close in psychic distance terms or whether an advanced mode of entry is required.

Network ApproachesThe network paradigm emphasises the role of linkages and relationships in the internationalisation process. Using this approach, Johanson and Mattsson describe modes of entry in terms of position:

International extension International penetration International integration

Global FirmA firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Levels of involvement in Global marketing

The Importance of Global Marketing

Global marketing is rapidly becoming a necessity the Internet makes it possible for every marketer to become an international marketerExporting: Marketing domestically produced goods and services abroadImporting: Purchasing foreign goods, services, and raw materials

Global Marketing in the 21 st Century & Marketing Decisions

1. Looking at the global environment2. Deciding whether to go international3. Deciding which markets to enter4. Deciding how to enter the markets5. Deciding on the global marketing problem6. Deciding on the global marketing organization

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Why Global Marketing? 1. Exploiting Firm-Specific Capabilities2. Technological innovations3. Strong Trade Names4. Lowering Cost Structure5. Outsourcing6. Hub and spokes model7. Diversification and competitiveness8. Product/market portfolio9. Cross-subsidization10. Country market attractiveness11. Income12. Consumer preference13. Technology and market globalization14. Saturation of domestic markets: Domestic market saturation in the industrialized countries and

growing marketing opportunities overseas.15. Global competition: Competition around the world and proliferation of the Internet.16. Need for global cooperation: Global competition brings global cooperation.

Looking at the Global Marketing Environment1. The International Trade System2. Tariffs, quotas, embargos, exchange controls, nontariff trade barriers3. World Trade Organization and GATT4. Regional free trade zones5. European Union6. North American Free Trade Agreement7. Other free trade areas

GLOBAL INTEGRATIONRestraining

Forces

TechnologyCultureMarket NeedsCostFree MarketsEconomic IntegrationPeaceManagement VisionStrategic IntentGlobal Strategy and Action

CultureMarket DifferencesCostsNational ControlsNationalismWarManagement MyopiaOrganization HistoryDomestic Focus

Driving Forces

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Characteristics of globalization a. New regimes of regulation (WTO, NAFTA, etc.)World wide growth of market oriented societiesb. Greater role for private sectorc. Changing nature of the state d. Growing inequalitye. Increased exchange of goods, values, symbolsf. Compression of time and space--speeding up of changeg. Impacts on both social and cultural homogenization and differentiation.h. The centrality of migration to global change

A Comparison of Assumptions About Global and International Companies

Application International Companies Global Companies

Competition Ability to compete in national markets is affected by a firm’s global position.

Domestic/national competitive relationships.

Production Globally standardized production. Adaptations are handled through modular designs.

Standardization limited by requirements to adapt products to national tastes.

The Consumer Global convergence of consumer wants and needs.

Preferences reflect national differences.

Product Emphasis on value-enhancing distinction.

Products differentiated on the basis of design, features, functions, style, and image.

Price Consumers prefer a globally standardized good if it carries a lower

Consumers willing to pay more for a customized product.

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price.

Product Life Cycle

Global product life cycles. All consumers want the most advanced products.

Products are in different stages of the product life cycle in each nation.

Design International performance criteria considered during design stage.

Adjustments to products initially designed for domestic markets.

Adaptation Products are adapted to global wants and needs. Restrained concern for product suitability.

Product adaptation is necessary in markets characterized by national differences.

MarketSegmentation

Segments reflect group similarities. Group similar segments together.

Fewer standardized markets.Expansion of segments into worldwide proportions.

Segments reflect differences.Customized products for each segments.

Many customized markets.

Acceptance of regional/national differences.

Promotion Global product image, sensitive to national differences and global needs.

National product image, sensitive to national needs.

Place Global standardization of distribution. National distribution channels.

Benefits of Going Global a. Additional revenuesb. New insights into consumer behaviorc. Alternative distribution strategiesd. Advance notice of new productse. Positioned well to compete effectively with foreign competitors

International Planning Process

Information derived from each phase, market research, and evaluation of program performance

Phase 1Preliminary analysis and

screening: Matching company/country needs

Phase 2Adapting the

marketing mix to target markets

Phase 3Developing the

marketing plan

Phase 4Implemen-tation and

control

Environmental uncontrol-lables, company character,

and screening criteria

Matching mix requirements

Marketing plandevelopment

Implementation, evaluation, and

control

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Self Reference Criterion

SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions

Ethnocentrism refers to the notion that one’s own culture or company knows best how to do things

Both the SRC and ethnocentrism impede the ability to assess a foreign market in its true light

Reactions to meanings, values, symbols, and behavior relevant to our own culture are different from those of foreign

Strategic Orientation: EPRG Schema

Orientation EPRG Schema

Domestic Marketing

Extension

Multi-DomesticMarketing

Global Marketing

(Ethnocentric)

(Polycentric)

(Regio/Geocentric)

Generally, four distinctive approaches dominate strategic thinking in

international marketing:

Strategic Orientation: EPRG Schema

1. Ethnocentric or Domestic Marketing Extension Concept:

2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism Management of these multinational firms place importanceon international operations as a source for profitsManagement believes that each country is unique andallows each to develop own marketing strategies locally

Home country marketing practices will succeed elsewherewithout adaptation; however, international marketing isviewed as secondary to domestic operations

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Relying on one’s SRC could produce an unsuccessful marketing program

Avoiding Self Reference Criterion :

1: Define the business problem or goal in home-country cultural traits, habits, or norms2: Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value judgments3: Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem4: Redefine the problem without the SRC influence and solve for the optimum business goal situation

Stages of domestic to global evolution

Management emphasis

Stage one Domestic

Stage two International Stage three Multinational

Stage four Global

Focus Domestic Ethnocentric Polycentric Geocentric

Marketing strategy Domestic Extension Adaption Extension

Structure Domestic International Worldwide area Adaption creation matrix/mixed

Management style Domestic Centralised top down Decentralised bottom up Integrated

Manufacturing stance Mainly domestic Mainly domestic Host country Lowest cost worldwide

Investment policy Domestic Domestic used worldwide Mainly in each host country

Cross subsidization

Performance evaluation

Domestic market share

Against home country market share

Each host country market share

Worldwide

Case 1.1 Kenya Off Season Vegetables

In general, firms go through five different phases in going international:

In general, firms go through five different phases in going international:

Infrequent Foreign marketingInfrequent Foreign marketing

No Direct Foreign MarketingNo Direct Foreign Marketing

International MarketingInternational Marketing

Regular Foreign MarketingRegular Foreign Marketing

Global MarketingGlobal Marketing

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Stages of International Marketing Involvement

Kenya's export of off season and speciality vegetables has been such that from 1957 to the early 1990s exports had grown to 26 000 tonnes per annum. Kenya took advantage of:

a) increased health consciousness, increased affluence and foreign travel of West European consumers;

b) improved technologies and distribution arrangements for fresh products in Western Europe;

c) the emergence of large immigrant populations in several European countries:

d) programmes of diversification by agricultural export countries and

e) increased uplift facilities and cold store technologies between Europe and Kenya.

Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the European "off season" trade by sending small consignments of green beans, sweet peppers, chillies and other commodities to a London based broker who sold them to up market hotels, restaurants and department stores. From these beginnings Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the colonialists, production remained small, under the misguided reasoning that Kenya was too far from major markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya itseff.

The 1970s saw an increased trade as private investment in irrigation expanded, and air freight space increased, the introduction of wide bodied aircraft, and trading relationships grew with European distributors. Kenya, emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra, chillies etc.) to the UK growing immigrant population. Kenya was favoured because of its ability to supply all year round - a competitive edge over other suppliers. Whilst the UK dominated, Kenya began supplying to other European markets.

Kenya's comparative advantage was based on its low labour costs, the country's location and its diverse agro-ecological conditions. These facilitated the development of a diversified product range, all year round supply and better qualities due to labour intensity at harvest time. Kenya's airfreight costs were kept low due to government intervention, but lower costs of production were not its strength.

This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European immigrant population. Kenya's rapidly growing tourist trade also accelerated its canning industry and was able to take surplus production.

In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables (courgettes etc) to lower cost Mediterranean countries, it increased its share in French beans and other speciality vegetables significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major success. With the development and organisation or many small "outgrowers", channelled into the export market and thus widening the export base, the industry now provides an important source of income and employment. It also has a highly developed information system, coordinated though the Kenya Horticultural Crops Development Authority.

Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers and vegetables, particularly the former.

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