Download PPT SESSION 1 INT`L MKTG

INTERNATIONAL
MARKETING
DEFINITIONS
“ International marketing is the performance of business
activities that direct the flow of goods and services to
customers or users in more than one nation” –Hess and
Cateora
“ International marketing is the performance of business
activities designed to plan, price, promote and direct the
flow of a company’s goods and services to consumers and
users in more than one nation for profit” – Cateora and
Graham
“Global marketing is concerned with integrating or
standardizing marketing actions across a number of
geographic markets”. –Philip Kotler
International marketing considers the full range of
marketing across domestic borders involving exporters to
international firms
It is different and more complex than domestic marketing
The difference between domestic marketing and
international marketing is that the latter case involves
marketing activities in more than one country
While the concepts of marketing are similar, international
marketing involves a variety of strategies to cope with
different levels of uncertainty involved in foreign markets:
[International marketing Environment ]marketing practice
would vary from country to country as each country is
unique
It has evolved due to the emergence of a more borderless
world, i.e. globalisation: involves adapting marketing plan to
meet different customer , competitor, channels of distribution
and media: adaptation of marketing mix to individual
countries and capitalize on similarities between different
markets
Consists of ‘foreign marketing’ (marketing in foreign
countries) and global marketing ( coordinating marketing in
multiple markets, in the face of global competition).
Each nation has its own language, culture , regulation, social
values and norms-international marketing , though similar to
domestic marketing in terms of basic marketing principles,
varies in its implementation such that plans and programmes
vary according to the needs of the international markets.
Nature of international marketing
Multinational marketing –various national
marketing programmes of a firm are coordinated
and integrated in an effective multinational
programme which can be challenging
Greater uncertainty in the international marketing
Broader competence
Much more Marketing research needed
More complex
INTERNATIONAL
MARKETING
1. Diverse and fragmented
markets
2. More complex marketing
3. Lack of familiarity with
foreign markets, thus,
research becomes more
essential
4. Multiple currenciesdiffering in stability and
real value
5. Many languages, cultural
differences
6. Exchange controls and
tariffs are normal
obstacles
7. Multiple and unstable
marketing environment
DOMESTIC
MARKETING
1. Market is more
homogenous
2. Marketing control is
easier
3. Familiarity with domestic
market
4. Single currency
5. Similar languages and
culture
6. No such problem
7. Relatively stable
marketing environment
Factors contributing to increase/importance of
International Marketing
1. Product Life Cycle
2. Competition
3. Excess Capacity-Economies of Scale
4. Geographic diversification
5. Increase in market size
6.Higher profit and growth opportunities
7. Company wishes to reduce dependence on one market
8. Growth of developing nations-increase in purchasing
power, standards of living, customer desires
9. Counterattack global players entering domestic
market
10. Need to obtain materials, products or
technologies not available in home nations
11. Development of institutions that support &
facilitate international marketing[EXIM bank ]
12. Rapid technological advancements: internet
13. Globalisation
14. Strategic Vision of the Company (Bharati; Tata)
15 Liberalisation in various economies
Stages in International Marketing involvement
No direct foreign marketing
Infrequent foreign marketing
Regular foreign marketing
International marketing
Global marketing
International Marketing Environment
I. External Macro Environment: Related to factors
outside the firm over which firm has little control.
1.
Demography: distribution characteristics of human
population regarding specific countries. Includes
size, age structure, growth rate of population, gender
wise distribution, ethnicity, religion, etc. Developing
countries, esp., India and China-high & growing
population, thus present growth opportunities;
Europe : negative or zero birth rate, declining
population; Japan: 50% is over 60 years. Insurance,
travel and health care: Japan; J & J-less prospects in
developed nations. Low population means less
labour, hence greater labour costs in developed
nations.
2. Economy : GDP, growth rates, inflation,
prosperity, depression/recession, prevailing interest
rates. While US and Europe are suffering from
growth problems, China and India are fast growing
economies with 6-8% growth rates : attractive
investment destination for international marketers.
GM , for instance has made India one of its major
markets.
Increasing growth means greater purchasing power
amongst population. Low interest rates induces
people to spend more.
3. Political : political ideologies: capitalism, socialism,
democracy, etc. Governments may encourage joint
ventures with foreign companies: Maruti-Suzuki.
Governments also facilitate or regulate markets.
India is thinking of opening its retail sector to
international retailers. Political stability, frequent
changes in political parties in power; government’s
relationships with other governments, etc. Coca Cola
entered India in the 1970s but had to leave due to
political pressures, till India decided to liberalise its
economy.
4. Legal: Countries have their own legal rules and
regulations. A number of Gulf countries do not allow
exposure of women in advertisements; Norway bans
several forms of sales promotion like contests and
premiums; India does not allow advertising of
alcohol and cigarette products and food companies
need government approval for launching their
products.
5. Technology: affects consumption patterns; lifestyles; company’s
product mix; distribution; advertising. Low penetration or low
adoption of technological products ( telephones, computers, ) can be
an opportunity or an impediment ( obstacle) to companies. While
most global advertising is done through mass media like TV and
internet, in many parts of rural India, such channels are still not
available on a large scale. Different countries prefer different
medium of communication (Japanese: Newspapers). Mexico-traffic
jams: billboard advertising quite effective. Internal –global
phenomenon but still English dominated.
6. Competition: fierce in international markets. International
marketers face competition from 3 angles: domestic players; other
international firms and substitutes. Mergers and acquisitions can
help companies improve its competitive position: e.g.-Tata tea took
over Tetley , making Tata’s global market chare in tea much higher.
7. Social forces: social values, changing role of men
and women. In US< 50% of women are working: day
care, primary schools, durables. In USA, about 50%
of new cars are purchased by women and they
influence at least 80% of all car purchases. Growing
concern for health and fitness; environmental
awareness. Low fat foods, herbal products, yoga, etc.
Impulse buying increasing rapidly: point of purchase
displays.
8. Cultural factors: Language, cultural norms,
religion. Affect negotiations; sale of certain products
( liquor in predominantly Muslim countries); beef
products in Hindu population. Countries with higher
materialistic culture are more suited to international
marketers. Language: advertising. Pepsi’s “ Come
alive with Pepsi” campaign became “ Make your
ancestors come out of their graves with Pepsi” in
China.
II. External Micro Environment :
1. The Market: Group of customers: affect
segmentation decisions.
2. Suppliers: Consistent quality and supply. Sony’s
battery problems caused problems to computer
makers such as Dell.
3. Intermediaries: direct flow of company’s products
to consumers. McDonalds uses Indian franchisees
in India, e.g.: Fun Foods.
III. Internal Marketing Environment:
Leadership
R&D capabilities
HR
Financial resources
Image of the company : often related to country of
origin.
Marketing Mix
Market Orientation and ERPG framework
Preparation of marketing mix according to targeted
market is called ‘market orientation’.
How the company views its international operations,
ranging from viewing foreign operations as only
secondary to domestic operations to a complete
global perspective.
The management process in international markets is
influenced by certain concepts such as the
international product lie cycle, the ERPG framework
Among the approaches describing the different
orientation of firms in different stages of
international marketing ( from export to global
marketing),is the ERPG scheme.
The ERPG/EPRG framework
1. Ethnocentric Orientation: In this orientation, overseas
operations are viewed as secondary to domestic operations
and primarily as a means of disposing a ‘surplus’ domestic
production. In this type of orientation, the firm considers that
its product, marketing strategies and techniques are equally
applicable to overseas markets. Foreign operations are
planned and carried out from the home base with little or no
difference in product formulation and specifications, pricing
strategy , distribution and promotional measures between
home and overseas markets. Domestic firms view
international operations as secondary : domestic business is
priority and foreign sales are seen as profitable extensions of
domestic production with the main aim to market excess
domestic production. Thus there is little adaptation to
international market needs.
Purple is a colour of mourning in Mexico
Yellow in Brunei is discouraged as it is a royal colour
The number 8 is considered lucky in China and 4 in ‘unlucky’
‘Bum Crisps’ and ‘Bimbo Bread’ in Spain are not acceptable
names to advertise in the US
Supermodel Claudia Scheffer initiated anger when she cat
walked in a dress featuring words from the Quran , offending
Muslim beliefs
Federal Express went into the European market keeping its
package pick up time as 5 pm (typical end of American
working hours) while in Europe office hours end much later,
at 8 pm.
US company, Mattel’s Barbie doll didn’t do well in Japan as
Japanese girls did not like Barbie’s very western figure.
2. Polycentric Orientation: organise
international marketing operations on a country-bycountry basis. Each country is treated as a separate
market entity and individual strategies are worked
out accordingly. Local assembly or production
facilities an marketing departments are created to
serve market needs in each country. Philosophy is
local personnel and techniques are best suited to
deal with local market conditions. Differences among
countries is focused upon.
examples
Multinationals are progressively abandoning their traditional
approaches to the management of innovation in which R&D centres
based at their global HQs (typically in North America, Japan or
Europe) are the source of a one-way flow of creativity and
knowledge. So, products and services are developed first for the
home market and then rolled out to the rest of the world.
But now, influenced by the immense potential of the planet's largest
developing economies, India and China - both as markets and
sources of knowledge-driven creativity - such old certainties are
breaking down.
Companies such as GE, Cisco, Nokia and Fujitsu are seeing
these two giant nations as far more than a mine of low-cost offshore
skills and fresh market opportunities.
Looking towards these markets for new products and new ways of
doing business.
3. Regiocentric Orientation : Here, the firm adopts a
regional marketing policy covering a group of countries
that have comparable market characteristics. Production
and distribution facilities are created to serve the whole
region with effective economy of operations and closer
control and coordination. A company employing this
strategy strives for efficiencies of scale by developing
standardized marketing mix application to a particular
region. A region is treated as a single market with
common market characteristics (age, income, language
groups, etc.) Coordination is between headquarters and
regional headquarters. Regions, for instance could
include: Asia Pacific; Gulf countries; North America;
Latin countries, etc.
Geocentric orientation : Here, the firm adopts a worldwide
approach to marketing and its operations become truly global.
Marketing activity is global and market coverage is the world. In a
global enterprise, management establishes manufacturing and
processing activities around the world in order to serve the various
national or regional markets through a network of a complicated
but well coordinated system of productive and distribution network.
Company strives to achieve economies of scale by developing
standardised marketing mix applicable across national boundaries.
Markets are still segmented but countries or regions are considered
side by side with a variety of other segmentation variables. The
world as a whole is viewed as a market and firms develops a global
marketing strategy. The company projects a uniform image of the
company and its products for global markets.
Each orientation has its pros and cons. For instance,
ethnocentrism ignore differences , esp. in culture.
Polycentric: low economies of scale esp. as compared
to Geocentrism and Global marketing.
Global marketing: needs high level of competence to
coordinate marketing.