Marketing Management Class: Mba 2nd semPRESENTED BY:DR. POOJA

International marketing is the application of

marketing principles in more than one country, by companies

overseas or across national borders. International marketing is

based on an extension of a company’s local marketing strategy,

with special attention paid to marketing identification, targeting,

and decisions internationally.

According to the American Marketing

Association (AMA) "international marketing is the multinational

process of planning and executing the conception, pricing,

promotion and distribution of ideas, goods, and services to create

exchanges that satisfy individual and organizational objectives."

INTRODUCTION

The International Marketing is the application of marketing

principles to satisfy the varied needs and wants of differet

people residing across the national borders.

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. The only difference

between the definitions of domestic marketing and international

marketing is that in the latter case, marketing activities take place

in more than one country. No matter domestic or international the

Marketing objective remains the same for marketers. The

objective is to make profit by selling products or services in

geographies which have a demand for them.

DEFINITION:

MEANING:

INTERNATIONAL MARKETING EXAMPLES:

Nokia – Dust resistant phone, anti slip grip

and in built flash light for India rural

consumer.

Hindustan Unilever – Introduced shampoo

sachets priced at Re 1 for price sensitive

Indian consumer.

MTV – Localised programming help to gain

wider audience.

When compared to domestic Marketing, International Marketing has its own

set of challenges. Marketers are generally unaware of the foreign

environment and therefore have to deep dive into the market where they plan

to venture.

The challenges can be:

Competition

Legal Restrains

Government Controls

Varied Consumer Behaviour

Ecological factors – Weather etc-

Controlling all the above mentioned factors to create a favourable market is

next to impossible for the marketers as most of them are beyond their control.

Therefore, marketers need to focus more on what they can control instead of

things which is out of their purview. International Marketing Managers adapt

to the prevailing conditions and function in a way so that they can smoothen

their operation in the country with predictable results of their action.

CHALLENGES WITH INTERNATIONAL

MARKETING

FACTORS INFLUENCING THE

CHOICE OF MARKET ENTRY MODE:

Several important factors that affect the choice of entry

modes are:

Market Factors:

The size of the target country market is significantly influence on

the entry mode. Small market have low break even sales volume

so the entry mode must be different (Agent/distributor exporting,

licensing and some contractual arrangements). For Markets with

high sales potential have entry mode that have high break even

sales volume (Branch, subsidiary, exporting and equity

investment in local production).

Production Factors:

Entry mode are largely affected

by production factors of targeted country like

quality, quantity and cost of raw materials,

labors and energy.

Economic Factors:

Economic infrastructure

(Transportation, communication, port

facilities etc) also affect the mode of entry

into particular country or market.

Government Regulations:Defensive Import

regulations affect in the form of high

tariffs, these regulations make problems an

export entry.

Geographical Factors:When geographically

the distance to the targeted market is too

long then cost of transportation becomes a

barrier.

Dynamism of Country:

Economic dynamism of

the country also affect the entry mode.

Dynamism refers to the rate of investment,

growth rate and personal income.

Social Cultural Factors:Social and cultural

factors are very wide that affect entry mode

because of different values language, social

structure and different life style of target

market country to home country.

MARKET ENTRY STRATEGIES

A market entry strategy is the planned

method of delivering goods or services to a new target market and

distributing them there. When importing or exporting services, it

refers to establishing and managing contracts in a foreign country.

•Direct Exporting.

•Licensing.

•Franchising.

•Partnering.

•Joint Ventures.

•Buying a Company.

•Piggybacking.

•Turnkey Projects.

There are certain entry strategies there are as follows:

Direct Exporting:Direct exporting is selling

directly into the market you have chosen using in

the first instance you own resources. Many

companies, once they have established a sales

program turn to agents and/or distributors to

represent them further in that market. Agents and

distributors work closely with you in representing

your interests. They become the face of your

company and thus it is important that your choice

of agents and distributors is handled in much the

same way you would hire a key staff person.

Licensing:Licensing is a relatively

sophisticated arrangement where a firm

transfers the rights to the use of a product or

service to another firm. It is a particularly

useful strategy if the purchaser of the license

has a relatively large market share in the

market you want to enter. Licenses can be for

marketing or production. licensing).

Franchising:Franchising is a typical North

American process for rapid market expansion but it

is gaining traction in other parts of the world.

Franchising works well for firms that have a

repeatable business model (eg. food outlets) that

can be easily transferred into other markets. Two

caveats are required when considering using the

franchise model. The first is that your business

model should either be very unique or have strong

brand recognition that can be utilized

internationally and secondly you may be creating

your future competition in your franchisee.

Partnering:Partnering is almost a necessity when entering

foreign markets and in some parts of the world

(e.g. Asia) it may be required. Partnering can

take a variety of forms from a simple co-

marketing arrangement to a sophisticated

strategic alliance for manufacturing. Partnering

is a particularly useful strategy in those

markets where the culture, both business and

social, is substantively different than your own

as local partners bring local market knowledge,

contacts and if chosen wisely customers.

Joint Ventures:Joint ventures are a particular

form of partnership that involves the creation

of a third independently managed company. It

is the 1+1=3 process. Two companies agree to

work together in a particular market, either

geographic or product, and create a third

company to undertake this. Risks and profits

are normally shared equally. The best example

of a joint venture is Sony/Ericsson Cell Phone.

Buying a Company:In some markets buying an

existing local company may be the most appropriate entry

strategy. This may be because the company has substantial

market share, are a direct competitor to you or due to

government regulations this is the only option for your firm to

enter the market. It is certainly the most costly and determining

the true value of a firm in a foreign market will require

substantial due diligence. On the plus side this entry strategy

will immediately provide you the status of being a local

company and you will receive the benefits of local market

knowledge, an established customer base and be treated by the

local government as a local firm.

Piggybacking:Piggybacking is a particularly

unique way of entering the international arena. If

you have a particularly interesting and unique

product or service that you sell to large domestic

firms that are currently involved in foreign

markets you may want to approach them to see if

your product or service can be included in their

inventory for international markets. This reduces

your risk and costs because you are essentially

selling domestically and the larger firm is

marketing your product or service for you

internationally.

Turnkey Projects:Turnkey projects are

particular to companies that provide services such as

environmental consulting, architecture, construction and

engineering. A turnkey project is where the facility is

built from the ground up and turned over to the client

ready to go – turn the key and the plant is operational.

This is a very good way to enter foreign markets as the

client is normally a government and often the project is

being financed by an international financial agency such

as the World Bank so the risk of not being paid is

eliminated.

EPRG Framework

Ethnocentric:In this approach of the EPRG

Framework, the company in a local country that wants to do

business overseas does not put in much effort to do research

abroad about the host country’s market. Instead, most of the

market research is executed in the headquarters in the local

country. With this approach, the company seeks for markets

abroad that share the same characteristics as the local market so

that the marketing strategy does not have to be adapted. More

specifically, the ethnocentric approach uses the same marketing

strategies that are created by local personnel and further utilized

multiple countries.

Polycentric:In the polycentric approach of the

EPRG Framework is the opposite of the ethnocentric

approach. A company that utilizes this approach carefully

consider different markets abroad to identify host countries

that could potentially offer the most benefits. It means that

if a company has a local headquarter and a separate office

overseas in a host country that manages the operations in

that or more countries, the marketing strategies are locally

created and implemented based on the local needs.

Businesses that utilize the polycentric approach of the

EPRG Framework strongly believe that every market has

its differences. For this reason, these types of companies

implement different marketing strategies for each market.

Regiocentric:In a regiocentric approach of the

EPRG Framework, businesses create and implement

internationalization strategies for specific regions.

Companies that utilize this type of approach use this for

the area in which the local business is operated. It can

also be that an organization utilizes two kinds of

approaches. An organization can use a regiocentric

approach for the business in the region in which it

operates. And the same organization can use a

polycentric or ethnocentric approach to do business in

countries outside the region

Geocentric:A geocentric approach of the

EPRG Framework means that a business strongly believes

that it is possible to utilize one type of strategy for all

countries, regardless of the cultural differences. However,

companies that use this approach attempt to create products

or offer services in a way that best suit national and

international customers. This means that instead of

believing that their product or service is excellent and that it

will sell in other markets, like in the ethnocentric approach,

these organization proactively adapt their products and

services that best meet the global needs.

INTERNATIONAL PRICING

Pricing refers to the value determination process for a

good or service, and encompasses the determination of

interest rates for loans, charges for rentals, fees for

services, and prices for goods. Pricing decisions are

difficult to make even when a company operates only

in a domestic market, and the difficulty is still greater

in international markets. Multiple currencies, trade

barriers, additional cost considerations, and longer

distribution channels make price determination more

complex in international markets.

Companies operating in international

markets have to identify:

1) The best approach for setting prices worldwide.

2) The variables those are important in determining prices in

international markets.

3) The level of importance that needs to be given to each

variable.

4) The variance in prices across markets.

5) The variance in prices across customer types.

6) The factors to be considered while determining

transfer prices,

With respect to marketing mix, price is the least

attractive element to be considered. Marketing companies should really target on

producing as high a margin as possible. The debate is that the merchant should

change item, location or advertisement in some way before resorting to

minimization of price. Anyhow, price is a flexible component element of the

mix as we shall see.

Penetration Pricing:The rate issued for goods and services is set

artificially low in order to earn market share. After achieving, the price is

increased. This strategy was first used by France Telecom and Sky TV.

Enterprises need to grab the opportunity to hold on to customers, so they offered

free telephones or satellite dishes at minimal rates. And eventually, people

signed up for their services.

After getting large number of subscribers, rates gradually go up. For example,

Tata Sky or any cable or satellite company, when there is a premium movie or

sporting event rates are at their highest. Thus, they shift from penetration

strategy to more of a skimming or premium pricing strategy.

Economy Pricing:Here, the rates of marketing and advertising a product are kept

as low as possible. Supermarkets often have economy brands for soups, spaghetti, biscuits, etc.

Budget airlines are popular for keeping their overheads as low as possible and then providing

the customer a comparative lower rate to fill an aircraft. The first few seats are sold at a very

low rate almost an advertisement rate price and the middle majority are economy seats, with

the highest rate being sold for the last few seats on a flight i.e. in the premium pricing strategy.

During times of recession, economy pricing records more purchase.

Price Skimming:Price skimming sees an enterprise charge a higher rate

because it has a substantial competitive benefit. However, the benefit tends not to be

sustainable and reasonable. The high cost tempts new competitors into the market,

and the rate inevitably decreases due to increased supply.

Producers of smart phones used a skimming strategy. Once other producers

penetrated into the market and the smart phones were manufactured at a lower unit

price, other marketing approaches and pricing approaches were executed. New

products were launched and the market for smart phones earned a reputation for

innovation.

For an Organizations or a company thinking of

entry into the international arena set of strategic

alternatives often changing and depending on the

targeted country or market focuses on several ways

to enter a foreign market. Organization need to be

conscious of how prospective new market may

best by still considering the risk and the different

economic ,environmental and cultural factors

associated with the specific entry strategy.

(Deresky, 2003).

CONCLUSION