International Marketing

International Marketing

• It is the multinational process of planning and executing the marketing mix ( 4Ps) to create exchanges that satisfy organizational objectives

Dynamics of World Trade

• Global Competition among Global Companies for Global Consumers• Emergence of Networked Global Marketplace

Global Competition

• Global competition exists when firms originate, produce, and market their products and services worldwide.

Global Company

• It operates in more than one country and captures R&D, production, marketing, financial, logistical advantages in its costs that are not available to purely domestic competitors

Global Consumer

• Global consumers consist of customer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

Global Brand

• A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.

Globalization – Pros & Cons

International Marketing - From company point of view :

Benefits & Challenges

Selecting appropriate markets

• Market entry barriers – govt. regulations, competition

• Cost• Potential – population, income, growth, demand,

political climate, geography, etc.• Dominant players• Approach :– Gradually– At a time entry

Selecting appropriate markets

• Company to prefer market based on :– Rank high on market attractiveness– Low on market risk– Have competitive advantage

International Market Entry

Domestic Vs. International marketing

Environment Scanning

Birth of a nation• Since 1990, 33 new countries have been created; South Sudan will be Africa’s 54th nation • 1991 | 15 new countries after dissolution of USSR: Armenia, Azerbaijan, Belarus, Estonia, Georgia,

Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan

• Early 1990s | Yugoslavia dissolves into 5 independent nations: Bosnia-Herzegovina, Croatia, Macedonia, Serbia & Montenegro and Slovenia

• Mar 21, 1990 | Namibia freed by South Africa • May 22, 1990 | North and South Yemen merge to form unified Yemen • Oct 3, 1990 | East and West Germany create unified Germany • Sept 17, 1991 | Marshall Islands and Micronesia freed by US • Jan 1, 1993 | Czech Republic and Slovakia become independent as Czechoslovakia is dissolved • May 25, 1993 | Eritrea gains freedom from Ethiopia • Oct 1, 1994 | Palau freed by United States • May 20, 2002 | East Timor gets independence from Indonesia • June 2006 | Montenegro, Serbia go separate ways • Feb 17, 2008 | Kosovo declares independence from Serbia

Political

• Interrelationships between political, legal and business decisions

• It is closely tied up with Social environment• Government Form :– Parliamentary – No. of parties and their philosophies– Business ownerships -: private or govt. owned or

combination of both

Type of Govt. & Business Ownership

– Communist : Resources owned and shared by all people

– Socialist : Govt. owns and operates basic major industries & leaves small ones to private ownerships

– Capitalist : Free market system ( market oriented system )

Major Trends in Political Environment

• Govt. dominated economies or Socialist political systems have moved to Free market economies

• Free trade / reduce protectionism ( EEA – European Economic Area, NAFTA..)

• Lifting of trade sanctions

Political Risk

• It is uncertainty that stems from exercise of power by govt. and non-govt. actors

• It includes political instability, violence, expropriation, politicized policies, etc.

• Study govt. & public

Managing risks• Resource commitment• Demand stimulation• Earning foreign exchange• Provide employment • Merge with local company• Adapt country environment / local personality• Organizational credibility• Insurance • Avoidance

Social Trends

• Helps in knowing market size and needs• Global population : Size & Growth• Global demographics characteristics and

trends :– Urban & emerging rural population– Population in different Age group

Economic Environment

• Income levels • Production of goods and services• Market opportunities are function of both

economic size and growth • Customer Satisfaction Index

Legal Environment

• Legal & political environment are interdependent

• Branch or Subsidiary :– Negotiation– Arbitration– Litigation

• Bribes / Corruption• Intellectual capital

Act & Purpose• Sherman Act (1890) Prohibits monopolistic practices• Clayton Act (1914) Prohibits anticompetitive activities• Federal Trade Commission Act (1914) Establishes regulatory agency to enforce laws against unfair competition• Robinson–Patman Act (1936) Prohibits price discrimination• Lanham Trademark Act (1946) Protects trademarks & brand names• US–Canada Trade Act (1988) Allows free trade between US & Canada

Promoting Competition

Protecting Consumer & SocietyAct Purpose• Food, Drug, and Cosmetics Act (1938) Regulates food, drug &

cosmetic industries• Fair Packaging and Labeling Act (1966) Regulates packaging &

labeling• Child Protection and Toy Safety Act (1969) Prevents marketing of

dangerous products to children• Consumer Credit Protection Act (1968) Requires full disclosure of

financial charges for loans• Fair Credit Report Act (1970) Regulates reporting & use of credit

information• Fair Debt Collections Practice Act (1970) Regulates methods for

collecting debts• Child Protection Act (1990) Regulates advertising on children’s

television programs• Americans with Disabilities Act (1990) Prohibits discrimination against

consumers with disabilities

Culture• It is values, customs, belief….• It helps communication, can be learned,…• It influences consumption, thinking, behaviour, etc.• It includes :– Verbal & Non verbal communications ( space, addressing,

languages, smile, negotiation, etc. ) – Business time– Religion / fundamentalism / Superstition– Colour– Gifts

• Subcultures

Adaptation

• Creating local units in each national market- carrying out all steps in local market and achieving economies of scale

• Location : Various countries • Business headed by country chiefs• Strategy : Decentralization, Flexibility,

Innovation• Control : Since it is present in various location,

control is complex

Aggregation

• To deliver economies of scale by creating regional or sometimes global operations

• Standardizing the product / services & grouping the development and production processes – emphasis on economies of scale

• Strategy : Regional or country groupings, focus on products, functions, competence

Arbitrage

• To achieve absolute economies through international specialization – exploitation of differences between national or regional markets, often by locating separate parts of the supply chain in different places

• Location : Diverse set of countries• Operations : By functions across

organisational boundaries

Conclusion

• Focus on one or two of A’s• Make sure that all strategies are good fit

organizationally• Creativity, innovation, leaderships, change ----

key to integrate mechanisms