Internatiol Marketing Session 1

8/3/2019 Internatiol Marketing Session 1

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What is International Marketing?

International Marketing is the multinational processof planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and

services to create exchanges that satisfy individual

and organizational objectives.



Characteristics of IM1. What is to be exchanged is not restricted to tangible

products alone but may include concepts and services aswell. UN-birth control, TB, Polio etc.

2. IM applies not only to market or business transactionsbut also to non-profit marketing. Government attractingFDI at WEF, Ramdev Baba, Pope etc.

3. It is improper for a firm to create a product first and thenlook for a place to sell it. Refined edible oil, Slimmingcenters, Diapers etc.

4. It is improper for any firms to regard their internationalfunction as simply to export available products from onecountry to another.

5. International Marketing process is not a mere repetition of using identical strategies abroad. Dabur, Coca Cola,McDonalds, Sony etc.



Domestic Marketing VS International

Marketing

A company is subject to the risks of doing businessinternationally, including unexpected changes inregulatory requirements, fluctuations in foreign

currency exchange rates, imposition of tariffs andother barriers and restrictions, the burdens of complying with a variety of foreign laws, and

general economic and geopolitical conditions,

including inflation and trade relationships.



Process of Internationalization

HIGH



International Marketing Task





Economic Blocs and International Marketing

Types of Regional trade Blocks

1. Preferential trading agreement: Where the member

countries lower barriers to imports of identified productsfrom one another.

2. Free trade area: Where barriers to trade in respect of all

items among member countries are completely eliminatedby each member country, which follows its own policy in

regard to trade with non-member countries. NAFTA.



3. Customs union: Where, apart from elimination of all

barriers to trade among themselves, the member countries follow a common policy in their trade with non-

members. EU.

4. Common market: Where the region becomes acommon market for all factors of production including

labour, services and capital. EU.

5. Economic community: Where the member countriesfollow common policies in respect of all economic

matters.



Regional Economic IntegrationBenefits

Trade creation when locus of production shifts from a highcost point to a low cost point. NAFTA

Inter-commodity substitution in favour of goods produced

within the union. SAVE FOREIGN EXCHANGE.

Dynamic effects in the form of gains arising from theincreased size of market, from economies of scale and from

growing competition and technological change. EU

Development of collective self-reliance among member

countries, especially through harmonization of economicpolicies. EU

Increased foreign direct investment within the union and

from outside the union, especially in view of the larger

market.



Costs

Trade diversion when locus of production moves from a

low cost point to a high cost point.

Trade deflection when outside goods enter a free tradearea through a member country having lowest tariff.

Polarisation of benefits from integration moving away

from the weaker partner in favour of the economicallystronger partner, leading to intra-region inequality.



Global Warming

Green Marketing

Environmental protection laws

Influence on Marketing variables



Cultures and Marketing MixLow Context: Languages in which people state things directly and

explicitly.

High Context: Languages in which people state things indirectly andimplicitly. Communications have multiple meanings. Surrogatemarketing.

Examples :

In Japan many middle aged bureaucrats and company officials believe

that buying foreign products is downright unpatriotic. Dealing in China and with the Chinese, the international manager willhave to realize that making deals has more to do with cooperation thancompetition. Relationship matters a lot.

The Disneyland concept worked well in Tokyo, it had a tougher time inParis. One of the main reason was that while the Japanese are fond of American pop culture, the Europeans are quite content with their owncultural heritage.

In case of communication. Americans often interpret inaction andsilence as negative signs. As a result, Japanese executives tend toexpect that their silence can get Americans to lower prices or sweetena deal.





A British bank was interested in expanding its operations to Singapore

and wanted to use blue and green as its identification colours. A

consulting firm was quick to tell the client that green is associated with

death in that country.

Packaging of eatables in Malaysia in green packing.

Purple colour in Myanmar.

Japan and South Korea emphasize the sciences, especially

engineering, to a greater degree than do Western countries.

Nissan USA doesn¶t have any extra privileges for its employees

according to hierarchy. They do not have privileged parking space and

no private dining rooms, the president sits in the same room with a

hundred other white-collar workers.

For the Chinese, contracts form a useful agenda and a symbol of

progress, but obligations come from relationships. McDonald¶s found

this out in Beijing, where it was evicted from a central building only

after 2 years despite having a 20 year contract. The incomer had a

strong opposition, whereas McDonald¶s had not kept its in good repair.



Japanese are likely to say, ³ What has that piece of paper got to do with

the situation? If we can¶t trust each other enough to go ahead without it,

why bother?´

Americans generally consider it impolite to mound food on a plate, makenoises when eating. However, some Chinese feel it is polite to take a

portion of every food served and consider it evidence of satisfaction.

In Saudi Arabia, it is an insult to question a host about the health of his

spouse, show the soles of one¶s shoes, or touch or deliver objects with

the left hand.

In Korea, both hands should be used when passing objects to another

person and is considered impolite to discuss politics, communism.

In Korea formal introductions are very important.

In both Japan and Korea ranks and titles are expected to be used in

addressing hosts. In US, there is not a clear rule on this behavior, except

in select fields such as armed forces.

In Indonesia it is considered rude to point at another person with a finger.

In US bathtub and toilet are likely to be in the same room, however

Japanese consider as unhygienic.

In Indonesian hotels toilet paper is not found.



HOFSTED¶S CULTURAL TYPOLOGY

According to Hofsted cultures of different nations can be compared in terms

of four dimensions.The First, power distance, is the extent to which the less powerful

members of a society accept-even expect-that power is to be distributed

unequally.

The Second dimension is a reflection of the degree to which individuals in a

society are integrated into groups. In individualist cultures, eachmember of society is primarily concerned with his or her own interest

and those of the immediate family. In collectivist cultures, all of

society¶s members are integrated into cohesive in groups.

Masculinity , the Third dimension, describes a society in which men areexpected to be assertive, competitive, and concerned with material

success, while women fulfill the role of nurturer and are concerned with

issues such as the welfare of children.



F emininity , on the other hand describes a society in which the social

roles of men and women overlap, with neither gender exhibiting

overly ambitious or competitive behavior.

Hofstede notes that the first three dimensions refer to expected social

behaviour; the fourth dimension is concerned with, in Hofstede

words, ³man¶s search for Truth.´ Uncertainty avoidance is the

extent to which the members of a society are comfortable withunclear, ambiguous, or unstructured situations.

Some cultures express strong uncertainty avoidance with aggressive,

emotional, intolerant behavior; they are characterized by a belief in

absolute truth. The manifestation of low uncertainty avoidance isbehavior that is more contemplative, relativistic, and tolerant.



How to enter Foreign Markets?

Choice of Entry Modes

Non-equity modes Equity (FDI) modes

Exports

Direct Exports

Indirect Exports

Others

Contractual Agreements

Licensing/franchising

Turnkey Projects

R & D Contracts

Co-marketing

JVs

Minority JVs

50/50 JVs

Majority JVs

Wholly owned

subsidiaries

Green-fields

Acquisitions

Others



Modes of Entry-Advantages & Disadvantages

1.Non-equity modes

Exports

ENTRY MODES ADVANTAGES DISADVANTAGES



Documents used in Foreign Trade

Documents are used to record a written evidence of having carried out a

transaction in both local and international trade. A list of the variousdocuments required in cross border trade is given below.

1. Commercial Invoice 6. Customs Invoice

2. Bills of Lading 7. Certificate of Origin

3. Marine Insurance Policy 8. Inspection Certificate

and Certificate 9. Packing List

4. Bills of Exchange

5. Consular Invoice

Commercial Invoice: It is the seller¶s bill for the merchandise. It contains

a description of the goods, the price per unit at a particular location

and total value of the goods, packing specifications, terms of sale,terms of payment, identification markets of the packages, bill of

lading number, etc. Each exporter designs his own format of

commercial invoice.



Bills of Lading: This document is an evidence of shipment of the goods. Itis a receipt duly signed and issued by a shipping companyacknowledging that the goods mentioned in the document have beenshipped or received for shipment and an undertaking to deliver the

goods at the agreed destination.Consular Invoice: A consular invoice is a special type of invoice required

by some countries for their imports. Such invoices are required by theUS, Canada, Philippines and some Middle East countries, etc. It is madeout on a prescribed format certified by the consulate of the importingcountry stationed in the exporter¶s country. The main purpose of it to theimporting country is to have authenticated particulars of the goods thatare imported into their country. It also facilitates the clearance of thegoods at the port of entry by avoiding delay arising from the customsformalities.

Customs Invoice: Certain countries such as Canada and the US needcustoms invoice. Canada has prescribed a specific form of customsinvoice of allowing entry of merchandise at preferential tariff rates. TheUS in addition to the special customs invoice, requires a particular annex to the invoice, for cotton manufacturers.