INTERNATIONAL MAREKETING

INTERNATIONAL MARKETING

International marketing (IM) refers to marketing carried out by

companies overseas or across national borderlines. This strategy

uses an extension of the techniques used in the home country of a

firm. It refers to the firm-level marketing practices across the border

including market identification and targeting, entry mode selection,

marketing mix, and strategic decisions to compete in international

markets.

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

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International Marketing is Marketing across the national frontiers. It

refers to the strategy, process and implementation of the marketing

activities in the international arena.

International marketing may be defined as an activity related to the

sale of goods and services of one country in other, subject to the

rules and regulation framed by the countries concerned. In simple

words it refers to the marketing activities and operations among the

countries of the world following different political and economic

systems. International Marketing is marketing abroad beyond the

political boundaries of the country. International Marketing brings

countries closer due to economic needs and facilitates

understanding and co-operation among them; it is essentially a

constructive economic and commercial activity which is useful and

beneficial to all participating countries.

International marketing act as an instrument of global growth and

development. However, there is a crossover between what is

commonly expressed as international marketing and global

marketing, which is a similar term. The intersection is the result of

the process of internationalization. Many American and European

authors see international marketing as a simple extension of

exporting, whereby the marketing mix 4P's is simply adapted in

some way to take into account differences in consumers and

segments. It then follows that global marketing takes a more

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standardized approach to world markets and focuses upon

sameness, in other words the similarities in consumers and

segments.

Scope of International Marketing

Though international marketing is in essence export marketing, it

has a broader connotation in marketing literature.

Opening a branch / subsidiary abroad for processing,

packaging, assembly or even complete manufacturing

through direct investment.

Negotiating licensing / franchising arrangements whereby

foreign enterprises are granted the right to use the exporting

company know how, viz., patents processes or trade marks,

with or without financial investment.

Establishing joint ventures in foreign countries for

manufacturing and/or marketing.

Offering consultancy services and undertaking turnkey

projects abroad.

Important for export production.

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Characteristics of International Marketing

Large scale operations

Dominance of Multi

Nationals

International restriction and trading

blocs

Need of marketing research

Advance technology

Need for long term planning

Develop cultural

relation and maintain

world peace

Large scale operations

Characteristics of

international marketing

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International Marketing transaction is always conducted in

large and bulky quantity. It is not conducted on the retail basis

but on the wholesale basis.

Dominance of multinationals

Multinational cooperation dominates the International

Marketing scene. Such enterprise has worldwide contacts.

They conduct Business operation more efficiently and

economically. They are in better position to adopt global

approach, which is necessary in International Marketing.

Multinational corporations usually market their product in large

number of countries and thereby dominate developing

countries.

International restriction and trading blocs

International Marketing is not free like internal marketing;

there are various restrictions and barriers because of the

protective policies of different countries. Foreign exchange

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regulation also imposes various regulations on export and

import.

Need for marketing research

International Marketing requires marketing research in the

form of marketing surveys, product surveys, and product

testing as it is highly competitive.

Advance technology

International Marketing is extremely dynamic and competitive;

in such a type of marketing an enterprise must be able to sell

its product that carries the best quality articles at competitive

prices. Countries like USA. Japan and Germany have a

dominating position in international marketing because of the

use of advance technology in production and marketing of

goods.

Need for long term planning

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International Marketing requires long term planning. The

marketing situations in different countries because of

social .economical and political factors. This stresses the

need for long term planning in International marketing.

Develop cultural relations and maintain world peace

International Marketing brings different counties closer and

also develops cultural relations with them. Closer cultural

relations improve the quality of life f people in different

countries. The participating countries have to maintain friendly

relations among themselves

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Globalization of Markets and Competition through

International Marketing

Trade is increasingly global in scope today. There are

several reasons for this. One significant reason is

technological—because of improved transportation

and communication opportunities today, trade is now

more practical. Thus, consumers and businesses now

have access to the very best products from many

different countries. Increasingly rapid technology

lifecycles also increases the competition among

countries as to who can produce the newest in

technology. In part to accommodate these realities,

countries in the last several decades have taken

increasing steps to promote global trade through

agreements such as the General Treaty on Trade and

Tariffs, and trade organizations such as the World

Trade Organization (WTO), North American Free Trade

Agreement (NAFTA), and the European Union (EU).

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Stages in the International Involvement of a

Firm

We discussed several stages through which a firm

may go as it becomes increasingly involved across

borders. A purely domestic firm focuses only on its

home market, has no current ambitions of expanding

abroad, and does not perceive any significant

competitive threat from abroad. Such a firm may

eventually get some orders from abroad, which are

seen either as an irritation (for small orders, there

may be a great deal of effort and cost involved in

obtaining relatively modest revenue) or as "icing on

the cake." As the firm begins to export more, it enters

the export stage, where little effort is made to market

the product abroad, although an increasing number of

foreign orders are filled. In the international stage, as

certain country markets begin to appear especially

attractive with more foreign orders originating there,

the firm may go into countries on an ad hoc basis—

that is, each country may be entered sequentially, but

with relatively little learning and marketing efforts

being shared across countries. In the multi-national

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stage, some efficiencies are pursued by standardizing

across a region (e.g., Central America, West Africa, or

Northern Europe). Finally, in the global stage, the

focus centers on the entire World market, with

decisions made optimize the product’s position across

markets—the home country is no longer the center of

the product. An example of a truly global company is

Coca Cola.

Note that these stages represent points on a

continuum from a purely domestic orientation to a

truly global one; companies may fall in between these

discrete stages, and different parts of the firm may

have characteristics of various stages—for example,

the pickup truck division of an auto-manufacturer may

be largely domestically focused, while the passenger

car division is globally focused. Although a global

focus is generally appropriate for most large firms,

note that it may not be ideal for all companies to

pursue the global stage. For example, manufacturers

of ice cubes may do well as domestic, or even locally

centered, firms.

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Trade balances and exchange rates

When exchange rates are allowed to fluctuate, the

currency of a country that tends to run a trade deficit

will tend to decline over time, since there will be less

demand for that currency.  This reduced exchange

rate will then tend to make exports more attractive in

other countries and imports less attractive at home.

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Political and Legal Influences

The political situation

The political relations between a firm’s country of

headquarters (and other significant operations) and

another one may, through no fault of the firm’s,

become a major issue.  For example, oil companies

which invested in Iraq or Libya became victims of

these countries’ misconduct that led to bans on

trade.  Similarly, American firms may be disliked in

parts of Latin America or Iran where the U.S. either

had a colonial history or supported unpopular

leaders such as the former shah.

Certain issues in the political environment are

particularly significant.  Some countries, such as

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Russia, have relatively unstable governments,

whose policies may change dramatically if new

leaders come to power by democratic or other

means.  Some countries have little tradition of

democracy, and thus it may be difficult to

implement.  For example, even though Russia is

supposed to become a democratic country, the

history of dictatorships by the communists and the

czars has left country of corruption and strong

influence of criminal elements.

Laws across borders

When laws of two countries differ, it may be

possible in a contract to specify in advance which

laws will apply, although this agreement may not be

consistently enforceable.  Alternatively, jurisdiction

may be settled by treaties, and some governments,

such as that of the U.S., often apply their laws to

actions, such as anti-competitive behavior,

perpetrated outside their borders (extra-

territorial application).  By the doctrine known as

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compulsion, a firm that violates U.S. law abroad

may be able to claim as a defense that it was forced

to do so by the local government; such violations

must, however, be compelled—that they are merely

legal or accepted in the host country is not

sufficient.

The reality of legal systems

Some legal systems, such as that of the U.S., are

relatively “transparent”—that is, the law tends to

be what its plain meaning would suggest.  In some

countries, however, there are laws on the books

which are not enforced (e.g., although Japan has

antitrust laws similar to those of the U.S., collusion

is openly tolerated).  Further, the amount of

discretion left to government officials tends to

vary.  In Japan, through the doctrine of

administrative guidance, great latitude is left to

government officials, who effectively make up the

laws.

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One serious problem in some countries is a limited

access to the legal systems as a means to redress

grievances against other parties.  While the U.S.

may rely excessively on lawsuits, the inability to

effectively hold contractual partners to their

agreement tends to inhibit business deals.  In many

jurisdictions, pre-trial discovery is limited, making it

difficult to make a case against a firm whose

internal documents would reveal guilt.  This is one

reason why personal relationships in some cultures

are considered more significant than in the U.S.—

since enforcing contracts may be difficult, you must

be sure in advance that you can trust the other

party.

Legal systems of the World

There are four main approaches to law across the

World, with some differences within each:

Common law, the system in effect in the U.S., is

based on a legal tradition of precedent.  Each case

that raises new issues is considered on its own merits,

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and then becomes a precedent for future decisions on

that same issue.  Although the legislature can override

judicial decisions by changing the law or passing

specific standards through legislation, reasonable

court decisions tend to stand by default.

Code law, which is common in Europe, gives

considerably shorter leeway to judges, who are

charged with “matching” specific laws to situations—

they cannot come up with innovative solutions when

new issues such as patentability of biotechnology

come up.  There are also certain differences in

standards.  For example, in the U.S. a supplier whose

factory is hit with a strike is expected to deliver on

provisions of a contract, while in code law this

responsibility may be nullified by such an “act of

God”.

Islamic law is based on the teachings of the Koran,

which puts forward mandates such as a prohibition of

usury, or excessive interest rates.  This has led some

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Islamic countries to ban interest entirely; in others, it

may be tolerated within reason.  Islamic law is

ultimately based on the need to please God, so

“getting around” the law is generally not acceptable. 

Attorneys may be consulted about what might please

God rather than what is an explicit requirements of

the government.

Socialist law is based on the premise that “the

government is always right” and typically has not

developed a sophisticated framework of contracts

(you do what the governments tells you to do) or

intellectual property protection (royalties are

unwarranted since the government ultimately owns

everything).  Former communist countries such as

those of Eastern Europe and Russia are trying to

advance their legal systems to accommodate issues in

a free market.

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Culture

Culture is part of the external influences that impact the

consumer. That is, culture represents influences that are

imposed on the consumer by other individuals.

The definition of culture offered one text is “That complex

whole which includes knowledge, belief, art, morals,

custom, and any other capabilities and habits acquired by

man person as a member of society.”  From this definition,

we make the following observations:

Culture, as a “complex whole,” is a system of

interdependent components.

Knowledge and beliefs are important parts.  In the

U.S., we know and believe that a person who is skilled

and works hard will get ahead. In other countries, it

may be believed that differences in outcome result

more from luck.  “Chunking,” the name for China in

Chinese, literally means “The Middle Kingdom.”  The

belief among ancient Chinese that they were in the

center of the universe greatly influenced their

thinking.

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Other issues are relevant.  Art, for example, may be

reflected in the rather arbitrary practice of wearing

ties in some countries and wearing turbans in others. 

Morality may be exhibited in the view in the United

States that one should not be naked in public.  In

Japan, on the other hand, groups of men and women

may take steam baths together without perceived as

improper.  On the other extreme, women in some

Arab countries are not even allowed to reveal their

faces.  Notice, by the way, that what at least some

countries view as moral may in fact be highly immoral

by the standards of another country. 

Dealing with culture

Culture is a problematic issue for many marketers

since it is inherently nebulous and often difficult to

understand.  One may violate the cultural norms of

another country without being informed of this, and

people from different cultures may feel

uncomfortable in each other’s presence without

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knowing exactly why (for example, two speakers

may unconsciously continue to attempt to adjust to

reach an incompatible preferred interpersonal

distance).

Warning about stereotyping

When observing a culture, one must be careful not

to over-generalize about traits that one sees. 

Research in social psychology has suggested a

strong tendency for people to perceive an

“outgroup” as more homogenous than an

“ingroup,” even when they knew what members

had been assigned to each group purely by chance. 

When there is often a “grain of truth” to some of

the perceived differences, the temptation to over-

generalize is often strong.  Note that there are

often significant individual differences

within cultures.

High vs. low context cultures:

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In some cultures, “what you see is what you get”—

the speaker is expected to make his or her points

clear and limit ambiguity.  This is the case in the

U.S.—if you have something on your mind, you are

expected to say it directly, subject to some

reasonable standards of diplomacy.  In Japan, in

contrast, facial expressions and what is not said

may be an important clue to understanding a

speaker’s meaning.  Thus, it may be very difficult

for Japanese speakers to understand another’s

written communication.  The nature of languages

may exacerbate this phenomenon—while the

German language is very precise, Chinese lacks

many grammatical features, and the meaning of

words may be somewhat less precise.  English ranks

somewhere in the middle of this continuum.

Language issues

Language is an important element of culture.  It should be

realized that regional differences may be subtle.  For

example, one word may mean one thing in one Latin

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American country, but something off-color in another.  It

should also be kept in mind that much information is

carried in non-verbal communication.  In some cultures,

we nod to signify “yes” and shake our heads to signify

“no;” in other cultures, the practice is reversed.  Within the

context of language:

There are often large variations in regional dialects of

a given language.  The differences between U.S.,

Australian, and British English are actually modest

compared to differences between dialects of Spanish

and German.

Idioms involve “figures of speech” that may not be

used, literally translated, in other languages.  For

example, baseball is a predominantly North and South

American sport, so the notion of “in the ball park”

makes sense here, but the term does not carry the

same meaning in cultures where the sport is less

popular.

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Neologisms involve terms that have come into

language relatively recently as technology or society

involved.  With the proliferation of computer

technology, for example, the idea of an “add-on”

became widely known.  It may take longer for such

terms to “diffuse” into other regions of the world.  In

parts of the World where English is heavily studied in

schools, the emphasis is often on grammar and

traditional language rather than on current

terminology, so neologisms have a wide potential not

to be understood.

Slang exists within most languages.  Again, regional

variations are common and not all people in a region

where slang is used will necessarily understand this. 

There are often significant generation gaps in the use

of slang.

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Domestic marketing vs International marketing

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Difference Between Domestic marketing and International

marketing

Domestic marketing and International marketing are same when it

comes to the fundamental principle of marketing. Marketing is an

integral part of any business that refers to plans and policies

adopted by any individual or organization to reach out to its

potential customers. A web definition defines marketing as a

process of planning and executing the conception, pricing,

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

exchanges that satisfy individual and organizational goals. With the

world shrinking at a fast pace, the boundaries between nations are

melting and companies are now progressing from catering to local

markets to reach out to customers in different parts of the world.

Marketing is a ploy that is used to attract, satisfy and retain

customers. Whether done at a local level or at the global level, the

fundamental concepts of marketing remain the same.

Domestic Marketing

The marketing strategies that are employed to attract and influence

customers within the political boundaries of a country are known as

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Domestic marketing. When a company caters only to local

markets, even though it may be competing against foreign

companies operating within the country, it is said to be involved in

domestic marketing. The focus of companies is on the local

customer and market only and no thought is given to overseas

markets. All the product and services are produced keeping in

mind local customers only.

International Marketing

When there are no boundaries for a company and it targets

customers overseas or in another country, it is said to be engaged

in international marketing. If we go by the definition of marketing

given above, the process becomes multinational in this case. As

such, and in a simplified way, it is nothing but application of

marketing principles across countries. Here it is interesting to note

that the techniques used in international marketing are primarily

those of the home country or the country which has the

headquarters of the company. In America and Europe, many

experts believe international marketing to be similar to exporting.

According to another definition, international marketing refers to

business activities that direct the flow of goods and services of a

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company to consumers in more than one country for profit

purposes only.

Difference between domestic marketing and

international marketing

As explained earlier, both domestic as well as international

marketing refer to the same marketing principles. However, there

are glaring dissimilarities between the two:

Scope – The scope of domestic marketing is limited and will

eventually dry up. On the other end, international marketing has

endless opportunities and scope.

Benefits – As is obvious, the benefits in domestic marketing are

less than in international marketing. Furthermore, there is an added

incentive of foreign currency that is important from the point of view

of the home country as well.

Sharing of   Technology  – Domestic marketing is limited in the use

of technology whereas international marketing allows use and

sharing of latest technologies.

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Political relations – Domestic marketing has nothing to do with

political relations whereas international marketing leads to

improvement in political relations between countries and also

increased level of cooperation as a result.

Barriers – In domestic marketing there are no barriers but in

international marketing there are many barriers such as cross

cultural differences, language, currency, traditions and customs.

Multinational, global, and world marketing is all the same thing. Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications.

Foreign Trade Policy of India

Foreign Trade Policy of India

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To become a major player in world trade, a comprehensive

approach needs to be taken through the Foreign Trade Policy of

India . Increment of exports is of utmost importance, India will have

to facilitate imports which, are required for the growth Indian

economy. Rationality and consistency among trade and other

economic policies is important for maximizing the contribution of

such policies to development. Thus, while incorporating the

new Foreign Trade Policy of India, the past policies should also

be integrated to allow developmental scope of India’s foreign trade.

This is the main mantra of the Foreign Trade Policy of India. 

Objectives of the Foreign Trade Policy of India

Trade propels economic growth and national development.

The primary purpose is not the mere earning of foreign

exchange, but the stimulation of greater economic

activity. The Foreign Trade Policy of India is based on

two major objectives, they are :

To double the percentage share of global merchandise

trade within the next five years.

To act as an effective instrument of economic

growth by giving a thrust to employment generation. 

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Strategy of Foreign Trade Policy of India:

Removing government controls and creating an

atmosphere of trust and transparency to promote

entrepreneurship, industrialization and trades.

Simplification of commercial and legal procedures and

bringing down transaction costs.

Simplification of levies and duties on inputs used in

export products.

Facilitating development of India as a global hub for

manufacturing, trading and services.

Generating additional employment opportunities,

particularly in semi-urban and rural areas, and developing

a series of ‘Initiatives’ for each of these sectors.

Facilitating technological and infrastructural upgradation

of all the sectors of the Indian economy, especially through

imports and thereby increasing value addition and

productivity, while attaining global standards of quality.

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Neutralizing inverted duty structures and ensuring that

India's domestic sectors are not disadvantaged in the Free

Trade Agreements / Regional Trade Agreements /

Preferential Trade Agreements that India enters into in

order to enhance exports.

Upgradation of infrastructural network, both physical and

virtual, related to the entire Foreign Trade chain, to global

standards.

Revitalizing the Board of Trade by redefining its role,

giving it due recognition and inducting foreign trade

experts while drafting Trade Policy.

Involving Indian Embassies as an important member of

export strategy and linking all commercial houses at

international locations through an electronic platform for

real time trade intelligence, inquiry and information

dissemination. 

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SEGMENTATION, TARGETING, AND

POSITIONING

The importance of STP

Segmentation is the cornerstone of marketing—almost all

marketing efforts in some way relate to decisions on who to serve

or how to implement positioning through the different parts of the

marketing mix. For example, one’s distribution strategy should

consider where one’s target market is most likely to buy the

product, and a promotional strategy should consider the target’s

media habits and which kinds of messages will be most

persuasive. Although it is often tempting, when observing large

markets, to try to be "all things to all people," this is a dangerous

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strategy because the firm may lose its distinctive appeal to its

chosen segments.

In terms of the "big picture," members of a segment should

generally be as similar as possible to each other on a relevant

dimension (e.g., preference for quality vs. low price) and as

different as possible from members of other segments. That is

members should respond in similar ways to various treatments

(such as discounts or high service) so that common campaigns can

be aimed at segment members, but in order to justify a different

treatment of other segments, their members should have their own

unique behavior.

ENTRY TO OVERSEAS MARKET

A mode of entry into an international market is the channel

which your organization employs to gain entry to a new

international market. This lesson considers a number of key

alternatives, but recognizes that alternatives are many and

diverse. Here you will be consider modes of entry into

international markets such as the Internet, Exporting,

Licensing, International Agents, International Distributors,

Strategic Alliances, Joint Ventures, Overseas Manufacture and

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International Sales Subsidiaries. Finally we consider the

Stages of Internationalization.

It is worth noting that not all authorities on international

marketing agree as to which mode of entry sits where. For

example, some see franchising as a stand alone mode, whilst

others see franchising as part of licensing. In reality, the most

important point is that you consider all useful modes of entry

into international markets - over and above which pigeon-hole

it fits into. If in doubt, always clarify your tutor's preferred

view.

The Internet

The Internet is a new channel for some organizations and the sole

channel for a large number of innovative new organizations. The

eMarketing space consists of new Internet companies that have

emerged as the Internet has developed, as well as those pre-

existing companies that now employ eMarketing approaches as

part of their overall marketing plan. For some companies the

Internet is an additional channel that enhances or replaces their

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traditional channel(s). For others the Internet has provided the

opportunity for a new online company. 

Exporting

There are direct and indirect approaches to exporting to other

nations. Direct exporting is straightforward. Essentially the

organization makes a commitment to market overseas on its own

behalf. This gives it greater control over its brand and operations

overseas, over an above indirect exporting. On the other hand, if

you were to employ a home country agency (i.e. an exporting

company from your country - which handles exporting on your

behalf) to get your product into an overseas market then you would

be exporting indirectly. Examples of indirect exporting include:

Piggybacking whereby your new product uses the existing

distribution and logistics of another business.

Export Management Houses (EMHs) that act as a bolt on export

department for your company. They offer a whole range of

bespoke or a la carte services to exporting organizations.

Consortia are groups of small or medium-sized organizations

that group together to market related, or sometimes unrelated

products in international markets.

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Trading companies were started when some nations decided

that they wished to have overseas colonies. They date back to

an imperialist past that some nations might prefer to forget e.g.

the British, French, Spanish and Portuguese colonies. Today

they exist as mainstream businesses that use traditional

business relationships as part of their competitive advantage.

Licensing

Licensing includes franchising, Turnkey contracts and contract

manufacturing.

Licensing is where your own organization charges a fee

and/or royalty for the use of its technology, brand and/or

expertise.

Franchising involves the organization (franchiser) providing

branding, concepts, expertise, and infact most facets that are

needed to operate in an overseas market, to the franchisee.

Management tends to be controlled by the franchiser.

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Examples includeDominos Pizza, Coffee Republic and

McDonald's Restaurants.

Turnkey contracts are major strategies to build large plants.

They often include a the training and development of key

employees where skills are sparse - for example, Toyota's car

plant in Adapazari, Turkey. You would not own the plant once

it is handed over.

International Agents and International Distributors

Agents are often an early step into international marketing. Put

simply, agents are individuals or organizations that are contracted

to your business, and market on your behalf in a particular country.

They rarely take ownership of products, and more commonly take

a commission on goods sold. Agents usually represent more than

one organization. Agents are a low-cost, but low-control option. If

you intend to globalize, make sure that your contract allows you to

regain direct control of product. Of course you need to set targets

since you never know the level of commitment of your agent.

Agents might also represent your competitors - so beware conflicts

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of interest. They tend to be expensive to recruit, retain and

train. Distributors are similar to agents, with the main difference

that distributors take ownership of the goods. Therefore they have

an incentive to market products and to make a profit from them.

Otherwise pros and cons are similar to those of international

agents.

Strategic Alliances (SA)

Strategic alliances is a term that describes a whole series of

different relationships between companies that market

internationally. Sometimes the relationships are between

competitors. There are many examples including:

Shared manufacturing e.g. Toyota Ayago is also marketed as a

Citroen and a Peugeot.

Research and Development (R&D) arrangements.

Distribution alliances e.g. iPhone was initially marketed by O2 in

the United Kingdom.

Marketing agreements.

Essentially, Strategic Alliances are non-equity based agreements

i.e. companies remain independent and separate.

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Joint Ventures (JV)

Joint Ventures tend to be equity-based i.e. a new company is set

up with parties owning a proportion of the new business. There are

many reasons why companies set up Joint Ventures to assist them

to enter a new international market:

Access to technology, core competences or management skills.

For example, Honda's relationship with Rover in the 1980's.

To gain entry to a foreign market. For example, any business

wishing to enter China needs to source local Chinese partners.

Access to distribution channels, manufacturing and R&D are

most common forms of Joint Venture.

Overseas Manufacture or International Sales

Subsidiary

A business may decide that none of the other options are as viable

as actually owning an overseas manufacturing plant i.e. the

organization invests in plant, machinery and labor in the overseas

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market. This is also known as Foreign Direct Investment (FDI).

This can be a new-build, or the company might acquire a current

business that has suitable plant etc. Of course you could assemble

products in the new plant, and simply export components from the

home market (or another country). The key benefit is that your

business becomes localized - you manufacture for customers in

the market in which you are trading. You also will gain local market

knowledge and be able to adapt products and services to the

needs of local consumers. The downside is that you take on the

risk associated with the local domestic market. An

International Sales Subsidiary would be similar, reducing the

element of risk, and have the same key benefit of course.

However, it acts more like a distributor that is owned by your own

company.

Internationalization Stages

So having considered the key modes of entry into international

markets, we conclude by considering the Stages of

Internationalization. Some companies will never trade overseas

and so do not go through a single stage. Others will start at a later

or even final stage. Of course some will go through each stage as

summarized now:

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Indirect exporting or licensing

Direct exporting via a local distributor

Your own foreign presences

Home manufacture, and foreign assembly

Foreign manufacture

Export Pricing And Costing

Pricing and costing are two different things and an exporter should

not confuse between the two. Price is what an exporter offer to a

customer on particular products while cost is what an exporter pay

for manufacturing the same product.

Export pricing is the most important factor in for promoting export

and facing international trade competition. It is important for the

exporter to keep the prices down keeping in mind all export

benefits and expenses. However, there is no fixed formula for

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successful export pricing and is differ from exporter to exporter

depending upon whether the exporter is a merchant exporter or a

manufacturer exporter or exporting through a canalizing agency.

Determining Export Pricing

Export Pricing can be determined by the following factors:

Range of products offered.

Prompt deliveries and continuity in supply.

After-sales service in products like machine tools, consumer

durables.

Product differentiation and brand image.

Frequency of purchase.

Presumed relationship between quality and price.

Specialty value goods and gift items.

Credit offered.

Preference or prejudice for products originating from a particular

source.

Aggressive marketing and sales promotion.

Prompt acceptance and settlement of claims.

Unique value goods and gift items.

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Export Costing  

Export Costing is basically Cost Accountant's job. It consists of fixed cost

and variable cost comprising various elements. It is advisable to prepare

an export costing sheet for every export product.

As regards quoting the prices to the overseas buyer, the same are quoted

in the following internationally accepted terms which are commonly

known as Incoterm.

Export License

An export license is a document issued by the appropriate

licensing agency after which an exporter is allowed to transport

his product in a foreign market. The license is only issued after a

careful review of the facts surrounding the given export

transaction. Export license depends on the nature of goods to be

transported as well as the destination port. So, being an exporter

it is necessary to determine whether the product or good to be

exported requires an export license or not. While making the

determination one must consider the following necessary points

What are you exporting?

Where are you exporting?

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Who will receive your item?

What will your items will be used?

Canalisation

Canalisation is an important feature of Export License

under which certain goods can be imported only by

designated agencies. For an example, an item like gold, in

bulk, can be imported only by specified banks like SBI and

some foreign banks or designated agencies.

Application for an Export License

To determine whether a license is needed to export a particular

commercial product or service, an exporter must first classify the item by

identifying what is called ITC (HS) Classifications. Export license are

only issued for the goods mentioned in the Schedule 2 of ITC (HS)

Classifications of Export and Import items. A proper application can be

submitted to the Director General of Foreign Trade (DGFT). The Export

Licensing Committee under the Chairmanship of Export Commissioner

considers such applications on merits for issue of export licenses.

Exports Free unless regulated

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The Director General of Foreign Trade (DGFT) from time to time

specifies through a public notice according to which any goods, not

included in the ITC (HS) Classifications of Export and Import items may

be exported without a license. Such terms and conditions may include

Minimum Export Price (MEP), registration with specified authorities,

quantitative ceilings and compliance with other laws, rules, regulations.

RISK IN INTERNATIONAL TRADE

Risks in International Trade are the major barriers for the growth to

the same. International trade has been a much debated topic.

Economists have differed on the real benefits of international trade.

The increase in the export market is highly beneficial to an

economy, but on the other hand the increase in imports can be a

threat to the economy of that country. It has been the worry of the

policy makers to strike the right balance between free trade and

restrictions.

International trade can develop an economy, but at the same time

certain domestic players can be outperformed by financially

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stronger multi nationals and forced to close down or get merged.

Sometimes these multinational companies become so powerful,

especially in smaller countries, that they can dictate political terms

to the government for their benefit.

International trade is characteristically costlier in terms of

domestic trade. There are a number of reasons such as,

tariffs, cost of delay, cost related to differences in legal

system, etc. The factors of production like labor and capital

are more mobile within the territories of the country than

across other countries. International trade is restricted to the

exchange of goods and services. It does not encourage the

exchange of production factors, which may be more beneficial

in certain cases. The assessment of risks in the international

trade plays an important role in deciding the modes of

payment to be used for the settlement between buyer and

seller.

Risks in international trade can be divided under

several types, such as,

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Economic risks

Risk of concession in economic control

Risk of insolvency of the buyer

Risk of non-acceptance

Risk of protracted default i.e. the failure of the buyer to pay off

the due amount after six months of the due date

Risk of Exchange   rate

Political risks

 

Risk of non- renewal of import and exports licenses

Risks due to war

Risk of the imposition of an import ban after the delivery of the

Surrendering of political sovereignty

Buyer Country risks  

 

Changes in the policies of the government

Exchange control regulations

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Lack of foreign currency

Trade embargoes

GLOBAL MARKETING STRATEGIES

Although some would stem the foreign invasion through protective

legislation, protectionism in the long run only raises living costs and

protects inefficient domestic firms (national controls). The right

answer is that companies must learn how to enter foreign markets

and increase their global competitiveness. Firms that do venture

abroad find the international marketplace far different from the

domestic one. Market sizes, buyer behavior and marketing

practices all vary, meaning that international marketers must

carefully evaluate all market segments in which they expect to

compete.

Whether to compete globally is a strategic decision (strategic

intent) that will fundamentally affect the firm, including its

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operations and its management. For many companies, the decision

to globalize remains an important and difficult one (global strategy

and action). Typically, there are many issues behind a company`s

decision to begin to compete in foreign markets. For some firms,

going abroad is the result of a deliberate policy decision (exploiting

market potential and growth); for others, it is a reaction to a specific

business opportunity (global financial turmoil, etc.) or a competitive

challenge (pressuring competitors). But, a decision of this

magnitude is always a strategic proactive decision rather than

simply a reaction (learning how to business abroad). Reasons for

global expansion are mentioned below:

a) Opportunistic global market development (diversifying

markets)

b) Following customers abroad (customer satisfaction)

c) Pursuing geographic diversification (climate, topography,

space, etc.)

d) Exploiting different economic growth rates (gaining scale and

scope)

e) Exploiting product life cycle differences (technology)

f) Pursuing potential abroad

g) Globalizing for defensive reasons

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h) Pursuing a global logic or imperative (new markets and

profits)

Moreover, there can be several reasons to be mentioned including

comparative advantage, economic trends, demographic conditions,

competition at home, the stage in the product life cycle, tax

structures and peace. To succeed in global marketing companies

need to look carefully at their geographic expansion. To some

extent, a firm makes a conscious decision about its extent of

globalization by choosing a posture that may range from entirely

domestic without any international involvement (domestic focus) to

a global reach where the company devotes its entire marketing

strategy to global competition. In the development of an

international marketing strategy, the firm may decide to be

domestic-only, home-country, host-country or regional/global-

oriented.

Global Marketing Strategies

A global marketing strategy that totally globalizes all marketing

activities is not always achievable or desirable (differentiated

globalization). In the early phases of development, global

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marketing strategies were assumed to be of one type only, offering

the same marketing strategy across the globe. As marketers

gained more experience, many other types of global marketing

strategies became apparent. Some of those were much less

complicated and exposed a smaller aspect of a marketing strategy

to globalization. A more common approach is for a company to

globalize its product strategy (product lines, product designs and

brand names) and localize distribution and marketing

communication.

Integrated Global Marketing Strategy

When a company pursues an integrated global marketing strategy, most

elements of the marketing strategy have been globalized. Globalization

includes not only the product but also the communications strategy,

pricing and distribution as well as such strategic elements as segmentation

and positioning. Such a strategy may be advisable for companies that face

completely globalized customers along the lines. It also assumes that the

way a given industry works is highly similar everywhere, thus allowing a

company to unfold its strategy along similar paths in country by country.

One company that fits the description of an integrated global marketing

strategy to a large degree is CocaCola. That company has achieved a

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coherent, consistent and integrated global marketing strategy that covers

almost all elements of its marketing program from segmentation to

positioning, branding, distribution, bottling, advertising and more.

Reality tells us that completely integrated global marketing strategies will

continue to be the exception. However, there are many other types of

partially globalized marketing strategies; each may be tailored to specific

industry and competitive circumstances.

Global Product Category Strategy

Possibly the least integrated type of global marketing strategy is

the global product category strategy. Leverage is gained from

competing in the same category country after country and may

come in the form of product technology or development costs.

Selecting the form of global product category implies that the

company while staying within that category will consider targeting

different segments in each category or varying the product,

advertising and branding according to local market requirements.

Companies competing in the multi-domestic mode are frequently

applying the global category strategy and leveraging knowledge

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across markets without pursuing standardization. That strategy

works best if there are significant differences across markets and

when few segments are present in market after market. Several

traditional multinational players who had for decades pursued a

multi-domestic marketing approach-tailoring marketing strategies to

local market conditions and assigning management to local

management teams- have been moving toward the global category

strategy. Among them are Nestle, Unilever and Procter&Gamble,

three large international consumer goods companies doing

business in food and household goods.

Global Segment Strategy

A company that decides to target the same segment in many

countries is following a global segment strategy. The company may

develop an understanding of its customer base and leverage that

experience around the world. In both

consumer and industrial industries significant knowledge is

accumulated when a company gains in-depth understanding of a

niche or segment. A pure global segment strategy will even allow

for different products, brands or advertising although some

standardization is expected. The choices may consist of competing

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always in the upper or middle segment of a given consumer market

or for a particular technical application in an industrial segment.

Segment strategies are relatively new to global marketing.

Global Marketing Mix Element Strategies

These strategies pursue globalization along individual marketing mix

elements such as pricing, distribution, place, promotion, communications

or product. They are partially globalized strategies that allow a company

that customize other aspects of its marketing strategy. Although various

types of strategies may apply, the most important ones are global product

strategies, global advertising strategies and global branding strategies.

Typically companies globalize those marketing mix elements that are

subject to particularly strong global logic forces. A company facing strong

global purchasing logic may globalize its account management practices

or its pricing strategy. Another firm facing strong global information logic

will find it important to globalize its communications strategy.

Global Product Strategy

Pursuing a global product strategy implies that a company has

largely globalized its product offering. Although the product may

not need to be completely standardized worldwide, key aspects or

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modules may in fact be globalized. Global product strategies

require that product use conditions, expected features and required

product functions be largely identical so that few variations or

changes are needed. Companies pursuing a global product

strategy are interested in leveraging the fact that all investments for

producing and developing a given product have already been

made. Global strategies will yield more volume, which will make the

original investment easier to justify.

Global Branding Strategies

Global branding strategies consist of using the same brand name or logo

worldwide. Companies want to leverage the creation of such brand names

across many markets, because the launching of new brands requires a

considerable marketing investment. Global branding strategies tend to be

advisable if the target customers travel across country borders and will be

exposed to products elsewhere.

Global branding strategies also become important if target

customers are exposed to advertising worldwide. This is often the

case for industrial marketing customers who may read industry and

trade journals from other countries. Increasingly, global branding

has become important also for consumer products where cross-

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border advertising through international TV channels has become

common. Even in some markets such as Eastern Europe, many

consumers had become aware of brands offered in Western

Europe before the liberalization of the economies in the early

1990s. Global branding allows a company to take advantage of

such existing goodwill. Companies pursuing global branding

strategies may include luxury product marketers who typically face

a large fixed investment for the worldwide promotion of a product.

Global Advertising Strategy

Globalize advertising is generally associated with the use of the same

brand name across the world. However, a company may want to use

different brand names partly for historic purposes. Many global firms

have made acquisitions in other countries resulting in a number of local

brands. These local brands have their own distinctive market and a

company may find it counterproductive to change those names. Instead,

the company may want to leverage a certain theme or advertising

approach that may have been developed as a result of some global

customer research. Global advertising themes are most advisable when a

firm may market to customers seeking similar benefits across the world.

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Once the purchasing reason has been determined as similar, a common

theme may be created to address it.

Composite Global Marketing Strategy:

The above descriptions of the various global marketing models give the

distinct impression that companies might be using one or the other generic

strategy exclusively. Reality shows, however, that few companies

consistently adhere to only one single strategy. More often companies

adopt several generic global strategies and run them in parallel. A

company might for one part of its business follow a global brand strategy

while at the same time running local brands in other parts. Many firms are

a mixture of different approaches, thus the term composite.

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Type Soft drink

Manufacturer The Coca-Cola Company

Country of origin United States

Introduced 1886

On May 8, 1886, a pharmacist named Dr. John Pemberton carried

a jug of Coca-Cola® syrup to Jacobs' Pharmacy in downtown

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Atlanta, where it was mixed with carbonated water and sold for five

cents a glass.

From humble beginnings 125 years ago, This Company has

evolved from one product --Coca-Cola -- to more than 500 brands

in 2011. company grown from selling a modest 9 drinks a day in

1886 to 1.7 billion a day. And we've expanded from one city in one

country to availability in more than 200 countries around the world.

COCA-COLA IN INDIA

Coca-Cola, the corporation nourishing the global community with

the world’s largest selling soft drink concentrates since 1886,

returned to India in 1993 after a 16 year hiatus, giving a new

thumbs up to the Indian soft drink market. In the same year, the

Company took over ownership of the nation’s top soft-drink brand

and bottling network. It’s no wonder our brands have assumed an

iconic status in the minds of the world’s consumers.

The Company has shaken up the Indian carbonated drinks market

greatly, giving consumers the pleasure of world-class drinks to fill

up their hydration, refreshment, and nutrition needs. It has also

been instrumental in giving an exponential growth to the country’s

job listings.

With virtually all the goods and services required to produce

and market Coca-Cola being made in India, the business

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system of the Company directly employs approximately 6,000

people, and indirectly creates employment for more than

125,000 people in related industries through its vast

procurement, supply, and distribution system. 

The Indian operations comprises of 50 bottling operations, 25

owned by the Company, with another 25 being owned by

franchisees. That apart, a network of 21 contract packers

manufactures a range of products for the Company. 

 

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