International MarketingTYBMS

What is international marketing? Buying and selling of goods and services across

national frontiers refers to International Trade

Selling of goods to other countries refers to exports, while buying the goods from a foreign country is imports

Marketing of such goods and services across between two or more nations, is International Marketing

Features Large scale operations Domination of MNCs/developed countries in the world

trade Tariff and non tariff restrictions Acute competition International Research for marketing strategies Advanced technology Need for long term planning Lengthy and time consuming Vast scope in comparison with national trade Support from specialised institutions (banks, financial

institutions, marketing consultants) needed

Need for IM Unequal distribution of natural resources among

nations

Earning foreign exchange

To maintain favorable balance of payments position

Assistance to underdeveloped countries

Optimum utilization of available resources

Why go international?Broadly divided into push and pull factors- proactive and

reactive

1. Profit Advantage: Cheap labour, low cost of production, better technology in international markets, make international business more motivating than domestic one.

2. Growth Opportunities:Tremendous potential, population and income rising. Even though no present demand for the product, a future potential demand is predicted. Companies eager to establish a strong foothold in such countries.

3. Domestic market constraints:Saturation of local demand, e.g. US of A has more stock of consumer durables than number of households.Economies of scale, e.g., feasible no of units that can be produced, is less than the domestic demand.A small domestic market- Nestle and Philips get only 2% and 8% sales from home mkts-Switzerland and Holland

4. Competition:Post liberalization (July 1991), a protected domestic market disappeared. This made domestic players to plan internationalization strategies.

5. Govt. policies and regulations:Incentives by local govt. to export or make foreign investmentPolicies of other governments may be more favorable in an international market

6. Spin off benefits:International business may aid in improving domestic businessImage building exerciseForeign exchange earnings aid in importing technology etc.Economic incentives are attached to exports

Problems in IM Political and legal differences Cultural/language difference Economic differences Differences in currency units Differences in marketing infrastructure Trade restrictions High costs of distance

Poor performance of India’s Exports Volume of Indian exports is increasing, even though

the share of the exports in comparison with world exports is insignificant

Indian exports accounted for 0.8% of world exports in 2003-04, 1.3% in 2009 and 1.4% in 2010

Export promotion measures by Indian government have not contributed as expected

India’s balance of payments position is also poor

Reasons for poor export figures for India Limited capacity to compete in the global scenario

Export of services not tapped to the fullest

Less importance given to exports of agriculture and allied activities

Limited contribution of Special Economic Zones (SEZ s) to promote exports

Iraq war affected exports to the Middle East region

Global terrorism affected the business environment

Measures taken to globalise Indian economy not tapped completely

Infrastructure bottlenecks

Complex procedures

Inadequate information and its distribution

Unfair trade practices by Indian businessmen