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    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418INTERNATIONAL MARKETING MANAGEMENTRAGHAVENDRA.K.AAsst. Professor, SJBIT 1 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418MODULE 1Framework of international marketingGlobal Business Trends The rapid growth of the World Trade Organization and regional free tradeareas, e.g., NAFTA and the European Union General acceptance of the free market system among developing countries in LatinAmerica, Asia, and Eastern Europe Impact of the Internet and other global media on the dissolution of nationalborders, and Managing global environmental resourcesInternational Marketing: A DefinitionInternational 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 inmore than one nation for a profitMarketing concepts, processes, and principles are universally applicable all over the worldEnvironmental Adaptation NeededDifferences are in the uncontrollable environment of international marketingFirms must adapt to uncontrollable environment of international marketing by adjusting themarketing mix (product, price, promotion, and distribution)Developing a Global AwarenessTo be globally aware is to have:1. Tolerant of Cultural Differences, and2. Knowledgeable of:(a) Culture, (b) History, (c) World Market Potential,RAGHAVENDRA.K.AAsst. Professor, SJBIT 2 | P a g eAdaptation(of Marketing Mix)Standardization(of Marketing Mix)ContinuumINFLUENCED BY 7 ENVIRONMENTAL FACTORS
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418(d) Global Economic, Social and Political TrendsStages of International Marketing InvolvementRAGHAVENDRA.K.AAsst. Professor, SJBIT 3 | P a g eIn general, firms go through five different phases in goinginternational:In general, firms go through five different phases in goinginternational:Infrequent Foreign MarketingInfrequent Foreign MarketingNo Direct Foreign MarketingNo Direct Foreign MarketingInternational MarketingInternational MarketingRegular Foreign MarketingRegular Foreign MarketingGlobal MarketingGlobal MarketingStrategic Orientation: EPRGSchemaOrientation EPRG SchemaDomesticMarketingExtensionMulti-DomesticMarketingGlobal Marketing(Ethnocentric)(Polycentric)(Regio/Geocentric)
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Generally, four distinctive approaches dominate strategic thinking in international marketing:Ethnocentric or Domestic Marketing Extension Concept:Home country marketing practices will succeed elsewhere without adaptation; however,international marketing is viewed as secondary to domestic operationsPolycentric or Multi-Domestic Marketing Concept:Opposite of ethnocentrism Management of these multinational firms place importance oninternational operations as a source for profits Management believes that each country is uniqueand allows each to develop own marketing strategies locallyRegiocentric:Sees the world as one market and develops a standardized marketing strategy for the entireworldGeocentric:Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where auniform, standardized marketing strategy is used for several countries, countries in a region, orthe entire worldImportance of International Marketing International expansion helps firm: Keep pace with competition Reach a larger market Reap higher profits Prolong the lifecycle of their productsRAGHAVENDRA.K.AAsst. Professor, SJBIT 4 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Levels of International MarketingDomesticMarketingExport Marketing InternationalMarketingGlobalMarketing Leastinternationalcommitment Domesticfocus Limitedinternationalcommitment Involvesdirect or indirectexport Ethnocentric Substantialinternationalcommitment Focus onindividual countriesor regions Polycentric orRegiocentric Extensiveinternationalcommitment Focus onsegments, ratherthan countries orregions GeocentricDrivers of International Expansion Competition Regional Economic and Political Integration Technology Improvements in Transportation and Telecommunication Economic Growth Transition to Market Economy Converging Consumer NeedsFirm-Specific DriversProduct Life Cycle Considerations: opportunity to prolong product lifecycle by enteringgrowth markets.RAGHAVENDRA.K.AAsst. Professor, SJBIT 5 | P a g eSalesIntro Growth Maturity DeclineProfitsSales
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418International Marketing Vs Domestic Marketing Sovereign political entitiesI. Tariffs Or Customs DutiesII. Quantitative RestrictionsIII. Exchange ControlsIV. Local Taxes Different Legal Systems Different Monetary Systems Lower Mobility Of Factors Of Production Differences In Market Characteristics Differences In Procedures And Documentation Greater Degree Of RiskTransition From Domestic To International Business Pre – Export Behaviour1. Firm Characteristics2. Perceived External Export Stimuli3. Perceived Internal Export StimuliRAGHAVENDRA.K.AAsst. Professor, SJBIT 6 | P a g eThe International Marketing Environment73. ECONOMYEnvironmentaluncontrollablescountry market AEnvironmentaluncontrollablescountrymarket BEnvironmentaluncontrollablescountrymarket C1. Competition1. Competition2. TechnologyPrice ProductPromotion Place orDistribution6. Geography andInfrastructureForeign Environment(Uncontrollables)7. Structure ofDistribution3. Economy5. Political-LegalDomestic environment(Uncontrollables)(Controllables)2 .Technology4.Culture5. Political-Legal4. CultureTargetMarket
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. Level Of Organizational Commitment Motivation To Exporta. Bulk Salesb. Relative Profitabilityc. Insufficiency Of Domestic Demandd. Reducing Business Riskse. Legal Restrictionsf. Obtaining Imported Inputsg. Social Responsibilityh. Increased Productivityi. Technological Improvements How Much Commitmenta) No Involvementb) Temporary Involvementc) Continued Involvementd) Global Involvemente) Producing For ExportBalance of Payments1. When countries trade there are financial transactions among businesses or consumers ofdifferent nations2. Money constantly flows into and out of a country3. The system of accounts that records a nation’s international financial transactions is calledits balance of payments (BP)4. It records all financial transactions between a country’s firms, and residents, and the restof the world usually over a year5. The BP is maintained on a double-entry bookkeeping systemRAGHAVENDRA.K.AAsst. Professor, SJBIT 7 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418(1) current account—a record of all merchandise exports, imports, and services plusunilateral transfers of funds;(2) The capital account—a record of direct investment, portfolio investment, and short-term capital movements to and from countries;(3) The official reserves account—a record of exports and imports of gold, increases ordecreases in foreign exchange, and increases or decreases in liabilities to foreign centralbanks;Changing Balance Of Payments1. If a country’s expenditures consistently exceed its income, its standard of living falls2. Its exchange rate vis-à-vis foreign monies declines3. When foreign currencies can be traded for more dollars, U.S. products are less expensivefor foreign customers and exports increase4. Simultaneously foreign products are more expensive for U.S. buyers and the demand forimported goods is reducedBalance Of Payments EquilibriumA nation’s balance of payments is said to be in equilibrium when it is neither drawing upon itsinternational reserves to make excess payments nor accumulating such reserves as a result of itsreceipts. The disturbance in balance of payments may be either short-term or long-term. Long –term disturbances effect a lasting alteration in relations of one nation’s economy to othernation’s economy. They result from changes in the forces which govern the kinds or amounts ofa country’s exports and its imports, its position as a long-term debtor or creditor or the characterRAGHAVENDRA.K.AAsst. Professor, SJBIT 8 | P a g emerchandise export sales.money spent by foreign tourists.transportation.payments of dividends and interest from FDIabroad.new foreign investments in the U.S.BP Receiptscosts of goods imported.spending by U.S. tourists overseas.new overseas investments.cost of foreign military and economicaid.BP Payments
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418of the international services it renders. Each such disturbance upsets the pre-existing stability inthe balance of payments and sets in motion a number of consequences which bring it to a stableposition again.The Impact of Tariff (Tax) BarriersTariff Barriers tend to Increase:1. Inflationary pressures2. Special interests’ privileges3. Government control and political considerations in economic matters4. The number of tariffs they beget via reciprocityTariff Barriers tend to Weaken:1. Balance-of-payments positions2. Supply-and-demand patterns3. International relations (they can start trade wars)Tariff Barriers tend to Restrict:1. Manufacturer’ supply sources2. Choices available to consumers3. CompetitionSix Types of Non-Tariff Barriers(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to domestic goods (local content requirements)4. Minimum import price limits5. Embargoes(2) Customs and Administrative Entry Procedures:1. Valuation systems2. Antidumping practicesRAGHAVENDRA.K.AAsst. Professor, SJBIT 9 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183. Tariff classifications4. Documentation requirements5. Fees(3) Standards:1. Standard disparities2. Intergovernmental acceptances of testing methods and standards3. Packaging, labeling, and marking(4) Government Participation in Trade:1. Government procurement policies2. Export subsidies3. Countervailing duties4. Domestic assistance programs(5) Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies6. Border taxes(6) Others:1. Voluntary export restraints2. Orderly marketing agreementsMonetary BarriersThree types of monetary barriers include:1. Blocked currency: Blockage is accomplished by refusing to allow importers to exchangeits national currency for the sellers’ currency.RAGHAVENDRA.K.AAsst. Professor, SJBIT 10 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4182. Differential exchange rates: It encourages the importation of goods the governmentdeems desirable and discourages importation of goods the government does not want byadjusting the exchange rate. The exchange rate for importation of a desirable product isfavorable and vice-versa3. Government approval: In countries where there is a severe shortage of foreign exchange,an exchange permit to import foreign goods is required from the governmentArguments for Protectionism• Excess productive capacity• Excess labor• Infant industry argument and industrialization• Natural resources conservation and environmental protection• Consumer protection• National defenseLicenses Non-automatic import licenses Restrict volume and/or quantity of imports Automatic import licenses Granted freely to importing companies Facilitate import surveillance Discourage import surges Place administrative and financial burdens on importer May raise costs by delaying shipments“Voluntary” Expansion and Restraints Voluntary import expansion Governments agree to allow imports from a particular country as result of pressurefrom another country Increases foreign access to a domestic marketRAGHAVENDRA.K.AAsst. Professor, SJBIT 11 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Increases competition and reduces local prices Voluntary export restraints Self-imposed export quotas–imposed to avoid a greater penalty Used by the importing country to protect local industriesStandards Environmental, performance, manufacturing and other standards used as barriers toimports; primarily imposed by highly industrialized countries Excessive standards can help local and international industry alike, by deterring graymarketsPercentage Requirements Requirement that a percentage of the products imported be locally produced Local content requirement Met by manipulating and/or assembling the product on the territory of the importingcountry, usually in a foreign trade zone Favoring local contribution and labor Alternatively, limiting foreign ownership to a certain percentageBoycotts, Embargos, Sanctions Boycotts– Action group calling for a ban on all goods associated with a particular companyand/or country– Target company may be representative of, or even synonymous with, its country oforigin Embargos– Prohibiting all business deals with the target country; affects third parties Sanctions– Punitive trade restrictions applied by a country or group against another country fornoncomplianceCurrency Controls Blocked currencyRAGHAVENDRA.K.AAsst. Professor, SJBIT 12 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418– Does not allow importers to exchange of local currency for currency a seller is willingto accept as payment Differential exchange rates– Favorable and less favorable exchange rates imposed on imports, based on the extentto which they are necessary and desirable– Can also be the difference between black market and government exchange rates Foreign exchange permits– Give priority to imports in the national interest– Delay access to hard currency exchange for products not deemed essential–Hierarchy of international marketing for a companyRAGHAVENDRA.K.AAsst. Professor, SJBIT 13 | P a g eCOMMITMENT TOEXPORTANALYSEDECIDEEXPORTSETIMPLEMENTINTERNAL FACTORSPRODUCTRESOURCESTARGET MARKETMARKET SEGMENTENTRY METHODMARKETING STRATEGYEXTERNAL FACTORSMARKET ENVIRONMENTCOMPETITIVE PROFILEORGANISEDEPARTMENTSUBSIDIARYJOINT VENTUREEXPORT HOUSEALLOCATERESOURCESBUDGETARRANGERESOURCESTARGET• REVIEW• MODIFY• SET NEW TARGETS
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Module-2 Global vision through marketing researchIntroductionMarketing research is traditionally defined as the systematic gathering, recording, andanalyzing of data to provide information useful in marketing decision making.International marketing research involves two additional complications.(i) Information must be communicated across cultural boundaries. That is , executive inChicago must be able to translate their research questions into terms that consumers inGuanszhou, China can understand.(ii) The environment within which the research tools are applied are often different in foreignmarkets. Rather that acquire new and exotic method of research, the international marketingresearch must develop the ability for imaginative and deft application of tried and testedtechniques in sometimes totally strange milieus.BREDTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCHThe basic difference between domestic and foreign market research is the broader scopeneeded for foreign research, necessitates by higher levels of uncertainty. Research can bedivided into three types based on information needs:(i) General information about the country, area and/or market(ii) Information necessary to forecast future marketing requirement by anticipating social,economic consumer, and industry trend within specific market or countries(iii) Specific market information used to make product, promotion, distribution, and pricedecisions and to develop marketing plans.A country’s political stability, culture attributes and geographical characteristics are someof the kind of information not ordinarily gathered by domestic marketing research.RAGHAVENDRA.K.AAsst. Professor, SJBIT 14 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418THE RESEARCH PROBLEMA marketing research study is always a compromise dictated by limits of time, cost, and thepresent state of the art. The research must strive for the most accurate and reliable informationwithin existing constraints. A key to successful research is a systematic and orderly approachto the collection and analysis of data. The research process should follow these steps:(i) Define the research problem and establish research objectives.(ii) Determine the source of information to fulfill the research objectives.(iii) Consider the costs and benefits of the research effort.(iv) Gather the relevant data from secondary or primary sources, or both.(v) Analyze, interpret, and summarize the results.(vi) Effectively communicate the results to decision makers.DEFINING THE PROBLEM AND ESTABLISHING RESEARCH OBJECTIVESThe research process should being with a definition of the research problem and theestablishment of specific research objectives. the major difficulty here is converting a series ofoften ambiguous business problem into tightly drawn and achievable research objectives.PROBLEMS OF AVAILABILITY AND USE OF SECOUNDARY DATA:- The problem of availability and use of secondary data are as follows:(i) Availability of data;-detailed data on the numbers of wholesalers, retailers,manufacturers, and facilitating services, are unavailable for many parts of the world, as are dataon population and income. Most countries simply do not have governmental agencies thatcollect on a regular basis the kind of secondary data readily available in the united state.(ii) Reliability of data;- Available data may not have the level of reliability necessary forconfident decision making for many reasons. Official statistics are sometimes too optimistic,reflecting national pride or politics rather that practical reality, while tax structures and fear ofthe tax collector often adversely affect data.(iii) Comparability of data:- Comparability of available data is the third shortcoming faced byforeign marketers. In United States, current sources of reliable and valid estimates ofRAGHAVENDRA.K.AAsst. Professor, SJBIT 15 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418socioeconomic factors and business indicators are readily available. In other countries,especially those less developed, data can be many years out of data as well as having beencollected on an infrequent and unpredictable in many of these countries makes the problem ofcurrency a vital one.(iv) Validating secondary data:- many countries have similarly high standard for thecollection and preparation of data as those generally found in the United States, but secondarydata from any source, including the United States must be checked carefully and interpretedcarefully..GATHERING PRIMARY DATA: QUANTITATIVE AND QUALITATIVE RESEARCH:- If, after seeking all reasonable secondary data sources, research questions are still notadequately answered, the market research must collect primary data.- that is , data collectedspecially for the particular research project at hand.In most primary data collection. The researchers questions respondents to determine whatthey think about some topic or how they might behave under certain conditions. Marketingresearch methods, can be grouped into two basic types: quantitative and qualitative research. Inboth methods, the marketer is interested in gaining knowledge about the market.(i) Quantitative research:- in quantitative research, usually a large number of respondents areasked to reply either verbally or in writing to structure questions using a specific responseformat or to select a response from a set of choices. Questions are designed to obtain specificresponses regarding aspects of the respondent’s behavior, intentions, attitudes, motives anddemographic characteristics. Quantitative research provide the marketer with responses that canbe presented with precise estimations.(ii) Qualitative research:- In qualitative research, if questions are asked they are almost alwaysopen-ended or in-depth, and unstructured responses that reflect the person’s thoughts andfeelings on the subjects are sought. Direct observation of consumers in choice or product usagesituations in another important qualitative approach to marketing research.Qualitative research is used in international marketing research to formulate anddefine a problem more clearly and to determine relevant questions to be examined inRAGHAVENDRA.K.AAsst. Professor, SJBIT 16 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418subsequent research. It is also used where interest is centered on gaining an understanding ofa market, rather the quantifying relevant aspects.Qualitative research is also helpful in revealing the impact of socio-cultural factors onbehavior patterns and in developing research hypotheses that can be tested in subsequent studiesdesigned to quantify the concepts and relevant relationship uncovered in qualitative datacollection.PROBLEMS OF GATHERING PRIMARY DATAMost problem in collecting primary data in international marketing research stem fromcultural differences among countries, and range from the inability of respondents tocommunicate their opinions to inadequacies in questionnaire translation.(i) Ability to communicate opinions:- The ability to express attributes and opinions about aproduct or concept depends on the respondent’s ability to recognize the usefulness and value ofsuch a product or concept.(ii) Willingness to respond;- Cultural differences offer the best explanation for theunwillingness or the inability of many to respond to research surveys. The role of the male, thesuitability of personal gender-based inquiries, and other gender-related issues can affectwillingness to respond.(iii) Sampling in Field Surveys:- The greater problem in sampling stems the lack ofdemographic data and available lists from which to drawn meaningful samples. If current,reliable lists are not available, sampling becomes more complex and generally less reliable.(iv)Language and comprehension:-(v) The most universal survey research problem in foreign countries is the language barrier.Differences in idiom and the difficulty of exact respondents answer. Equivalent concept maynot exist in all language.MULTICULTURAL RESEARCHAs companies become global marketers and seek to standardize various parts of themarketing mix across several countries, multicultural studies become more important. Acompany need to determine to what extent adaptation of the marketing mix is appropriate. ThusRAGHAVENDRA.K.AAsst. Professor, SJBIT 17 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418market characteristics across diverse culture must be compared for similarities and differencebefore a company proceeds with standardization on any aspect of marketing strategy.Multicultural research involves dealing with countries that have different languages,economies, social structure, behavior, and attitude patterns. It is essential that these differencesbe taken into account.RESEARCH ON THE INTERNETFor many countries the internet provides a new and increasingly important medium forconducting a variety of international marketing research. Indeed, a survey of marketing researchprofessionals suggests that the most important influences on the industry are the internet andglobalization. It has been suggested that there are at least seven different uses for the internet ininternational research:-(i) Online survey and buyer panels(ii) Online focus groups.(iii) Web visitor tracking(iv) Advertising marketing lists(v) E-mail marketing lists(vi) Embedded research.A vexing challenge facing international marketers will be the cross-cultural concern aboutprivacy and the enlistment of cooperative consumer and customer group. As more of the generalpopulation in countries gain access to the internet. This tool will be all can be used one ofseveral methods of collecting data offering more flexibility across countries. Today the realpower of the internet for international marketing research is the ability to easily access volumesof secondary data.There are volumes of good secondary data that can be accessed from your computer thatwill make international marketing research much easier and more efficient that it has ever been.ESTIMATING MARKET DEMANDIn assessing current product demand and forecasting future demand reliable historical dataare required. Despite of limitations, there are approaches to demand estimation that are usablewith minimum information. The success of these approaches relies on the ability of theresearcher to find meaningful substitute or approximations for the needed economic,geographic, and demographic relationships.RAGHAVENDRA.K.AAsst. Professor, SJBIT 18 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418When the desired figures are not available, a close approximation can be madeusing local production figure plus imports, with adjustments for exports and current inventorylevels. In a rapidly developing economy, extrapolated figures may not reflect rapid growth andmust be adjusted accordingly. Given the greater uncertainties and data limitations associatedwith foreign markets, two methods of forecasting demand are particularly suitable forinternational marketers:(i) Expert Opinion: - for many market estimation problems, particularly in foreign countriesthat are new to the marketer, expert opinion is advisable. In this method, expert are polled fortheir opinion about market size and growth rates. Such expert may be companies, own salesmanagers or outside consultants and government officers. the key in using expert opinion tohelp in forecasting demand is triangulation, that is, comparing estimates produced by differentsources.(ii) Analogy: - This assumes that demand for a product develops in much the same way in allcountries as comparable economic development occurs in each country.A relationship must be established between the item to be estimated and a measurablevariable. Once a know relationship is established, the estimator then attempt to draw an analogybetween the known situation and the country in question.PROBLEM IN ANALYZING AND INTERPRETING RESEARCH INFORMATIONAfter data are collected, the final steps in the research process are the analysis andinterpreting of findings in light of the stated marketing problem. There are so many factors, theresearchers must take consideration these factors and, despite their limitations, producemeaningful guides for management decisions.Accepting information at face value in foreign market is imprudent:- The meanings ofwords, the consumer’s attitude toward a product, the interviewer’s attitude, or the interviewsituation can distort research findings. Just as culture and tradition influence the willingness togive information, so they also influence the information, so they also influence the informationgiven.• News paper circulation figures• Readership and listener ship studies• Retail outlet figures• Sales volume can all be distorted through local business practice.RAGHAVENDRA.K.AAsst. Professor, SJBIT 19 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418To cope with such disparities, the foreign marketing researcher must possess three talented togenerate meaningful marketing information.• First, the researcher must possess a high degree of cultural understanding of the market inwhich research is being conducted.• Second, a creative talent for adapting research methods is necessary. A researcher in foreignmarkets often is called on to produce result under most difficult circumstances and shortdeadlines.• Third, a skeptical attitude in handling both primary and secondary data is helpful.RESPONSIBILITY FOR CONDUCTING MARKETING RESEARCHDepending on the size and degree of involvement in foreign marketing, a company inneed of foreign market research can rely on an outside foreign-based agency or on a domesticcompany with a branch within the country in question. It can conduct using its own facilities oremploy a combination of its own research force with the assistance of an outside agency.Many companies have executive specifically assigned to the research function in foreignoperations;Other companies maintain separate research department for foreign operations or assign afull-time research analyst to this activityA trend toward decentralization of the research function is apparent. In terms ofefficiency, it appears that local analysts are able to provide information more rapidly andaccurately than a staff research department.A comprehensive review of the different approaches to multi-country research suggeststhat the ideal approach is ti have local research in each country, with close coordination betweenthe client company and the local research companies.COMMUNICATING WITH DECISION MAKERSAs concert with the decision maker, it should be clearly recognized, however that gettingthe information is only half problem/job. That information must also be given to decisionmakers in a timely manner. High-quality international information system design will be anincreasingly important competitive tool as commerce continues to globalize, and resources mustRAGHAVENDRA.K.AAsst. Professor, SJBIT 20 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418be invested accordingly. At the most basic level, marketing research is mostly a matter oftalking to customers. Marketing decisions makers have questions about how best to servecustomers, and those questions are posed and answered often through the media ofquestionnaires and research agencies. Even when both managers and customers speak the samelanguage and are from the same culture, communication can become garbled in either direction.That the customer misunderstands the questions and/or managers misunderstand the answers.Throw in a language/cultural barrier, and the changes of misinformation expand dramatically.The four kind of company-agency-customer relationships possible are presented in overcomingthe cultural barriersRAGHAVENDRA.K.AAsst. Professor, SJBIT 21 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418MODULE – 3GLOBAL MARKETING MANAGEMENTPlanning and OrganizationIntroductionConfronted with increasing global competition for expanding markets, multinational companiesare changing their marketing strategies and altering their organizational structures. Their goalsare enhance their competitiveness and to ensure proper positioning in order to capitalize onopportunities in the global marketplace.In fact, the flexibility of a smaller company may enable it to reflect the demands of globalmarkets and redefine its program more quickly than larger multinationals. Acquiring a globalperspective is easy, but the execution requires planning, organizations, and a willingness to trynew approaches-from engaging in collaborative relationships to redefining the scope ofcompany operations.Global Marketing: A Old Debate and a New View Global Marketing Management thought has undergone substantial revision In the 1970s the argument was framed as “standardization vs. adaptation” In the 1980s it was “globalization vs. localization” or “Think local, act local” In the 1990s it was “global integration vs. local responsiveness” The basic issue is whether the global homogenization of consumer tastes allowed globalstandardization of the marketing mixGLOBAL MARKETINGDefinition:“marketing on a worldwide scale reconciling or taking commercial advantage of globaloperational differences, similarities and opportunities in order to meet global objectives.Why global marketing?Here are three reasons for the shift from domestic to global marketingRAGHAVENDRA.K.AAsst. Professor, SJBIT 22 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 Saturation of Domestic MarketsFor a company to keep growing, it must increase sales. Industrialized nations have, in manyproduct and service categories, saturated their domestic markets and have turned to other countriesfor new marketing opportunities. Companies in some developing economies have foundprofitability by exporting products that are too expensive for locals but are considered inexpensivein wealthier countries. World Wide CompetitionOne of the product categories in which global competition has been easy to track is in U.S.automotive sales. Three decades ago, there were only the big three: General Motors, Ford, andChrysler. Now, Toyota, Honda, and Volkswagen are among the most popular manufacturers.Companies are on a global playing field whether they had planned to be global marketers or not. E-CommerceWith the proliferation of the Internet and e-commerce (electronic commerce), if a business isonline, it is a global business. With more people becoming Internet users daily, this market isconstantly growing. Customers can come from anywhere. According to the book, “GlobalMarketing Management,” business-to-business (B2B) e-commerce is larger, growing faster, andhas fewer geographical distribution obstacles than even business-to-consumer (B2C) e-commerce.GLOBAL MARKETING EVOLUTIONRAGHAVENDRA.K.AAsst. Professor, SJBIT 23 | P a g ePHASE 1Leverage of domestic capabilities:Foreign market entryObjective:- Economies of scalePHASE 2Expansion of foreign market presenceObjective :-Economies of ScopePHASE 3Coordination of global operationsObjective :-Exploit synergiesthroughout network
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Benefits Of Global Marketing: Economies of scale in production and marketing can be important competitive advantages forglobal companies Unifying product development, purchasing, and supply activities across several countries itcan save costs Transfer of experience and know-how across countries through improved coordination andintegration of marketing activities Diversity of markets by spreading the portfolio of markets served brings an important stabilityof revenues and operations to many global firms Helps to establish relationships outside of the "political arena" Helps to encourage ancillary industries to be set up to cater the needs of the global player.Disadvantages Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to marketing mix elements Differences in brand and product development and the competitive environment Differences in the legal environment, some of which may conflict with those of the homemarket Differences in the institutions available, some of which may call for the creation of entirely newones (e.g. infrastructure) Differences in administrative procedures Differences in product placement.PLANNING FOR GLOBAL MARKETSPlanning is a systematized way of relating to the future. It is an attempt to manage theeffects of external, uncontrollable factors on the firm’s strengths, weakness, objectives andgoals to attain a desired end. Planning is the job of making things happen that might nototherwise occur.RAGHAVENDRA.K.AAsst. Professor, SJBIT 24 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418The difference between planning for a domestic company and for an international companyDomestic Planning International Planning1. Single language and nationality 1. Multilingual/multinational/multicultural factors2. Relatively homogeneous market 2. Fragmented and diverse markets3. Data available, usually accurateand collection easy3. Data collection a large task requiring significantlyhigher budgets and personnel allocation4. Political factors relativelyunimportant4. Political factors frequently vital5. Relative freedom fromgovernment interference5. Involvement in national economic plans;government influences business decisions6. Individual corporation has littleeffect on environment6. "Gravitational" distortion by large companies7. Chauvinism helps 7. Chauvinism hinders8. Relatively stable businessenvironment8. Multiple environments, many of which are highlyunstable (but may be highly profitable)9. Uniform financial climate 9. Variety of financial climates ranging from over-conservative to wildly inflationary10 Single currency 10. Currencies differing in stability and real value11 Business "rules of the game"mature and understood11. Rules diverse, changeable and unclear12 Management generallyaccustomed to sharingresponsibilities and usingfinancial controls12. Management frequently unautonomous andunfamiliar with budgets and controlsRAGHAVENDRA.K.AAsst. Professor, SJBIT 25 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Planning allows for rapid growth of the international function, changing markets, increasingcompetition, and the turbulent challenges of different national markets. The plan must be blendthe changing parameters of external country environments with corporate objectives andcapabilities to develop a sound, workable marketing program.Planning relates to the formulation of goals and methods of accomplishing them, so it is both aprocess and a philosophy. Structurally, planning may be viewed as corporate, strategic, ortactical. International Corporate Planning is essentially long term, incorporating generalizedgoals for the enterprise as a whole. Strategic planning is conducted at the highest levels ofmanagement and deals with products, capital, and research, and long and short-term goals of thecompany. Tactical planning or market planning, pertains to specific and to the allocation ofresources used to implement strategic planning goals in specific markets.The Key success of planning is evaluating company objectives, including management’scommitment and philosophical orientation to international business.THE PLANNING PROCESSGuidelines and systematic procedures are necessary for evaluating international opportunitiesand risks and for developing strategic plans :International planning process includes 4 phases:RAGHAVENDRA.K.AAsst. Professor, SJBIT 26 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418TPhase 1: Preliminary Analysis and Screening-Matching Comapany and Country NeedsA critical first step in the international planning process is deciding in which existing countrymarket to make a market investment. A company’s strengths and weakness, products,philosophies, and objectives must be matched with a country’s constraining factors and marketpotential. In the first part of the planning process, countries are analyzed and screened toeliminate those that do not offer sufficient potential for further considerations. The next step isto establish screening criteria against which prospective countries can be evaluated. Thesecriteria are ascertained by an analysis of company objectives, resources, and other corporatecapabilities and limitations. It is important to determine the reasons for enetering a foreignmarket and the returns expected from such an investment. Minimum market potential,minimum profit, return on investment, accepatable competitive levels.Phase 2: Adapting the Marketing Mix to Target Makets:When target markets are slelected, the market mix must be evaluated in light of the datagenerated in the phase 1. Incorrect decisions at this point lead to products inappropriate for theintended market or to costly mistakes in pricing, advertising, and promotion. The primary goalof phase 2 is to decide on am marketing mix adjusted to the cultural constraints imposed by theuncontrollable elements of the environment that effectively achieves corporate objectives andgoals. Phase 2 also permits the marketer to determine possibilities for applying marketingtactics across national markets.//Phase 3: Developing the Marketing PlanAt this stage of the planning process, a marketing plan is developed for the target market-whether it is a single country or a global market segment. The marketing plan begins witn asituation analysis and culminates in the selection of an entry mode and a specific actionprogram for the market. The specific plan establishes what is to be done, by whom, how it is tobe done, and when. Included are budgets and sales and profit expectations.RAGHAVENDRA.K.AAsst. Professor, SJBIT 27 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Phase 4: Implementation and ControlA “go” decision in phase 3 triggers implementation of specific plans and anticipation ofsuccessful marketing. However, the planning process does not end at this point. All marketingplans require coordination and control during the period of implementation. An evaluation andcontrol system requires performance-objective action, that is, bringing the plan back on trackshould standards of perrformances fall short. A global orientation facilities the difficult butextremely important management tasks of coordinating and controlling the complexities ofinternational marketing.FOREIGN MARKET ENTRY STRATEGIESWhen a company makes the commitment to go international, it must choose an entry strategy.This decision should reflect an analysis of market characteristics ( such as potential sales,strategic importance, cultural differences, and country restrictions) and company capabilitiesand characteristics, including the degree of near-market knowledge, marketing involvement,and commitment that management is prepared to make.Alternative Market-Entry StrategiesImport regulations may be imposed to protect health, conserve foreign exchange, serve aseconomic reprisals, protect home industry, or provide revenue in the form of tariffs.A company has four different modes of foreign market entry from which to select exporting contractual agreements strategic alliances, and direct foreign investmentRAGHAVENDRA.K.AAsst. Professor, SJBIT 28 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418EXPORTINGExporting can be either direct or indirect. In direct exporting the company sells to a customer inanother country. In contrast, indirect exporting usually means that the company sells to a buyer(importer or distributor) in the home country who in turn exports the product. The internet isbecoming increasingly important as a foreign market entry method. Direct sales, particularly forhigh technology and big ticket industrial products a direct sales force may be required in a foreigncountry. This may mean establishing an office with localor expatriate managers and staffdepending of course on the size of the market and potential sales revenues.CONTRACTUAL AGREEMENTSContractual agreements are long term, noneqauity associations between a company and anotherin a foreign market. Contractual agreements involve the transfer of technology, processes,trademarks, or human skills.•Contractual forms of market entry include:(1)Licensing: A means of establishing a foothold in foreign markets without large capitaloutlays is licensing of patent rights, trademark rights, and the rights to use technological(2)Franchising: In licensing the franchiser provides a standard package of products, systems,and management services, and the franchisee provides market knowledge, capital, and personalinvolvement in management.STRATEGIC INTERNATIONAL ALLIANCESStrategic alliances have grown in importance over the last few decades as a competitivestrategy in global marketing management. A strategic international alliance (SIA) is a businessrelationship established by two or more companies to cooperate out of mutual need and to shareRAGHAVENDRA.K.AAsst. Professor, SJBIT 29 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418risk in achieving a common objective.. SIAs are sought as a way to shore up weaknesses andincrease competitive strengths. SIAs offer opportunities for rapid expansion into new markets, access tonew technology, more efficient production and marketing costs.An example of SIAs in the airlines industry is that of the Oneworld alliance partners made up ofAmerican Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and Qantas .INTERNATIONAL JOINT VENTURESInternational joint ventures (IJVs) have been increasingly used since 1970s.JVs are used as ameans of lessening political and economic risks by the amount of the partner’s contribution to theventure. JVs provide a less risky way to enter markets that pose legal and cultural barriers thanwould be the case in an acquisition of an existing company. A joint venture is different fromstrategic alliances or collaborative relationships in that a joint venture is a partnership of two ormore participating companies that have joined forces to create a separate legal entity. Jointventures are different from minority holdings by an MNC in a local firm.Four factors are associated with joint ventures:1. They are established, separate, legal entities2. They acknowledge intent by the partners to share in the management of the Jv.3. They are partnerships between legally incorporated entities such as companies, charteredorganizations, or governments, and not between indiciduals4. Equity positions are held by each of the partners.CONSORTIAConsortia are similar to joint ventures and could be classified as such except for two uniquecharacteristics.(1)They typically involve a large number of participants.(2)They frequently operate in a country or market in which none of the participants is currentlyactive.Consortia are developed to pool financial and managerial resources and to lessen risksRAGHAVENDRA.K.AAsst. Professor, SJBIT 30 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418DIRECT FOREIGN INVESTMENTA fourth means of foreign market development and entry is direct foreign investment.Companies may manufacture locally to capitalize on low-cost labor, to avoid high import taxes,to reduce the high costs of transportation to market, to gain access to raw materials, or as ameans of gaining market entry. Firms may either invest in or buy local companies or establishnew operations facilities.Comparision of Market Entry OptionsThe following table provides a summary of the possible modes of foreign market entry:Comparison of Foreign Market Entry ModesModeConditions Favoring thisModeAdvantages DisadvantagesExportingLimited sales potential in targetcountry; little product adaptationrequiredDistribution channels close toplantsHigh target country productioncostsLiberal import policiesHigh political riskMinimizes risk andinvestment.Speed of entryMaximizes scale; usesexisting facilities.Trade barriers & tariffsadd to costs.Transport costsLimits access to localinformationCompany viewed as anoutsiderLicensing Import and investment barriersLegal protection possible intarget environment.Low sales potential in targetcountry.Large cultural distanceMinimizes risk andinvestment.Speed of entryAble to circumvent tradebarriersHigh ROILack of control over useof assets.Licensee may becomecompetitor.Knowledge spilloversLicense period is limitedRAGHAVENDRA.K.AAsst. Professor, SJBIT 31 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Licensee lacks ability to becomea competitor.JointVenturesImport barriersLarge cultural distanceAssets cannot be fairly pricedHigh sales potentialSome political riskGovernment restrictions onforeign ownershipLocal company can provideskills, resources, distributionnetwork, brand name, etc.Overcomes ownershiprestrictions and culturaldistanceCombines resources of 2companies.Potential for learningViewed as insiderLess investment requiredDifficult to manageDilution of controlGreater risk than exportinga & licensingKnowledge spilloversPartner may become acompetitor.DirectInvestmentImport barriersSmall cultural distanceAssets cannot be fairly pricedHigh sales potentialLow political riskGreater knowledge oflocal marketCan better applyspecialized skillsMinimizes knowledgespilloverCan be viewed as aninsiderHigher risk than othermodesRequires more resourcesand commitmentMay be difficult tomanage the localresources.ORGANIZING FOR GLOBAL COMPETITIONAn international marketing plan should optimize the resources committed to companyobjectives. The organizational plan includes the type of organizational arrangements to be used,and the scope and location of responsibility. Companies are usually structured around one ofthree alternatives:1. Global product divisions responsible for product sales throughout the world;RAGHAVENDRA.K.AAsst. Professor, SJBIT 32 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4182. Geographical divisions responsible for all products and functions within a given geographicalarea; or3. A matrix organization consisting of either of these arrangements with centralized sales andmarketing run by a centralized functional staff, or a combination of area operations and globalproduct management.PRODUCTS FOR CONSUMERS IN GLOBAL MARKETSPRODUCT DEVELOPMENTProduct planning, broadly defined, refers to the process of determining the length and depthof the product line to be offered in the target export markets. The length is the number ofproducts to be offered and the depth relates to the variations of a product.RAGHAVENDRA.K.AAsst. Professor, SJBIT 33 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418PRODUCT ADAPTATIONA product that is perfectly good for one market may have to be adapted for another. Therecan be many reasons for this. Physical conditions may be different. Functional requirementsmay vary from market to market. People in different places may use products differently or fordifferent type of finish than furniture used indoors. Finally tastes, levels of skill and technicaldevelopment may be different and may dictate changes in products.Adaptation may pertain to size, functions, materials, design, style, colour, tastes andstandards. Sometimes this could be done easily and at low cost but at times it may cost much.Robinson has identified thirteen environment factors which may necessitate design changes.The factors are –Environmental factor Design change1. Level of technical skills product simplification2. Level of labour cost Automation or manulization of product3. Level of literacy Remarking and simplification of product.4 . Level of income Quality and price change.5. Level of interest rates Quality and price change.6. Level of maintenance Change of tolerance7. Climatic differences Product adaptation8. Isolation improvement9. Differences in standards Recalibration of product and resizing.10. Availability of other products Greater or lesser product integration.11. Availability of materials Change in product structure and fuel.12. Power availability resizing of product.13. Special conditions Product redesign or invention.All these factors are relevant in the marketing of durable consumer goods or machinery items.RAGHAVENDRA.K.AAsst. Professor, SJBIT 34 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418PRODUCT STANDARDISATIONEven though product adaptation becomes inevitable in the case of certain products, it shouldbe realized that there is sound economics logic behind a product policy which suggestsuniformity in all markets. Terpstra has identified six factors which may favour internationalproduct standardization.1. Economies of Scale in Production: When only one standard version is marketed in all theareas, it will be possible to have larger production runs, which will result in lowermanufacturing costs.2. Economies in Product Research and development: Similarly, product standardizationwill allow recovery of all costs incurred in product research and development from theentire sales. This will reduce the recovery period as also lower the break-even point.Moreover, additional expenditure on adapting product to each individual market can beavoided.3. Economies in Marketing. When the same product is to be launched in different markets,economies can be achieved in terms of sales literature, sales force training, inventorymanagement, advertising and after-sales requirements.There are 3 marketing factors which may reinforce the standardization level:1. Consumer Mobility: Consumers are becoming increasingly more mobile andtranscontinental travel in now fairly common. A consumer who is loyal to a particularbrand in his home market is more likely to remain loyal in a foreign country as well whenthe product in question is the same.2. Made-in Image: When the name of a country is associated with a high standard of qualityin the minds of the consumers, a product manufactured in that country may enjoy apsychological premium in the foreign markets.RAGHAVENDRA.K.AAsst. Professor, SJBIT 35 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183. Impact of Technology: Industrial products generally tend to have standard andspecifications and do not require much adaptation for foreign markets unless climatic andsimilar considerations call for it.GREEN MARKETINGAt the forefront of the “green movement,” with strong public opinion and specific legislationfavoring environmentally friendly marketing and products.•Green marketing is a term used to identify concern with the environmental consequences of avariety of marketing activities.•The designation that a product is “environmentally friendly” is voluntary, and environmentalsuccess depends on the consumer selecting the eco-friendly product•In some countries each level of the distribution chain is responsible for returning all packaging,packing, and other waste materials up the chainMARKETING OF SERVICEAdvice regarding adapting products for international consumer markets also applies to adaptingservices or intangible productsHowever, many consumer services are distinguished by four unique characteistics:1.intangibility,2.inseparability,3.heterogeneity, and4.perishabilityMost services are inseparable and require production and consumption to occur almostsimultaneously; thus, exporting is not a viable entry method for them.Globally, consumer services marketers face the following four barriers:•protectionism,•controls on transborder data flows,RAGHAVENDRA.K.AAsst. Professor, SJBIT 36 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418•protection of intellectual property, and•cultural requirements for adaptationMODULE 4- PRODUCTS AND SERVICES FOR CONSUMERSQUALITY:The ability of a product or service to meet customer needs. It can be defined on 2dimensions, Market perceived quality Performance qualityBoth are important but consumer perception of a quality product often has to do more withmarket perceived quality. It is also measured in many industries by objective third parties.Maintaining performance quality is critical, but frequently a product that leaves the factory atperformance quality is damaged as it passes through the distribution chain.A product may have to change in a number of ways to meet the physical or mandatoryrequirements of a new market, ranging from simple package changes to total redesign of thephysical core product.Green marketing is a term used to identify concern with the environmental consequencesof a variety of marketing activities.RAGHAVENDRA.K.AAsst. Professor, SJBIT 37 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Quality is associated with customer satisfaction. It is a means to an end.Q: QUEST FOR EXCELLENCE.U: UNDERSTANDING CUSTOMER’S NEEDS.A: ACTION TO ACHIEVE CUSTOMER’S APPRECIATION.L: LEADERSHIP.I: INVOLVING ALL PEOPLE.T: TEAM SPIRIT TO WORK FOR A COMMON GOAL.Y: YARDSTICK TO MEASURE PROGRESS.PRODUCTS AND CULTURE:A product is the sum of physical and psychological satisfactions it provides the user. Aproduct is more than a physical item. It is a bundle of satisfaction that the buyer receives. Aproduct’s physical attributes generally are required to create its primary function. The meaningand value imputed to the psychological attributes of a product can vary among cultures and areperceived as negative or positive.To maximize the bundle of satisfaction received and to create positive product attributesrather than negative ones, adaptation of the nonphysical features of a product. The adoption ofsome products by consumers can be affected as much by how the product concept conforms tonorms, values, and behavior patterns as by its physical or mechanical attributes.An important first step in adapting a product to a foreign market is to determine the degreeof newness as perceived by the intended market. Any idea perceived as new by a group ofpeople is an innovation. Product diffusion is the process by which innovation spreads. A criticalfactor in the newness of a product is its effect on established patterns of consumption andbehavior.RAGHAVENDRA.K.AAsst. Professor, SJBIT 38 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Analyzing the 5 characteristics of an innovation can assist in determining the rate ofacceptance or resistance of the market to a product. A product’s, Relative advantage – The perceived marginal value of the new product relative to the old. Compatibility – With acceptable behavior, norms, values. Complexity – The degree of complexity associated with product use. Trial ability – The degree of economic and/or social risk associated with product use. Observability – The ease with which the product benefits can be communicated.After the degree of its acceptance or resistance.ANALYZING PRODUCT COMPONENTS FOR ADAPTATION:A product is a multidimensional, and the sum of all its features determines the bundle ofsatisfactions received by the consumer.RAGHAVENDRA.K.AAsst. Professor, SJBIT 39 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Core Component:It consists of the physical product, the platform that contains the essential technology andall its design and functional features. It is on the product platform that product variations can beadded or deleted to satisfy local differences. Alterations in design, functional features, flavors,color can be made to adapt the product to cultural variations. Functional features can be addedor eliminated depending on the market.Packaging Component:Includes style features, packaging, labeling, trademarks, brand name, quality, price of aproduct’s package. Packaging component frequently require both discretionary and mandatorychanges. Care must be taken to ensure that corporate trademarks and other parts of thepackaging component do not have unacceptable symbolic meanings. Labeling law create aspecial problem for companies selling products in various markets with different labeling lawsand small initial demand in each.RAGHAVENDRA.K.AAsst. Professor, SJBIT 40 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Support Services Component:Includes repair and maintenance, instructions, installations, warranties, deliveries and theavailability of spare parts. Repair and maintenance are difficult in developing countries.The product component model can be a useful guide in examining adaptationrequirements of products destined for foreign markets. A product should be carefully evaluatedon each of the 3 components for mandatory and discretionary changes that may be needed.MARKETING CONSUMER SERVICES GLOBALLY:Products are often classified as tangible, whereas services are intangible. The intangibilityof services results in characteristics unique to a services. It is inseparable, heterogeneous, andperishable. A service can be marketed as a B2B or consumer service.There are various barriers to entering global markets for consumer services:-• ProtectionismRAGHAVENDRA.K.AAsst. Professor, SJBIT 41 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• Restrictions on Transborder data flows• Protection of Intellectual Property• Cultural Barriers and AdaptationBRANDS IN INTERNATIONAL MARKETS:A GLOBAL BRAND is defined as the worldwide use of a name, term, symbol, design orcombination thereof intended to identify goods or services of one seller and to differentiatethem from those of competitors. A successful brand is the most valuable resource a companyhas. Brand image is at the very core of business identity and strategy.The brands are Kodak, Sony, Coca-cola, Toyota, Marlboro, Kellogg, Levi’s, Caterpillar, Nestle,Mars, P&G, Gillette, and BMW.A global brand gives a company a uniform worldwide image that enhances efficiency andcost savings when introducing other products associated with the brand name, but not allcompanies believe a single global approach is the best.Country – of – origin (COE) can be defined as any influence that the country ofmanufacture, assembly or design has on a consumer’s positive or negative perception of aproduct.PRODUCTS AND SERVICES FOR BUSINESS:B2B marketing requires close attention to the exact needs of customers. Basic differencesacross various markets are less than for consumer goods, but the motives behind purchasesdiffer enough to require a special approach. Global competition has risen to the point thatindustrial goods marketers must pay close attention to the level of economic and technologicaldevelopment of each market to determine the buyer’s assessment of quality. Companies thatadapt their products to these needs are the ones that should be the most effective in the marketplace.The demand for products and services in B2B markets is by nature more volatile than inmost common markets. The demand also varies by level of economic development and thequality of educational systems across countries. Ultimately, product or service quality is definedby customers, but global quality standards such as ISO 9000 are being developed that provideRAGHAVENDRA.K.AAsst. Professor, SJBIT 42 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418information about company’s attention to matters of quality. After sale services are hugelyimportant aspect of industrial sales. The demand for other kinds of business services isburgeoning around the world. Trade shows are an especially important promotional medium inB2B marketing.Stages of Economic Development:TOP 20 GLOBAL BRANDS:1. COCA-COLA2. MICROSOFT3. IBMRAGHAVENDRA.K.AAsst. Professor, SJBIT 43 | P a g eThe age of massconsumptionDrive tomaturity Take offPreconditionsfor take offThe traditionalsocietyStages ofEconomicDevelopment
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. GE5. INTEL6. NOKIA7. DISNEY8. MC DONALD’S9. MARLBORO10. MERCEDES11. FORD12. TOYOTA13. CITIBANK14. HP15. AMERICAN EXPRESS16. CISCO17. AT&T18. HONDA19. GILLETTE20. BMWModule –5IntroductionRAGHAVENDRA.K.AAsst. Professor, SJBIT 44 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418DIRECT AND INDIRECT EXPORTINGExporting can be either direct or indirect:Direct exporting:The company sells to a customer in another county. This is the most commonapproach employed by companies taking their international step because the risksof loss can be minimized. In contrast,In direct exporting:Usually means that the company sells to buyer in the home country who inturn exports the product. Customer include large retailers such as wal mart orsears, wholesaler supply houses, trading companies, and other that buy to supplycustomers abroadex: America’s largest exporterLICENCING:A means of establishing a foothold in foreign markets without large capitaloutlays is licensing patent right, trademarks right, and the rights to usetechnological processes are granted in foreign licensing. It is a favorite strategyfor small and medium sized companies, although it is by no means. Commonexamples of industries that use licensing arrangements in foreign markets aretelevision programming and pharmaceuticals. Not many confine their foreignoperation to licensing alone it is generally viewed as a supplement to exporting ormanufacturing rather than the only mans of entry into foreign market.Although licensing may be the least profitable way of entering a market, therisks and headaches are fewer than for direct investments. It is a legitimate meansRAGHAVENDRA.K.AAsst. Professor, SJBIT 45 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418of capitalizing on intellectual property in a foreign market, and such agreementscan also benefit the economies of target countries.FRANCHISING:Is a rapidly growing form of licensing in which the franchising provides astandard package of products, systems, and management services, and thefranchisee provides market knowledge, capital and personal involvement inmanagement. The combination of skills permits flexibility in dealing with localmarket conditions and yet provides the parent firm with a reasonable degree ofcontrol. The franchisor can follow through on marketing of the products to thepoint of final sale.INTERNATIONAL JOINT VENTURE:International joint ventures as a means of foreign market entry haveaccelerated sharply since the 1970’s. Besides serving as a means of lesseningpolitical and economic risk by the amount of the partner’s contribution to theventure. IJV provide a less risk way to enter markets that pose and culturalbarriers than would be the case in an acquisition of an existing company.Distribution channels• Getting the product to the target market can be a costly process• Forging an aggressive and reliable channel of distribution may be the mostcritical and challenging task facing the international firms• Each market contains a distribution network with many channel choices whosestructures are• In some markets the distribution structure is multi-layered, complex, inefficient,even strangeRAGHAVENDRA.K.AAsst. Professor, SJBIT 46 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• Competitive advantage will reside with the marketer best able to build the mostefficient channelChannel of distribution or marketing channels is defined as the whole set ofinterrelated marketing agencies which are involved in making the goodsavailable form the producer to the consumers.Channel of distribution structures• The distribution process includes the physical handling and distribution ofgoods, the passage of ownership (title), and the buying and selling negotiationsbetween producers and middlemen and between middlemen and customers• Each country market has a distribution structure through which goods passfrom producer to use• Within this structure are a variety of middlemen whose customary functions,activities, and services reflect existing competition, market characteristics,tradition, and economic development• Channel structures range from those with little developed marketinginfrastructure such as those found in many emerging markets to the highlycomplex, multi-layered system found in JapanJapanese distribution structure• a structure dominated by many small middlemen dealing with many smallretailers—high density of middlemen,• channel control by manufacturers,• a business philosophy shaped by a unique culture, and• laws that protect the foundation of the system—the small retailerRAGHAVENDRA.K.AAsst. Professor, SJBIT 47 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Distribution in Japan has long been considered the most effective non-tariffbarrier to the Japanese market .The Japanese distribution structure is differentenough from its U.S. or European counterpartsIt has four distinguishing features:• a structure dominated by many small middlemen dealing with many smallretailers• channel control by manufacturers• a business philosophy shaped by a unique culture• laws that protect the foundation of the system – the small retailer.Channel factor:Manufacturers depend on wholesalers for a multitude of services to othermembers of the distribution network. Financing , physical distribution ,warehousing , inventory , promotion and payment collection are provided toother channel members by wholesalers . the system works becausewholesalers and all other middlemen downstream are tied to manufacturers bya set of practices and incentives designed to ensure strong marketing supportfor their product and to exclude rival competitors from the channel .wholesalertypically act as agent middlemen and extend the manufacturers controlthrough the channel the following element1. Inventory financing :- sales are made on consignment with credit extendingfor several months .2.Cumulative rebates :- rebates are given annually for any number of reasonsincluding quantity purchases , early payments , achieving sales target ,performing services , maintaining specific inventory levels , participating inRAGHAVENDRA.K.AAsst. Professor, SJBIT 48 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418sales promotions , remaining loyal to suppliers , maintaining manufacturersprice policies , cooperating and contributing to overall success.3. Merchandise returns :- all unsold merchandise may be returned to themanufacturers.4. Promotional support :- intermediaries receive a host of displays ,advertising layouts , management educations programs , in store demonstrationsand other dealer aids that strengthen the relationship between the middlemenand the manufacturer.Distribution patternsEven though patterns of distribution are in a state of change and newpatterns are developing , international marketers need a general awareness ofthe traditional distribution base . The “traditional “ system will not changeovernight and vestiges of it will remain for years to come .Nearly everyinternational firm is forced by the structure of the market to use at least somemiddlemen in the distribution arrangement.The following description should convey a sense of the variety of distributionpatterns.General patterns : generalizing about internal distribution channel patterns ofvarious countries is almost as difficult as generalizing about behaviors patternsof people. Despite similarities , marketing channels are not the samethroughout the world . marketing methods taken for granted in the united statesare rare in many countries.• Middlemen Services:- The service attitudes of people in trade vary sharplyat both the retail and whole sale levels from country to country .RAGHAVENDRA.K.AAsst. Professor, SJBIT 49 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• Line Breadth:- every nation has a distinct pattern relative to the breadth ofline carried by wholesalers and retailers . The distribution system of somecountries is characterized by middlemen who carry or can get everything inother every middlemen is a specialist dealing only in extremely narrow lines.Government regulation in some countries limit the breadth of line that can becarried by middlemen and licensing requirement to handle certainmerchandise are not uncommon.• Costs and Margins :- cost levels and middlemen margins vary widelyfrom country to country depending on the level of competition , service offered, efficiencies for inefficiencies of scale and geographic and turnover factorsrelated to market size ,purchasing power , tradition and other basicdeterminants.• Channel Length :-some correlation may be found between the stage ofeconomic development and the length of marketing channels . In everycountry , channels are likely to be shorter for industrial goods and high pricedconsumer goods than for low priced products. In general , there is an inverserelationship between channel length and the size of the purchase .combinationswholesaler – retailer or semi wholesaler exist in many countries adding one ortwo link to the length of the distribution chain.• Nonexistent Channels : one of the things companies discover aboutinternational channel of distribution patterns is that in many countries adequatemarket coverage through a simple channel of distribution is nearly impossible.In many instances , appropriate channels do not exist .• Blocked Channels :- International marketers may be blocked from using thechannel of their choice. Blockage can result from competitors alreadyestablished lines in the various channel or from trade associations or cartelshaving closed certain channels.• Stocking :- the high cost of credit , the danger of loss through inflation , a lackof capital and other concerns cause foreign middlemen in many countries toRAGHAVENDRA.K.AAsst. Professor, SJBIT 50 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418limit inventories this often results in out of stock conditions and sales lost tocompetitors.• Power and Competition :-distribution power tends to concentrate in countrieswhere a few large wholesalers distribute to a mass of small middlemen . largewholesalers generally finance middlemen downstream . the strong allegiancesthey command from their customers enables them to effectively blockexisting channels and force an outsiders to rely on less effective and morecostly distribution .• Distribution patterns are always evolving and new patterns are developing andmarketing channels are not the same throughout the worldSome general distribution patterns that are similar globally include:Retail Patterns• Retail Size Patterns :- the extremes in size in retailing are similar to thosethat predominate in wholesaling. The retail structure and the problem itengenders cause real difficulties afro the international marketing firm sellingconsumer goods .large dominant retailers can be sold direct , but there is noadequate way to directly reach small retailers who in the aggregate handle agreat volume of sales.• Direct Marketing :-selling directly to the consumer through the mail , bytelephone or door to door is often the approach of choice market withinsufficient or underdeveloped distribution systems. The approach of coursealso works well in the most affluent market.• Resistance to Change :- effort to improve the efficiency of the distributionsystem new types of middlemen and other attempts to change traditional waysas typically viewed as threatening and are thus resisted .• Alternative Middleman Choices :- A marketers options range fromassuming the entire distribution activity to depending on intermediaries forRAGHAVENDRA.K.AAsst. Professor, SJBIT 51 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418distribution of the product . channel selection must be given considerablethought because once initiated it is difficult to change and if provesinappropriate , future growth of market share may be affecteda) Agent middlemen ;- represent the principal rather than themselvesb) merchant middlemen:- take title to the goods and buy and sell on their ownaccount.• International retailing shows even greater diversity in its structure than doeswholesalingSome general retailing patterns include:Home-Country Middlemen :- located in the producing firms country providemarketing services from a domestic base. By selecting domestic middlemen asintermediaries in the distribution process , companies relegate foreign marketdistribution to others. Manufacturers’ Retail Stores :- An important channel of distribution for alarge number of manufacture is the owned or perhaps franchised. Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , Toys“R” Us and Wall–mart expand their global coverage , they are becoming amajor domestic middlemen for international markets. Export Management Companies :- is an important middlemen for firmswith relatively small international volume or for those unwilling to involvetheir own personnel in the international function. Trading Companies:- trading companies have a long and honorable historyas important intermediaries in the development of trade between nation.Trading companies accumulate , transport and distribute goods from manycountries .RAGHAVENDRA.K.AAsst. Professor, SJBIT 52 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418 U.S. Export Trading Companies :-the ETC act allows producers of similarproducts to form export trading companies .A major goal of the ETC Act wasto increase U.S exports by encouraging more efficient export trade services toproducers and suppliers in order to improve the availability of trade financeand to remove antitrust disincentives to export activities. Complementary Marketers :-companies with marketing facilities orcontacts in different countries with excess marketing capacity or a desire for abroader product line sometimes take on additional lines for internationaldistribution although the formal name for such activities is complementarymarketing. Manufacturer’s Export Agent :- is an individual agent middlemen or anagent middlemen firm providing a selling service for manufactures. Home-country middlemen, or domestic middlemen, provide marketingservices from a domestic base and find foreign markets for products for localmanufacturersFrequently used types of domestic intermediaries include:Home-Country Brokers:- the term broker is a catchall for a variety ofmiddlemen performing low cost agent services.Buying Offices :- a variety of agent middlemen may be classified simply asbuyers or buyer for export. Their common denominator is a primary function ofseeking and purchasing merchandise on request from principals as such theydo not provide a selling serviceSelling Groups:- several types of arrangement have developed in whichvarious manufactures or producer cooperate in a joint attempt to sell theirRAGHAVENDRA.K.AAsst. Professor, SJBIT 53 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418merchandise abroad. This may take the form of complementary exporting or ofselling to a combined business such a Webb –Pomerene export association.Webb-Pomerene Export Associations:-are another major form of groupexporting. WPEAs Act of 1918 made it possible for American business firms tojoin forces in export activities without being subject to the Sherman antitrust .WPEAs cannot participate in cartesl or other international agreement thatwould reduce competition in the united states but can offer four major benefits1. reduction of export costs2. demand expansion through promotion3. trade barriers reductions4. improvement of trade terms through bilateral bargaining .Foreign Sales Corporation :- is a sales corporation set up in a foreign country orU.S possession that can obtain a corporate tax exemption on a portion of theearnings generated by the sale or lease of export property.Export Merchants :- are essentially domestic merchants operating in foreignmarket . as such they operate much like the domestic wholesaler . specificallythey purchase goods from a large number of manufacturers , ship them toforeign countries and take full responsibility for their marketing .Export Jobbers:- deal mostly in commodities they do not take physicallypossession of goods but assume responsibility for arranging transportation.Foreign-Country Middlemen :- using foreign country middlemen moves themanufacturers closer to the market and involves the company more closely withproblems of language , physical distribution , communications and financing .foreign middlemen may be agents or merchants , they may be associated withthe parent company to varying degrees or they may be temporarily hired forRAGHAVENDRA.K.AAsst. Professor, SJBIT 54 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418special purposes. Some of the more important foreign country middlemen aremanufacturers representatives and foreign distributors.Manufacturer’s Representatives:- are agent middlemen who take responsibilityfor a producers goods in a city , regional market area entire country or severaladjacent countries . when responsible for an entire country the middlemen isoften called a sole agent.Distributors :- A foreign distributor is a merchant middleman. This intermediaryoften has exclusive sales right in a specific country and works in close co-operation with the manufacturer . the distributor has a relatively high degree ofdependence on the supplier companies and arrangements are likely to be on along run continuous basis.Foreign-Country Brokers:- are agents who deal largely in commodities andfood products . the foreign brokers are typically part of small brokerage firmsoperating in one country or in a few contiguous countries.Managing Agents and Compradors :- A managing agent conducts businesswithin a foreign nation under an exclusive contract arrangement with the parentcompany. The managing agent in some cases invests in the operation and inmost instances operates under as contract with the parent company.Dealers :- generally speaking anyone who has a continuing relationship with asupplier in buying and selling goods is considered a dealer . more specificallydealers are middlemen selling industrial goods or durable consumer goodsdirect to customers they are the last step in the channel of distribution.Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goodsdirectly from the manufacturers and sell to wholesalers and retailers and toindustrial customers . large and small wholesalers and retailers engage in directRAGHAVENDRA.K.AAsst. Professor, SJBIT 55 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418importing for their own outlets and for redistribution to smaller middlemen . thecombination retailer wholesaler is more important in foreign countries than inthe united states. It is not uncommon to find large retailers wholesaling goods tolocal shops and dealers.• Some of the more important foreign-country middlemen, who find marketsfor foreign manufacturers include:Factors Affecting Choice of ChannelsThe international marketers needs clear understanding of market characteristicand must have established operating policies before beginning the selection ofchannel distribution . the following points should be addressed prior to theselection process• Identify specific target markets within and across countries.• Specify marketing goals in terms of volume, market share, and profit marginrequirements.• Specify financial and personnel commitments to the development ofinternational distribution.• Identify control, length of channels, terms of sale, and channel ownershipOnce these points are established , selecting among alternatives middlemenchoices to forge the best channel can begin . marketers must get their goodsinto the hands of consumers and must choose between handling alldistribution or turning part or all of it over to various middlemen . Distributionchannels vary depending on target market ,competition and availabledistribution intermediaries.1. Cost :- There are two kinds of channel costa. The capital or investment cost of developing the channel andRAGHAVENDRA.K.AAsst. Professor, SJBIT 56 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418b. The continuing cost of maintaining it.The later can be in the form of direct expenditure for the maintenance of thecompany selling force or in the form of margins , markup or commissions ofvarious middlemen handling the goods.2. Capital requirement :- the financial ramifications of a distribution policy areoften overlooked .critical element are capital requirement and cash flowpatterns associated with using a particular type of middlemen .3. Control ;- the more involved a company is with the distribution , the morecontrol its exerts . A company own sales force affords the most control , butoften at a cost that is not practical.4. Coverage :- another major goal is full market coverage to gain the optimumvolume of sales obtainable in each market , secure a reasonable market share.And attain satisfactory market penetration .coverage may be assessed bygeographic or market segments or both .5. Character :- the channel of distribution system selected must fit the characterof the company and the markets in which it is doing business. Some obviousproduct requirement often the first considered relate to perishability or bulk ofthe product , complexity of sale , sales service required and value of theproduct.6.Continuity :- channel of distribution often pose longevity problems . mostagent middlemen firms tend to be small institution when one individual retiresor moves out of a line of business the company may find it has lost itsdistribution in that area. Wholesaler and especially retailers are not noted fortheir continuity in business either. Most middlemen have little loyalty to theirvendors.RAGHAVENDRA.K.AAsst. Professor, SJBIT 57 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418WarehousingThe borrowing of funds by a retail lender on a short-term basis using permanentmortgage loans as collateral. This form of interim financing, called a warehouseloan, is used to raise funds to make home mortgages and carry them until themortgages are packaged and sold "out of the warehouse" to an investor. Proceedsfrom the sale are used to reduce the warehouse loan.Warehousing constitutes an important segment of the physical distributionmanagement . the need for warehousing in a corporate unit may arise for thefollowing reasons Seasonality :- certain products , especially agro- based items , are producedwith in a limited season , while these are sold throughout the year. Variation in demand :- there are items for which very high demand isexperienced during a short period e.g demand for sugar during dewali in India .To meet additional demand , stocks will to have to be built up and stored overa period of time. Speculation :- companies tend to maintain a large inventory of itemswhose prices are highly volatile . this practice is essentially followed as ahedge against price variations. Product conditioning :- some products are to be stored in order to attainthe required level of quality . for example ripening of bananas is carried outunder controlled temperature conditions after they are picked.Necessity of warehousing for export marketingWare housing operations become necessary especially for two reasons so faras export marketing is concerned .these areRAGHAVENDRA.K.AAsst. Professor, SJBIT 58 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• Break bulk:- break bulk operations are called for where the manufactureships the goods in bulk and then repacks them into small consignmentaccording to the orders received form individuals customers . In exportoperations this system may prove to be a cost saving device especially whenindividual orders are so small that the minimum space stipulation of theshipping lines cannot be fulfilled . shipping lines generally indicate theminimum space that must be booked if the shippers requirements is smallerthan the minimum , he has to pay the freight as fixed for the minimum space.• Re – assembly:- re assembly operations are also critically important formany export items , especially for engineering goods . in order to saveshipping space ,many items are exported on completely knocked downcondition .in fact there are certain countries where the government insist thatthe goods must be imported in CKD conditions where ever shipment s are madeon this basis the exporter will need warehousing facility in the importingcountry where the goods can be re- assembled.Air transportationAir transportation provide only world wide transportation network which makethe essential for global business tourism .it play vital role in facilitating economicgrowth particularly in developing country.Air transport provides significant social benefits• Air transport improves quality of life by broadening people’s leisure and culturalexperiences. It provides a wide choice of holiday destinations around the worldand an affordable means to visit distant friends and relatives.RAGHAVENDRA.K.AAsst. Professor, SJBIT 59 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• Air transport helps to improve living standards and alleviate poverty, forinstance, through tourism.• Air transport may provide the only transportation means in remote areas,thus promoting social inclusion.• Air transport contributes to sustainable development. By facilitating tourism andtrade, it generates economic growth, provides jobs, increases revenues from taxes,and fosters the conservation of protected areas.• The air transport network facilitates the delivery of emergency and humanitarianaid relief anywhere on earth, and ensures the swift delivery of medical suppliesand organs for transplantation.Surface V/s air transportThe choice regarding modes of transport in relation to export marketingrevolves around the appropriateness of transporting goods by ship or by air,assuming that both types of transport systems are available to the shipper , thechoice should depend on the estimates he makes as to the total costs ofdistribution by ship and air .it is found that the important elements of costsbehave in the following fashion for ocean and air transport.Cost of element airtransportSurface transportFreight High LowDepot costs Low HighFixed inventory Low HighPackaging Low HighInsurance Low HighAdvantages of air transport• Low inventory carrying costs• Decreased capital costs of goods in transitRAGHAVENDRA.K.AAsst. Professor, SJBIT 60 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418• less packing lowers cost and reduces chargeable weight• related surface transport costs are reduced• the loss due to rough handling and pilferage is reduced to the minimum• breakage is negligible• deterioration is avoided• obsolescence is eliminated• insurance premium is reduced.• Costs related to administration ,ordering etc are minimized.INTERNATIONAL ADVERTISING1. Global Mass Media Advertising is a powerful tool for any business .2. Advertising function is to interpret or translate the qualities of products & Services interms of consumer wants, needs, desires and aspirations the emotional appeals, symbols,persuasive approaches and other characteristics of an advertising must coincide with culturalnorms if the ad is to be effective.3. Of all the elements of the Marketing Mix, decisions involving Advertising are those mostoften affected by cultural differences among country Markets.EFFECTS OF GLOBAL ADVERTISING ON ECONOMY1. Global Advertising expenditures has slowed with the global economy.2. Estimates in 2003 in neighboring countries was $400 to $500 billion. A 4% annual growthrate is predicted through 2006.3. Some of the biggest companies doing Global Advertisinga) P&G g) Daimler Chryslerb) GE h) Volkswagenc) Unilever i) L’Oreald) Ford Motor Co. j) Walt Disney Co.e) Toyota Motor Co. k) Honda Motor Co.f) AOL Time Warner l) Sony Corp.RAGHAVENDRA.K.AAsst. Professor, SJBIT 61 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4184. There are seven steps involved in Marketing Research. They are:a) Performing Marketing Researchb) Specify the goals of the communicationc) Develop the most effective message for the market segments selected.d) Select effective mediae) Compose And secure a budget.f) Execute the campaigng) Evaluate the campaign relative to the goals specified.5. Advertising involves Integrated Marketing communications. It is totally composed of :a) Advertising e) Direct Sellingb) Sales Promotion f) Public Relationsc) Trade Showsd) Personal SellingSALES PROMOTIONS IN INTERNATIONAL MARKETS1. Sales Promotions are marketing activities that stimulate consumer purchases andimprove retailer or middlemen effectiveness and co-operation.2. sales promotion devices area) Cents off f) Product tie-insb) In Store Demos g) Contestsc) Samples h) Sweepstakesd) Coupons i) Sponsership of Special Events such ase) Gifts Concerts & Fairs3. Sales Promotions are short term efforts directed to the consumer or retailer toachieve such Objectives as Consumer-Product trial or immediate purchase, ConsumerIntroduction to the store, gaining retail Point-of-Purchase displays etc.4. Sales Promotions constitute the major portion of the promotional effort in rural & lessaccessible parts of the marketRAGHAVENDRA.K.AAsst. Professor, SJBIT 62 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418E.g. In parts of Latin America, a portion of the Advertising-Sales Budget for both Pepsi-Cola &Coca-Cola is spent on carnival trucks which makes frequent trips to outlaying villages topromote their products.5. The success of Sales Promotion depends on local Adaptation.6. Responses to Promotions can vary across Promotional types & culture.7. Effective Sales Promotion can enhance the Advertising & Personal Selling effortsAnd in some instances, may be effective substitutes when environmentalConstraints prevent full utilization and advertising.8. Major constraints are imposed by local laws, which may not permit premiumsor free gifts to be given.INTERNATIONAL PUBLIC RELATIONS1. Creating good relationships with the popular press & other media to help companiescommunicate messages to their publics- customers, the general public & government regulatorsis the role of Public Relations(PR).2. The job consists of not only encouraging the press to cover positive stories aboutcompanies, but also of managing unfavorable rumours, stories & Events.GLOBAL ADVERTISING & THE COMMUNICATION PROCESSCreative Challenges1. A message may not get through because of media inadequacy, the message may not bereceived by the intended audience but not be understood because of cultural interpretations, orthe message may reach the intended audience & be understood but have no effect because themarketer did not correctly assess the needs & wants or the thinking process of target market.2. communication process consists ofa) Sourceb) Encodingc) A message Channeld) Decodinge) Receiverf) FeedbackRAGHAVENDRA.K.AAsst. Professor, SJBIT 63 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418g) Noise3. Communication process is not simple because- a different cultural context can increase theprobability of misunderstanding, psychological overlap between the sender & the receiver.4. Legal constraints5. Legal Limitations6. Cultural Diversity7. Media Limitations8. Production & cost LimitationsSPECIFIC MEDIA INFORMATION1. Newspaper2. Magazines3. Radio & Television4. Satellite & Cable T V5. Direct Mail6. The Internet7. Other MediaPERSONAL SELLING1. Happens via Sales Person2. In the eyes of most of the customer, the sales person is the company3. The sales Representative is the final link in the culmination of a company’s marketing &Sales effort.4. Growing global competition coupled with the dynamic & complex Nature of internationalbusiness increases both the need & the means for closer ties with the both customers &suppliers. Relationship marketing built on effective communication between the seller & thebuyer, focuses on building long term alliances rather than treating each sales as a one timeevent.5. Advances in IT are changing the nature of personnel selling & sales management6. Following are the steps to manage the sales force:a) Designing the Sales ForceRAGHAVENDRA.K.AAsst. Professor, SJBIT 64 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418b) Recruiting Marketing & Sales Personnel( Sales Personnel include Expatriates, LocalNationals & Third Country Nationals. Virtual Expatriates are the new breed of Expatriatesdeveloped through Internet)c) Selecting Sales & Marketing Personneld) Training for International Marketinge) Motivating Sales Personnel.f) Evaluating & Controlling Sales representatives.Module 7- Institutional Infrastructure for Export Promotion in IndiaRAGHAVENDRA.K.AAsst. Professor, SJBIT 65 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4181. Explain about institutional infrastructure for export promotion in India?The Government of India has set up several institutions whose main functions areto help an exporter in his work. It would be advisable for an exporter to acquaint himselfwith these institutions and nature of help that they can render to him so that he caninitially contact them and have a clear picture of what help he can expect of theorganized sources in his export effort.Institutions engaged in export effort fall in six distinct tiers.1. Department of Commerce of the Ministry of Commerce and Industry2. Deliberative and consultative organizations3. Commodity specific organizations4. Service Institutions5. Government trading organizations6. Agencies for export promotion at the State LevelExport Promotion BoardThere is an export promotion board under the Chairmanship of the cabinetsecretary to provide policy and infrastructural support through greater coordinationamong ministries concerned for boosting the growth of exports. All ministries directlyconnected with facilitating foreign trade are represented on this board by theirsecretaries.Export Promotion CouncilThere are 19 Export Promotion Councils covering a number of products. Thesecouncils advice the government regarding current developments in the export sector andmeasures necessary to facilitate future growth in exports, assist manufactures andexporters to overcome the various constraints and extend to them the full range ofservices for the development of market overseas. The councils also perform certainregulatory functions as they have the power to de – register errant or defaultingexporters.RAGHAVENDRA.K.AAsst. Professor, SJBIT 66 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Marine Products Export Development AuthorityThe marine products export development authority started functioning inSeptember 1972. the authority serves the seafood industry right from fishing toprocessing, packaging, storing, transporting and marketing to the different marketers allover the world. The authority is entrusted with the task of ensuring a healthy growth ofthe industry through judicious regulation, conservations and control. Importers andexporters can obtain any information relating to the markets and the products from theMarine Export Development Authority.Agricultural and Processed Food Products Export Development AuthorityWith a view to increase the exports from agricultural sector, council has beenestablished. It will coordinate its activities with national bodies like Horticulture Boardand State Governments for generating production for exports and with research institutefor development of value added products.India Trade Promotion Organization (ITPO)It has become into effect from 01-01-1992 with the main objective of promotingexports and imports and up gradation of technology through the medium of fairs to beheld in India and abroad, to undertake publicity through the print and electronic media toassist Indian companies in product development, to organize programmes, buyer sellermeets, contact promotion programmes for specific products in specific market.National Center for Trade Information (NCTI)It’s a joint venture of ITPO and National Informatics Center. It was established toprovide the latest trade, business and economic information to help Indian and foreignenterprises in the promotion of the trade from and to India.Export Credit Guarantee Corporation (ECGC)RAGHAVENDRA.K.AAsst. Professor, SJBIT 67 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418For minimizing the risk element in export business and to facilitate the flow offinance from the banks to exporters, there is an Export Credit Guarantee Corporation.Export – Import BankIt was established for the purpose of financing, facilitating and promoting foreigntrade of India. The bank is the principal financial institution in India for coordinating thework of institutions engaged in financing export and import trade.Federation of Indian Export OrganisationsAn apex body called the Federation of Indian Export Organisations wasestablished in order to make a common and coordinating platform for the various exportorganizations.Department of Commercial Intelligence and StatisticsIt is located at Kolkata. Its functions comprise:1. commercial intelligence2. collection, compilation and publication of the statistics of trade, tariffs andshipping.India’s Trade Policy2. Explain about India’s Trade Policy?• Trade policy of a country refers to the set of policies which govern the externalsector of its economy.• The twin objectives of India’s trade policy have been to promote exports and torestrict the level of imports to the level of foreign exchange available to the government.• The basic objective of trade policy revolves around the instruments and techniquesof export promotion and import management.RAGHAVENDRA.K.AAsst. Professor, SJBIT 68 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418India’s Export PolicyThe objectives are:• To earn adequate foreign exchange to finance the required volume of imports• To effect a change in the directional pattern with a view to reduce dependence on asingle country/limited number of countries• To supplement domestic demand for increasing employment opportunities• To raise unit value realization by promoting exports of value added items• To impose minimum price regulation where inter se compensation is serve.• To impose controls when domestic availability is less than adequate.India’s Import PolicyThe objectives are:• To use the available foreign exchange according to national priorities• To so allocate foreign exchange that capacity utilization is maximized• To grant protection to domestic industries• To maintain price stabilityLong Term Fiscal PolicyThe government of India has formulated long-term fiscal policy which was presentedin December 1985. The principal features of the Long Term Fiscal Policy relating to theforeign trade sector are as follows:• Reform of duty drawback scheme for exports• Ad Valorem Vs Specific Duties• Restructuring of Customs Duties• Thrust CommoditiesRAGHAVENDRA.K.AAsst. Professor, SJBIT 69 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Export Assistance3. What are the needs of export assistance?Developing countries have started manufacturing industries only recently. As a resulttheir cost of production generally tends to be high because of the following reasons:1. Total market availability within the country is small with the result that theeconomies of large scale production cannot be reaped.2. Productivity of labour is low because the level of mechanization as comparedto that in the developed countries is low.3. The cost of production is generally a function of experience i.e. “learning bydoing”.4. Manufacturing units in developing countries being small and new, haveconsiderably less expertise in the field of international marketing and becausethe volume of exports is low, the per unit cost of the trade promotionexpenditure tends to be high.India has to raise higher resources for development which has to be done through anumber of indirect levies which tend to push up the overall cost of production.Most developing countries have therefore resorted to a number of export promotionmeasures. India has also been providing export assistance to Indian exporters.From 1992, export incentive system in India has been made simple. There areessentially three major incentives. These are:1. market based exchange rate2. fiscal concessions3. facilities under the export – import policyRAGHAVENDRA.K.AAsst. Professor, SJBIT 70 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Export documentsStandardized and Aligned Pre-shipment documents more than two dozencommercial and regulatory documents are involved in the pre-shipment stage ofexport transactions. These include 16 commercial documents and 9 regulatorydocuments.Commercial DocumentsThe commercial documents are those which, by customs of trade, are requiredfor effecting physical transfer of goods and their title from the exporter to the exporter to theimportant and realization of export sale proceeds.14 out of 16 commercial documents have been standardized and aligned to oneanother, shipping order and Bill of exchange could not be brought within the fold of the aligneddocumentation system because of their very different data elements and having very little incommon with other commercial documents.The commercial documents are classified into principal documents and auxiliary documents.Principal Export Documents:1) commercial Invoice2) packing list3) bill of lading4) combined transport document5) certificate of inspection/quality control(where required)6) insurance certificate7) certificate of origin8) Bill of exchange and shipment adviceAuxiliary Documents:1) Proforma Invoice2) Intimation for inspectionRAGHAVENDRA.K.AAsst. Professor, SJBIT 71 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183) Shipping Instructions4) Insurance declaration5) Shipping order6) Mate receipt7) Application for certificate of origin8) Letter to the bnk for collection/negotiation of documentsRegulatory documents:Regulatory pre-shipment export documents are those which have been prescribed bydifferent government departments/bodies in compliance of the requirements of various rules andregulations under relevant laws governing export trade such as export inspection, foreignexchange regulations, export trade control, customs etc.Documents related to goods:Invoice :An invoice is the seller’s bill for merchandise and contains particulars of goods, suchas the price per unit at particular location, total value, packing specifications, terms of sale,identification marks of the package, etcPacking note and list:A packing note should include the packing note number, the date of packing, thename and address of the exporter, the name and address of the importer, the order number, date,shipment per s/s etc. Apart from the details in the packing note, a packing list should alsoinclude item-wise details.Certificate of origin:A certificate of origin, as the name indicates, is a certificate which specifies thecountry of the production of the goods. This certificate also to be produced before clearance ofgoods and assessment of duty, for the customs law of the country may require this procedure.CERTIFIED RELATED TO SHIPMENT1) Mate receipt:RAGHAVENDRA.K.AAsst. Professor, SJBIT 72 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418A mate receipt is a receipt issued by the commanding office of the ship when the cargo isloaded on the ship, and contains information about the name of the vessel, berth, date ofshipment, description of packages, marks and numbers, condition of the cargo at the time ofreceipt on board the ship, etc.2) Shipping Bill:The shipping bill is the main document on the basis of which the customs permission forexport is given. The shipping bill contains particulars of the goods exported, name of the vessel,master or agents, flags, the port at which goods are to be discharged, the country of finaldestination, etc.3) Cart Ticket:A car ticket, also known as a cart chit, vehicle and gate pass, is prepared by the exporterand includes details of the export cargo in terms of the shippers name, the number of packages,the shipping bill number, the port of destination and the number of the vehicle carrying thecargo.4) Certificate of Measurement:Freight is charged either on the basis of weight or measurement. When it is charged on thebasis of weight, the weight declared by the shipper may be accepted. The certificate contains thename of the vessel, port and destination, the description of goods, the quality, length, breadth,depth, etc. of the packages.5) Bill of Lading:The bill of lading is a document wherein the shipping company gives its official receipts for thegoods shipped in its vessel and at the same time contracts to carry them to the port ofdestination. It is also a document of title to then goods and, as such, is freely transferable byendorsement and delivery.A bill of lading serves 3 main purposes:• As a document of title to the goods;• As a receipt from the shipping company;• As a contract for the transportation of goodsRAGHAVENDRA.K.AAsst. Professor, SJBIT 73 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4186) Airway Bill:An Airway bill, also called, an air consignment note, is a receipt issued by an airlinefor the carriage of goods. As eah shipping company has its own bill of lading, each airline hasits own airway bill.Documents Related To Payment(a) Letter of Credit:A letter of credit is a document containing the guarantee of a bank to honor drafts drawnon it by an exporter, under certain conditions and up to certain amounts, provided that thebeneficiary fulfils the stipulated conditions.(b) Bill of Exchange:The Negotiable Instrument Act,1881, defines the bill of exchange as “an instrument inwriting containing an unconditional order, signed by the maker, directing a certain person topay a certain sum of money only to, or to the order of, a certain person or to the bearer of theinstrument”.(c) Trust Receipt:If the importer is unable to take possession of the documents by making the payment onthe D/P bill following the arrival of the goods, the merchandise may be made available to theimporter by his bank under an arrangement whereby the importer signs a trust receipt.(d) Letter of Hypothecation:A letter of hypothecation is a document signed by the customer conveying to a banker thefull ownership of goods at the port of destination in respect of which he has made advanceseither by loan or by acceptance or negotiation of bills of exchange.(e) Bank Certificate of payment:It is a certificate issued by the negotiating bank of the exporter, certifying that the bill coveringparticular consignments, has been negotiated and that the proceeds received in accordance withexchange control regulations in the approved manner.RAGHAVENDRA.K.AAsst. Professor, SJBIT 74 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Documents Relating To InspectionCertificate of inspection:It is a certificate issued by the export inspection agency, certifying that the consignment hasbeen inspected as required export act 1963, and satisfies the condition relating to quality controland inspection applicable to it, and is certified to it , and is certified export worthy.Documents Related To Excisable GoodsI. G.P. Forms:a. A GP form is a gate pass for the removal of excisable goods from a factory orwarehouse. Form GP1 is used for the removal of excisable goods on payment of duty and formGP 2 is used for the removal of excisable goods with payment of duty.II. Form C:a. Form c is to be used for applying for rebate of duty on the excisable goods ( otherthan vegetables, non essential oils and tea) exported by sea.III. Forms A.R. -4/A.R. -4A:a. These forms are meant for applying for the removal of excisable goods for export bysea/post. Form A.R.-4 is used for applying For excise inspection at the factory and form A.R.-4A is used when the goods are to be exported under the claim for rebate of excise duty or underbond.Documents Related To Foreign Exchange RegulationForeign exchange regulations in India require to fill several forms. There are fourimportant types of forms namely, GR/PP, VP/COD and SOFTEX form for exporter of computersoftware obtainable from the RBI or a bank authorized deal with the foreign exchange.RAGHAVENDRA.K.AAsst. Professor, SJBIT 75 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Module – 8 Introduction of retailingRetailing is going through a process of rapid internalization: the retailing environmentworldwide is undergoing dynamic changes; with local retailers defensively counteringcompetitive moves of mammoth chains or successfully duplicating their strategies.Major international retailers are no longer competing only for mature markets-and forconsumers in highly industrialized countries. Retailer’s competitive arena has expanded to allemerging markets, where they are responding to an increasing affluence of consumers and totheir increasingly sophisticated consumer related demands. Numerous successful globalretailers and consumer-product-companies-cum-retailers such as Wal-Mart (US),Promodes/Carrefour (France), Louis Vuitton Moet Henessy(France).International expansion of retailersRetailers are expanding internationally to gain competitive advantage and to increasesales, profits, and overall firm performance. As they expand beyond their home country borders,retailers also take cost advantage of cost savings and learn from experiences in a way that couldfurther enhance home-country operationsEx:- Tesco, the British retailer, for example, is using its stores in central and easternEurope as a testing ground for ideas hat are intended for application in the home market: thenew Tesco extra in Newcastle., is based on a Tesco hypermarket in Hungary.Retailers from America are expanding in Latin America, Asia and Europe. For exampleWal-Mart has adopted an aggressive strategy for international penetration; its purchase of theAsda group (UK) has boosted its international sales to $25 billion, which is only a fraction of itstotal sales figure of $165 billion. Its ambition is for its international operations to account for athird of sales.RAGHAVENDRA.K.AAsst. Professor, SJBIT 76 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418The top ten list of retailers.Name of retailer Country Sales in milliondollarsWal-Mart U.S 137,634Metro AG Germany 52,131Sears Roebuck U.S 36,704Rewe Gruppe Germany 36,212Edeka Rruppe Germany 32,573Aldi Gruppe Germany 32,403Dayton Hudson U.S 30,951Carrefour France 30,489TenzelmannGruppeGermany 30,243International retailing defined:-International retailing is defined as all the activities involved in selling products andservices to final international consumers for their personal consumption.International retailing differs from local retailing as defined in marketing management inthat it address operations of international retailers beyond home-country borders, as well asoperations of local retailers in different countries in world wide- in general and/or in response tothe presence or entry of international retailers aiming for their target market, as such anexamination international retail operations must include an evaluation of global and localretailing formats, retail practices, and overview of local retailing environments.Retail Formats: Variation in different marketsThere are three main retail formats:1.General merchandise retailing2.Food retailing3.Non store retailing.1. General Merchandise Retailinga. Specialty StoresRAGHAVENDRA.K.AAsst. Professor, SJBIT 77 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Specialty Stores offer a narrow product line and wise assortment. In this category are clothingstores (usually further specialized in to the women`s, men’s, or children`s clothing stores),bookstores, toy stores, office supply stores, and consumer electronics, among others.In many markets, specialty stores---- chains in particular--- are expanding at the expenseof all forms of n nonfood retailing. For example, specialty store chains are taking market shareaway from traditional department stores in the United Kingdom and France. U.K especiallyretailers have great strides in international expansion: Marks & Spencer is rapidly expanding inFrance, and retailers such as Virgin Records have already made substantial inroads in to the U.Smarket .In France ,specialty store appear to be particularly well suited to addressing the uniqueFrench lifestyle. Local payers, as well as international firms such as the Gap, are very successfulin the market.In most developing countries, specialty stores represent the main retail format. Althoughwestern and local specialty chain stores are quite popular and have done well for decades,developing country markets are dominated by independent specialty stores(usually family-owned), such as apparel stores, cosmetic stores, and local arts and crafts stores aimed at thetourist market as well as other traditional retail system as exemplified by specialized markets.b. Specialized MarketsSpecialized markets contain specialty stores specialized in a particular product category.Example of such markets exist worldwide in both developed and development countries.Examples of specialized markets are the Cairo Gold Market in the Khan El Khalili bazaar, theJade Market in Hong Kong, and the spice Market and Gold Market in the Covered Bazaar inIstanbul, Turkey. Specialized market may even cover entire cities. For example, the town ofOtavalo Ecuador, house large and small retailers of leather goods.c.Department StoresDepartment stores offer a broad variety of goods and wide assortments. Among theproducts they carry are clothing for men, women, and children; household appliances andelectronics; kitchenware; china; home furnishing; and toys and games. Outside the UnitedStates, department stores typically also have large supermarkets sections, and some may evencarry fresh produce.In the United States and Canada, and department stores have suffered substantial losses inthe past decade, mostly attributed to the rise in the discount stores, off-price retailers, andRAGHAVENDRA.K.AAsst. Professor, SJBIT 78 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418category killers. In an attempt to conquer new markets, however, a number of chains have beenlooking overseas for expansion: Sears Roebuck and JCPenney, in particular, have been lookingat the Latin American Market, with JCPenney recently opening a number of stores in Mexicoand Chile.Although department stores remain a dominant retail outlet in Asia, they are currentlydisplaying symptoms of decline, such as oversupply, over duplication of merchandise, fiercecompetition, and declining profits. Shanghai alone witnessed the demise of five departmentstores in 1997. Existing department stores in the city have done well when changing theirformat, for example, specializing in European style clothing and furnishings, or emulating thehypermarket environment by offering lower prices and maintaining a customer-friendlyenvironment.d. General Merchandise Discount StoresGeneral Merchandise Discount Stores sell high volumes of merchandise, offer limitedservice, and charge lower prices. Discount stores are divided in to two categories: all purposesdiscount stores, which offer a wide variety of merchandise and offer a wide assortment.The all-purpose category is dominated by stores such as Wal-Mart, Kmart, and target inthe United States. Internationally, this retailer category tends to draw a substantial portion ofprofits from its supermarkets section. In all purpose categories, Wal-Mart has more than 600stores internationally mainly they ate present in Canada, Mexico, Puerto Rico, Argentina,Brazil, Germany, and the United Kingdom. Wal-Mart also has a presence in china, through jointventures, and two franchise locations in Indonesia. Its goal is to derive one-third of its earningsfrom international operations.Category specialists, also known as category killers or stores with category dominance,are large specialty stores that carry a narrow variety of merchandise and a wide assortment.Among examples of category specialists successful internationally are office supply stores, suchas Staples, Office Max, and office Depot; home improvement centers, such as Home Depot;bookstores, such as Borders, which are especially well received in East Asia; children`s stores,such as Toys “R” Us, which leads sales in this product category from Scandinavia to SouthAfrica; and furniture stores, such as IKEA, which dominates the modern, basic furniture market.e.Off price retailersRAGHAVENDRA.K.AAsst. Professor, SJBIT 79 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Off price retailers sell brand name and designer merchandise below regular retail; theproducts they sell may include over runs, irregular products, as well as products from previousseasons. Among example of off price retailers are factory outlet stores; close-out retailers, withbroad, inconsistent assortments; and single price retailers. Although this type of retailing ispopular in US and Canada, in the rest of the world, there are only limited possibilities, otherthan store sales, for purchasing brand names at a discount. For example Hugo boss has an outlet store in Sothern Germany, close its factory, near Stuttgart, and Zurich has a famous designerout let mail; Italy has few outlet stores for its famous designers. Non of these examples comeclose in depth and variety to the north American off price retailer presence, but that is about tochange, as more and more international consumers demands similar deals as the ones offered inthe US.Often, American companies must build their own outlet stores in environments where thistype of retail format is unknown. In Japan, for instance, in the Tokyo suburb of Sagami-one,American malls international opened an outlet mall for companies such as Guess! And LauraAshely to sell discountinued merchandise at a discount.f.Catalog showroomsCatalog showrooms usually offer high turn over, brand name goods at discount price. Atypical format for a catalog showroom is one in which customers order from a Catalog in theshowroom where the product is only displayed, and then pick up the merchandise at adesignated location. Internationally, the goods sold in retail formats are not typically brandname goods, but, rather, they are goods that have not sold in season through a companiescatalog. For example, Neckrmann and Quelle, the well-known German catalog retailers, havecatalog showrooms in many of Germany’s largest cities where they sell their catalog storebrands. In addition, Ikea uses this strategy to sell to consumers worldwide: customers receive acatalog and in the showroom, they order in the store the product they would like to produce andpick it up from a designated location in its unassembled state.RAGHAVENDRA.K.AAsst. Professor, SJBIT 80 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4181) Define the international retailing or what is international retailing?International retailing is defined as all the activities involved in selling products andservices to final international consumers for their personal consumption.International retailing differs from local retailing as defined in marketing management in that itaddress operations of international retailers beyond home-country borders, as well as operationsof local retailers in different countries in world wide- in general and/or in response to thepresence or entry of international retailers aiming for their target market, as such anexamination international retail operations must include an evaluation of global and localretailing formats, retail practices, and overview of local retailing environments.2) List out various formats of retailing under international retailing?There are three main retail formats:1. General merchandise retailinga. Specialty storesb. Specialized marketsc. Department storesd. Discount storese. Off-price retailersf. Catalog showrooms2. Food retailinga) Conventional supermarketsb) Superstoresc) Warehouse clubs or wholesale clubsd) Convenience storesRAGHAVENDRA.K.AAsst. Professor, SJBIT 81 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM4183. Non store retailing.a) Internet retailingb) Vending machinesc) Television home shoppingd) Catalog retailing and Direct mail retailinge) Direct sellingf)Network marketing3) Explain the various forms general merchandise retailing?4) Explain various forms of food retailing?a. Conventional supermarkets:Food retailers include conventional supermarkets, which are self-service retailers withannual sales higher than 2 million dollar & less than 20000 square feet of store space. Suchsupermarkets abound worldwide, with local retailers & regional international retailers mostprominent in this retail category.b. Superstores:It includes combination stores (food & drug) & hypermarkets (which combinesupermarket, discount and warehouse retailing principles). In the United States, combinationstores have been quite successful; all purpose general discount stores, such as wal-mart andKmart, are often transferred into superstores to facilitate one stop shopping for consumers.These same stores have attempted, without success, to adopt a hypermarket format in the UnitedStates, by offering consumers an extensive supermarket section, with fresh produce and amplerefrigeration space.c. Warehouse clubs or wholesale clubs:It requires members to pay an annual fee and operate in low-overhead, warehouse-typefacilities. They offer limited lines of brand name and dealer-brand groceries, apparel, appliancesRAGHAVENDRA.K.AAsst. Professor, SJBIT 82 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418and other goods at a substantial discount. They sell to final consumers who are affiliated withdifferent institutions, as well as to business.d. Convenience stores:These are small retailers located in residential areas, convenient to consumers. They areopen long hours, carry limited lines of higher- turnover necessities and offer the possibility of aone stop shopping experience.5) Explain various types of non store retailing formats?a. Internet retailing:Also known as interactive home shopping or electronic retailing, selling through theinternet is quickly becoming an important retail format. In the retailing category are both thenew dot-com companies as well as traditional retailers. In this case, traditional retailers areattempting additional market penetration making it convenient for loyal customers to purchasetheir products as well as market diversification-expanding their market to consumers whootherwise would not normally shop in their particular retail establishment.In developed countries, internet purchasing is consumption market driven and not experiencedriven. Consumers shop for needs and wants but do not view. Internet surfing as a pleasure trip,as would consumers going to mall or a store.b. Vending machine:With the event of this smart card, vending machine retailing has become more popularthan ever (and increasingly, more vending machines worldwide accept credit cards).Technology is now facilitating a more interactive consumer relationship, where videos illustrateproduct use and provide more information. The extent to which vending machines are used as aretail venue varies from country to country. Vending machines are used most in Japan, wherethey sell just about anything one can think of, including beer, sausage, rice, life insurance. Cokealone has one million vending machines in Japan.c. Television home shopping:RAGHAVENDRA.K.AAsst. Professor, SJBIT 83 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418It includes cable channels selling to consumers in their homes, infomercials and directresponse advertising shown on broadcast and cable television. Television shopping networks,much like QVC and the home shopping network in the United States, operate in manydeveloped countries.d. Catalog retailing and direct mail retailing:Retailers of all categories are expanding internationally through catalog sales and directmail retailing. Tiffany’s is expanding its direct mail operations internationally; its internationalsales account for 42% of the company’s total revenues. Marketers are using consistentmarketing communications worldwide, coordinating their advertising with direct mail brochuresand catalogs.e. Direct selling:In this retail format, a salesperson, typically an independent distributor, contacts aconsumer at a convenient location-at his or her home or workplace, demonstrates product useand benefits, takes orders and delivers the merchandise. Direct selling is in the growth stage inmost of the developing world, here number of impediments restrict firm’s capability tosuccessfully carry out their selling activity.Direct selling firms are most active in growth markets, such as the emerging economies ofchina and Southeast Asia, central and Eastern Europe and Latin America. American directselling firms, such as Avon products, Nu skin and marry Kay cosmetics, is very active in thesemarkets, as well as worldwide.f. Network marketing:Network marketing or multilevel marketing is a variation on direct selling and anapproach to selling at the same time. It involves signing up sales representatives to go intobusiness for themselves with minimal start up capital. Their task is to sell more distributorship,which is to identify more sales representatives from their own personal network, to buy theproduct and to persuade others to buy the product. It is experiencing rapid growth, especially inemerging markets.6) Explain the various issues in international retailing.a. Legislation and regulation:Country regulations differ from one market to another and legislation can have a profoundimpact on a firms operations.RAGHAVENDRA.K.AAsst. Professor, SJBIT 84 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418Legislation created stores that limit access of local consumers. In addition to shops created forthe use of different categories of consumers, such as diplomatic shops or shops for the military,different countries have shops that are open to all consumers except nationals. This is the casein countries where locals are not allowed access to hard currency, which must be channeledthrough the central bank and where all hard currency retail transactions are conducted only withexpatriates.b. Taxation and cross-border shopping:In countries where consumers are not charged duties for products they purchase from aneighboring country, cross- border shopping affects most retailers in the higher –tax countries.To avoid the large value added tax on most products for personal consumption, consumers inthese countries cross borders into countries where this tax is substantially lower. In this case,consumers purchase decisions are driven by tax differences rather than by underlyingdifferences in producer prices and cross border shopping causes an inefficient allocation ofresources, leading to significant reductions in sales by domestic retailers and manufacturers,reduced profits and job losses.c.Variation in retail practices: a consumer perspective:Retail practices vary from one market to another. Consumers in the United States prefer to shopless frequently and purchase products in bulk, whereas consumer in Japan prefers to purchaseproducts in smaller quantities, packaged individually.d. Variation in retail practice: salespeople and management:Sales service differs greatly from one market to another. Whereas in the United States it iscustomary to have friendly salespeople waiting on customers, treating them with respect, inmany other countries this is not always the case. In eastern and southeastern Europe, forexample, salespeople tend to be curt, bordering on unfriendly. A pizza Hut employee trained incustomer service according to U.SRAGHAVENDRA.K.AAsst. Professor, SJBIT 85 | P a g e
    • INTERNATIONAL MARKETING MANAGEMENT 10MBAMM418RAGHAVENDRA.K.AAsst. Professor, SJBIT 86 | P a g e