INTERNATIONAL MARKETING Marketing <ul><li>Technical: </li></ul><ul><li>Domestic and international marketing are identical. </li></ul><ul><li>It involves the non human factor such as Product, Price, cost, Brand etc. </li></ul><ul><li>It has Universal applicability </li></ul><ul><li>Social: </li></ul><ul><li>Unique in both the marketing </li></ul><ul><li>It involves the human elements such as- </li></ul><ul><li>Behaviour pattern of consumers. </li></ul><ul><li>Society: custom, attitudes, values, etc. </li></ul>
<ul><li>Definition: </li></ul><ul><li>“ International Marketing is the performance of business activities that direct the flow of goods and services to consumers or users in more than one nation”. </li></ul><ul><li>Existence of more than market necessarily complicates the marketing process. </li></ul><ul><li>International marketing will have to take care of barriers to free trade. </li></ul><ul><li>Even when there is free trade, logistic may create the problem. </li></ul><ul><li>Human needs and wants will have different attribute in foreign market. </li></ul><ul><li>International marketing will also has the concept controllable and uncontrollable factors. </li></ul>
<ul><li>The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. </li></ul><ul><li>Competition, legal restraints, government controls, weather, fickle consumers, and any number of other uncontrollable elements can, and frequently do, affect the profitable outcome of good, sound marketing plans . </li></ul><ul><li>Marketing principles and concepts are universally applicable, the environment within which the marketer must implement marketing plans can change dramatically from country to country or region to region. The difficulties created by different environments are the international marketer’s primary concern. </li></ul><ul><li>The more foreign markets in which a company operates, the greater the possible variety of foreign environmental factors with which to contend. Frequently, a solution to a problem in country market A is not applicable to a problem in country market B. </li></ul>
<ul><li>International Trade to International Marketing : </li></ul><ul><li>Originally, the producer used to export their products to the nearby countries and gradually extended the export to far-off countries. </li></ul><ul><li>For e.g. India used to export raw cotton, raw jute and iron ore during the early 1990s. India, during 1980s could create markets for its products, in addition to mere exporting. </li></ul><ul><li>International Marketing to International Business : </li></ul><ul><li>The MNCs which were producing the products in their home countries and marketing them in foreign countries before 1980s started locating their plants and other manufacturing facilities in host countries. Later they started producing in one foreign country and marketing in other foreign countries. </li></ul><ul><li>For e.g. Uni lever established its subsidiary company in India, i.e Hl. HLL produces its products in India and markets them in Bangladesh, Sri lanka, Nepal etc. </li></ul>
<ul><li>Why go International : </li></ul><ul><li>To achieve higher rate of profits: when the domestic markets do not promise a higher rate of profits, business firms search for foreign markets which promise for higher rate of profits. E.g. Apple earned US $ 390 million as net profit from the foreign markets and only US $ 310 million as net profit from its domestic market in 1994. </li></ul><ul><li>Expanding the Production capacities beyond the Demand of the domestic country: to sell their excess in foreign country. E.g. Toyota of Japan </li></ul><ul><li>Severe competition in foreign country </li></ul><ul><li>Limited home market </li></ul><ul><li>Political stability vs. Political instability: stability means continuation of same policies of the Govt. </li></ul><ul><li>Availability of Technology and Managerial competence: Co.s from developing world is attracted by the developed countries due to this reason. </li></ul>
<ul><li>High cost of transportations: </li></ul><ul><li>Nearness to Raw materials </li></ul><ul><li>Availability of Quality human resources at less costs </li></ul><ul><li>Liberalisation and Globalisation </li></ul><ul><li>To increase market share </li></ul><ul><li>To avoid tariff and import quotas: Govt. imposed tariffs or duty on imports to protect the domest6ic company. E.g. sony, Honda and Toyata preferred direct investment in various countries by subsidiaries or through JV. </li></ul>
<ul><li>Stages of Internalisation : </li></ul><ul><li>Stage1. Domestic Company : </li></ul><ul><li>Domestic company limits its operations, mission and vision to the national political boundaries. These companies focus its view on the domestic market opportunities, domestic suppliers, domestic financial companies, domestic customers etc. These companies analyse the national environment of the country, formulate the strategies to exploit the opportunities offered by the environment. </li></ul><ul><li>Stage2. International Company : </li></ul><ul><li>These companies select the strategy of locating the branch in the foreign market and extend the same domestic operations into foreign markets. These companies remain ethnocentric or domestic country oriented. Normally internalization process of most of the global companies starts with this stage of two processes. Many of the companies follow this strategy due to limited resources and also to learn from the foreign market gradually before becoming a global company without much risk. </li></ul>
Stage3. Multinational Company : This stage of multinational company is also referred as multidomestic company formulates different strategies for different market, thus the orientation shift from ethnocentric to polycentric. Under polycentric orientation the offices/branches/subsidiaries of a MNC work like a domestic company in each country where they operate with distinct policies and strategies suitable to that country concerned. Stage 4 Global Company : Global company is the one which has either produces in home country or in a single country and focuses on marketing these products globally and focuses on marketing these products domestically .
<ul><li>Stage5. Transnational Company : </li></ul><ul><li>Transnational company produces, market, invests and operate across the world. It is an integrated global enterprise which links global resources with global market at profits. There is no such pure transnational corporation. </li></ul><ul><li>Characteristics of a Transnational Company: </li></ul><ul><li>Geocentric Orientation : This Company thinks globally and acts locally. This co. adopts global strategy but allow value addition to the customer of a domestic country. The assets of a transnational company are distributed throughout the world, independent and specialized. The R&D facilities of a transnational co. are spread in many countries. </li></ul><ul><li>Scanning or Information Acquisition : These cos. scan the environmental information regarding economic, political, social and cultural and technological environment. These cos. collect and scan the information regardless geographical and national boundaries. </li></ul><ul><li>Vision and Aspiration : are global, global markets, global customers, and grow ahead of other global/transnational cos. </li></ul>
<ul><li>Geographical Scope : They analyse the global opportunities regarding the availability of resources, customers, markets, technology, research and development etc. The scope is not limited to certain countries in analysing opportunities, threat and formulating strategies. </li></ul><ul><li>Adaptation : Global and Transnational cos. Adapt their products, marketing strategies and other functional strategies to the environmental factor of the market concerned. For e.g. Mercedes Benz is a super luxury car in North America, luxury in Germany and standard taxi in Europe. </li></ul><ul><li>Extension : Some products do not require any change when they are marketed in other countries. Their market is just extension. E.g. Casio </li></ul><ul><li>Creation through Extension : Transnational cos. Create their global brand extending the product to the new market. For e.g. Rothmans cigarette extended its products in many Europeans and African countries. </li></ul><ul><li>HRM policy : it selects the best human resource and develops them regardless nationality, ethnic group. </li></ul><ul><li>Purchasing : Transnational Company procures world class material from the best source across the globe. </li></ul>
INTERNATIONAL BUSINESS APPROACHES Douglas Wind and Pelmutter advocated four approaches of international business. They are: Ethnocentric Approach : The excessive production more than the demand for the product, either due to competition or due to change in customer preferences push the co. to exports the excessive production to the foreign countries. The co. export the same product designed for domestic market to foreign market under this approach. Thus, maintenance of domestic approach towards international business is called ethnocentric approach. Polycentric Approach : The co establishes a foreign subsidiary company and decentralised all the operations and delegates decision making and policy making authority to its executives. The executives of the subsidiary formulate the policies and strategies, design the product based on the host country’s environment and the preferences of the local customer. Thus this approach mostly focuses on the conditions of the host country in policy formulation, strategy implementation and operations.
<ul><li>Regiocentric Approach : </li></ul><ul><li>The foreign subsidiary considers the regional environmental for formulating policies and strategies. It market more or less the same product designed under polycentric approach in other countries of the region, but with different market strategies. </li></ul><ul><li>Geocentric Approach : </li></ul><ul><li>Under this approach, the entire world is just like a single country for the company. They select the employees from the entire globe and operate with the number of subsidiaries. Each subsidiary functions like an independent and autonomous company in formulating policies, strategies, product design, human resource policies, operations etc. </li></ul>