UNIT 1_Introduction of International Marketing.pptx

International Marketing
UNIT 1
1
DR VIJAY VISHWAKARMA

UNIT 1
• a) Introduction of International Marketing: Meaning,
Features of International Marketing, Need and Drivers of
International Marketing, Process of International
Marketing, Phases of International Marketing, Benefits of
International Marketing, Challenges of International
Marketing, Difference between Domestic and International
Marketing, Different Orientations of International
Marketing : EPRG Framework, Entering International
Markets :Exporting, Licensing, Franchising, Mergers and
Acquisition, Joint Ventures, Strategic Alliance, Wholly
Owned Subsidiaries, Contract Manufacturing and Turnkey
Projects, Concept of Globalization
• b) Introduction to International Trade: Concept of
International Trade, Barriers to Trade: Tariff and Non Tariff,
Trading Blocs : SAARC, ASEAN, NAFTA, EU, OPEC
2

• International Marketing can be defined as the
act of marketing the products and services
outside the domestic boundary.
• International Marketing is also known
as Global Marketing.
• When the business decides to go beyond the
domestic audience to reach the foreign
audience, the concept of international
marketing arises.
• International Marketing includes understanding
the culture, language, values, and beliefs of
the international audience and making one’s
products and services useful for them.
• Practices to overcome language barriers,
different cultural norms, and other barriers are
undertaken with effective marketing
strategies.
3

• In the words of Kotler, “Global
Marketing is concerned with integrating
and standardising marketing actions
across a number of graphic markets.”
• According to Cateora and Graham,
“International Marketing is 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 in more
than one nation for a profit.”
4

Features of International Marketing
• Scope
• Foreign Exchange
• Research
• Market Access
• Difficult Legal System
• Broader market is available
• Involves at least two set of uncontrollable
variables
• Requires broader competence
• Competition is intense
• Involves high risk and challenges
• https://www.tutorialspoint.com/international
_marketing/international_marketing_characteri
stics.htm
• https://www.geeksforgeeks.org/international
-marketing-features-scope-and-significance/
5

BMW: Understanding local norms
• On the flip side, BMW’s international marketing campaign in the
United Arab Emirates (UAE) serves as a cautionary tale. The
campaign used the market’s national anthem in a commercial,
sparking local complaints and leading to the withdrawal of the
campaign. The lesson here is the importance of cultural
sensitivity and understanding local norms when crafting
international marketing strategies.
6

• Examples of International Marketing
• Airbnb: Airbnb is a San Francisco-based
vacation rental facility, founded in 2008 by
two friends. Due to international marketing,
the brand is now operating in 34,000 cities
worldwide. The brand set up a localised
department to facilitate the public all around
the globe.
• Nike: Nike established its brand name and
gained recognition worldwide due to its
effective international marketing strategies.
Nike interacted with a wide range of
customers by entering into a long-term
standing arrangement with Manchester
United.
7

Lay’s: Adapting to
local tastes
• Lay’s potato chips offer another example
of successful international marketing.
Known by different names like “Walkers,”
“Smiths,” “Sabritas,” and “Margarita” in
various parts of the world, Lay’s also
adapts its flavors to local tastes.
• For instance, you’ll find ‘Masala’ flavored
Lay’s in India and ‘Nori Seaweed’ in
Japan. This adaptation to local
preferences has helped Lay’s maintain a
strong global presence while appealing to local
tastes.
8

Dolce & Gabbana:
Cultural sensitivity
• Dolce & Gabbana faced significant
backlash for a series of ads released
in China that were considered
culturally insensitive.
• The ads featured a Chinese model
struggling to eat pizza and spaghetti
with chopsticks, leading to public
outrage and calls for a boycott of the
brand.
• This example underscores the
potential pitfalls of not adequately
researching and understanding the
cultural context of your target markets.
9

Drivers of IM
• 1. Liberalisation: Liberalisation refers to the relaxation of government
restrictions on trade and commerce. While the credit for liberalisation of
economic policies in a number of countries goes to the GA'IT/WTO,
substantial liberalisation has been occurring outside GATT/WTO as well.
• For example, the revolutionary economic policy reforms in China and
other socialistic and communist countries. Liberalisation has contributed
to two-way movement of goods in all economies.
• 2. Privatisation: Privatisation is the process of divesting the government
stake, both in terms of money and control from public companies.
• In lndia, this process has been kicked off from a long time and is moving in
steady albeit slow pace with the government divesting its stake in public
enterprises and offering it to the common public. Private companies are
better equipped to exploit emerging opportunities in different parts of the
world.
• 3. Globalisation: Globalisation is described as an ongoing process by
which regional economies, societies and cultures have become integrated
through globe-spanning networks of exchange.
• The term is sometimes used to refer specifically to economic globalisation,
i.e., the integration of national economies with the international economy
through trade, foreign direct investment, capital flows, migration and the
spread of technology.
10

• 4. World Economic Growth: One of the important trends of 21st century is the
difference in the growth rates of the economies. The comparative slow growth of
the developed economies or the stagnation of their markets and the fast growth
of a number of developing countries, prompt firms of developed countries to
turn to the expanding markets, elsewhere. This has prompted a number of MNCS
to turn to markets of the developing and underdeveloped economies.
• 5. Multinational Companies (MNCs): MNCs that link their objectives and
resources with world market opportunities have been a powerful force driving
globalisation. Due to liberalisation, there has been a fast growth of the number of
MNCs and their affiliates. As per the World Investment Report 2009 (UNCTAD),
there is a total of 8,89,416 MNCs around the world; 82,053 parent corporations
and 807,363 affiliates. These MNCs dominate the world trade scenario.
• 6. Technological Development: Technological advances have tremendously
fostered globalisation. Technology has, in fact, been a very important facilitating
factor of globalisation, with its rising costs and risks, which makes it imperative
for firms to tap world markets and to spread these costs and risks. Technology is
truly stateless, there are no cultural boundaries limiting its application. Once a
technology is developed, it soon becomes available everywhere in the world.
11

• 7. Transport and Communication Revolutions: Revolutions in
transport and communication technology has enormously
contributed to the emergence of the global village. IT revolution has
made it possible for buyer and seller to negotiate the terms of
contract without meeting personally. The development in satellite,
optical fibre, wireless technologies and internet services are greatly
contributing to increased exchange of goods and services at the
global level.
• 8. Cost and Efforts of Product Development: The cost and efforts
required for the development of new products is very huge in some
industries like pharmaceuticals. To recoup such high costs, it is
necessary to spread it over several markets. Further, due to huge
investment and diverse requirements of skills associated with new
product development, cross-border alliances in research and
development are becoming more and more popular.
• 9. Competition: Another factor that has contributed to increased
internationalisation of trade and commerce is the increasing
competition, internally as well as externally. Heightened
competition compels firms to explore new ways of reducing costs
and increasing their efficiency. Internationalisation is one of the
ways of reducing costs and increasing efficiency resulting from
economies of large-scale production and distribution and spread of
risks to several markets.
12

• 10. Regional Integration: The proliferation of regional economic integrations,
like European Union (EU), North American Free Trade Agreement (NAFTA), South
Asian Association of Regional Cooperation (SAARC), Association of Southeast
Asian Nations (ASEAN), etc. by creating a borderless world between the member
of such trade blocs, foster the Internalisation trend. These regional trade blocs
also give a fillip to the cross-border Investments and financial flows.
• 11. Leverages from Internationalisation: Leverage is some type of advantage
that a company enjoys by virtue of the fact that it conducts business in more
than one country. These leverages are economies of large-scale operations,
sharing management practices, advantage of technological breakthroughs and
International strategy to scan the world business environment to identify
opportunities, trends, threats and resources. These leverages promote
internationalisation.
• 12. Consumer Expectations: Due to increasing levels of education and exposure
to the electronic media, the aspirations of people all around the world are rising.
The customer today is by and large international, as he/she wants a world-class
product or products of desired attributes at the competitive prices. Further,
consumers have become quality and brand conscious. This has given boost to
trade prospects of international brands owned by MNCs.
13

NEED/IMPORTANCE
1. Division of Labour and Specialisation: Each
country enjoys comparative cost advantage in
the production of certain commodities due to
favourable climatic conditions and availability
of technical knowhow and natural and human
resources. These countries produce such
commodities in excess of their requirements
and exchange surplus production with other
countries for the commodities they are
deficient in.
2. Increases National Income and Per-capita
Income: Due to division of labour and
specialisation each country produces and
exports commodities for which it has
comparative cost advantage and imports
commodities for which it has comparative cost
disadvantage. This generates additional
income through export promotion and
increases real income by providing imported
goods at competitive rates
14

• 6. Optimum Utilization of Resources: International trade also includes the flight
of capital and transfer of technology. This helps underdeveloped countries to
make full utilisation of their resources which may otherwise remain unutilised or
underutilised. Similarly, countries facing the problem of surplus can export their
surplus production. Thus international trade promotes full utilisation of resources
in both developed as well as underdeveloped economies.
• 7. Employment Opportunities: International trade brings about multiple
increases in employment opportunities. It not only increases employment in the
manufacturing and export and import sector but also in other related sectors
such as, banking, insurance, warehousing, transportation, and advertising. etc. It
has also promoted outsourcing which has proved boon to some of the labour
abundant countries like India and China.
• 8. Consumer Choice and Satisfaction: International trade provides consumers
with variety of goods and services from different parts of the world. Goods which
are not produced in the home country can be imported from other countries.
Similarly, surplus production of goods and services in the home country can be
disposed of in other countries of the world. This two way traffic provides goods
and services to consumers at competitive rates.
15

• 3. Facilitates Transfer of Technology: Some advanced countries like Japan. the USA, the UK
and Germany are highly developed in terms of technology and possess superior scientific
knowledge while most of the Afro-Asian and South American countries are backward in
technology. This directs the flow of technology from the technically advanced countries to
the technically backward countries of the world.
• 4. Resolves Balance of Payments Crisis: Balance of payments may be defined as the
difference between the monetary value of exports and Imports of a country. When the
outflow of foreign currencies exceeds the inflow, a country suffers from an unfavourable
balance of payments. Such imbalance in balance of payments can be resolved only through
international trade, i.e., export promotion and import substitution. Division of Labour and
Specialisation Increases National Income and Per-capita Income Facilitates Transfer of
Technology Resolves Balance of Payments Crisis Global Peace Optimum Utilisation of
Resources Employment Opportunities Consumer Choice and Satisfaction
• 5. Global Peace: In the age of nuclear weapons, there is a greater need of promoting
exchange of dialogues between countries of the world. International trade may provide a
platform to nations for exchange of ideas and bringing about amicable solutions to their
problems without confrontation. This promotes international peace and friendly relations
among the countries of the world. Thus, international trade may also contribute to
international peace. 16

Scope of International
Marketing
• Exporting/Importing: Selling goods and
services to a company in a foreign country
is referred to as Exporting.
• For instance, Gulab sold sweets to a store
in Canada. Purchasing goods from a
foreign company is known as Importing.
• For instance, the purchase of dolls from a
Chinese company by an Indian dolls dealer.
Exports and imports are the typical way
through which businesses begin their
activities overseas before moving on to
other kinds of international trade.
Important ways to Export and Import are:
17

• Direct Importing/
Exporting: The company
handles all of the necessary
paperwork for the shipment and
financing of goods and services
and deals directly with foreign
suppliers or purchasers.
• Indirect Importing/
Exporting: The company uses
a middleman to handle all the
paperwork and negotiate with
foreign suppliers or customers.
The firm’s involvement is
limited.
18

• Contractual Manufacturing: According to this, every well-known company in a
nation accepts responsibility for promoting the goods and services created by a
business in another nation.
• Here, the company is specialised in the manufacturing process but lacks
marketing skills, whereas the other company, due to its established reputation, is
capable of selling those items and services.
• Offering these items and services is not the primary business of these
organisations, but they do it for the benefit of their name and reputation, as well
as to provide high-quality products at a low cost to their customers.
• Multinational firms, like Maybelline, Loreal, Levi’s and others use contract
manufacturing to have their products or component parts produced in developing
nations. Contract manufacturing is also known as International Outsourcing.
19

• Licensing: When a corporation from one country (the
Licensor) grants a license to a company from another
country (the Licensee) to use its brand, patent,
trademark, technology, copyright, marketing skills; etc.,
to assist the other firm sell its products, this contractual
agreement is referred to as Licensing.
• The licensor corporation receives returns in proportion to
sales.
• For instance, Pepsi and Fanta are made and distributed
globally by local bottlers in other nations under the
licensing system.
• The company that provides such authorisation is known
as the Licensor, while the other company in a different
country that receives these rights is known as
the Licensee.
• The mutual sharing of knowledge, technology, and/or
patents between the companies is called Cross-
licensing.
20

• Franchising: The franchise is the unique right or
freedom that a producer grants a certain person or group
of people to establish the same business at a specific
location.
• The producers use this contemporary business model to
market their products in far-off locations.
• In general, producers who have a good reputation use
this system. Individuals are motivated by their goodwill
and try this mode of business in order to earn profit.
• Franchising is a contractual agreement that involves the
grant of rights by one party to another for the use of
technology, trademarks, and patents in return for the
agreed payment for a certain period of time.
• The business that gives the rights (i.e., the parent
company) is referred to as the Franchisor and the
business that purchases the rights is referred to as
the Franchisee.
21

Joint Ventures: A joint venture is formed when two or more businesses decide to work
together for a common goal and mutual benefit.
These two commercial entities could be private, public, or foreign-owned. Joint ventures
are those types of businesses that are established in international trade where both
domestic and foreign entrepreneurs are partners in ownership and management.
The trade is carried out in collaboration with the importing nation’s firm.
For instance, the Joint venture of the Indian company Maruti with the Japanese
Company Suzuki.
22

• Wholly Owned Subsidiary: When a
foreign company establishes a business
unit or acquires a full stake in any
domestic company, then they are called a
Wholly-owned Subsidiary.
• Wholly owned subsidiaries are set by a
foreign company to enjoy full control over
their overseas operations.
• A wholly-owned subsidiary in a foreign
country may be established in two ways:
Setting up a wholly-owned new firm in the
foreign land, also called Green Field
Venture.
• Acquiring an established firm in a foreign
country and using that firm to do business
in a foreign country.
23

Process/Stages of International
Marketing
• International marketing endeavor should rest on a solid strategy from
the very beginning. Creating an international marketing strategy will be
different from one company to another, but it generally involves 3
stages:
• Analysis (diagnosis)
• Choice (guiding policy)
• Execution (coherent action)
24

• Stage 1: Analysis
• Result: In-depth understanding of the target market and the best entry strategy.
• Goal setting
• Establish specific objectives and targets that will guide the development of the
international marketing strategy, ensuring alignment with the company’s expansion goals.
• Market research
• Begin by conducting thorough market research. Gather data on market size, growth
potential, customer demographics, and trends. For each target market, understand the
cultural nuances and legal requirements, including language, customs, regulations, and
any potential barriers to entry.
• Competitive analysis
• Analyze competitors in the target market. Identify their strengths, weaknesses, market
share, and strategies. This will help in positioning your company effectively.
• SWOT analysis
• Conduct a SWOT analysis (strengths, weaknesses, opportunities, threats) to assess your
company’s internal capabilities and external factors that may impact your international
expansion.
• Market entry assessment
• Evaluate various market entry options such as exporting, licensing, joint ventures, or
establishing a wholly-owned subsidiary. Select the most suitable entry strategy based on
your analysis.
25

• Stage 2: Choice
• Result: Clear strategic direction, target audience, value proposition, positioning, pricing,
and distribution strategy.
• Target market segmentation
• Define your target audience within the international market. Segment the market based on
demographics, psychographics, and behavioral factors.
• Value proposition
• Develop a unique value proposition tailored to each target market. Highlight how your
product or service meets the specific needs and preferences of the target audience.
• Positioning strategy
• Determine how you want your brand to be perceived in the international market. Create
a market positioning strategy that sets you apart from competitors.
• Pricing strategy
• Establish a pricing strategy that factors in local market conditions, competitive pricing, and
cost considerations. Ensure it aligns with your value proposition.
• Distribution and promotion channels
• Carefully select the channels for promoting your product to ensure effective reach to your
target audience. This may involve partnerships with local distributors or the use of e-
commerce platforms.
26

• Stage 3: Execution
• Result: Effective implementation of strategy, localization, marketing, sales, monitoring,
and risk management for successful expansion.
• Localization
• Tailor your product, marketing materials, and communication to align seamlessly with the
local culture and language. Localization is a nuanced process with many moving parts,
including translating content and customizing product features if needed.
• Marketing and promotion
• Execute marketing campaigns tailored to the international market. This may involve digital
marketing, advertising, social media, and other relevant channels.
• Sales
• Implement your chosen distribution strategy. Ensure your product is readily available to
customers through your chosen channels.
• Monitoring
• Continuously monitor the performance of your international marketing efforts. Gather
feedback, track key performance indicators (KPIs), and be prepared to make adjustments
as needed.
• Compliance and risk management
• Stay compliant with local laws and regulations. Develop a risk management plan to
address potential challenges such as currency fluctuations, political instability, or supply
chain disruptions.
https://phrase.com/blog/posts/international-marketing/ 27

Benefits
Provides Higher Standard of Living
Optimum Utilization of Resources
Rapid Industrial Growth
Benefits of Comparative Cost
International Cooperation and World Peace
Facilitates Cultural Exchange
Better Utilization of Surplus Production
Availability of Foreign Exchange
Expansion of Tertiary Sector
https://getuplearn.com/blog/benefits-of-international-marketing/#benefits-of-international-marketing 28

Challenges
Cultural differences: Cultural norms, values, and behaviors vary greatly worldwide. Misunderstanding these
differences can lead to marketing mishaps, potentially offending consumers and damaging a brand's reputation.
Language barriers: Language differences can cause communication difficulties. Poor translation or lack of
understanding of colloquial phrases may distort a brand's message or even cause offense.
Legal and regulatory variances: Every country has different laws and regulations regarding business operations,
marketing practices, consumer protection, and data privacy. Non-compliance can lead to legal issues and fines.
Economic differences: Differences in economic conditions, such as income levels and exchange rates, can
influence pricing strategies, product demand, and profitability.
Market saturation: In certain international markets, high levels of competition might make it difficult for a brand
to stand out and achieve a significant market share.
Logistical challenges: International marketing can involve logistical issues like shipping, handling customs,
managing international teams, and coordinating multi-time-zone activities.
Adapting to local preferences: Brands need to adapt their product, packaging, or marketing strategy to meet the
preferences of consumers in different countries, which can be a complex task.
https://www.gelato.com/blog/international-marketing 29

EPRG Framework
EPRG stand for Ethnocentric,
Polycentric, Regiocentric, and
Geocentric. It is a framework
created by Howard V
Perlmuter and Wind and
Douglas in 1969.
It is designed to be used in an
internationalization process of
businesses and mainly
addresses how companies view
international management
orientations.
According to the EPRG
Framework (or the EPRG
Model), there are four
management approaches that
an organization can take to get
more involved in international
business substantially.
30

The EPRG Framework suggests that
companies must decide which
approach is most suitable for
achieving successful results in
countries abroad.
For this reason, the EPRG Framework
can be a useful tool to utilize if a
company does not know yet how to
manage business activities between
companies in the local country and a
host country. The EPRG Framework is
additionally useful for making
strategic decisions.
31

• Ethnocentric Example – Nissan
• The ethnocentric approach of Nissan was quite visible in its initial
years as the cars and trucks exported to the USA were difficult to
start during the cold winter months. In Japan, the car owners
would cover their cars with hoods or blankets during winters and
expected American’s to do the same.
• Regiocentric Example – McDonald’s
• In the country of India, McDonald’s’ serves the burgers without
pork and beef keeping in mind the religious sentiments of the local
citizens
• Geocentric Orientation :
• M TV
• M TV caters to the local taste of India, China, and South Korea
with the company broadcasting channels with Hindi Pop in India
and Chinese music in China.
• McDonald’s
• McDonald’s offers beer in Germany and wine in France
32

• Ethnocentric
• In this approach of the EPRG Framework, the company in a local country that wants to
do business overseas does not put in much effort to do research abroad about the host
country’s market. Instead, most of the market research is executed in the headquarters
in the local country.
• With this approach, the company seeks for markets abroad that share the same
characteristics as the local market so that the marketing strategy does not have to be
adapted. More specifically, the ethnocentric approach uses the same marketing
strategies that are created by local personnel and further utilized multiple countries.
• It is many times possible that companies that utilize this approach believe that local
products should not be adapted to the local need of countries abroad because the
products are already of high quality. Another reason could be that a specific product is
sold in large volume in the local market, and for this reason, it is believed it will do the
same in other markets abroad.
• The ethnocentric approach of the EPRG Framework has benefits but also downsides. At
first, the company saves a lot of operational costs that can be invested elsewhere. But
the downside is that the company does not build up new knowledge about the market
abroad, which could substantially increase sales volume if products and strategies would
be adopted to the needs of the host country.
33

• Polycentric
• In the polycentric approach of the EPRG Framework is the opposite of the ethnocentric approach. A company that
utilizes this approach carefully consider different markets abroad to identify host countries that could potentially offer
the most benefits.
• It means that if a company has a local headquarter and a separate office overseas in a host country that manages the
operations in that or more countries, the marketing strategies are locally created and implemented based on the local
needs.
• Businesses that utilize the polycentric approach of the EPRG Framework strongly believe that every market has its
differences. For this reason, these types of companies implement different marketing strategies for each market.
• In the polycentric approach, it is therefore easier to make strategic decisions based on current cultural
differences and political differences. Companies that use this approach can also more easily adapt to changes in the
market because of their decentralized decision-making authorities.
• The downside is that the local headquarter has less control over its operations abroad. As long as the business
operations in the host country demonstrate to be successful, this might not be a problem. But if the business
operations overseas show to be not too profitable and result in losses, it is more difficult for the local company to
minimize those losses.
• However, companies that use this approach learn by doing. For this reason, a learning effect occurs, and new
knowledge is an intellectual asset of the company.
• If a company is the first to enter a market or offer an unfamiliar product, the local company has first-mover
advantages. It could have the best location in a host country to operate the business, and this could additionally
substantially increase profit margins.
34

• Regiocentric
• In a regiocentric approach of the EPRG Framework, businesses create and
implement internationalization strategies for specific regions. Companies that
utilize this type of approach use this for the area in which the local business is
operated.
• It can also be that an organization utilizes two kinds of approaches. An
organization can use a regiocentric approach for the business in the region in
which it operates. And the same organization can use a polycentric or
ethnocentric approach to do business in countries outside the region.
• Businesses that use a regiocentric approach of the EPRG Framework many
times believe that the markets in the region share the same characteristics of
the market in the home country.
• It is still challenging to determine countries in one region that share the same
characteristics. Consider, for example; some companies use this approach
for NAFTA countries, which include the United States, Canada, and Mexico.
• All countries are in the same region but still have some different
characteristics. The same implies for the Benelux, which include Belgium,
Netherlands, and Luxembourg. The countries are in the same region, but
Belgium has different market characteristic than the Netherlands and
Luxembourg.
• The reason why companies use this approach to group countries into for
example NAFTA and Benelux. is depending on the type of industry and
product or service. Every organization has its way of internationalization.
35

Geocentric
A geocentric approach of the EPRG Framework means that a business strongly believes that
of strategy for all countries, regardless of the cultural differences.
However, companies that use this approach attempt to create products or offer services in a
international customers. This means that instead of believing that their product or service is
other markets, like in the ethnocentric approach, these organization proactively adapt their
meet the global needs.
Companies sometimes prefer this type of strategy of the EPRG Framework because it does
which minimizes operational costs. These companies use one strategy to sell a product or
reason, achieve economies of scale.
Organizations that have a geocentric approach are many times considered as key
companies utilize a combination of the polycentric and ethnocentric approaches.
It means that organizations with a geocentric approach of the EPRG Framework can identify
and they can convert the different cultural characteristics into mutual characteristics.
https://www.toolshero.com/marketing/eprg-framework-perlmutter/
DR VIJAY VISHWAKARMA 36

Concept of Globalization
• Globalization is a term used to describe how trade and technology
have made the world into a more connected and interdependent
place.
• Globalization also captures in its scope the economic and social
changes that have come about as a result.

Concept of International Trade
• International trade is an exchange involving a good or service
conducted between at least two different countries.
• The exchanges can be imports or exports.
• An import refers to a good or service brought into the domestic
country.
• An export refers to a good or service sold to a foreign country.

• Trading globally gives consumers and countries the opportunity
to be exposed to goods and services not available in their own
countries, or more expensive domestically.
• The importance of international trade was recognized early on
by political economists such as Adam Smith and David Ricardo.
• Still, some argue that international trade can actually be bad for
smaller nations, putting them at a greater disadvantage on the
world stage.

Barriers to Trade: Tariff and Non Tariff
• Tariff and Non-tariff Barriers are different from each other.
• Tariff Barriers are the fees charged in the form of a tax or duty.
• However, Non-Tariff Barriers are the non-tax measures used by
the government of a country in order to restrict imports from
foreign countries.

What are Tariff Barriers?
• When two nations trade in commodities, the country in which
the goods are exported levies a tax in order to generate revenue
for the government while also raising the price of foreign goods
so that domestic firms can compete with foreign products.
• The fee is in the form of a tax or duty which is referred to as
a Tariff Barrier.
• The amount of tax or duty levied as a tariff is added to the cost
of the import, making foreign goods more expensive, which is
ultimately borne by the product’s customer.
• The tariff is paid to the customs authorities of the country where
the goods are being sent.

• Examples of Tariff Barriers:
• Export Duties
• Import Duties
• Transit Duties
• Specific Duties
• Ad-valorem Duties
• Compound Duties

What are Non-Tariff Barriers?
• Non-tariff Barriers are non-tax measures used by the
government of a country in order to restrict imports from
foreign countries.
• It includes constraints that result in prohibition, formalities, or
circumstances that make imports of commodities difficult and
reduce market potential for foreign products.
• These are quantitative and exchange controls that have an
impact on trade volume, pricing, or both.
• It might be in the form of laws, policies, practices, conditions,
and requirements imposed by the government to limit imports.
https://www.geeksforgeeks.org/difference-between-tariff-and-non-tariff-barriers/

• Example of Non-Tariff Barriers:
• Import Quotas
• VERs, i.e. Voluntary Export Restraints
• Import Licensing
• Technical and Administrative Regulations
• Price Control
• Foreign Exchange Regulations

Basis Tariff Barriers Non – Tariff Barriers
Meaning
Tariff Barriers are taxes or fees
imposed by the government on
imports in order to protect domestic
industries and boost revenue for the
government.
Non-tariff barriers include all
the limitations other than taxes
imposed by the government on
imports in order to protect domestic
enterprises and discriminate against
new entrants.
Permissibility
The World Trade Organisation
authorised its members to impose
tariff barriers but only at reasonable
rates.
Import quotas and voluntary export
barriers were eliminated by the World
Trade Organisation.
Nature Tariff barriers are explicit in nature.
Non-tariff barriers are implicit in
nature.
Form
Tariff barriers are imposed in the form
of Taxes and Duties.
Non-tariff barriers are imposed in the
form of Regulations, Conditions,
Requirements, Formalities, etc.
https://www.geeksforgeeks.org/difference-between-tariff-and-non-tariff-barriers/

Revenue
Tariff barriers generate
revenue for the government.
Non-tariff barriers do not
generate revenue for the
government.
Affects
Tariff barriers affect the price
of imported goods.
Non-tariff barriers affect the
quantity or price or both of
the imported goods.
Monopolistic Organisations
As the government charges
tariff barriers, monopolistic
organisations’ prices can be
controlled.
The monopolistic
organisation charges high
rates for low output.
Profit
Profits made by the
importers can be restricted
through tariff barriers.
Importers can make high
profits through non-tariff
barriers.
Example
Import Duties, Export Duties,
Ad-valorem Duties, etc.
Import Licensing, Foreign
Exchange Regulations,
Import Quotas, etc.

Trading Blocs :
• SAARC,
• https://www.saarc-sec.org/
• ASEAN,
• https://asean.org/
• NAFTA,
• https://www.federalregister.gov/north-american-free-trade-agreement-
nafta-
#:~:text=The%20North%20American%20Free%20Trade,trade%20bloc%20i
n%20North%20America.
• EU,
• https://european-union.europa.eu/index_en
• OPEC
• https://www.opec.org/opec_web/en/

UNIT 1_Introduction of International Marketing.pptx

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UNIT 1_Introduction of International Marketing.pptx