International Marketing BY Naresh Bangeja Swapnil Chaskar Khushboo Dhedia Prachanti Bisne
Introduction International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations In contrast to the definition of marketing only the word multinational has been added. In simple words international marketing is the application of marketing principles to across national boundaries. However, there is a crossover between what is commonly expressed as international marketing and global marketing, which is a similar term.
Reasons for Global Marketing Growth Access to new markets and access to resources Survival Against competitors with lower costs (due to increased access to resources) – e.g. India and China Or push and pull factors
International Marketing Decisions Deciding whether to go abroad Deciding which markets to enter Deciding how to enter the market Deciding on the market program Deciding on the market organization
Deciding whether to go abroad? Reasons to consider going global: Foreign attacks on domestic markets Foreign markets with higher profit opportunities Stagnant or shrinking domestic markets Need larger customer base to achieve economies of scale Reduce dependency on single market Follow customers who are expanding
Deciding which markets to enter? Before going abroad, the company should try to define its international marketing objectives and policies. What Volume of Foreign Sales is Desired? How Many Countries to Market In? What Types of Countries to Enter? Choose Possible Countries and Rank Based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level
Deciding how to enter the market? Joint Venturing: Joining with foreign companies to produce or market products or services. Approaches: Licensing Contract manufacturing Management contracting Joint ownership Direct Investment: The development of foreign-based assembly or manufacturing facilities. This approach has both advantages and disadvantages.
Deciding on the market program Standardized Marketing Mix: Selling largely the same products and using the same marketing approaches worldwide. Adapted Marketing Mix: Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return.
Deciding on the market organization Organize an export department Create international divisions Geographical organizations World product groups International subsidiaries Become a global organization
Strategies Global strategy Companies such as Sony and Panasonic pursue a global strategy which involves: Competing everywhere Appreciating that success demands a presence in almost every part of the world in order to compete effectively Making the product the same for each market Centralized control Taking advantage of customer needs and wants across international borders Locating their value adding activities where they can achieve the greatest competitive advantage Integrating and co-ordinating activities across borders
Global Strategies Continued… A global strategy is effective when differences between countries are small and competition is global. It has advantages in terms of Economies of scale Lower costs Co-ordination of activities Faster product development However, many regret the growing standardization across the world.
Domestic Strategies A multi-domestic strategy involves products tailored to individual countries Innovation comes from local R&D There is decentralization of decision making within the organization One result of decentralization is local sourcing Responding to local needs is desirable but there are disadvantages: for example high costs due to tailored products and duplication across countries
The Ethnocentric Orientation-- It is a belief which considers- one’s own country/ culture, products as superior-- It views similarities in all markets/ foreign country market.-- Product’s/ services/ management practices/ methods that is being offered/ followed in one’s own country/ successful in one’s own country will be acceptable in other world markets, anywhere.-- Adaptation of the product is not required.-- Shades of egoism encircled herewith
The Polycentric Orientation-- Opposite of Ethnocentrism .-- It views each country as unique.-- Each subsidiary is to develop its own unique business.-- Each subsidiary to develop its own marketing strategies to succeed in its own right.
The Regiocentric Orientation: Management views regions as unique.-- Management seeks to develop an integrated regional strategy, to market product/services- in the particular identified region.-- Regions are considered to be one- i.e. consumers having one taste, choices, preferences, one regional identity etc.-- NAFTA, EU, SAARC etc are examples.
The Geocentric Orientation:-- The Company views the entire world as a potential market.-- Company strives to develop integrated world market strategies.-- It views similarities and differences in markets and countries.-- It seeks to create a global strategy- responsive to local needs and wants.
The Importance of Global Marketing For US-based companies, 75% of sales potential is outside the US. About 90% of Coca-Cola’s operating income is generated outside the US. For Japanese companies, 85% of potential is outside Japan. For German and EU companies, 94% of potential is outside Germany.
Marketing Mix AdaptationIn India, McDonald’s serves chicken, fish, and vegetable burgers, andthe Maharaja Mac—two all-mutton patties, special sauce, lettuce,cheese, pickles, onions, on a sesame-seed bun.
U.S. Globalization Many U.S. companies have made the world their market.
Cultural DifferenceWhen Nike learned thatthis stylized “Air” logoresembled “Allah” inArabic script, itapologized and pulledthe shoes fromdistribution.
Colgate Goes to ChinaUsing aggressive promotional and educationalprograms, Colgate has expanded its marketshare from 7% to 35% in less than a decade.
Joint OwnershipKFC entered Japan through a joint ownershipventure with Japanese conglomerate Mitsubishi.
International PricingTwelve European Union countries have adopted the euro asa common currency, creating “pricing transparency” andforcing companies to harmonize their prices throughoutEurope.