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International MarketingInternational Marketing
Prof. Roshni SawantProf. Roshni Sawant
ScenarioScenario
 The world is shrinking rapidly with theThe world is shrinking rapidly with the
advent of faster communi...
Cont…Cont…
 To compete, many International companies areTo compete, many International companies are
continuously improvi...
NIKE: a cultural issueNIKE: a cultural issue
 When Nike learnedWhen Nike learned
that this stylizedthat this stylized
““A...
Colgate Goes to ChinaColgate Goes to China
Using aggressive promotional and educational programs, Colgate hasUsing aggress...
Objectives of IMObjectives of IM
 To establish trade relation among theTo establish trade relation among the
nations and ...
 To provide assistance to developingTo provide assistance to developing
countries in their economic and industrialcountri...
Call for Int. Marketing /TradeCall for Int. Marketing /Trade
 International interdependence ofInternational interdependen...
 Bridge the gap between developed andBridge the gap between developed and
developing nation: i.e. transfer of technicalde...
Orientation to IMOrientation to IM
Ethnocentric Orientation
In the ethnocentric company, overseas
operations are viewed as secondary to
domestic operations ...
A person who assumes his or her home
country is superior compared to the rest of
the World is said to have an ethnocentri...
In the ethnocentric global company,
foreign operations are viewed as being
secondary or subordinate to domestic
ones.
 Geocentric Orientation
A geocentric company views the entire world as
a single market and develops standardized
marketin...
Regiocentric Orientation
A Regiocentric company views different
regions as different markets. A particular
region with ce...
• Objectives are set by negotiation between
headquarters and regional Headquarters on the one hand and
between regional HQ...
Polycentric Orientation
The polycentric orientation is the opposite
of ethnocentrism .The term polycentric
describes man...
Patterns of TradePatterns of Trade
 Trade in goods: commodities, raw materials,partTrade in goods: commodities, raw mater...
Stages of MarketingStages of Marketing
 Export Marketing: Ethnocentric: e.gExport Marketing: Ethnocentric: e.g
smaller pl...
Export MarketingExport Marketing
 Domestic market remains of primeDomestic market remains of prime
importanceimportance
...
International MarketingInternational Marketing
 Go beyond exporting and become moreGo beyond exporting and become more
di...
Multinational MarketingMultinational Marketing
 Result of development of MultinationalResult of development of Multinatio...
Cont…Cont…
 Challenge is to find the best possibleChallenge is to find the best possible
adaptation of a complete marketi...
Global MarketingGlobal Marketing
 Single strategy for a product,service, orSingle strategy for a product,service, or
comp...
Why enter foreign markets?Why enter foreign markets?
 Increase market shareIncrease market share:Domestic market may lack...
Why enter foreign marketsWhy enter foreign markets

Economies of scaleEconomies of scale::
 Expanding size or scope of m...
Deciding whether to goDeciding whether to go
International or notInternational or not
 Not all companies need an internat...
InternationalInternational Marketing EnvironmentMarketing Environment
 Economic EnvironmentEconomic Environment
Industri...
Cont…Cont…
 Political-Legal EnvironmentPolitical-Legal Environment
Attitudes toward international buyingAttitudes toward...
Cont…Cont…
 Cultural EnvironmentCultural Environment
 Impact of Culture on Marketing Strategy and vice-Impact of Culture...
Deciding which markets to enterDeciding which markets to enter
 Define international marketing polices andDefine internat...
Deciding How to Enter the MarketDeciding How to Enter the Market
Common way to enter new international marketsCommon way to enter new international markets
No need to establish operations...
Choice of International Entry ModeChoice of International Entry Mode
LicensingLicensingLicensingLicensing
Firm authorizes ...
Choice of International Entry ModeChoice of International Entry Mode
Strategic AlliancesStrategic AlliancesStrategic Allia...
Choice of International Entry ModeChoice of International Entry Mode
AcquisitionsAcquisitionsAcquisitionsAcquisitions
Enab...
New Wholly-Owned SubsidiaryNew Wholly-Owned Subsidiary
Choice of International Entry ModeChoice of International Entry Mod...
Joint OwnershipJoint Ownership
KFC entered Japan through a joint ownership venture with JapaneseKFC entered Japan through ...
Problems or difficulties in IMProblems or difficulties in IM
 Payment difficultyPayment difficulty
 Government restricti...
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Im intro

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Im intro

  1. 1. International MarketingInternational Marketing Prof. Roshni SawantProf. Roshni Sawant
  2. 2. ScenarioScenario  The world is shrinking rapidly with theThe world is shrinking rapidly with the advent of faster communication,advent of faster communication, transportation, and financial flows.transportation, and financial flows.  International trade is boomingInternational trade is booming  Between 1996 and 2006, U.S. exports areBetween 1996 and 2006, U.S. exports are expected to increase 51%.expected to increase 51%.  Global competition is intensifyingGlobal competition is intensifying
  3. 3. Cont…Cont…  To compete, many International companies areTo compete, many International companies are continuously improving their products,continuously improving their products, expanding into foreign markets,expanding into foreign markets,  International firms face several major problems:International firms face several major problems:  Inflation, and unemployment have resulted in highlyInflation, and unemployment have resulted in highly unstable governments & currencies,unstable governments & currencies,  Governments placing more regulations on foreignGovernments placing more regulations on foreign firmsfirms  Protectionist policies and trade barriers,Protectionist policies and trade barriers,  Corruption.Corruption.
  4. 4. NIKE: a cultural issueNIKE: a cultural issue  When Nike learnedWhen Nike learned that this stylizedthat this stylized ““Air” logo resembledAir” logo resembled “Allah” in Arabic“Allah” in Arabic script, it apologizedscript, it apologized and pulled the shoesand pulled the shoes from distributionfrom distribution
  5. 5. Colgate Goes to ChinaColgate Goes to China Using aggressive promotional and educational programs, Colgate hasUsing aggressive promotional and educational programs, Colgate has expanded its market share from 7% to 35% in less than a decadeexpanded its market share from 7% to 35% in less than a decade
  6. 6. Objectives of IMObjectives of IM  To establish trade relation among theTo establish trade relation among the nations and to maintain cordial relationnations and to maintain cordial relation among nations for maintaining worldamong nations for maintaining world peacepeace  To provide better life and welfare toTo provide better life and welfare to peoplepeople  To bring countris closer for tradingTo bring countris closer for trading purpose and to encourage large scale freepurpose and to encourage large scale free trade among the countris of the world.trade among the countris of the world.
  7. 7.  To provide assistance to developingTo provide assistance to developing countries in their economic and industrialcountries in their economic and industrial growth and to remove or reduce gapgrowth and to remove or reduce gap between the develop n developingbetween the develop n developing countries .countries .  To keep international trade free and fair to allTo keep international trade free and fair to all countries by avoiding trade barriers.countries by avoiding trade barriers.  To ensure optimum utilization of resource atTo ensure optimum utilization of resource at the global level.the global level.
  8. 8. Call for Int. Marketing /TradeCall for Int. Marketing /Trade  International interdependence ofInternational interdependence of countries: no country in the world is selfcountries: no country in the world is self sufficient.sufficient.  Absence of uniform geographic & climaticAbsence of uniform geographic & climatic condition.condition.  Availability of comparative cost advantageAvailability of comparative cost advantage  Growing needs of countriesGrowing needs of countries  To solve the problem of surplus/shortageTo solve the problem of surplus/shortage of production in countries.of production in countries.
  9. 9.  Bridge the gap between developed andBridge the gap between developed and developing nation: i.e. transfer of technicaldeveloping nation: i.e. transfer of technical know how and skills .know how and skills .  International cooperation and world peaceInternational cooperation and world peace  Facilitates culture exchangeFacilitates culture exchange  Provides higher standard of livingProvides higher standard of living  Special benefits during emergencySpecial benefits during emergency situationssituations  Company exporting abroad may earnCompany exporting abroad may earn substantial profits out of its operationsubstantial profits out of its operation
  10. 10. Orientation to IMOrientation to IM
  11. 11. Ethnocentric Orientation In the ethnocentric company, overseas operations are viewed as secondary to domestic operations and primarily as a means of disposing of “surplus” domestic production. The top management views domestic techniques and personnel as regional level.
  12. 12. A person who assumes his or her home country is superior compared to the rest of the World is said to have an ethnocentric orientation. Ethnocentric companies that do conduct business outside the home country can be described as global companies; they adhere to the notion that the products that succeed in the home country are superior and, therefore, can be sold every where without adaptation
  13. 13. In the ethnocentric global company, foreign operations are viewed as being secondary or subordinate to domestic ones.
  14. 14.  Geocentric Orientation A geocentric company views the entire world as a single market and develops standardized marketing mix, projecting a uniform image of the company and its products, for the global market. “The business of the geocentric multinational is usually characterized by sufficiently distinctive national markets
  15. 15. Regiocentric Orientation A Regiocentric company views different regions as different markets. A particular region with certain important common marketing characteristics is regarded as a single market, ignoring national boundaries.
  16. 16. • Objectives are set by negotiation between headquarters and regional Headquarters on the one hand and between regional HQ and individual subsidiaries on the other.” • In a company with a Regiocentric orientation, management views regions as unique and seeks to develop an integrated regional strategy. For example, a U.S. company that focuses on the countries included in the North American Free Trade Agreement (NAFTA) – the United States, Canada, and Mexico – has a Regiocentric orientation. Similarly, a European company that focuses its attention on the EU or Europe is Regiocentric. A company whose management has a Regiocentric or geocentric orientation is sometimes known as a global or transnational company.
  17. 17. Polycentric Orientation The polycentric orientation is the opposite of ethnocentrism .The term polycentric describes management’s often unconscious belief or assumption that each country in which a company does business is unique.
  18. 18. Patterns of TradePatterns of Trade  Trade in goods: commodities, raw materials,partTrade in goods: commodities, raw materials,part or finished goods-between different locationsor finished goods-between different locations  Trade in services:travel and tourism,financialTrade in services:travel and tourism,financial services,consultancy,education and training-services,consultancy,education and training- expanding marketsexpanding markets  E-commerce and E-business: using IT to tradeE-commerce and E-business: using IT to trade across bordersacross borders  B2B changing relationshipsB2B changing relationships  Business with Governments and Agencies-Business with Governments and Agencies- impact of privatization and economicimpact of privatization and economic developmentdevelopment
  19. 19. Stages of MarketingStages of Marketing  Export Marketing: Ethnocentric: e.gExport Marketing: Ethnocentric: e.g smaller playerssmaller players  International marketing: some overseasInternational marketing: some overseas activity: e.g Hidesignactivity: e.g Hidesign  Multinational: marketing in countries orMultinational: marketing in countries or regions which differ significantlyregions which differ significantly  Global marketing-Integrated to exploitGlobal marketing-Integrated to exploit global opportunitiesglobal opportunities
  20. 20. Export MarketingExport Marketing  Domestic market remains of primeDomestic market remains of prime importanceimportance  Profitable by product of its domesticProfitable by product of its domestic strategystrategy  Challenge is to select appropriateChallenge is to select appropriate markets, determination of appropriatemarkets, determination of appropriate product modifications to meet theproduct modifications to meet the requirements and development of exportrequirements and development of export channelschannels
  21. 21. International MarketingInternational Marketing  Go beyond exporting and become moreGo beyond exporting and become more directly involved in the local marketingdirectly involved in the local marketing environment within a given country.environment within a given country.  Have its own sales subsidiaries,developHave its own sales subsidiaries,develop entire marketing strategies to fit newentire marketing strategies to fit new market demands.market demands.  Need to understand differentNeed to understand different environmentsenvironments
  22. 22. Multinational MarketingMultinational Marketing  Result of development of MultinationalResult of development of Multinational corporations.corporations.  Characterized by extensive development ofCharacterized by extensive development of assets abroad,operate in several foreignassets abroad,operate in several foreign countries as if the firms were local companies.countries as if the firms were local companies. This has led to the development of manyThis has led to the development of many domestic strategies also calleddomestic strategies also called multi-domesticmulti-domestic strategystrategy-whereby a MNC competes with many-whereby a MNC competes with many strategies, each tailored to a particular localstrategies, each tailored to a particular local market.market.
  23. 23. Cont…Cont…  Challenge is to find the best possibleChallenge is to find the best possible adaptation of a complete marketingadaptation of a complete marketing strategy for an individual country.strategy for an individual country.  Maximum localizationMaximum localization
  24. 24. Global MarketingGlobal Marketing  Single strategy for a product,service, orSingle strategy for a product,service, or company for the entire global market. E.gcompany for the entire global market. E.g DellDell  Aimed at leveraging the commonalitiesAimed at leveraging the commonalities across many marketsacross many markets  Last stage in the development of the fieldLast stage in the development of the field of International Marketingof International Marketing
  25. 25. Why enter foreign markets?Why enter foreign markets?  Increase market shareIncrease market share:Domestic market may lack the size to:Domestic market may lack the size to support efficient scale manufacturing facilities.support efficient scale manufacturing facilities. Example:Example: Japanese electronics or automobile manufacturersJapanese electronics or automobile manufacturers  Mature or saturated home markets: European ConglomeratesMature or saturated home markets: European Conglomerates  Preferential trading agreements: India-PakistanPreferential trading agreements: India-Pakistan  Return on investment:Return on investment: Large investment projects may requireLarge investment projects may require global markets to justify the capital outlaysglobal markets to justify the capital outlays Example:Example: Aircraft manufacturers Boeing or AirbusAircraft manufacturers Boeing or Airbus • Weak patent protectionWeak patent protection in some countries implies that firms shouldin some countries implies that firms should expand overseas rapidly in order to preempt imitatorsexpand overseas rapidly in order to preempt imitators
  26. 26. Why enter foreign marketsWhy enter foreign markets  Economies of scaleEconomies of scale::  Expanding size or scope of markets helps to achieve economies of scale inExpanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R & D or distributionmanufacturing as well as marketing, R & D or distribution  Can spread costs over a larger sales baseCan spread costs over a larger sales base Increase profit per unitIncrease profit per unit New Market creation:Channel, HidesignNew Market creation:Channel, Hidesign Competitor attacking all marketsCompetitor attacking all markets: Mercedes and BMW, Dell and: Mercedes and BMW, Dell and Toshiba.Toshiba. Location AdvantagesLocation Advantages::Low cost markets may aid in developingLow cost markets may aid in developing competitive advantagecompetitive advantage May achieve better access to: raw materials, low cost labor, key suppliers, KeyMay achieve better access to: raw materials, low cost labor, key suppliers, Key customers, Natural resourcescustomers, Natural resources
  27. 27. Deciding whether to goDeciding whether to go International or notInternational or not  Not all companies need an internationalNot all companies need an international presencepresence  Globalization may be triggered by severalGlobalization may be triggered by several factorsfactors  Risk and the ability to operate globallyRisk and the ability to operate globally must be carefully assessedmust be carefully assessed
  28. 28. InternationalInternational Marketing EnvironmentMarketing Environment  Economic EnvironmentEconomic Environment Industrial structureIndustrial structure  Subsistence economiesSubsistence economies  Raw material exporting economiesRaw material exporting economies  Industrializing economiesIndustrializing economies  Industrial economiesIndustrial economies Income distributionIncome distribution
  29. 29. Cont…Cont…  Political-Legal EnvironmentPolitical-Legal Environment Attitudes toward international buyingAttitudes toward international buying Government bureaucracyGovernment bureaucracy Political stabilityPolitical stability Monetary regulationsMonetary regulations Barter, compensationBarter, compensation
  30. 30. Cont…Cont…  Cultural EnvironmentCultural Environment  Impact of Culture on Marketing Strategy and vice-Impact of Culture on Marketing Strategy and vice- versaversa  Cultural traditions, preferences, behaviorCultural traditions, preferences, behavior  Sellers must examine the ways consumers in different countriesSellers must examine the ways consumers in different countries think about and use products before planning a marketing program.think about and use products before planning a marketing program.  Business norms vary from country to country.Business norms vary from country to country.  Companies that understand cultural nuances can use them toCompanies that understand cultural nuances can use them to advantage when positioning products internationally.advantage when positioning products internationally. E.g:T-shirts with prints of religious deities.E.g:T-shirts with prints of religious deities.
  31. 31. Deciding which markets to enterDeciding which markets to enter  Define international marketing polices andDefine international marketing polices and objectives, and sales volume goalsobjectives, and sales volume goals  Decide how many countries to targetDecide how many countries to target  Decide on the types of countries to enterDecide on the types of countries to enter  Screen and rank each of the possibleScreen and rank each of the possible international markets using several criteriainternational markets using several criteria  Market size, market growth, cost of doing business,Market size, market growth, cost of doing business, competitive advantage, risk levelcompetitive advantage, risk level
  32. 32. Deciding How to Enter the MarketDeciding How to Enter the Market
  33. 33. Common way to enter new international marketsCommon way to enter new international markets No need to establish operations in other countriesNo need to establish operations in other countries May have high transportation costsMay have high transportation costs May have less control on marketing and distributionMay have less control on marketing and distribution May encounter high import tariffsMay encounter high import tariffs Difficult to customize productsDifficult to customize products Establish distribution channels through contractualEstablish distribution channels through contractual relationshipsrelationships Choice of International Entry ModeChoice of International Entry Mode ExportingExportingExportingExporting
  34. 34. Choice of International Entry ModeChoice of International Entry Mode LicensingLicensingLicensingLicensing Firm authorizes another firm to manufacture andFirm authorizes another firm to manufacture and sell its productssell its products Licensing firm is paid a royalty on each unitLicensing firm is paid a royalty on each unit produced and soldproduced and sold Licensee takes risks in manufacturing investmentsLicensee takes risks in manufacturing investments Least risky way to enter a foreign marketLeast risky way to enter a foreign market Licensing firm loses control over product qualityLicensing firm loses control over product quality and distributionand distribution Relatively low profit potentialRelatively low profit potential A significant risk is that licensor learns technologyA significant risk is that licensor learns technology and competes when license expiresand competes when license expires
  35. 35. Choice of International Entry ModeChoice of International Entry Mode Strategic AlliancesStrategic AlliancesStrategic AlliancesStrategic Alliances Enable firms to shares risks and resources to expand intoEnable firms to shares risks and resources to expand into international venturesinternational ventures Most joint ventures (JVs) involve a foreign companyMost joint ventures (JVs) involve a foreign company with a new product or technology and a host companywith a new product or technology and a host company with access to distribution or knowledge of localwith access to distribution or knowledge of local customs, norms or politicscustoms, norms or politics May experience difficulties in merging disparateMay experience difficulties in merging disparate culturescultures May not understand the strategic intent of partners orMay not understand the strategic intent of partners or experience divergent goalsexperience divergent goals
  36. 36. Choice of International Entry ModeChoice of International Entry Mode AcquisitionsAcquisitionsAcquisitionsAcquisitions Enable firms to make most rapid internationalEnable firms to make most rapid international expansionexpansion Can be very costlyCan be very costly Legal and regulatory requirements may presentLegal and regulatory requirements may present barriers to foreign ownershipbarriers to foreign ownership Usually require complex and costly negotiationsUsually require complex and costly negotiations Potentially disparate corporate culturesPotentially disparate corporate cultures
  37. 37. New Wholly-Owned SubsidiaryNew Wholly-Owned Subsidiary Choice of International Entry ModeChoice of International Entry Mode Most costly and complex of entry alternativesMost costly and complex of entry alternatives Achieves greatest degree of controlAchieves greatest degree of control Potentially most profitable, if successfulPotentially most profitable, if successful Maintain control over technology, marketingMaintain control over technology, marketing and distributionand distribution May need to acquire expertise and knowledgeMay need to acquire expertise and knowledge that is relevant to host countrythat is relevant to host country Could require hiring host countryCould require hiring host country nationals or consultants at high costnationals or consultants at high cost
  38. 38. Joint OwnershipJoint Ownership KFC entered Japan through a joint ownership venture with JapaneseKFC entered Japan through a joint ownership venture with Japanese conglomerate Mitsubishi.conglomerate Mitsubishi.
  39. 39. Problems or difficulties in IMProblems or difficulties in IM  Payment difficultyPayment difficulty  Government restrictionGovernment restriction  Language problemLanguage problem  Problem related to communicationProblem related to communication  Documentation & ProceduresDocumentation & Procedures

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