WTO & Trade Issues - International Marketing Introduction.pptx

International Marketing – An Introduction
• Marketing refers to activities a company undertakes
to promote the buying or selling of a product or
service. It includes advertising, selling, and
delivering products to consumers or other
businesses
• International Marketing is the application of
marketing principles by industries in one or more
than one country
• International marketing is based on an extension of
a company’s local marketing strategy, with special
attention paid to marketing identification, targeting,
and decisions internationally
• According to the American Marketing Association
(AMA) "international marketing is the multinational
process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods,
and services to create exchanges that satisfy
individual and organizational objectives." Source: Secondary Sources on Google

Scope of International Marketing
International marketing has broadened its capacity due to some major factors mentioned below:
• Export: Trading of goods and services from one country to another and abiding by the rules and
regulation of both the home country and the foreign country. In short, exporting means shipping
the products and services from one nation to another
• Import: Buying of products and services from an external source across national borders is
known as import
• Re-Export: It means export of foreign goods which already imported to the country from a
foreign country. In other words, if any goods already imported in to a country and the same
goods are again exported to either to same country or to some other country, such movement of
goods is called ‘Re export’
• Formalities and procedures of marketing: There are a number of laws and policies framed by
different countries and these make international marketing more complex, and a time
consuming process. The exporters & importers are compelled to abide by all the formalities &
procedure related to licensing, foreign exchange, customs duties & goods clearance. These
policies, rules and regulations are not static for all participating countries. So, it is important to
be well aware of the procedure and formalities and plunge into the vast expanse of international
marketing.
Source: Secondary Sources on Google

Scope of International Marketing (cont.)
• Commercial policies and their impact: The countries participating in the international marketing
design their own commercial policies that suit their requirements. Different policies of different
nations invoke the commercial environment of international market
• International Marketing Research: International market is important, as it deals with marketing
on a larger scale and also paves way for productive research. Research requires complete
knowledge of the in and out of target market, customers’ needs and requirement, buying
behaviour, prevailing market competition and many more. Market research at international level
provides base for product planning & development, introduction of sales promotion techniques

Domestic vs International Marketing
• Domestic marketing is when commercialization of goods and services are limited to the home
country only
• On the other hand, International marketing, as the name suggests, is the type of marketing
which is stretched across several countries in the world, i.e. the marketing of products and
services is done globally

Domestic vs International Marketing (cont.)

Principles of International Marketing
• People - Understanding Customer Behaviour in a Different World
 The people you are marketing to and the product that you are marketing go hand in hand.
However, we’re leading off with the people because if you don’t first and foremost
understand who you are marketing to, you may end up trying to sell them a product they
don’t want and probably will never buy
 For example: Best Buy, an American multinational consumer electronics retailer, has not
found much international success, especially in Europe. While their products were something
that their target market wanted overseas, the way in which it was distributed was not well
executed based on the way consumers shop in Europe
 Instead of tailoring their stores to fit the preferred mold of Europeans — which is smaller
shops as opposed to large box stores — Best Buy opened up brick and mortars that were
much bigger than what Europeans were used to
 In this example, had Best Buy done more research to understand their intended target
audience, they would have seen that their product offering — tech gadgets in an extremely
large one-stop-shop — would not have fared well. Instead, they could have opened up
smaller stores to accommodate cultural preference

Principles of International Marketing (cont.)
• Product - Altering to Fit the Needs of Your New Market
If you notice that the current offering of your product now won’t play in the new market you
want to enter then you can do one of two things:
 Decide not to sell in that market
 Change your offering to meet the local demand
The classic example of this is McDonald’s. The fast-food empire has an astounding 34,480
restaurants in 119 countries. In order to be successful, they had to alter their menu for just
about every one of those countries — which led to some pretty interesting entrees. McDonald’s
put in the work to understand the people they were about to serve and altered their offering to
fit their palate. Overall, this decision is an excellent one to learn from for those looking to branch
out to foreign markets.

• Prices - Choosing a Premium or Economy Pricing Strategy
 It’s difficult to pull off being associated as a more expensive, premium product in one country,
and the complete opposite in another. You may even risk bringing down your brand image as
a result
 If you have a premium product, it’s likely premium elsewhere.
 If you have a more affordable, economically-friendly product, it’ll be the same in your new
market
 For Example: Imagine if Omega, Swiss luxury watchmaker, was entering the Swiss market for
the first time and because they knew Rolex already had a definitive hold on the premium
watch market, they decided to pivot to a more economy pricing strategy. While a move like
this might help them sell more watches in the short term, the long term effects could make
people outside of Switzerland associate them with cheaper products, which is not could
negatively impact sales in other regions
 However, it is not inconceivable to think Omega could enter the Swiss market with an
affordable watch under a different name if they truly wanted to target that segment of the
watch market

• Promotion - Choosing Strategies That Work in This New Environment
 Figuring out the most effective methods for marketing your product or service abroad is not
that much different than doing it domestically
 Even if you live where you’re promoting your product, you still have to do some additional
research to find out where your target audience is and which mediums they frequent
 Take Brazil, China, Japan, Russia, Poland, South Korea, and Vietnam for example. In these
countries — at least as of 2011 — Facebook is not the most popular social media site
 Instead, Twitter or Orkut and other regional platforms reign supreme
 Obviously, this doesn’t mean you shouldn’t be advertising on Facebook, but this information
does suggest that perhaps focusing more effort on the leading site in those geographical
locations — like Twitter, may be more effective. Especially if that’s where your demographic is
hanging out
 Does my new target market like coupons? Should I be advertising on television in this part of
the world, or is Youtube be more appropriate?
 These are just a few of the many questions you should ask yourself prior to starting any big
marketing campaigns anywhere in the world

• Place - Finding the Sales Avenue That Your Consumers Use
 Defining where you’ll be advertising and marketing your product or service is one thing. But
finding the right place to actually sell your offering is another
 One of the bigger questions you should look to answer is whether or not you’ll be able to sell
your product online
 Did you know that there are many European countries where their people prefer to shop in
person as opposed to online?
 Just like with Best Buy in Europe, the size and layout of your store may need to be altered to
fit your consumers. But in addition to that, deciding how much effort to put into online stores
— or any effort at all — is another big decision that must be made

• Packaging - Finding the Right Look
 The way you package your product or service may vary a lot from country to country. When
you determine how to package your offering, color is an important choice. One reason for
this is because different areas of the world associate specific meanings to certain colors
 For example, in Eastern and Asian cultures, red is a color that is synonymous with happiness,
joy, and celebration but in the Middle East, red is considered a warning and brings forth
feelings of danger. Some also consider it to be the color of evil
 In addition to the design, the copy on the packaging is also important. Example: When KFC
tried to translate their tagline “Finger-Lickin’ Good” to fit the Mandarin language, it ended up
forming the phrase “We’ll Eat Your Fingers Off.” Not exactly the best message to convey,
though one could interpret the slogan to read that KFC’s chicken is so good you’ll accidentally
nibble one of your fingers off as you’re scarfing it down. Even then, not the best tagline

• Positioning - Determining Which Messages Will Resonate With The Market
 Positioning is absolutely critical when entering a new market
 A significant part of your positioning will be evident in the messages you relay in marketing
campaigns. The messaging should be derived from your unique value proposition (UVP)
 Let’s say you are a toothpaste company that is attempting to enter the market in Brazil.
Because you did your research, you discovered that there is an opportunity in the Brazil
market for a toothpaste that helps reduce sensitivity. You create a toothpaste that does just
that and name it SensePaste. So, your UVP would look something along the lines of this:
SensePaste is a toothpaste that helps improve the strength of your teeth and gums so you
don’t experience the negative symptoms of sensitive teeth. By using specific ingredients in
our toothpaste, SensePaste is able to prevent your teeth from hurting in addition to keeping
them clean. Unlike other toothpaste in the market that just clean teeth, SensePaste will keep
your mouth healthy and pain-free. As you can see, your UVP will then influence your global
marketing strategy.

• Physical Evidence - Getting the Ambiance and Mood Right
Attention needs to be paid to the physical evidence in the setting where people will receive your
service. The physical evidence can be broken into three separate areas:
 Physical Environment: The physical environment is the physical space that surrounds the
consumer during the service or experience. So, if you’re selling food, then the restaurant is
the physical environment
 Ambiance: You can look at the ambiance as a subsidiary of the physical environment, it is
about the mood and feeling inside the physical space. Colors, music, and lighting are little
details that can make a big difference when it comes to how your service is perceived by your
consumers
 Spatial Layout: To further illustrate the significance of the actual layout of the space where
your service is offered, let’s consider a karaoke bar. In the U.S, karaoke bars typically set up
the karaoke machine in an open space, where anyone can see the person performing.
However, in Japan, karaoke bars are much different — the majority of them feature private
rooms (karaoke bars) for groups of people to rent for a specific amount of time
 Once again, the Best Buy example fits this bill as well, where their consumers in Europe found
their large stores overwhelming because of how big they were

Customer Value
• What is Customer Value?
Virtually all organizations strive to deliver good overall value for both their current and potential
customers value. Without providing true customer value firms will be unable to attract and
retain customers. And without customers there is no functioning business in the long-term.
Customers need to perceive that value exists for them – that is, they will receive more benefits
than the costs they incur.
Therefore, in simple terms, customer value is when a customer perceives that the range of
benefits they receive from a transaction exceeds the cost and effort undertaken to participate in
that transaction. In other words, did they get a good deal and did they benefit overall from the
purchase?

Customer Value
When considering customer value, it is important to understand that it is much more than
simply a price/quantity view
Let’s look at an example to understand the concept:
Suppose there are two bottles of Coca-Cola; one being a large family size and the other being an
individual serving size.
In supermarkets, in particular, the family size bottle sits on the shelves at room temperature,
whereas the smaller size is in a refrigerator near the checkout. In many supermarkets, the
smaller bottle is equal in price and sometimes greater in price than the larger bottle.
If we take the view that value is simply how much I get for what I pay, this situation makes no
sense at all. It only makes sense when you think about the range of benefits that the consumer
will receive from a particular purchase.

Customer Value
Example (cont.)
Let’s look at some benefits:
1. In this case, some of the benefits received from the smaller bottle purchase are:
 Convenience, easy to carry, easier to fit in a bag,
 Less socially conspicuous,
 Less wastage
 More refreshing
Therefore, because the smaller product, in many ways provides a greater range of benefits for an
individual, consumers will be willing to purchase such an item, even though on a straight value
for money (on a quantity basis) it is not as attractive as the larger family size bottle.

Customer Value
Example (cont.):
2. The family size bottle, sitting at room temperature however, is attractive to the household
buyer, who has no need for immediate consumption of the beverage.
Instead, they are seeking the benefit of having a suitable beverage available at home when
required for the family, or perhaps when catering for a party or a family function.
You will note that in these situations the needs of these consumers differ and, as a result, are
seeking different benefits – and will see different value in the two product offerings.
So the key question, when considering customer value, is: “Which product offering better suits
my needs?“
3. Suppose private-label and generic brands of cola are often also available in the supermarket
at a lesser price same in the refrigerator section. However the well-known brands will outsell
the generic ones. This situation again highlights another benefit being received by the
consumer. In this case the consumer is selecting a product with strong brand equity, which
may mean that they are seeking the benefit of social status and/or confidence in knowing
that they have tried and already like the taste of that brand

Customer Value
Example (cont.):
Let’s look at types of costs:
The second part of the customer value equation is the cost and effort involved in acquiring the
product. In most cases the most significant costs considered by the consumer will be the actual
price they pay for the item
However, there are other costs that need to be considered. The time taken to purchase is
another key consideration factor. For example, a consumer is willing to pay more for a cola drink
at a convenience store, as opposed to going to the supermarket. This is because it is much faster
for them to access and purchase via that particular type of retailer. Therefore, the amount of
time involved in the purchase transaction will be considered by some consumers.

Competitive Advantage
Introduction:
• There is no one answer about what is competitive advantage or one way to measure it, and
for the right reason. Nearly everything can be considered as competitive edge, e.g. higher
profit margin, greater return on assets, valuable resource such as brand reputation or unique
competence in producing jet engines
• Every company must have at least one advantage to successfully compete in the market. If a
company can’t identify one or just doesn’t possess it, competitors soon outperform it and
force the business to leave the market.
• A company that is able to achieve superiority in cost or differentiation is able to offer
consumers the products at lower costs or with higher degree of differentiation and most
importantly, is able to compete with its rivals.
• An organization that is capable of outperforming its competitors over a long period of time
has sustainable competitive advantage.
• A competitive advantage is an advantage over competitors gained by offering consumers
greater value, either by means of lower prices or by providing greater benefits and service
that justifies higher prices

How a company can achieve it?
An organization can achieve an edge over its competitors in the following two ways:
• Through external changes. When PEST (political, economic, socio-cultural and technological)
factors change, many opportunities can appear that, if seized upon, could provide many
benefits for an organization. A company can also gain an upper hand over its competitors
when its capable to respond to external changes faster than other organizations.
• By developing them inside the company. A firm can achieve cost or differentiation advantage
when it develops VRIO (valuable, rare, hard to imitate and organized) resources, unique
competences or through innovative processes and products

External Changes
• Changes in PEST factors:
PEST stands for political, economic, socio-cultural and technological factors that affect firm’s
external environment. When these factors change many opportunities arise that can be
exploited by an organization to achieve superiority over its rivals. For example, new superior
machinery, which is manufactured and sold only in South Korea, would result in lower
production costs for Korean companies and they would gain cost advantage against
competitors in a global environment
Changes in consumer demand, such as trend for eating more healthy food, can be used to
gain at least temporary differentiation advantage if a company would opt to sell mainly
healthy food products while competitors wouldn’t. For example, Subway and KFC
If opportunities appear due to changes in external environment why not all companies are
able to profit from that? It’s simple, companies have different resources, competences and
capabilities and are differently affected by industry or macro environment changes

External Changes
• Company’s ability to respond fast to changes:
The advantage can also be gained when a company is the first one to exploit the external
change. Otherwise, if a company is slow to respond to changes it may never benefit from the
arising opportunities

Internal Environment
• VRIO Resources
A company that possesses VRIO (valuable, rare, hard to imitate and organized) resources has
an edge over its competitors due to superiority of such resources. If one company has gained
VRIO resource, no other company can acquire it (at least temporarily). The following
resources have VRIO attributes:
 Intellectual property (patents, copyrights, trademarks)
 Brand Equity
 Culture
 Know-how
 Reputation

Internal Environment
• Unique Competences:
Competence is an ability to perform tasks successfully and is a cluster of related skills,
knowledge, capabilities and processes. A company that has developed a competence in
producing miniaturized electronics would get at least temporary advantage as other
companies would find it very hard to replicate the processes, skills, knowledge and
capabilities needed for that competence
• Innovative Capabilities:
Most often, a company gains superiority through innovation. Innovative products, processes
or new business models provide strong competitive edge due to the first mover advantage

The strategies that Porter suggested are appropriate to seek competitive advantage are
summarised in the figure below:

Cost Leadership
Cost leadership means companies provide reasonable value at a lower price. Firms do this by
continuously improving operational efficiency. That usually means paying their workers less.
Some compensate for lower wages by offering intangible benefits such as stock options,
benefits, or promotional opportunities.
Others take advantage of unskilled labor surpluses. As these businesses grow, they can benefit
from economies of scale and buy in bulk
Walmart is a good example of cost leadership. This is because they sometimes pay their workers
less than the cost of living, but higher minimum wage laws threaten their advantage

Differentiation
Differentiation means companies deliver better benefits than anyone else. A firm can achieve
differentiation by providing a unique or high-quality product. Another method is to deliver it
faster. A third is to market in a way that reaches customers better
A company with a differentiation strategy can charge a premium price, which means it usually
has a higher profit margin
Companies typically achieve differentiation with innovation, quality, or customer service
An excellent example of this is Apple. The iPod was innovative because it allowed users to play
whatever music they wanted, in any order

Focus
Focus means the company's leaders understand and service their target market better than
anyone else. They either use cost leadership or differentiation to do that. The key to a successful
focus strategy is to choose a very specific target market. Often it's a tiny niche that larger
companies don't serve.
Cost-focus refers to organisations who seek to develop a lower-cost advantage, but only within a
small market segment. These products will generally be basic, vaguely similar to the average
market-leading products (though more popular products can be charged at a higher price) and
will be acceptable to a sufficient number of customers in order to make a profit.
An example would be budget food items or other household tools stocked only by small, local
supermarkets. Another would be a low-cost regional airline which focuses only on specific
routes. These products are often referred to as "me too's"

Differentiation Focus
In a differentiation-focus strategy, the organisation will look to develop product differentiation,
but only within one or a smaller number of market segments. As these organisations have
identified a smaller consumer group to focus on, they can more specifically appeal to the needs
and wants of this group than could an organisation which is attempting to differentiate for a
wider population.
This approach is the most common niche marketing strategy. Small businesses can use this
method to force themselves into a niche, developing unique products which can be sold for
higher prices than similar undifferentiated products, often due to specialist knowledge or
innovation compared with other businesses.
For example, community banks use a focus strategy to gain sustainable competitive advantage.
They target local small businesses or high net worth individuals. Their target audience enjoys the
personal touch that big banks may not be able to give, and customers are willing to pay a little
more in fees for this service. These banks are using a differentiation form of the focus strategy.

Market Orientations of International Marketing
Introduction:
Different attitudes towards company’s
involvement in international marketing
process are called international
marketing orientations. EPRG
framework was introduced by Wind,
Douglas and Perlmutter. This
framework addresses the way strategic
decisions are made and how the
relationship between headquarters
and its subsidiaries is shaped.
Perlmutter’s EPRG framework consists
of four stages in the international
operations evolution.

ETHNOCENTRIC:
The ethnocentric orientation of a firm considers that the products, marketing strategies and
techniques applicable in the home market are similar to that in the overseas market.
In such a firm, all foreign marketing operations are planned and carried out with little or no
difference in product formulation and specifications, pricing strategy, distribution and promotion
measures.
For example, Walmart’s offerings remain the same throughout.

REGIOCENTRIC:
In regiocentric approach, the firm accepts a regional marketing policy covering a group of
countries which have comparable market characteristics such as economic, cultural or political
similarities and formulates operational strategies based on region instead of countries.
For example, countries like Pakistan, India and Bangladesh are very similar. They possess a strong
regional identity
GEOCENTRIC:
In geocentric orientation, the firms accept a worldwide approach to marketing and target “global
consumers” with similar tastes.
There are similarities between geocentric and regiocentric approaches in the international
market except that the geocentric approach calls for a much greater scale of operation.
For example, Nokia offers products to a similar kind of consumer worldwide.

POLYCENTRIC:
When a firm adopts polycentric approach to overseas markets, it attempts to organize its
international marketing activities on a country to country basis.
Polycentric approach works better among countries which have significant economic, political
and cultural differences.
For example, McDonald’s tailoring its offerings to the country of operation such as Maharaja
Mac in India, McItaly in Italy, McLobster in Canada

MNC’s
Multinational corporations function on a large scale and own or control production of goods or services
in one or more countries other than their home country
These companies produce large amount of wealth. Their operations are so huge that sometimes their
sales turnover exceeds the GROSS NATIONAL PRODUCT of some developing nations. For example, the
physical assets of IBM crosses 8 billion dollars
Some distinct characteristics of MNC’s are as follows −
Centralized Control − MNCs have their branches in different countries. These branches are monitored,
controlled and managed by centralized offices or the headquarters usually located in the home countries.
Professional management − MNCs hire qualified, professional, and skilled people. They make all possible
efforts to keep their employees updated by ensuring proper training on a regular basis
International operation − MNCs establish their branches, plants, and offices in more than one country.
They operate through a network of branches, subsidiaries and affiliates in host countries. For example,
Coca Cola, Apple, etc.
Sophisticated Technology − MNCs adapt to the latest trends and follow advanced technology to supply
world class products. They use capital-intensive technology and innovative techniques of production.

MNC vs TNC

Benefits of International Marketing

WTO & Trade Issues - International Marketing Introduction.pptx

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