UNIT-1 INTERNATIONAL MARKETING

UNIT-1 INTERNATIONAL MARKETING

1. What is international markets? Write the essentials of international marketing.

International marketing is the application of marketing principles in more than one country, by companies overseas or across national borders. 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.”

Cateora (1997) defines international marketing as performance of business activities that direct the flow of company’s goods and services to consumers in more than one nation for profit.

Jain (1989) refers to international marketing as exchanges across national boundaries for the satisfaction of human needs and wants.

Terpestra (1972) looks upon international marketing as marketing carried on across the national boundaries.

Keegan (1997) comprehends that international marketing as going beyond the export marketing and becoming more involved in the marketing environment in which it is doing business.

 

Essentials of Intenational Marketing:

 

1. Identifying Global Customer Needs

International marketing research is conducted to determine the customer needs possessed by the customers belonging to the different markets, it becomes easy to understand similarities and dissimilarities in customer groups across countries.

Example: US company desires to sell washing machines in Europe, then US company must ha ve clear idea about how European wash their clothes i.e. they wash their clothes at high temperature at 60 degree centigrade compare to US.

Therefore, companies must clear analyze market segments across countries before placing their products at international level.

 

2. Satisfying Global Customers

When needs vary across countries and regions then, a company to satisfy global customers must adapt products, services and elements of the marketing mix. To reduce prices, a company must decide is it necessary to design a product at less manufacturing costs or produce it in a country where it is easier to achieve the target of less manufacturing costs.

There is a need for well-designed distribution and logistics system to make easy availability of goods and services at point-of-sale in adequate level of quantities.

Companies must provide the facility of global customer database and information systems to satisfy the needs of global customers by responding in accordance with their needs and purchasing decisions.

 

3. Being Better than the Competition

Companies must struggle against both the domestic and the global competitors. Companies must evaluate, monitor and respond to global competition by providing better value, developing superior brand image and product positioning, low prices, high quality, wide range of products, appreciable performance and superior distribution advertising and service.

Competitors are composed of state-owned enterprises, other multinationals and domestic firms with different targets like market share over profits.

 

4. Coordinating Marketing Activites

International marketing introduces a new level of complexity that takes place due to company’s coordinates their marketing activities across nations. There is involvement of this processes like centralization, delegation, standardization and local responsiveness to coordinate and integrate marketing strategies and introduce them across countries, regions and global market.

 

5. Recognizing the Constraints of the World Environment

When firms desire to enter the global market then, they must possess the ability to manage cultural and economic variance due to marketing infrastructure variances, financial restrictions due to exchange-rate variation and inflation-rate variation and influence of governmental policies, protectionist and industrial policies. All these aspects may generate complexities for companies towards market entry.

 

Further, international marketing covers some more activities that are listed below:

1. Exporting
2. Overseas manufacturing
3. Working with local partners
4. Licensing and franchising overseas
5. Imparting even, from foreign subcontractors
6. Counter trade.

International marketing for example, is engaged in exporting products to few countries then a company becomes an international marketer because it is directly involved in foreign markets by participating in specific activities like pricing, promotion, after sales service and manufacturing.

 

 

2. What is Global Marketing ? explain briefly about the various decisions associated with Global Marketing.

Ans:

Meaning:

Global Markets are the markets where the buying and selling of goods and services occurs between two or more nations.

 

Global Marketing:

“Global Marketing” refers to marketing done across various countries rather than just focusing on marketing in the home country. The firms involved in global marketing, to market their products and services in foreign countries. The needs wants, preference and buying behavior of target customers differ from country to country and this makes the task of global marketing difficult. Global marketing is the last stage in the process internationalization of business and marketing as a challenge because global marketing involves planning a marketing strategy which is applicable and acceptable to all countries.

 

Global Marketing Decisions

The five steps involved in developing a global marketing program are as follows,

Step1: Identifying target market and place of customers.

Step 2: Product Planning for global markets.

Step 3: Pricing for global markets.

Step 4: Deciding the mode of entry into the global markets.

Step 5 : Promoting products/services in global markets/foreign markets.

Decision are taken at each step and these decisions are collectively known as global marketing decisions.

 

Step1: Identifying target market

In the first step, marketer need to identify the target market. Developed countries would be the profitable markets for developing countries because developed countries have more purchasing power, great infrastructure facilities and encourages imports. After identifying markets in order to find out what products have to be offered at each market. Due to development in technology locating foreign buyers has become an easy task. For example, with the help of internet, marketers today are able to locate and communicate with foreign buyers without making personal visits to foreign countries.

 

Step 2: Product Planning for Global Markets

In global marketing, product markets differ from one another in terms of demand patterns and customers view point about the product benefits. A marketer who wants to market its products in the global markets is required to identify the significance of product planning, decide which alternative has to be chosen i.e., product adaptation or standardization and design a plan for cross country segmentation. Product adaptation is a process wherein global product is localized. Standardization leads to development of product which reserves same level of demand from various product market segments.

Step 3: Pricing for Global Markets

            Deciding the product prices in the global markets is a crucial task. A marketer need to find out minimum and maximum export prices. After this negotiation on product prices takes place between exporter and importer. In case of products having differential value can be sold at higher prices in the foreign markets. Few non-price factors which have to be taken into consideration in global marketing are,

1. Product differentiation
2. Industrial goods
3. Consumer goods
4. Engineering products etc.

These factors influence the pricing decisions in global marketing.

Step 4: Deciding the Mode of Entry into the Global Markets

The two modes available to enter the global markets are

1. Direct Exporting: in direct exporting, product manufacturer take decision to export its products directly to global markets without taking any help from export house/trading houses.

 

2. Indirect exporting: In indirect exporting, manufacturer export its product to foreign markets/global markets indirectly i.e., through trading houses. Few government trading organizations such as MMTC, state trading corporation and national small industries corporation are working as export houses.

 

Step 5: Promoting Product/Services in the Global Markets

            A company which wants to go for direct exporting must make efforts to create awareness in the customers regarding the product. Compared to domestic marketing, promoting products in global markets is a complicated task. Some of the methods used for promoting products in the global markets are advertising; direct Mailing, trade fairs and exhibitions, sales promotion and personal selling. Among all these methods, advertising is the best method to promote products in the global markets.

 

3. Explain the environmental factors of international marketing?

Definitions:

1. 1. International marketing environment is a set of controllable (internal) and uncontrollable (external) forces or factors that affect international marketing. International marketing mix is prepared in light of this environment.
2. International marketing environment consists of global forces, such as economic, social, cultural, legal, and geographical and ecological forces, that affect international marketing decisions.
3. International marketing environment for any marketer consists of internal, domestic, and global marketing forces affecting international marketing mix.

The formulation of market strategy is mainly dependent on both the internal as well as the external forces i.e., firm-related and market related forces. Internal environment and external environment helps to make strategic decisions related to the marketing environment. For example, based on internal and external environment aspects, company undertakes strategic decisions,

1. The competencies required to enter the foreign market.
2. Type of the marketing strategy required to adopt while entering the foreign market.
3. The most suitable strategies for implementing the product, pricing, promotion and distribution decisions.

Thus, there exists differences in the national and international marketing strategy in the marketing environment.

Environment of Global Marketing

Any company dealing or enters into global markeing should undertake the following:

1. Internal environment
2. Domestic environment
3. Foreign environment
4. Global environment

 

1. Internal Environment:

Firm related factors are termed as “internal environment”. For example, company’s ability to carry out international business and operations relies mainly on its internal aspects such as, mission and vision of the company, the attitude, capabilities and commitment of the senior executives and all the employees in the company, organizational structure, decision-taking and implementing aspects, financial, and other resources and capabilities.

Doing international business calls for restricted production and delivery schedules, commitment towards quality, effective and faster response to customer requirements, cost competitiveness, innovativeness and so on.

 

1. Domestic Environment:

When a company desires to carry-out its business in foreign countries it tends to follow the home-country environment in the foreign countries.

Domestic factors are related to the economy of the nation. Overall economic, social and cultural, demographic, political and legal, and other domestic aspects constitute domestic environment for international marketing. This environment affects international marketing mix in several ways.

Important domestic factors include:

 

1. Political climate/stability/philosophy
2. Government approach and attitudes toward international trade

iii. Legal system and business ethics

1. Availability and quality of infrastructural facilities
2. Availability and quality of raw-materials
3. Functioning of institutions and availability of facilities

vii. Technological factors

viii. Ecological factors, etc.

• Foreign Environment:

Foreign Environment implies environment related to the foreign market wherein, the elements of business environment varies between different markets.

For instance, US business environment is entirely different from the business environment of China, Russia, Middle East or other regions.

However, there is greater differentiation/variations of business environment even within a foreign country which is mainly due to rules and regulations applied for foreign trade and investment and other identical policies which are used to monitor and governs the business. Moreover, there exist variations among socio-cultural, demographic, economic and natural factors within and between the countries.

1. Global Environment:

Global factors that are related to the international business often referred to as global environment. These global factors include, the WTO principles and agreements, international conventions/treaties/agreements/declarations/protocols so on, business and economic situation influence of main developments such as war, considerable fluctuations in the oil prices, opinion of other countries etc.

Certain development also have global impact on the foreign trade, such as, considerable fluctuations in the price of crude-oil, the occurance of global economic crisis which spread throughout the year 2008, followed by a sharp decline in global trade in 2009, war or other political development.

An Indian company when desires to enter the global market should adopt the internationally acceptable standards and practices appropriate for different areas. For example, increase of accounting and reporting governances especially when it aims to enter the international capital market or enter into foreign collaboration, a company must adopt US GAAO (General Accepted Accounting Principles) for the issue of ADRs/GDRs.

 

4. How do you identify the international consumer needs?

A customer need is a motive that prompts a customer to buy a product or service. Ultimately, the need is the driver of the customer’s purchase decision. Companies often look at the customer need as an opportunity to resolve or contribute surplus value back to the original motive.

Researching customers

Successful businesses make profits by understanding their customers and identifying their needs. Good customer research helps you choose products, tailor your marketing, and develop sales tactics for the people in your market based on reliable, accurate information.

Customer research should be part of your overall market research and should be conducted regularly. While your market research looks broadly at your customers, competition and industry to identify who you will market to, customer research provides more in-depth information on the needs, wants, expectations and behaviours of your customers.

By identifying information about your consumers such as where they work, what they read and where they look at advertising, you can improve the strategies you use to attract them. It is also important to understand their purchasing behaviour and attitudes with regards to brands and products. Testing new product or marketing concepts with potential customers is also a good way to prepare for a launch to see if your work has potential to translate to success.

Identifying your customers’ needs and preferences allows you to tailor the strategies and tactics you use in your marketing plan. This will help you to:

• attract more customers
• set the best price for your products
• create the right marketing message
• increase how much your customers spend
• increase how often your customers spend
• increase your sales
• decrease your costs
• refine your approach to customer service.

Identifying  international customer needs:

International marketing research is conducted to determine the customer needs possessed by the customers belonging to the different markets; it becomes easy to understand similarities and dissimilarities in customer groups across countries.

Identifying customer needs

Before you start promoting your business you need to know what your customers want and why. Good customer research helps you work out how to convince your customers that they need your products and services.

Identify your customers

The first step of customer research is identifying your customers. Your market research should help you understand your potential customers. Further customer research can help you develop a more detailed picture of them and understand how to target them. It will also highlight key characteristics your customers share, such as:

• gender
• age
• occupation
• disposable income
• residential location
• recreational activities.

Understand why they shop

Once you’ve identified who your customers are, you can find out what motivates them to buy products and services. For example, consider if they make decisions based on:

• work demands
• family needs
• budget pressures
• social or emotional needs
• brand preferences.

Identify preferred shopping methods

As well as understanding why they shop, you will also want to understand how they shop. To learn about your customers’ preferred method and means of shopping, consider if they:

• shop online, over the phone or in stores
• make spontaneous or carefully considered buying decisions.

Consider their spending habits

Different types of customers will be willing to spend different amounts. Find out what financial capacity and spending habits your customers have. For example, consider:

• their average income
• the portion of their income they spend on the type of products or services you sell
• if they budget.

Find out what they think of you

Learn about your customers’ views and expectations of your business and rivals. For example, find out what they think of your:

• products and services
• customer service
• competitors

A customer needs is used in product development and branding to provide an in-depth analysis of the customer to ensure that the product or message offers the benefits, attributes, and features needed to provide the customer with value.