Unit-4 International Marketing

UNIT-4

1. Discuss the development of International Marketing?

 

Definition: Market development is a strategic step taken by a company to develop the existing market rather than looking for a new market. The company looks for new buyers to pitch the product to a different segment of consumers in an effort to increase sales.

⇒The development of International Marketing

Global Marketing is an extension and new vision of international marketing and it is being used since 1980’s.

• Domestic Marketing

Marketing activities of the firm specifically targeting the needs and wants of single market i.e., the firms domestic/home market and is often referred to as ‘domestic marketing’ and the firm here face individual set of issues related to economic, competitive and marketing aspects. Domestic marketing mainly focuses on a single set of national customers, even though it is serving the several segments of single market.

⇒          Segment 1

Eg: Single country                        ⇒      Segment 2

(India)                                      ⇒   Segment 3

 

• Export Marketing : This take place when a company sells its products to another company/country which is beyond the range of the domestic operations i.e., firms produce products in one country and sells them in other country. The biggest change of export marketing is to appropriately select those market or countries which are offering growth opportunities by conducting market research, identifies appropriate product modifications which are in accordance with the needs of export market and introduce an export channel that helps the company to market its products abroad.

 

Eg: Japan            ⇒        India

(Dual-country export marketing)

 

• International Marketing:

A company is said to have engaged in international marketing when it has surpassed the export marketing and is directly engaged in local marketing within a specific country. Such companies also establish their own sales subsidiaries along with the introduction of marketing strategies especially meant for the foreign markets.

 

Companies are required to take appropriate decisions regarding the adjustment of marketing strategy i.e., how to sell, advertise, and distribute products that fulfills the demands of new market. Companies must have clear idea and understanding about the varied cultural, economic and political environments to operate successfully in the world markets.

 

Eg: from Canada to many other countries

 

• Multinational Marketing: Multinational marketing is an outcome of multinational corporation (MNC). MNCs make huge investments in the form of assets across countries and operates in many foreign countries. Such companies make use of multidomestic  strategies to remain competitive in market and to act locally wherever they operates.

            The main issue faced by a multinational marketer is to identify and to adopt the appropriate marketing strategy for a single county. However, multinational fail to gain competitive advantage form their global size while making agreements with their suppliers and distributors.

 

• Pan-regional marketing:

Dis-economics of scale which afflicts individualized marketing strategies that is designed in accordance with the local environment because companies have started focusing on strategies related to large regions. Regional strategies include many markets like pan-European strategies for Europe which is an outcome of regional, political and economic integration.

This form of integration also found in countries like United States, Canada and Mexico. Companies with regional strategies in marketing operations tries to synergize in one region to achieve increased efficiency.

• Global Marketing: International companies are already awake of the opportunities existing for economics of scale and increased competition at higher level with which the companies can control and created for a product, service or a company which is applicable to all types of markets. Global marketers face few challenges while preparing marketing strategies that is suitable for the countries throughout the globe and they must have clear idea and view about cultural, economic and political environment of different countries. Managing the global marketing needs expertise and talented global marketers and managers to achieve success in global markets.

 

2. Discuss the scope and reasons for entering into Global Marketing.

 

Scope of Global Marketing:

 

The  global marketing has a wider scope. The marketing is a managerial activity, which helps in transferring the goods and services from the producer to the customer. An effective global marketing carryout marketing activities across various counties regions and across the globe. It acts as a means for entering the global markets by.

1. Starting a subsidiary or branch in foreign country for processing packaging, assembly or manufacturing with the help of the direct investment.
2. Negotiating licensing so that the foreign enterprises are given the right to utilize the exporting are given the right to utilize the exporting company’s processes, patents or trademarks with the financial investment or without the financial investment.

• Developing joint venture in foreign countries for the purpose of manufacturing or marketing.

1. Providing the consultancy services and taking up the turnkey projects in foreign countries.
2. Undertaking sub-contracting and counter trade.
3. Importing goods to carry out export production.

Reasons for Firms Entering Global Markets

There are several reasons for the firms to enter global market apart from the purpose of just serving global customers. These reasons are as follows,

1. Bulk Sales: by entering into the global markets, the firm can sell the goods in bulk. The global orders are bigger than the orders of domestic markets which enables the firm to use its capacity and attain the economies of scale of operations.
2. Relative Profitablity: The profit rates that are earned from global business are higher than the profit earned from domestic sales.
3. Inadequate Domestic Demand: The domestic demands level over the time period is not sufficient for utilizing the installing capacity effectively. The global business helps in providing adequate mechanism for using the unused capacity. This will in turn help in decreasing the cost and enhancing the firms’ profitability. Establishing the expanding global markets gives a level of protection to the company against the domestic economic slow down.
4. Decreasing Business Risks: An expanded global business assists in reducing the fluctuations in the firms’ overall activities. If a company is selling products in different makes then the downward fluctuations in sales in one market. Which can be domestic market will be balanced by the upward fluctuation in sales in other markets.
5. Legal Restrictions for internal Growth: some restrictions are imposed by the government on the growth and expansion of the company with in the domestic market so as to attain specific social objectives. For making the overseas investments, there will not be any restrictions or if the additional capacity of the company is utilized for exports, then the restrictions can be removed even in domestic markets. In such cases the company can inspect the export operations, as it provides a way for attaining the corporate growth. In this way, the business activities were carried out in India, before the industrial licensing was virtually eliminated.
6. Obtaining Imported Inputs: The countries need export to make payment for importing the materials, processes or technology which are unavailable with in their national borders. The government may be forced to levy export obligations on the firms, specifically those which needs imported inputs.
7. Social Responsibility: In many situations, the businessmen feel responsible to make their contribution towards the foreign exchange reserves of the country by improving their exports, as this helps them to establish their image in the domestic market. They also consider exporting as a way to achieve status and prestige.
8. Increased Productivity: Enhanced productivity is needed for the firm’s survival. It is very essential for the firm to improve production rate and search export markets. In today’s rapidly changing environment, large firms must spend a significant amount of money on the activities of research and development. In order to meet the expenses of research and development, huge markets are required and exports become a necessity.
9. Technological Improvement: Entering the export markets will help the firms,
10. To select innovative product ideas and to make additions to product lines
11. To enhance its products

• To minimize the cost

1. To find new product’s application

Thus, the above mentioned were the reasons for globalization.

1. Challenges in managing international distribution strategies.

Challenges in managing an international distribution strategies:

 

Many companies today distribute goods throughout their local region or across the country with considerable success, and some may be considering expanding into an international market to increase sales. The fact is that managing international distribution channels can be profitable and rewarding for many companies, but it can also be challenging on several different levels. By spending some time analyzing what is involved in managing international distribution channels, you may make a more informed decision about expansion that is right for your company.

 

The Right Market for Your Products

 

First, you should carefully consider the benefit associated with finding an international market that is similar to your own. Reaching into international markets can be difficult to do because your products may appeal to a different target audience, marketing messages may be skewed when they reach a foreign audience or are translated into a foreign language and more. Examples of similar international markets that may be compatible include New Zealand and Australia or Singapore, Malaysia and Hong Kong. Do your research and find out if the desired market does have a demand for your goods. Choosing the right international market is imperative for success as your company expands. Talk to local retailers and their customers to establish if the market is worth the investment.

Other Logistical Concerns

 

In addition to selecting the right international market to invest in, there are other logistical concerns to consider when managing international distribution channels. For example, you must consider if you will sell your goods online or through local retailers.

 

Selling Online to International Markets

 

Online distribution only requires you to ship goods overseas direct to the customer. But international freight can cause issues and lost stock can be a time consuming nightmare to deal with. Consider insurance.

 

Supplying International Retailers

 

While selling big orders to international retailers sounds good it also brings with it some administrative issues. The lack of transparency, trust and distance between you and the retailer can cause communication issues and in a lot of cases the retailer will ignore your account leaving you with little hope in recovering what’s owed to you.

 

Get in front of you desired retailers as much as possible. Establish a good business  relationship with them before entering into a risky business deal. Consider getting a local distributor. Someone who can go door knocking when it comes time to do the debt collection.

 

Managing Multiple Currencies

 

You must also navigate the challenges associated with working with multiple currencies. Fluctuating currencies rates are not manageable on spreadsheets. Consider a good cloud based inventory management and sales management system to handle this for you.

 

As you can see, there are many factors to consider when you are evaluating the pros and cons of managing international distribution channels. Thanks to innovations in technology, shipping services and more, expanding a company’s operations into international areas is easier to do than ever before, and many companies are finding great levels of success from these efforts. However, you do want to carefully consider each of these points so that you make the best decision possible for your business.

 

 

Management of physical distribution of goods:

 

• Order Processing:

 

A company receives orders from other companies, middlemen, or directly from customers through mail, e-mail, fax, phone, or salesmen. Order processing is an importation component of the distribution system. It is considered as a key to customer service and satisfaction.

 

Order processing mainly includes:

 

1. Receiving order

 

2. Recording order

 

3. Filing order

 

4. Executing order or assembling of products for dispatch

 

5. Credit and

 

Thus, it concerns with processing the orders quickly, accurately, and efficiently. The time period from the receipt of an order to the date of dispatch of products must be as short as possible. Ideally, the order recycle time should be completed within 8 days. But, the use of computer and computer networks, for speedy and accurate order processing, can save time, money and efforts for the company and increases customer satisfaction. It is often called as electronic data processing that minimizes possibility of error and omission. Every firm should establish the standard order procedure.

 

The physical distribution must be customer-oriented. It starts with customer order. Note that order processing affects customer service in two ways – reordering time (interval between two orders) and consistency of delivery time (delivering products within the fixed time). Rapid order processing enables a company to attain economy in other areas of physical distribution.

 

The person in charge of order processing must be careful for following aspects:

 

1. Assembling product must be exactly as per demand of customers in terms of quantity, quality, features, and

 

2. Execution must be as quick as
3. The dispatch must be in appropriate mode of

 

4. Credit discount and other allied benefits must be offered as per

 

5. Assessing the effectiveness of order processing. That includes feedback and follow-up.

 

(2)    Warehousing:

 

In today’s context, production is made in expectation of demand. Therefore, products are to be stored or preserved safely for the future demand. And also, all the production is not sold directly. Warehousing plays an important role for balancing demand and supply. For example, most of the agricultural products are produced seasonally, but have demand throughout the year.

 

It facilitates both continuous production and continuous marketing of the production. Warehousing service can contribute to customer satisfaction. Be clear that storage and warehousing are not similar terms, though are closely related.

 

Storage is marketing activity that involves holding and preserving products from the time of their production until their sale. Warehousing embraces storage plus a broad range of functions, such as assembling, breaking the bulk, dispatching as per need of middlemen, sorting/classification, providing market intelligence, preparing product for reshipping, etc. Warehousing involves more activities.

 

Classification of Warehouses:

 

Warehouses may be classified on two bases, on the basis of commodity and on the basis of ownership. Let’s have overview of different warehouses.

 

On the Basis of Commodity:

 

On the basis of commodity stored, there can be:

 

1. Special Commodity Warehouses provide facility for storing special types of commodities, e.g., cotton warehouses, potato warehouses, grain warehouses, tanks for liquid products, explosive product warehouses,

 

2. Cold Storage Warehouses provide facility for storing perishable products, e.g., fish, flowers, vegetable, fruits,

 

Many companies set up their distribution centers in each of regions around the market and integrate its distribution network with them for smooth, safe, and speedy delivery of products. The latest technology is used for maximum consumer benefits. Warehouses offer a number of direct advantages to manufacturers and sellers, and indirect advantages to customers.

 

(3)    Transportation:

 

Transportation is one of the core components of distribution system. It consists of moving or transferring products from producers to final users. Transportation involves two parties, carriers and shippers. Carriers are those companies that provide transportation facilities to others, such as the Western Railway, Indian Airline, Indian Shipping Companies, and many other private carriers provide transportation services by road, rail, water, air and underground pipes.

 

Shippers are those organisations and individuals such as manufacturers, middlemen, customers, and others to whom the carriers provide transportation services. For different modes of transportation, various regulatory bodies deal with various issues related to transportation of products. The Central and the State Governments have formulated a lot of Acts or legal provision to regulate transportation activities in the country.

 

The main regulatory bodies may include:

 

1. The Civil Aviation Department, for air

 

1. The Shipping Corporation of India, for water

 

• The Oil and Natural Gas Commission, for pipeline

 

1. The Road Transport Corporation of the state, for land or road carriers

 

1. The Railway Authorities, for rail transportation,

 

Transportation plays a crucial role in today’s global marketing. It creates the place utility. In brief, transportation has positive impact in every facet of economic, social, and cultural development of the society. The key issues in transportation are type, costs, time, speed, risk, suitability, and availability. Marketer should take transportation decision carefully.