International MKT

Biyani's Think Tank
Concept based notes
International Marketing
MBA Part-III
Miss Shashi Gurjar

Lecturer
MBA Department
Biyani institute of Science and Management
Jaipur
Published by :
Think Tanks
Biyani Group of Colleges
Concept & Copyright :

Biyani Shikshan Samiti
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First Edition : 2011
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Preface
I am glad to present this book, especially designed to serve the needs of
the students. The book has been written keeping in mind the general weakness
in understanding the fundamental concepts of the topics. The book is self-
explanatory and adopts the Teach Yourself style. It is based on question-
answer pattern. The language of book is quite easy and understandable based
on scientific approach.
Any further improvement in the contents of the book by making corrections,
omission and inclusion is keen to be achieved based on suggestions from the
readers for which the author shall be obliged.
I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay
Biyani, Director (Acad.) Biyani Group of Colleges, who are the backbones and
main concept provider and also have been constant source of motivation
throughout this Endeavour. They played an active role in coordinating the various
stages of this Endeavour and spearheaded the publishing work.
I look forward to receiving valuable suggestions from professors of various
educational institutions, other faculty members and students for improvement of
the quality of the book. The reader may feel free to send in their comments and
suggestions to the under mentioned address.
Author

Contents
S.No. Name of Topic Page No.
1. International Market Environment:- 3-22

1.1) Meaning(InternationalMarketing&InternationalEnvironment)
1.2) Characteristics
1.3) Importance
1.4) Identifying&AnalyzingOpportunities
1.5) Changesintheworldtradingenvironment
1.6) IMF,WTO,WorldBank
1.7) Cfactors(Countries,Currency,Competitors)
2332
2. Understandingcustomerbuyingbehavior:
2.1)whatiscustomerBuyingBehavior
2.2)Factorsinfluencingbuyingbehavior
2.3)Identifydifferentstagesofeconomicandpoliticaldevelopment
3. InternationalMarketingResearch 3346
3.1)Meaning
3.2)Characteristics
3.3)MarketingResearch
3.4)SelectionofMRAgency
3.5)ComparativeAnalysisininternationalmarketingappraisal
3.6)InternationalMarketstrategy
3.7) International Marketing Planning
4. International Product Management 47-55

4.1) International Product Strategies
4.2)ProductPortfolios
4.3) Standardization&Adaptation
4.4) Evaluationofstabilitywithreferencetomarketingandfinancialimplications.
5. Marketing Communication 56-60

5.1) Meaning
5.2) Characteristics
5.3) Importance
5.4) Availability, Constraints, Suitability, Selection of agencies
6. Distribution & Logistics 61-74

6.1) Channel Management

6.2) Characteristics and Importance
6.3) Foreign-Market Channel Management
6.4) Appropriateness for financial, distribution, marketing and international trade purposes,
customer service levels-demand generation and costs.
7. Pricing Strategies 75-79

7.1) Meaning
7.2) Types of Pricing Strategies
7.3) Currency Considerations
8. Evaluating & Controlling 80-82

8.1) Evaluation and Control
8.2) Difficulties in evaluation &Control

Chapter I
International Market Environment and

International Marketing
Q.1 DefineInternationalMarketing.Explaintheimportance&ScopeofInternational
Marketing.
Ans. AccordingtoCateora: InternationalMarketingistheperformanceofbusiness
activities
Thatdirectstheflowofgoodsandservicestoconsumersorusersinmorethanone
nation.
AccordingtoCateora&Graham:Itistheperformanceofbusinessactivitiesdesigned
toplan,price, andpromote&directtheflowofacompanysgoods&servicesto
consumersorusersinmorethanonenationforaprofit
AccordingtoKotler: GlobalMarketingisconcernedwithintegratingor
standardizingmarketing actionsacrossanumberofgeographicmarkets.
NatureofInternationalMarketing
1. MultinationalMarketingManagement
2. Controllableanduncontrollablefactors:forinternationalmarketuncertaintyis
createdbyuncontrollablefactors.
3. BroaderCompetence
4. IntenseCompetition
5. CreditOriented
Politicalrisk
6. Comprehensiverisk export&Import
Payments
Changes in fashion & Styles

Sudden War
Rules and Regulations

Changes in Government

7. Political Nature
Importance and Benefits of International Marketing

1) Survival
2) Growth of Overseas Markets
3) Sales & Profits
4) Diversification
5) Inflation & Price Moderation
6) Employment
7) Standard of Living
8) Understanding of Marketing Process
Scope of International Marketing

1. Exporting (Selling to foreign markets)
2. Importing (Buying from abroad)
3. Re-exporting (Importing semi-finished goods & Exporting final goods)
4. Management of International Operations
4.1) Operating, Marketing & Sales Facilities abroad
4.2) Establishing Production or assembly facilities in foreign countries.
4.3) Monitoring Operation of marketing practices of multinationals & other agencies.
Q.2 Define the Characteristics of International Marketing. What are the differences
between Domestic Trade and International Trade?
Ans. Characteristics of International Marketing:-
a) Large Scale Operations
b) Dominance of Multinationals
c) International Restrictions & Trading Blocks
d) Need of Marketing Research
e) Importance or Advanced Technology
f) Keep and acute competition
g) Need for long term Planning
h) Develops cultural relations & maintains world peace

Differences between Domestic Trade & International Trade
The following are the major differences between domestic trade and international
trade:-
1. Mobility in Factor Of Production
Domestic Trade: Free to move around factors of production like land,

labor, capital and labor capital and entrepreneurship from one state to
another within the same country
International Trade: Quite restricted
2. Movement Of Goods
Domestic trade: easier to move goods without much restrictions. Maybe

need to pay sales tax,etc
International Trade: Restricted due to complicated custom procedures

and trade barriers like tariff, quotas or embargo
3. Usage of different currencies
Domestic trade: same type of currency used
International trade: different countries used different currencies
4. Broader markets
Domestic trade: limited market due to limits in population, etc
International trade: Broader markets
5. Language And Cultural Barriers
Domestic trade: speak same language and practice same culture
International trade: Communication challenges due to language and

cultural barriers

Q.3 Define the terms in international Marketing
a) Domestic Marketing
b) International Marketing
c) Global Marketing
d) Foreign Marketing
And the difference between Domestic Marketing and International Marketing.
Ans.3a) Domestic Marketing:-It is concerned with the marketing practices within the
researchers or Marketers home country (domestic market).
3b) International Marketing: - It focuses on the firm level marketing practices across the
broader including market, identification &targeting, Entry mode selection &
marketing mix & Strategic decisions.
3c) Global Marketing: - It treats the whole world as a single market & standardizes the
marketing mix of companies.
Eg- Mc Donald have designed a restaurant anywhere in the world. It has customized
its menu offering according to local customers.
3d) Foreign- Marketing: - Marketing methods used outside the home market. It
encompasses the domestic operations with a foreign country.
Eg- A U.S. Company considers marketing in India as foreign marketing.

Differences between Direct Marketing and International Marketing
Domestic Marketing International

Marketing
1. Marketing 1. Marketing
practices within the practices outside the
marketers home marketer home
country. country.
2. One set of 2. Two or more set of
uncontrollable uncontrollable
variables. variable.
3. Deals with one 3. Deals with 2 or
culture. more culture.
4. Deals with one 4. Deals with many
language. language.
5. Single currency is 5. Transactions are
used. carried out in various
currency.
6. Easy to 6. Difficult to
understand domestic understand.
competitive forces.
7. Easy to conduct 7. Very expensive
research. and difficult .
8. Product 8. Product
development & development &
product planning product planning
according to local varies from country
environment. to country.
9. Only local 9. International and
regulation. host country

Domestic International
10. Advertising, 10. Different

Personal selling and countries have
other promotional different legal
methods not framework.
restricted through
legal framework.
11. Domestic players 11. International
are involved. players are involved.
Q.4 Define the process of international marketing. What are the reasons for entering
international markets?
Ans. Process:-
Motivation for international Marketing
Growth
Profitability
Risk Spread
SWOT Analysis
Decision to enter international markets
Enter International markets

Review Performance
Consolidate Marketing efforts in global Marketing
Reasons for entering International Markets:-
Reasons for Entering International

Markets
Profitability
Achieving economies
Growth of scale
WhyInternational Risk spread

Spreading R &D Market
cost
Marketing opportunities
due to life cycle Uniqueness of
product or services
Reasons for Entering International markets-

1. Growth-
When the domestic market potential saturates.
Firm enter international markets to explore opportunities their.
Companies having small home market like-Singapore, Hongkong, Japan.
Example - Healthcare companies Cipla, Dr. Reddy, Candilla Pharma

entered into South America countries like Brazil and Argentania.

2. Profitability-
Price differentials and enhanced profits in international markets.
Exemption from indirect taxes and duties, several incentives by government for
export oriented production, marketing support schemes contribute to enhance the
profitability of firms.
Example- Apple earn 390 million U.S dollar net profit from foreign land and
310 m U.S dollar from domestic land.
3. Achieving Economics of Scale-

Large scale production capabilities in international markets.
Large scale production, reduction in unit production cost.
Example- world market is 4 times larger than U.S market
4. Risk spread-
Overseas markets provide an opportunity to reduce their dependence on one
market and spread the market risks.
It reduces dependence on one market only.
5. Uniqueness of product or service-

The products with unique attributes in order to meet competition in the overseas
markets and enjoy enormous opportunities in international markets.
Herbal products, Handicraft, Software, B.P.O sell at competitive price provide

Indian firms edge over other countries.
6. Quality-
Quality and cost are the two important determinants of demand & these can
better achieved in global firm.
International marketing strategies can generate greater revenue and greater

operating margins.
Example- Nissan, Caterpillar, Matsushita etc.
7. World Economic Trends-

Fast growth of developing economies has created new marketing opportunities
and has provided a major incentive for companies to expand globally.

8. L.P.G movement-
Liberalization, privatization and globalization movement is opening up closed
markets and has provided opportunities and threats.
Example- Privatization of telephone system.
9. Leverage -
Leverage is an advantage that a company enjoys that conducts business in more
than one country.
Example -Experience transfers, scale economics, resource utilization, global

strategy.
Management Orientations/ EPRG Concept
1. ETHNOCENTRIC ORIENTATION-
It assumes home country superior to the rest of world.
Opportunities outside the home country are ignored.
It has a belief that the same marketing strategy can work in domestic and
international market.
Environmental differences between markets are ignored.
Example - Indian products sold outside as Sal war- kurta ,Saris, Dosa mix,
Idli mix, Sambhar mix etc.
2. POLYCENTRIC ORIENTATION-
It is a strong orientation to the host country.
It emphasizes differences between markets.
Each subsidiary develops its own unique business and marketing strategies to
succeed.
The marketing mix decisions, product development strategies, pricing strategies

are different for different countries.
Example- Citicorps financial services

3. REGIOCENTRIC ORIENTATION-
Firm treats a region as a uniform market segment and adapts a similar

marketing strategy within the region.
Example- Mc Donalds strategy to not to serve pork and to slaughter animals

through the Halal process is followed in Middle East or Muslim dominated
countries.
4. GEOCENTRIC ORIENTATION-
It considers the whole world rather than any particular country as the target
market.
It identifies similarities between various markets and formulates a uniform

marketing strategy.
Q.5 Success in international markets depends upon identifying opportunities in global

business environment, analyzing them and encashing them for developing ones own
business. Please elaborate this by explaining what you understand by international
Trading Environment and what strategies should be applied for success?
A Step 1: -Identify Basic Appeal For a potential market this entails determining basic
product demand. For a Potential site this involves determining the availability of
resources required.
1. Determining Basic Demand
Must explore the suitability of a nations climate, and whether there are bans on a
product (such as alcohol in Islamic nations).
2. Determining Availability of Resources

a. Raw materials for manufacturing must be local or imported. Imports may face tariffs,
quotas, or other trade barriers.
b. Labor is essential to production in any country. Many companies relocate to lower-
wage countries,
Especially those with labor intensive products.
c. Financing can send production abroad if it is not available at home or when interest
rates are high at home.
d. Markets and sites not meeting requirements are dropped.

B. Step 2: Assess the National Business Environment
Managers must understand differences in cultures, politics, laws, and economies and
incorporate that understanding into market and site selection decisions.
1. Cultural Forces
a. Countries differ in language, attitudes towards business, religious beliefs, traditions,
and customs. Cultural elements can influence what kinds of products are sold and how.
b. Cultural elements such as work ethic, educational attainment, or the level of
managerial skills of the local people affect site selection decisions.
2. Political and Legal Forces

a. Government Regulation
i. Nations differ in their attitudes toward trade and investment based on culture , history,
and current events.
ii. Can quickly eliminate a market or site from further consideration. They create
investment barriers to ensure domestic control of a company or industry by imposing
investment rules on business ownership.
iii. Restrict international companies from freely removing profits, forcing them to hold
cash in the host country or to reinvest it in new projects there.
b. Government Bureaucracy
Lean and smoothly operating bureaucracy can encourage investment while an inefficient,
cumbersome, or corrupt one can discourage it.
c. Political Stability
i. Companies must monitor political events that threaten operations and future earnings.
Political risk can threaten activities of any international business activity.
ii. Key to political risk is unforeseen political change: if a company cannot estimate the
future political
Environment with accuracy, political risk is increased.

3. Economic and Financial Forces
a. Poor fiscal and monetary policies can increase inflation and budget deficits, weaken a
currency, lower productivity levels, and slow innovation. These reduce investor
confidence and cause companies to scale back or cancel proposed investments.
b. Currency and liquidity issues: a volatile currency complicates the prediction of future
earnings in the home-country currency.
c. Managers can obtain information about economic and financial conditions from
international agencies.
4. Other Forces
A countrys image and the cost of transporting materials and goods are important in
assessing a nations business environment.
a. Cost of Transporting Materials and Goods

I) can affect where manufacturing facilities are located.
II) Logistics is managing the physical flow of products from point of origin as raw
materials to end users as finished products. Logistics weds production to delivery
b. Country Image
i. Embodies all facets of a nations business environment and affects the selection of sites
for any activity.
ii. Affects product image because products are stamped with labels identifying country of
origin or assembly.
iii. Country image can be good for certain products but unfavorable for others.
C. Step 3: Measure Market or Site Potential Despite local demand for a product and/or
availability of resources, consumers might not be ready or able to buy a product
and/or certain sites may be unable to supply the resources needed.
1. Measuring Market Potential

Level of economic development affects the products sold, how they are sold, and their
features. Different levels of economic development
Require varying approaches to researching market potential.

a. Industrialized Markets
i. Great deal of information on market potential is available about industrialized
countries.
ii. Information in a typical industry analysis:
Names, production volumes, and market shares of largest competitors.
Volume of exports and imports of the product.
Structure of wholesale and retail distribution networks.
Market background, including population, social trends, and marketing approaches
used.
Total expenditure on product (and similar products).
Retail sales volume and market prices of product.
Future market outlook and potential opportunities.
b. Emerging Markets
i. Companies often face a lack of information. Data on market size or potential may be
unavailable.
ii. Can rank locations using a market-potential indicator if company is considering
exporting:
Market size: snapshot of market size at the moment.
Market growth rate: Identify large (but shrinking) markets and small (but expanding)
markets.
Commercial infrastructure: Assess channels of distribution and communication.
Country risk: Estimate risk of doing business, including political, economic, and
financial risks.
2. Measuring Site Potential
a) Managers must assess the quality of resources they will employ locally. For many
companies, the most important resource will be labor and management.
b) Wages are lower if labor is abundant, relatively less skilled (though perhaps well-
educated), or both. Yet, training local managers requires a substantial investment of time
and money.
c) Managers should examine local infrastructure, including roads, bridges, airports,
seaports, and telecommunications
3. Select the Market or Site
Managers visit each location to confirm earlier expectations and perform a competitor
analysis. Managers evaluate each potential locations
Contribution to cash flows by undertaking a financial evaluation.
a) Field Trips
Trips to each remaining site let managers experience the culture, observe the workforce,
or make personal contact with potential new customers
And distributors.
b) Competitor Analysis
Competitor analysis should address the following:
Number of competitors in each market (domestic and international).
Market share of each competitor
Whether each competitors product appeals to a small market segment or has mass
appeal
Whether each competitor focuses on high quality or low price

Whether competitors tightly control channels of distribution
Customer loyalty commanded by competitors
Potential threat from substitute products
Q.6 Define the terms, WTO, IMF, World Bank.

Ans.The World trade Organisation (WTO) is an organisation that deals with the rules of
rade between nations at a global level.t
A set of Agreements
The WTO agreements are at the core of the WTO.
They are the result of negotiations by the different members inside the WTO.
These agreements are negotiated, agreed by consensus, and signed by the
members. (the bulk of the worlds countries)
The agreements provide the legal ground-rules for international commerce.
They are essentially contracts or promises that governments have to respect.
Whos there?
The WTO members are the governments of 148 countries.
Over are developing countries and countries in transition to market economies.
Its members resolve to abide by its rules by becoming a member

(Regional trade agreements are exempted and fall outside the scope of the WTO)
History
Already in 1948, there was a failed attempt to create an International Trade

Organisation.
From 1948 to 1994, the GATT (General Agreement on Tariffs and Trade)
provided the rules for world trade.
GATT was a provisional agreement and organisation under whose umbrella

negotiation rounds were held.
From 1948 to 1995, there have been 8 trade rounds.
At first, the rounds focussed on lowering tariffs (customs duties) on imported
goods.
As each round had more countries involved, it also discussed more issues (e.g.
anti-dumping measures, specific sector agreements, services, problem solving,).
The most comprehensive round was the Uruguay round (1986 - 1994). 123
countries took part in the discussions.
One of the results was 22.500 pages listing commitments by countries on specific
categories of goods and services.

A ninth round, the Doha Development agenda is currently ongoing.
Start of the WTO

The WTO, as an organisation, was established on 1 January 1995.
It is based in Geneva.
It has a staff of about 550 and is headed by a director-general, Supachai,,
Panitchpakdi.
Who does what?

The WTO has a very limited staff at its headquarters. It largely consists of
technical staff.
The General Council (i.e. the ambassadors of the different countries) is in
charge of the day-to-day work at the WTO.
Negotiations are undertaken by experts.
In the end, the ministers (representing their governments) adopt the results of the
negotiations.
This takes place at the WTO ministerial which is the highest authority.
Many different WTO Agreements
9 The WTO agreements cover three broad areas: goods, services and intellectual
property.
For each of these, there is main agreement (containing broad principles):
9 Goods: the General agreement on tariffs and Trade (GATT)
9 Services: the General Agreements on Trade in Services (GATS)
9 Intellectual property: Trade Related Aspects of Intellectual property Rights
(TRIPS)
9 Under each of these broad agreements, there are extra (sub-) agreements and
annexes dealing with specific sectors or issues.
E.g. there are agreements on agriculture or textiles as part of the GATT agreement
(goods).
9 Finally, there are the detailed and lengthy schedules (or lists) of commitments
made by individual countries allowing specific foreign products or service-
providers access to their markets.
The IFIs (International Financial Institutions)

IMF and World Bank
The World Bank (WB) and International Monetary Fund (IMF) were founded in
1944 in Bretton Woods, USA.
They were created as companion organisations to the United Nations.

The IFIs are meant to contribute to financial stability and economic growth,
leading to a more stable and prosperous global economy.
What do they do?

IMF
The IMF main responsibilities:
international monetary co-operation;
growth of international trade;
Exchange rate stability;
establishment of a multilateral system of payments; and
Making its resources available (under adequate safeguards) to members
experiencing balance of payments difficulties.
The main functions of the IMF

Surveillance: Regular dialogue and policy advice
The IMF discusses with countrys authorities (usually annually) the policies that are
most conducive to stable exchange rates and a growing and prosperous economy.
Technical assistance:
Offered in several areas, including
fiscal policy
monetary and exchange rate policies,
banking and financial system supervision and regulation and
statistics
Financial assistance
Available to give member countries the breathing room they need to correct
balance of payments problems
Continued financial support is conditional on effective implementation of this

programme.
Reducing poverty
The IMF provides financial support through its concessional lending facility, the
Poverty Reduction and Growth Facility (PRGF) and through the HIPC (Heavily
Indebted Poor Countries) initiative.
World Bank
The World Bank promotes
long-term economic development and
poverty reduction
It provides technical and financial support to help countries reform
particular sectors or implement specific projects.
For example, building schools and health centres, providing water and electricity,
fighting disease, and protecting the environment.

World Bank
One group - Five agencies
IBRD (The International Bank For Reconstruction and Development):
provides loans and development assistance to middle-income countries
IDA (International Development Agency):
Interest free loans and grants to poorest countries
IFC (International Finance Corporation):

Financing private sector investments and technical assistance to governments
and business
MIGA (Multilateral Investment Guarantee Agency):
Provides guarantees to foreign investors also technical assistance to help
developing countries promote investment
ICSID (International Centre for the Settlement of Investment Disputes)
Co-operation and overlap IMF World Bank

There is a lot of co-operation between the IMF and the World Bank as there are
many areas of overlapping responsibilities.
There are many joint-meetings and missions.
(E.g. the annual meeting of the boards of governors of the IMF and the World
Bank)
The membership of both organisations is the same.
Joint initiatives
The IMF and World Bank have jointly launched two major initiatives to help poor
countries.
In 1996, the IMF and the World Bank introduced the Heavily Indebted poor
Countries (HIPC) initiative
Reduce the external debt burdens of the most heavily indebted poor countries.
In 1999, the IMF and the World Bank initiated the Poverty Reduction Strategy
Paper (PRSP) approach
A country-led strategy for linking national policies, donor support, and the
development outcomes needed to reduce poverty in low-income countries.
Q.7 What are the Changes in the world trading environment?

Ans.
New trends in international Trade:-
1) Trade in agricultural and manufactured goods
2) Developing Countries trade
3) Global Production Network
4) Intra-firm Trade (Trade within the same company)
5) E-commerce (Doing business electronically)

Changes in Indias Trading Environment
1. Change in the value of trade
2. Change in the composition and direction of trade
By direction of trade------
i) Patterns of imports or composition of imports
a) Consumer goods
b) Raw-Materials and Intermediates goods
c) Capital Goods
ii) Sources of imports or direction of imports
Indias trading partners can be classified into 5 broad categories.
a) Organization for economic Corporation and development
b) Organization of petroleum Exporting Countries
c) Eastern Europe
d) Developing countries
e) Others
iii) Pattern of exports or Composition of exports
iv) Direction of exports
3) Export Promotion
4) Trading Policy Reforms
5) Export-Import Policy
Q.8 Elaborate briefly the impact of three C factors on the firms marketing decisions.
Ans. Country of Origin, Currency and Competition are the most vital factors which help
the international marketers for deciding their marketing strategies at global level.
1. Country of Origin
a) Country of Origin:-Country of origin, often abbreviated as COO, is the country of

manufacture, production or growth where an article or product comes from.
b) It is believed that the country of origin has an impact on the willingness to buy a
product, and consumers may tend to have a relative preference for or aversion to
certain products that originate from certain countries.
c) The origin of design can be more important than the country of origin.
Country of origin feature may be changed according to the following themes:

a) an identity system 2) added value 3) a legal instrument 4) a differentiate device 5)
an image in the consumers mind 6) a relationship etc.
These important themes may be seen in the most admired international companies.
The important themes may be seen in the most admired international companies.
a) General Electric(US) b) Microsoft(US) c) Toyota (Japan) d) IBM)( US) e) Wal-
Mart(US) f) Coca-Cola(US) g) Dell(US)

The country of origin forms an integral part of the brand culture. Country of origin
has an influence on the brand image, for example, Taj Mahal depicts Indian culture
and has strong Indian brand image.
Indian firms such as Dabur, Zandu, Himalaya, Balsara, reflect traditional strength in
their international market strategy
2. Currency
Every country has its own currency. The world currency environments worth billions
annually. Foreign exchange market is a market where one currency is traded for another
is called foreign exchange market.
Foreign exchange transactions are derived from transactions in the market for
commodities, services and assets among the people of two nations
Foreign Exchange facilitates business across national boundries, usually expressed in

foreign currency bought or sold on foreign exchange markets.
European Union (EU) have created a common currency Euro as means of avoiding
fluctuations
The UK decided not to join the Euro although the strong pound is damaging some of its
exports.
Foreign currency (FOREX) transactions increase the risks involved in cross-border
marketing.
The prices charged in different markets are influenced by the exchange rate of the
currencies involved.
The three major transactions in the foreign exchange market are the Spot, Forward,Swap
transactions.
Forward contracts require execution of the transaction on the date of contract maturity
because they are generally used by large international banks and MNCs.
Current Swap is an agreement in which currency is exchanged at a specified rate only to
be reversed at a future date.
Most currency transactions are channeled through the worldwide interbank m arket,the
wholesale market in which banks trade with one another.
The purpose of the foreign exchange market is to permit transfers of purchasing power
denominated in one currency to another that is to trade one currency for another currency.
For example a Japanese Exporter sells automobiles to a US dealer for dollars and a US
manufacture sells machine tools to a Japanese company for Yen.

3. Competition
The heightened impact of competition in world markets has influenced many aspects of
international marketing strategy.
The main areas are:-
a) The development of more integrated and coordinated international and global
marketing approaches. Good examples are Coca-Cola, Kodak and Sony.
b) The development of world regional markets.
The nature of international competition is clear that:-
a) The new competition is between networks rather than single organizations.

b) The size of the foreign competitors is increasing and they have more resources to
compete e.g. Microsoft and Apple in computer operating systems, Glaxo-Smith-
Kline and Pfizer in drugs, Shell and B.P. in the oil etc.
Competitors face five forces including a) The threat of substitutes b)the threat of new
entrants c) the bargaining power of buyers d) the bargaining power of suppliers e)
intensity of rivalry
Kotler describes following steps to assess competition:
a) Identity competitors strategies

b) Identity the organizations competitors
c) Determine competitors objectives
d) Assess competitors strengths and weaknesses
e) Estimate competitors reactions

Chapter-2
Understanding Customer Buying
Behavior
Q.1 Define the Consumer buying behavior. Draw a flow chart of consumer buying
Behavior.
Consumer Buying Behavior:
The process by which individuals search for, select, purchase, use, and dispose of goods
and services, in satisfaction of their needs and wants. See also consumer decision making.
Learning Objectives:
Understand the major factors influencing consumer behavior
Know and recognize the types of buying decision behavior
Understand the stages in the buying decision process
Consumer Market:
Consists of all the individuals and households who buy or acquire goods and services for
personal consumption.
Types of Buying Behavior:
Routine Response
Limited Decision
Extension Decision
Impulse Buying
Consumer Buying Decision Process
Problem Information Evaluation of

Recognition Search Alternatives
Purchase Post-Purchase
Decision Evaluation

Consumer Decision Making Process/Consumer Buying Process

1. Need Recognition:-The buying process starts when an unsatisfied need creates
tension.
2. Product Awareness: - This awareness may be on account of the search
conducted by the consumer or due to promotional campaign of the marketing
company about its product.
3. Interest:-It may be viewed as a state of mind that exists when a consumer
perceives a need and is aware of alternative products capable of satisfying that
need.
4. Evaluation of alternatives:-Once all the reasonable alternatives are identified,
the consumer then evaluates each one to purchase decision. Consumer also uses
the opinions of members of their families and other reference groups as guidelines
in the selection of a particular brand.
5. Purchase Decision: - This is the final stage in the buying decision.
6. Post Purchase Decision: - Post Purchase Behavior of the consumer plays a
significant role in the generation of favorable or unfavorable public opinion for
the companys product.
7. Post purchase Behavior
Cognitive Dissonance:
- Post-purchase cognitive dissonance is very important in this regard. It is a state of
anxiety in the mind of consumer due to the difficulty choosing a specific brand, out of
several brands available in the market.

Q.2 Define the factors or determinants of the consumer buyer behavior.
Five Stage Model Of Consumer Buying Process
Five Stage Model Of Consumer

Buying Process
Problem Recognition
InformationSearch
Evaluation Of Alternatives
Purchase Decision
Post Purchase Behavior

Q.3 Define the types of consumer buying behavior, and how the consumer behavior is
measured in international marketing?
The four types of consumer buying behavior are:
1. Routine Response/Programmed Behavior: Buyer low involvement frequently
purchased low cost items.
Need very little search and decision effort. Consumer purchase on regular basis.
Examples include soft drinks, snack foods, milk etc
3. Limited Decision Making Shopping goods
Goods consume purchase on suitability, quality, price & style. Example- Furniture
and clothing.
3. Extensive Decision Making/Complex high involvement- Specialty goods
Unfamiliar, expensive infrequently bought products. High degree of economic risk.
Examples include cars, homes, computers, education.
4. Impulse buying-
Purchase without planning or search effort.
Consumer-Behavior in International Marketing

Culture affects the psychological and social processes an thus affects consumer
behavior.
1. Motivation-
Rational Motives-price, durability etc.
Non Rational Appeals-prestige, comfort, pleasure.
Example- Chinese consumers place greater emphasis on convenience of location.
American are more concerned with Quality than the mannerism of the sales
person.
2. Learning-
Learning is a change in behavior that occur overtime.
Food and drink habits are learned.
Example-American style cocktails prove to be too much for Europeans who are
accustomed to milder drinks.
4. Personality
Individual characteristics that make a person unique.
A. National Characteristics It states that people of each nation have a distinctive
behavior and personality characteristics.
Koreans see themselves as being driven by 2 complementary passion-Han(
bitterness) and Jang (devoted love).
Japanese prefer personal relationships.
Canadians sought fast decisions.
B. Consumer Ethnocentrism-
Due to patriotic and nationalistic sentiments Consumer tends to buy domestic
products.
Interpret others from the perspective of their own group.
Reject those who are culturally dissimilar.
C. Power Distance- degree to which a culture fosters social inequality.
High power distance cultures emphasize prestige and wealth.

Example- Greece, Mexico, Pakistan, Philippines, Taiwan, Thailand& Venezuela.
Low power distance- Australia, Canada, UK, USA, New Zealand, Swedon,
Denmark.
4. Psychographics
Lifestyle or Activities, interest, opinion.
It is an Analysis of consumers lifestyle and activities with purpose of relating these
to buyer behavior.
Lifestyle groups on worldwide basis are as follows-
1. Strivers- 26%, young people who work hard and seek convenience.
2. Achievers - 22%, style leaders who makes statement about status and quality.
3. Pressured- 13%, Women who contend with economic & family pressures and have
Little room for pleasure.
4. Adopters -18%, older customers who respect new ideas without losing values.
5. Traditional-16%, follow oldest values of their countries and culture and resist
change,
Prefer familiar products.
Example- U.S lifestyle create social pressure, mostly Americans use sedatives as
valium &Other pain relievers for headache Caused by stress.
Japanese demand for drugs is small because these they take sound sleep after whole
day work.
5. Perception
Ones culture greatly affects ones perception.
Example- The Chinese perceive coke to look & taste like medicine.
Indians believe non-violence is a part of their culture.
American prefer to cook big pieces of meat and to cut up on serving plate, while
Chinese prefer to cut the meet into small bite sized pieces before cooking.
In Spain accepting credit is considered shameful situation.
1. Country of origin- Mexican products are considered of inferior quality to those
made in Japan and U.S and Germany.
2. Product Country match Animosity

Consumers may prefer automobiles from Japan, Germany or U.S.
Consumers make their own preferences regarding product country match.
Chinese consumers have been found to hold animosity towards Japanese products
in general.
Older Mexican consumers are less likely to buy U.S. products than younger
Mexicans.
6. Attitude
-Learned tendency to respond to an object favorably or unfavorably.
-Attitude is influenced by culture.
-Most people have favorable attitude towards automobiles as Mercedes Benz,
BMW etc. Viewing them as status symbol.

-Ford use Quality theme to affect consumers attitude.
-As person grows older, attitude becomes more established.
7. Social Class
-In U.S all are supposed to be equal.
- Many Asian and Middle East countries view status difference positively.
-Chinese social classes found that income occupation, education, residence,
Family background affects Purchase decision.
-In U.S occupation, source of income, house type construct social group.
- Social class influences store selection, product selection, media selection,
advertising appeal selection and sales promotion selection.
8. Reference Group
It has direct or indirect influence on a persons attitude or behavior.
The more the product is visible & stands out more conspicuous it becomes. It allows a
reference group to operate.
Philip Morriss Galaxy brand was at one time perceived as diet cigarette & for the
Reason Brazilians became ashamed to be seen with it because of social and personal
pressures.
9. Family
Familys are-
Nuclear
Extended
Example- American emphasizes individual freedom and children are taught to be
independent.
Japanese have a strong sense of responsibility and obligation to their families.
10. Opinion Leader

Individuals in a social group who influence attitudes of the members towards all
the products.
It is able to influence other members & affect their thinking and behavior in
desired direction.
In marketing products overseas MNC should appeal them.
Q.4 Explain consumer buying behavior, business buyer behavior and government
buyer behavior in different Economic and Political Systems?
Consumer buying behavior in different Economies and Political System

A) Consumer behavior in Democratic and Developed Nations (capitalistic
economy):-
Nations have economic prosperity, freedom of business activity, technological
superiority.
Individuals are motivated towards higher needs.

Buying behavior must be matched to market.
B) Consumer Behavior in Democratic and Developing Nations-
Less disposable income for consumers, purchase important product only.
Due to increasing growth potential of developing countries their buying behavior
is changing.
These are very attractive and more foreign retailers are investing their.
C) Consumer Behavior in Democratic and less Developed Nations
These countries are poor and low level of economic and social infrastructure.
Consumers have low income and little spending power and small market size.
D) Consumer Behavior in Autocratic and Developed Nations
Political power is in hands of people Who are concerned with rules & regulations.
Consumers have limited choice of goods because of govt. control.
Consumers have high disposable income, they engage in purchase of costly
products.
E) Consumer Behavior in Communist Nations
Political power is in hands of people Who believe in equal distribution of goods .
Consumer has limited choice of goods because of government control and low
disposable income.
Business Buyer Behavior in Different Countries at different stages of Economic and

Political Development
1. Business Buyer Behavior in Democratic and Developed Countries-
Business Buyers judge products on careful evaluation.
Businesses are trying to cut costs. They offer reliable high Quality products at
lower price.
2. Business Buyer Behavior in Democratic and Developing Countries-
Increased opportunities and demand for Infrastructure improvement ,power and
communication ,education and health care.
Competition is high.
Business buyer favor local supplier, lower price.
3. Buyer behavior in Democratic & Less Developed Countries
Few business buyers
Limited industrial development.
L.D.C encourages export from their country and discourages imports.
Government Buyer Behavior in different country at different stage of Economic and

Political Development
1. Elements of buying by govt. Institutions-
Govt. and governmental institutions are important buyers in most national markets.
2. Tender system-
Public announcement of a contract for specific goods or services inviting to submitting a
quotation for contract in tender.
Details of contract & criteria for selection are made available to interested parties.
3. Political Influence-
4. National Preference-
Govt. institutions try to buy from their own nations.

5. Type of business and govt. buying-
Example- Defense equipments
1. Govt. Buyer Behavior in Democratic and Developed Countries-
Difficult to get contract
2. Govt. Buyer Behavior in Democratic & Developing Countries-
3. Govt. Buyer behavior in Democratic & less Developed countries-
In L.D.C influence of govt. is high.
Chapter -3
International Marketing Research
Q1.What is International Marketing Research? Define the Classification and the

process of International Marketing Research.
Marketing -Research
Marketing research is systematic gathering, recording and analyzing of data about
problems relating to the marketing of goods and services.
International marketing research: - It is the systematic design, collection, recording,
analysis, interpretation, and reporting of information pertinent to a particular marketing
decision facing a company operating internationally.
Objectives of I.M.R
To carry out country screening and selection.
To evaluate a countrys market potential.
To identify problems
To identify aspects of countrys environment that needs further study.
To evaluate components of marketing mix.
To facilitate in developing a strategic marketing plan.
Classification of I.M.R
a) Single Country Research- The marketer Based in country x wants to know
Whether the marketing strategies that works well in domestic environment can be
translated to country Y market.
b) Multi country Research-Research conducted in more than one market.
c) Sequential Multi country research-
It is used for a geographical market one or two markets are researched and then it is
applied to other countries.
d) Simultaneous Multi country Research
It involves conducting marketing research studies in multiple country market
simultaneously.

e) Independent Multi country Research-
When subsidiaries or branches of multinational companies independently conduct
similar research on same products in a number of countries.
Example- Awareness checks on international brands and test marketing of new
products.
International Marketing Research Process
STEP 1 Define the international research problem and agree on the research
objectives
Exploratory Research
Descriptive Research
Causal Research
STEP 2 Set specific objectives
STEP 3 Develop the International Research Plan
STEP 4 Define Information Sources

Primary Data: - Information collected for a specific purpose, to address the
problem at hand.
Primary Data Research Approaches:

Qualitative research has been particularly useful as a first step in studying
international marketing phenomena.
Focus Groups
Observation
Quantitative researches are more structured, involving either descriptive

research approaches, such as survey research, or causal research approaches, such
as experiments.
Content Analysis
Survey Research
Experimental Research
Secondary Data

Researchers must determine if the information is available, and, if so, how
reliable it is
Internal data is useful only if company has collected similar info from
relevant respondents in a country with similar environment
Secondary Data Constraints
Conceptual Equivalence
Concepts have different meanings in different cultural environments
Functional Equivalence
Products themselves may be used for different purposes in different country
environments
Availability, Reliability, and Validity
Accuracy of secondary data can be questionable: Published statistics may be
unreliable
Sources of reliable data:
World Bank
United Nations Development Program
Organization of Economic Cooperation and Development (OECD)
STEP 5 Design Data Collection Instrument

Emic instruments measure phenomena specific to each culture.
Etic instruments measure the same phenomenon in different cultures.
STEP 6 Decide on the Sampling Plan

Sample Unit
Sample Size
Sampling Procedure
STEP 7 Collect, Analyze, and Interpret Data
Q.2 What type of factors are needed while selecting the Foreign Market?
Internal factors in Foreign market selection
Personnel
This section includes not only that of management but also employees.
Ethnocentric Management of an organisation see the home market as superior, but see
similarities in other markets to their own.
Polycentric Management view each country as unique and outline the differences
associated with each new country.
Regio centric both the similarities and differences are viewed of each country in relation
to the world.
Geocentric Management have a worldwide view and can see the differences and
similarities in home and host countries.

Management
Management or the owner of the organisation will be an influencing factor in
selecting a specific country for international trading.
Customers
Organisations customers may influence the market in which an organisation will
select to compete in
Capital requirements
The organization will outline a cost-benefit analysis on each specific country and
more importantly the capital requirements that
Will be required for the initial outlay of a global orientation, into this country.
Corporate social responsibility

The social responsibility of business encompasses the economic, legal, ethical and
discretionary expectations
That society has of organisations at a given point in time.
Social responsibility also incorporates the environment and the pollution restrictions
imposed by each specific government.
Time and research

The decision on which country to select for international trading has an effect on the
strategic development of an organisation,
Yet this decision will be affected by the element of time allotted for the decision.
2. External factors in foreign market selection
A) Market potential
Aa) Marketsize
Ab) Marketgrowth
Ac) Competitiveintensity
Ad) Competitiveentry
Ae) Entrybarriers
B) Political environment
Ba) Politicalissuesforconsiderationinmarketselection

Bc) Riskassessment
C) Legal environment
A countrys legal environment can be identified as the rules and principles that nation
states regard as binding upon themselves
D) Economic environment
Economic growth affects a countries attitude towards foreign business activity, the
demand for goods and the distribution system found within the country. The economic
environment is an important issue for international marketers to examine in choosing
markets
In which to expand their business.
E) Culture
Global marketers who understand and recognize the meaning and substance of cultures
other than their own and the associated behaviors
In those cultures will have a significant global advantage?
Q.3 what is Research Agency? How the selection of agency is taken place?
Research Agency Selection

When a firm may not have the required knowledge of foreign marketing
environment for conducting the research. Research agencies have professional
expertise, credibility and knowledge of marketing environment.
Advantages of research agencies-
1. Expertise
2. Knowledge
3. Creditability
4. Cost-effective
Selection of Agency
The choice of Research agency to run a multi country research project may be
made by headquarter or locally by regional headquarter..
1. Collection of information about research agencies sources of information include
export promotion organization, trade association, advertising agencies, importers,
distributors in foreign market etc.
2. Small no. of research agencies are selected by preliminary screening- firms
provide general information, services, expertise, list of references.
3. List should be pruned down to 2 or3 for detailed discussion.
4. Agencies may be asked to submit written research proposal i.e research
methodology, time , total cost.
5. It helps client to select best agency.
Several consideration in agency selection decision-

1. Coordination-

Company should examine willingness of agency to be flexible and coordination
among members.
2. Level of Expertise- Qualification of staff, fieldwork.
3. Track record of Agency-
How long the agency has been in business?
What sort of problem has it dealt with?
What clients it has served?
4. Level of confidentiality required-
Back ground check-Does agency have any tie with potential competitor.
5. Does it have good reputation in keeping matter confidential?
6. Cost
Letter of Agreement
There is a written contract or letter of agreement which includes-
1. Type of agreement
2. Geographic coverage
3. Remuneration
4. Duration and termination
5. Nature of report
Q.4 Explainindetailtheuseofmarketingresearchforcomparativeanalysisin
internationalmarketappraisal.
ComparativeAnalysisininternationalmarketingappraisal
1. Value
2. Religion
3. Aesthetics
4. Communication
5. Custom and Manner
6. Attitudes
A) Culture:-
Culture is a set of traditional beliefs and values that are transmitted and shared in
society.
It includes norms, values, customs etc.
Kind of behavior considered acceptable in society. E.g. - Consumption of wine

acceptable in west but not in India.
Culture is based on social interaction. Example- Chinese parents preferred their

children to have small feet.
Culture can be learned.
E.g. Westernization in India.

People in different culture have different ideas about the same subject. E.g.-
Dowry
Culture is shared and passed from generation to generation .E.g. Respect

towards elders.
Cultural pride can make many nations reject foreign ideas and products.
What is right and wrong is based on culture.
E.g. To be honest and straightforward are considered right in U.S

B) Attitudes:-
Consumption pattern- American Europeans and Arabians consume beef Whereas
Thais, Chinese and majority of Indian not.
Eating habits- Asian consumer prefer boiled chicken. American preferred fried
chicken.
Muslims dont use alcoholic drink So a non alcoholic beer from Switzerland
Moussy was manufactured.
Lifestyle- dressing habits like-Indians prefer sarees, wearing burke by Middle

East women.
C) Aesthetics
It relates the artistic taste of culture.
Aesthetically related area is color.
In many countries color black is associating with mourning, White with joy and
purity.
In many Asian countries white is color for mourning.
Green is favorable in Islam, But associated with sickness across much Asia.
D) Religion-
1. Hinduism -
2. Christianity
Protestantism- In U.S.A, Canada and Australia.
Catholicism Latin America, Southern Europe countries.
3. Islam- North Africa, Middle east, Malaysia, Indonesia.
4. Buddhism- Japan, Korea, china.

E) Communication
a) Verbal communication (Language)-
More than 5000 spoken language in world.
Chinese-20%
English-6%
Hindi-5%
Russian-4%
Spanish-3%
Others-62%
b) Non Verbal communication-
It means differently in different nature.
Japanese view eye contact as rude.
American feel avoidance of eye contact impolite
F) Manners
Indians meet their business partners with folded hands.
Indonesians avoid use of left hand while offering food and other objects.
In Arab countries it is considered bad manners to attempt to shake hands with
person of higher authority. But In U.S it is reverse
G) Value
Marriage, right of women, truth and justice, honesty and loyalty.
Norms-
I. Folk way- time conscious
In America 7 means 7.
In Great Britain 7 means 7.30 to 8.
In Argentina 7 means its far too early.
Ii Mores-
America- alcohol good.
Saudi Arabia alcohol is punishable.
Cross cultural analysis.
Cross Cultural Analysis is effort to determine to what extent the consumer of 2 or
more nations are similar or different.
ItProvidesmarketerunderstandingofpsychological,social&culturalcharacteristics
offoreign consumers
Variation in Cultural values

1. Other oriented values
Relationship between individual and groups within society.
A) Individualism- America, Australia, U.K, Canada, New-Zealand etc.
Collective- Taiwan, Hong- Kong, Korea, Mexico, Japan and India.
B) Age-
American-youth oriented
Asian- wisdom comes from age.

C) Extended /limited family-
U.S- Narrowly defined
In Japan, India- Extended families
In Mexico-Adolescents seek parental advice.
D) Masculine/ Feminine-
Are rank, prestige & important social roles assigned primarily to men or
woman?
Due to increasing % of working woman in Japan Led to increased demand for

time saving products. Example-Perfect Rouge Shiseido brand lipstick targeted
working woman.
E) Competitive/ Cooperative-
Germany and Spain ban competitive ads and U.S encourages.
2. Environment Oriented Values

Society relationship to its economic & technical as well physical environment.
a.) Cleanliness-
In U.S high value is placed on Cleanliness. In poor countries It is not valued.
Example-Mc Donald has introduced more hygienic food preparation and toilets in east
Asian markets and china.
b.) Power Distance-
Degree to which people accept inequality in power, authority, status, wealth in
society.
India, Brazil, France, Hong-kong, Japan are high in acceptance in power.
Australia, Denmark, New-zealand, U.S are low.
c). Change-
In comparison to Americans, Koreans and Chinese feel less comfortable dealing
with new situations.
d) .Nature-
Most Northern European countries place high value on environment.
Example-Packaging and other environmental regulations are stronger in
countries than in America.
China doesnt have strong environmental orientation.
3. Self Oriented Values

Approaches to life that the individual members of society find desirable.
a). Active/Passive-
American show quick response to problem. Take action oriented approach.
b). Hard work/Leisure-
In Latin America work is viewed as necessary evil
c). Religious/Secular-
Islamic countries and Catholic countries are religiously oriented.

It plays small role in Chinese culture.
4. Cultural Variation in Non-Verbal Communication
Ford Motors face problems. Fiera (A low cost truck designed for developing
countries) faced sales problems because Fiera means terrible, cruel, ugly in Spain.
Whirlpool faced problems in Spain where its name is unpronounceable in Spain.
Popular ford car Camet has limited sales in Maxico Where Caliente is slang for
streetwalker.
a). Time Perspective-

Monochromic Perspective-
Americans, Canadians, Europeans, Australians tends to view time as inseparable,

fixed in nature.
Polychromic Perspective-
Most Latin Americans, Asians, Indians view time as discrete and less important.
b). Use of time-
Promptness is considered v. important in America and Japan.
c). Space-
America and Northern Europe bigger space is better.
In Latin America space is shorter.
d). Symbol-
A leading U.S Golf ball manufacturer failed to penetrate Japanese market
because it packaged balls in set of 4.4 is symbol of death in Japan.
Pepsi lost its market share in Southern Asia when it changed color of vending
equipment from deep regal blue to ice blue. Ice blue is associated with death in
South Asia.
e). Friendship-
Chinese relationships are complex.
In most Asians and Latin American good personal relationships matters.
Americans rely on legal system for business obligations.
In China character of trading partner is important.
f). Negotiation-
Americans assume prices are uniform.
In Latin America, Asia, Middle east prices are negotiated prior to sale.
g). Things-
Clock is similar to word for funeral in China.

In China gifts should be presented privately.
In Arab countries they are given in front of others.
h). Etiquette-
Way of behaving in social situation.
Japanese executives will seldom say no directly during negotiation as it is
considered impolite.
Japanese find American tendency to look into eyes to be rude.
Q.5 WhataretheinternationalMarketingStrategiesthataMarketerhastoadoptwhile
enteringintheForeignMarket?
Ans. The Development of International Marketing Strategy

Marketing strategy decisions will be based on based on information about market
potential, customer requirement, industry and market trends, present and future
competitive behavior, expected sales, market segment size and requirements, sales
and profit performance for customers, products and territories.
a) Selection of target customers & market is one of the basic strategies in
international marketer.
b) Choice of target customers and market segments facilitates adequate allocation of

resources within the supplier present and future market.
c) Market opportunities and risks associated with operating in different countries

influence market choice at country level.
d) Global strategies are formulated at the corporate level and determination of

overall allocation of company resources across countries, product market and
target segments.
e) At the customer level actual and potential customers in each market of operation
should be evaluated.
The market decision process for each target customer at S.B.U (strategic Business
level) would involve.
1. The analysis of demand (customer Requirement).
2. The Analysis of competition offerings (differentiation Analysis).
3. The setting of objectives (market share, profit).
4. The definition of a strategy.
5. Planning

6. Implementation
7. Control and evaluation
Q.6 How the International Marketing Planning is taken place in International Market?
Ans. International Marketing Planning:-
Planningisasystematizedwayofrelatingtothefuture.Itisanattempttomanagethe
effectsofexternal,uncontrollablefactorsonthefirm'sstrengths,weaknesses,
objectives,andgoalstoattainadesiredend.Further,itisacommitmentofresourcesto
acountrymarkettoachievespecificgoals.Inotherwords,planningisthejobofmaking
thingshappensthatmaynototherwiseoccur.
PHASEI
A) PreliminaryAnalysisandScreening
THERESULTSOFPHASE(1)PROVIDETHEMARKETERWITHTHEBASICINFORMATIONNECESSARYTO:
9 Evaluatethepotentialofaproposedcountrymarket.
9 Identifyproblemsthatwouldeliminatethecountryfromfurtherconsideration.
9 Identifyenvironmentalelementswhichneedfurtheranalysis.
9 Developandimplementamarketingactionplan.
PHASE2
B) Adaptingthemarketingmixtotargetmarkets.
THEANSWERSTOTHREEMAJORQUESTIONSAREGENERATED
INPHASE2:
Whichelementsofthemarketingmixcanbestandardizedandwhereisstandardizationnot
Culturallypossible?
Whichcultural/environmentaladaptationsarenecessaryforsuccessfulacceptanceofthe
marketingmix?
Willadaptationcostsallowprofitablemarket?
PHASE3
Developingthemarketingplan
PHASE4
Implementationandcontrol

Chapter4
InternationalProductManagement
Q.1 What are the International product strategies? Define the terms of Product
Portfolio and Product Positioning in International Market.
International product strategy

International Competitive Posture Matrix-Given by Google and Larreche
BARONS KINGS
COMMONERS CRUSADERS
` Product Strengthening is used to create and maintain product competitive position

in market.
` Geographical expansion is used to grab opportunities and respond to competitors.
1. Kings-
Strong product portfolio and wide geographic coverage.
Example- Coke, Pepsi, Mc Donald, Sony etc.
2. Barons-
` High product strength and low geographic coverage.
` Strategic Alliance is used by firms to enter in foreign market.
` Example- Tata motors with high product strength in motor vehicles acquired
Daewoo Company.
3. Crusaders-
` Firms having high geographical coverage and low product strength. Outsourcing,
acquisition or international product development is required by firms
4. Commoners-
` Firms with low product strength and limited geographical coverage.
` Firms sustain in domestic market or limited overseas market due to regulations.
Firms need to strengthen their portfolio

Product Portfolio
A product is anything that can be offered to a market to satisfy want or need. It
may include physical goods, services, experiences, events, persons, places,
organisations, information and ideas.
It is set of companys product mix and brands at different levels of P.L.C.
Decision relating to international product planning is based on marketing potential
in host market and careful analysis.
Product portfolio approach is used for product planning.
It classifies a firms international performance on the basis of relative market
share & growth rate.
Correnche (1980) notes that product portfolio approach is useful in formulating
international marketing strategies.
Difference between countries in terms of market growth and structure lead to the
consideration of multiple market entries for given product.
Product portfolio Analysis gives a correct picture of competitive situation.
It offers global view of international competitive structure.
It acts as guide for formulation of global international marketing strategy.
Types of Products
1. Local Products- Products available in a portion of a national market.
Example-Cape Cod potato chips was a local product in England market.
2. National Product- It is offered in a single national market.

Example- Coca-Cola develops a non-carbonated ginseng flavored beverage for
sale in Japan.
3. International Products - These products are offered in multinational regional

markets.
Example-Renault was a European product, then Renault entered the Brazilian
market and became multiregional company. Renault acquire Nissan and
capture the Europe, Latin America, Asia, America, Middle East, Africa.
4. Global Products-
These products are offered in global Markets.
Example- Sony is a Global brand. Its portable. Its portable personal sound
system or personal stereos are global products.
Product -Positioning
Kotler Positioning is act of designing the company image & value offer so that
segment customer understand and appreciate what the company stands for in
relation to its competitors.
1. Product positioning can be achieved by emphasizing the attributes of products

or benefits that consumers seek.
Example- Toyota launches its lexus range as very luxurious cars.

2. Positioning by product category-
Pitching a product against similar product with difference in quality or price.
Example-Unilever launched Radion in U.k as a detergent that removes stale

odour in washed clothes.
3. Positioning by use/user- according to user characteristics and life style.
Example- Rolex watches are positioned as exclusive products for wealthy.
In International market each market is unique in character & present different set
of market opportunities and problems.
A single product is positioned differently in each market.
Q.2 What types of product promotion strategies are adopted by International Market?
INTERNATIONAL PRODUCT PROMOTION STRATEGIES

1. Straight Extension
Where the product function, needs satisfied and conditions of product use is same.
This strategy is used.
Example- Coke and Lux brand of soaps etc.
Example-Gillette Razor:-
Consumer needs satisfied-disposable, easy to use product
2. Product Extension-Promotion Adaptation
It is used in market where the product function and the needs satisfied are different
but
The conditions of product use are same. Products remain same but their promotional
Strategy is customized.
Example-Bicycles are cost effective and affordable means of transport in low income
countries.
It is used as means of recreation and health care in high income countries.
Example-In India chewing gum is viewed as children products Whereas it is used as
a substitute to smoking in U.S.
3. Product Adaptation-Promotion extension-
In markets where conditions of product use are different but the product performs
the Same function or satisfies the same needs.
Example- Washing habits of people vary in various markets. Indian housewives use
Lukewarm water, French use scalding hot water and Australian use cold water.
Difference in electrical voltage, difference in operating system require product
modification
4. Dual Adaptation-
In countries where the functions of the product and need satisfied are different and
the conditions of product use are also different. A firm has to customize both product
and promotion strategies.

Example-In low income countries clothing serves the basic purpose of physical
protection whereas in high income countries it symbolizes the personality and
status.
5. Developing New Product-

It is used in the market where product function, need satisfied remain same but
conditions of product use differ and consumers dont possess ability to pay for the
product.
Example- Philips introduced a hand wound radio in 2003,to suit the needs of rural
India where electricity supply is erratic and use of batteries makes the radio
expensive
Q3. Define the different stages of product life cycle in international market.
Product Life Cycle in International Markets:

1. Introduction-
A majority of new product interventions are made in highly developed countries.
Price of product is high.
Emphasizes on customer feedback and frequent modifications.
Marketed in home country and export to other developed countries. New
products are made in highly industrialized and developed countries
2. Growth-
Firm gets better opportunities for exports
Price competition
Standardization of products.
Production in other developed countries.
Competition determines prices.
Export grows to other developed countries and developing countries.
3. Maturity-
` Production at multiple location
` Emphasis on creating product differentiation, innovating company establishes
production in other developed countries to face local competition.
` A firm establish its operations in middle and low income countries .
4. Decline-
` Technical know-how and skills become widely available.
` Emphasis on cost effective locations.
` Product attributes are offered by several competitors
` Price and cost competitiveness.
U.k which has been largest manufacturer and exporter of bicycle ,import them. Bicycles
are at declining stage in developed countries and maturity stage in developing
countries.
` Chemical and hazardous industries are shifting from high income countries to
low income countries.

Example-Perrier has adopted differentiated positioning strategy. In France its
sparkling water is positioned as ordinary bottled water and in U.K it is positioned as
substitute for soft drinks with snob appeal.
So marketer has to strike a balance between product features, user characters &
culture & benefit from product to determine ideal positioning strategy.
Q.4 Define the concept of Product Standardization and Product Adaptation in

International Marketing.
Product Standardization & Adaptation in International

Marketing
` Product Standardization:-Process of marketing a product in overseas market
with little changes (modified packaging and labeling, translation of words and
other cosmetic changes).Eg Revlon, Amway etc.
Factors that favor product standardization

1. High level of technology Intensity-
` To reduce confusion and promote compatibility.

` Example- Computer servers, micro & macro processors and VAN (Value
Added Networks).
2. Formidable Adaptation cost-

` Production and distribution of product and services through standardization is
simple and cost effective.
3. Convergence of customer needs worldwide-

` When a consistent company or product image is needed, product uniformity is
required.
` When customers from different countries share similar needs and want identical
products.
` Example- Levis jeans, MTV, Mc Donald, Watches, Diamond.
Product -Adaptation
Making changes in a product in response to needs of target market.
Food, fashion and style are highly sensitive and customer preference varies.
Firm customize the features, packaging, labeling,
Support services and payment to suit target market.
Benefits
` Enable firm to tap market.
` Fulfill the need and expectation of customers

` Helps in gaining market share
` Increases sales
Product Adaptation by Mc Donald
` Mc Donald-
9 Hum burger in U.S.
9 Maharaja Mac in India
9 Chicken Tatsuta and Teriyaki Chicken in Japan
9 Kiwi burger in New Zealand
9 Mc Palta-Hong kong
9 Japanese firms have always adapted their automobile to American customers.
9 Du pont has customized its manufacturing and marketing for Japanese market
and design parts to their specification.
9 The lime taste of sprite was taken out because Japanese prefer a purer lemon
flavor.
Q.5 What are the trade off strategies are adopted between Product Standardization and
Product Adaptation?
Trade-Off Strategy between Product Standardization and Adaptation
STANDARDIZATI ADAPTATION
ON
` A firm has to carry out cost benefit analysis of its decisions.

` The purpose of business organization is not to save the cost but to maximize
market share and profitability.
` Firm needs to carry out product customization. If a firm sells standardized
products it leads to decline in market share and generate profitability to company.
Product Quality Decisions
` Quality plays an important role in maintaining goodwill and image in the market.
` A firm has to not any adapt mandatory quality requirement of target market but
also attempt to achieve quality excellence.
Packaging and Labeling for International Market
` Packaging and labeling should meet importers specification and the regulations
of the importing countries.
1. Physical Protection-
2. Quality Protection
3. Product Promotion
4. Product Information
5. Efficiency in use
6. Convenience in use
7. Storage
8. Transport
9. Recyclability

10. Trade Appeal
Q.6 What types of approaches are there while entering foreign market?
Timing of Foreign Entry
New Product Launch
Waterfall Approach
` Products are launched in international market in a sequential manner.

` Longer time is available to customize a product in Foreign market.
` Firms having low growth potential and resources.
` Example-Mc Donalds took 22 yrs to market outside the U.S.
` Coca-cola took 20 yrs etc.
Sprinkler Approach
` Product is launched simultaneously in various countries.
` It is suitable in-
` High competition
` Short life cycle
` High potential markets
` Large resources
Example- luxury consumer goods, I.T software products etc.

Microsoft Windows 95 - Global roll out:
4-6 million customers worldwide bought the operating system in the first three weeks
after the launch.
Q.7 Write a detailed note on Evaluation of stability with reference to marketing and
financial implications.
Ans.Evaluation of Stability with reference to Marketing and Financial

Implications
Risk is inherent in all strategic decisions, budgets and action plans relating to marketing
and financing the product planning and its development.
Most of the reasons for failure of new products can be eliminated by the firm itself by
properly evaluating the stability if products in terms of marketing and financial
implications.
An evaluation of stability is therefore an important task of the product manager.
a) External business environment analysis

b) External competitive survey
c) Internal capability audit
d) Feasibility Analysis:-This study involves the following the following:-
1) Estimation of demand in target market at different price levels.
2) Forecasting sales based on demand estimation and competitive analysis
3) Estimate the cost of serving the market segment, taking into account cost
of transportation, warehousing, margins required by the trade to market
the new product, promotion, promotion expenses and sales force cost.
4) Based on the cost and anticipated sales revenue, calculation of break even
price and the sales- volume
e) Test Marketing Analysis

The new product is tested on 4 parameters: trial, first purchase, adoption (repeat
purchase) frequency and the volume bought each time.
f) Financial Analysis: - A financial analysis needs to take place in order to assess

whether the product concept can be made into a profitable proposition. An income and
expenditure statement, together with the associated balance sheet and cash flow analysis,
therefore need to be prepared.

Chapter-5
Marketing Communication
Q.1 What is Marketing Communication? Define the functions and the process of
International marketing communication.
Marketing -Communication
Market communication is the means by which firms attempts to inform, persuade and
remind consumers directly or indirectly about the products and brands that they sell.
International Promotional Mix:

Understanding the norms, motivations, attitudes, interests, and opinions of the target
market is crucial to company success in marketing to and communicating with different
cultures around the globe.
Functions of Marketing Communication

Consumers can be told how & why a product is used, by which and when.
Consumers can learn about who makes the product and what the company and
brand stands for.
It allows company to link their brands to other people, place, events, experience,
feelings etc.
Communication mix
1. Advertising-
-Any paid form of non personal presentation & promotion of ideas, goods and
services by sponsor.
-It is carried out through newspapers, magazines, radio, t.v & other mass media.
2. Sales Promotion-
-Short term incentive to encourage trial or purchase of product or service.
-It includes rebates and price discounts, catalogues, brochures, samples, coupons and
gifts.
3. Public relation and publicity-
-Programmes designed to promote or protect a company image or its products.
It includes sponsorship of sports, cultural events, company magazine, annual report,
seminars etc.
4. Direct Marketing-
Firm has direct interaction with customers.
Use of mail, telephone, fax, email, internet etc.
5. Personal selling-
Direct selling by firms sales force & it is considered to be 2 way method of
communication.

Sales presentation, sales meetings, samples, fair and trade shows.
Non personal communication Media

Broadcast media
Interactive media
Salespeople
Telemarketers
Trade show and exhibits
Communication Process
Source's environmental factors Receivers Environmental factors
Source's field of experience Receivers Field of
Source Encoding Information Decoding Receiver
Noise
Feedback
Process of International Marketing

Communication
It aims at conveying a firms message effectively and accurately.
1. Sender-
Marketing firm conveying the message.
2. Encoding-
Putting ideas, thoughts or information into a symbolic form.
Language and cultural issues are considered.
3. Message-
It can be non-verbal, oral, written or symbolic.
Marketing message has an object is product (Marlboro cigarettes), a sign or
symbol (Marlboro cowboy) and interpret ant (rugged, individualistic American).
4. Medium-
The channel used to convey the encoded message.
Personal- face to face, word of mouth.
Non-Personal-Mass communication channels.
5. Decoding-
Process of transforming the sender message into thoughts.
6. Receiver-
Customer who receive message by reading, hearing or seeing.
7. Feedback-
Feedback is used to assess the effectiveness of communication process.
Immediate response is obtained by personal selling.
It takes longer time in advertisement.
Q.2 What are the cultural issues that a marketer has to face while entering the
foreign market?
International Marketing Communication

SALES PROMOTION
PUBLIC RELATION
DIRECT MARKETING
Cultural Issues and International Marketing Communications

Cultural issues that international marketers need to consider when communicating
with target audiences in different cultures.
Language will always be a challenge. One cannot use a single language for an
international campaign.
The work ethic of employees and customers to be targeted by media.
Levels of literacy and the availability of education for the national population.
The similarity or diversity of beliefs, religion, morality and values in the target
nation.
The family and the roles of those within it are factors to take into account.

1. SALES PROMOTION
-S.P is marketing activities that stimulate consumer purchases & improve retailer or
middle
Man effectiveness and cooperation.
- It is short term efforts directed to the consumers or retailers to achieve specific goals.
- Demonstration, samples, coupons, gifts, contest, point of purchase etc.
1. Consumer Promotion
2. Trade promotion
It is effective in low developed countries.
When product concept is new & has small market share.
International marketer should know the specific law of each country, marketer
must consult local lawyers and authorities before launching a promotional
compaign.
P & G introduction of Ariel detergent in Egypt through road show and puppet
show in rural areas.
1. Premium and Gifts-
In Argentina ,Australia, Brazil, Chille, Columbia, U.K, Ireland, Malaysia,
Mexico, New Zealand, Poland, Singapore etc premium and gift vouchers are
legal.
In Belgium, Finland, France, hungry, Italy, Japan, Spain, Sweden, U.S its legal
but some restriction apply.
Some countries have set limit to premium.
Italy- 20% tax on prize value, Govt. notification required.
Japan- 10%
Belgium- 5%
2. Price Reduction & Discounts-
Austria has a discount law prohibiting cash reduction.
In France it is illegal to sell the product less than cost.
In Germany marketer must notify authorities in advance.
In Austria and Germany special sales may be made only during specified period
of time. Discount for payment on delivery may not exceed 3%.
3. Samples -
In Argentina, Australia, Belgium, Brazil, Chile, Columbia, France, Israel, Italy,
Mexico,
New Zealand, Spain, Sweden it is legal.
In U.S product sampling is legal with restrictions on alcohol, tobacco, drugs and
some agricultural products.
In Poland, Holland, Hungry it is legal ,except pharmaceutical ,alcoholic
beverages.
In Japan legal, except medicine.
In UK legal but some restrictions on alcohol, tobacco, medicines and some food.
Germany restricts door to door sampling.
4. Games and Contests
In Argentina, Australia, Brazil, Japan, Mexico, New Zealand etc it is legal.
In Spain, Venezuela, govt. registration is required.
Singapore-legal but requires permission from authorities.

Italy- legal 45% tax on prize value & govt. notification required.
UK subject to compliance with lotteries & Amusements Act.
2. PUBLIC RELATIONS
Public relations aim at building corporate image and influencing media and other
target groups to have a favorable publicity.
A public relation effort should foster goodwill and understanding both inside and
outside the company.
It includes sponsorship of sports, cultural events, contribution to sports and other
events, release of news about company.
Nike was able to overtake Adidas in U.S with effective publicity & sales
promotion compaign.
Indian firm J.K Tyres sponsor sports events in Europe, as public relation
activity.
P.R practices in countries can be affected by cultural traditions, social and
political contexts, economic environment.
In high income countries, professional firms offer specialized public relation
services.
In low income countries the word of mouth mode of publicity is used.
3. DIRECT MARKETING
Selling products and services to customers without using any market intermediary
is termed as direct marketing.
Technological advances as proliferation of telecommunication and I.T has
facilitated direct marketing.
The rapid growth in credit card usage has increased payment over Internet.
Provide direct contact with the customers.
Eliminate intermediaries.
Personalized service.
Helps in building customer relationships.
1) Direct Marketing- sending letters, brochures, e-mails, faxes and other directly
to consumer.
2) Door to Door Marketing- In Japan motorcars are sold door to door,
Example-Amway, Avon and Tupperware rely on door to door marketing
worldwide.
3) Multi-level Marketing-
A core group of distributor is recruited who pay registration fee to company and
works as sponsor.
Example- Amway, Avon, Mary kay cosmetics etc.
Send your requisition at

info@biyanicolleges.org

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Biyani's Think Tank

Concept based notes

Miss Shashi Gurjar

Concept & Copyright :

First Edition : 2011

Leaser Type Setted by :

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1. International Market Environment:- 3-22

4. International Product Management 47-55

5. Marketing Communication 56-60

6. Distribution & Logistics 61-74

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7. Pricing Strategies 75-79

8. Evaluating & Controlling 80-82

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International Market Environment and

Changes in fashion & Styles

Rules and Regulations

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Importance and Benefits of International Marketing

Scope of International Marketing

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1. Mobility in Factor Of Production

Domestic Trade: Free to move around factors of production like land,

International Trade: Quite restricted

Domestic trade: easier to move goods without much restrictions. Maybe

International Trade: Restricted due to complicated custom procedures

3. Usage of different currencies

Domestic trade: same type of currency used

International trade: different countries used different currencies

Domestic trade: limited market due to limits in population, etc

International trade: Broader markets

5. Language And Cultural Barriers

Domestic trade: speak same language and practice same culture

International trade: Communication challenges due to language and

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Domestic Marketing International

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10. Advertising, 10. Different

Decision to enter international markets

Enter International markets

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Consolidate Marketing efforts in global Marketing

Reasons for entering International Markets:-

Reasons for Entering International

WhyInternational Risk spread

Reasons for Entering International markets-

Firm enter international markets to explore opportunities their.

Companies having small home market like-Singapore, Hongkong, Japan.

Example - Healthcare companies Cipla, Dr. Reddy, Candilla Pharma

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3. Achieving Economics of Scale-

Large scale production, reduction in unit production cost.

Example- world market is 4 times larger than U.S market

It reduces dependence on one market only.

5. Uniqueness of product or service-