International Marketing

Assignment -1 Dhawal Thacker ( 19BM63050)

1. What is the EPRG framework?

Ans – EPRG framework stands for Ethnocentric, Polycentric, Regiocentric, and Geocentric. It is designed so
that it can be used in an internationalization process of businesses and mainly addresses how companies view
international management orientations. The EPRG Framework is additionally useful for making strategic
decisions. The EPRG Framework suggests that companies must decide which approach is suitable for getting
successful results in countries beyond home county. For this reason, the EPRG Framework is a vital if a company
does not know yet how to strike the business operations in domestic and home-away countries. According to the
EPRG Framework (or the EPRG Model), there are four management approaches that an organization can take to
get more involved in an international business substantially:

1. Ethnocentric: This framework stipulates that the home country is superior and the needs of the home country
are most relevant. When they look to new market, they only rely on what the know and is similar to their home
market. These companies make few adaptations to their products and undertake little research in in international
market. Controls are highly centralized and the organization.
For example, Nissan exported the same cars to other
cold countries like Japan. Hence the consumer there
faced problem as the cars didn’t start after a
prolonged halt due to freezing environment.

2. Polycentric (multi-domestic): each country is unique and should therefore be targeted differently. The
polycentric enterprise recognizes that there are different conditions for production and marketing in different
locations and tries to adapt to those different conditions to maximize profits in each location. The control is highly
decentralized among affiliates, and communication between headquarters and affiliates is limited.

Example: Fast food companies like McDonalds and Burger King have introduced the burger variants suitable to
Indian culture with relevant ingredients. Even infact, in states where the vegetarian population is significant (Like
Gujrat, these stores have come up with pure-veg outlets. This is due to the fact that company wants to target
consumers of the given geography in while being close to their culture and preferences.

3. Regio centric: the world consists of regions (e.g. Europe, Asia, the Middle East). The firm tries to integrate
and coordinate its marketing program within regions, but not across them.

4. Geocentric (global): the world is getting smaller and smaller. The firm may offer global product concepts but
with local adaptation (‘think global, act local’). This notion focuses on a more world-orientated approach to
multinational management. The main difference of geocentrism compared to ethno- and polycentrism is that it
does not show a bias to either home or host country preferences but rather spotlights the significance of doing
whatever it takes to better serve the organization

For example, technology companies like, Google, Amazon are Global companies. Tough theya re bound to follow
the regulations of the land of operating countries also, but the product offering are similar everywhere, and they
also have dedicated management team in each of those geographies.

1
2. What types of strategies you should recommend for management structure, marketing strategies &
production/ operation for each of these categories of the market?

The Ethnocentric model places International operations as secondary and is centered on the domestic market.
The staff/human resource is from the domestic geography and the planning center is at the National headquarters
of such a company. With all the resources being domestic, the production is also within the same geographic
boundaries with a centralized decision making management. Although production is domestic, the company
should enter into partnerships for exporting and licensing into the nearby geographies with some similar
requirements. However, the attributes of the product are as per the home country. When it comes to gauging
performance, domestic market share is seen as the measure of success.

In the Polycentric model, several important foreign markets exist and each market has unique characteristics.
Hence an organization falling under this category should be able to adapt to these varied markets by giving priority
taking into consideration differences in foreign markets. This type of organization should have subsidiaries in
each country to take tactical decisions about the respective geographies.
The organization should adopt a structure where it has a division for each zone. To cater to the culture and
consumer behavior, the organization should staff the people from the market geographies itself rather than that of
a single nationality in all markets. To penetrate further closer to the consumer, the company should enter into
Joint-venture or/and franchise business model as well. When it comes to gauging performance, the local market
share of each geography is seen as the measure of success.

The strategies for Regio centric and Geocentric are almost similar to their common approach is that of a
world/region as a common market with the global/ regional vision of the world. Their priority is to unify the
differences in the world/regional markets with the main planning headquarter at the world/regional level. These
organizations should follow a matrix structure to allow the free flow of information to enable the management to
take strategic decisions. The management style is therefore integrated and interactive. Due to the gigantic scale,
these types of organizations can attract the most qualified person irrespective of the boundaries. As their marketing
strategy, they must focus on extension, adaption, and creation. These organizations should leverage their
global/large geographical presence to source low-cost supplies. They should focus on growing by entering into
strategic alliances and direct investments either to eliminate competition or to venture into new segments. When
it comes to gauging performance, global/ regional market share is seen as the measure of success.

2
3. What are the four important components of International Product Life cycles?
Ans - The International Product Life Cycle (IPLC) theory describes the diffusion process of an innovation across
national boundaries. This briefs about how a company evolves over time and across national borders. For each
curve, net export results when the curve is above the horizontal line; if the curve is below the horizontal line, net
import results for a particular country.

Typically, demand first grows in the innovating country (here the US). In the beginning excess production in the
innovating country (greater than domestic demand) will be exported to other advanced countries where demand
also grows. Only later does demand begin in less developed countries. Production, consequently, takes place first
in the innovating country.

As the product matures and technology is diffused, production occurs in other industrialized
countries and then in less developed countries. Efficiency/comparative advantages shift from
developed countries to developing countries. Finally, advanced countries, no longer cost-effective, import
products from their former customers.

The four key elements of the international product lifecycle theory are −
● The demand layout
● Manufacturing
● Competitive intensity in the local market
● Marketing strategy
The marketing strategy of a company is responsible for inventing or innovating any new product or idea. The
stage in which a product belongs in its lifecycle, is the key factor behind deciding these strategies. These stages
are introduction, growth, maturity, saturation, and decline.

The lifecycle of a product is based on sales volume, introduction, and growth. These remain constant for marketing
internationally and involves the effects of outsourcing and foreign production. The different stages of the lifecycle
of a product in the international market are given below −

Stage one (Introduction)

In this stage, a new product is launched in a target market where the intended consumers are not well aware of its
presence. Customers who acknowledge the presence of the product may be willing to pay a higher price in the
greed to acquire high-quality goods or services. With this consistent change in manufacturing methods, production
completely relies on skilled laborers.
Competition at the international level is absent during the introduction stage of the international product lifecycle.
Competition comes into the picture during the growth stage when developed markets start copying the product
and sell it in the domestic market. These competitors may also transform from being importers to exporters to the
same country that once introduced the product.

Stage two (Growth)

This stage of the product lifecycle is marked by fluctuating increase in prices, high profits, and promotion of the
product on a huge scale.The exporter of the product conducts market surveys, analyse and identify the market size
and composition. In this stage, the competition is still low. Sales volume grows rapidly in the growth stage.

Stage three (Maturity)

In this level of the product lifecycle, the level of product demand and sales volumes increase slowly. Duplicate
products are reported in foreign markets marking a decline in export sales. To maintain market share and
accompany sales, the original exporter reduces prices. There is a decrease in profit margins, but the business
remains tempting as sales volumes soar high.

Stage four (Saturation)

At this level, the sales of the product reach the peak and there is no further possibility for further increase. This
stage is characterized by the Saturation of sales. (In the early part of this stage sales remain stable then it starts
falling). The sales continue until substitutes enter into the market. The marketer must try to develop new and
alternative uses of the product.

Stage five (Decline)

This is the final stage of the product lifecycle. In this stage sales volumes decrease and many such products are
removed or their usage is discontinued. The economies of other countries that have developed similar and better
products than the original one export their products to the original exporter's home market. This hurts the sales
and price structure of the original product. The original exporter can play a safe game by selling the remaining
products at discontinued items prices.
3
4. What are the challenges an International Marketer faces in managing the Product Life Cycle of
International Product?
Ans - As a consequence of increasing international competition, time is becoming a driving factor for an
increasing number of companies that manufacture technologically sophisticated products. Competition and the
level of technological development mean that product life cycles are getting shorter and the product fade out soon.
In parallel to shorter PLCs, the product development times for new products are being greatly reduced. This
applies not only to technical products in the field of office communication equipment but also to cars and consumer
electronics. In some cases, there have been reductions in development times of more than half.
Similarly, the time for marketing/selling, and hence also for R&D cost to pay off, has gone down from about four
years to only two years. For all types of technological products, it holds that the manufactured product must have
as good a quality as required by the customer (i.e. as good as necessary), but not as good as technically feasible.
Too frequently technological products are over-optimized and therefore too expensive from the customer’s point
of view.

Today product quality is not enough to reach and to satisfy the customer. Quality of design and appearance play
an increasingly important role. Highly qualified product support and customer service are also required.

A new product can have several degrees of newness. It may be an entirely new invention (new to the world) or it
may be a slight modification of an existing product. The newness has two dimensions: newness to the market
(consumers, channels, and public policy) and newness to the company. The risk of market failure also increases
with the newness of the product. Hence the greater the newness of the product, the greater the need for a thorough
internal company and external environment analysis, to reduce the risk involved.

Some other challenges are -

● Companies find it difficult to succeed in new markets that are culturally unfamiliar
● They often underestimate differences in the patterns of daily life in the new markets
● This makes it difficult to develop products and services that fit peoples’ lives
● It becomes difficult to extend their brand and manage culturally diverse teams

Product and promotion go hand in hand in foreign markets and together can create or destroy markets in a very
short order. We have considered the factors that may drive an organization to standardize or adapt its product
range for foreign markets. Equally important are the promotion or the performance promises that the organization
makes for its product or service in the target market. As with product decisions, promotion can be either
standardized or adapted for foreign markets.