International

Marketing

SECOND EDITION

RAKESH MOHAN JOSHI

Professor (International Business and International Marketing)
Indian Institute of Foreign Trade
New Delhi

OXTORD
UNIVERSITY PRESS
 Detailed Contents
Preface to the Second Edition v
Acknowledgements ix
Preface to the First Edition x
Brief Contents xii
List of Exhibits and Case Studies xxiii
PART I DECISION TO INTERNATIONAUZE
1. The Concept of International Marketing
Introduction 3
Globalization and Its Marketing
Implications 5
Understanding Globalization 7
Measuring Globalization 9
Impact of Globalization on Present-day
Marketing 11
Concept of International Marketing 13
Marketing Fundamentals 13
International Marketing:
The Concept 13
Terms in International Marketing 14
Domestic Marketing vs International
Marketing 15
Evolutionary Process of Global Marketing 18
Domestic Marketing 19
Export Marketing 19
International Marketing 20
Multinational Marketing 21
Global Marketing 21
Towards GLOCAL Marketing 22
Adaptation: The Critical Success Factor in
International Markets 23
EPRG Concept 25
PART II SCANNING INTERNATIONAL MARKETING ENVIRONMENT
Scanning the International
Economic Environment
Introduction 51
World Economic Outlook 52
International Economic Institutions 53
World Bank Group 53
3 Theoretical Background of International
Trade 26
Theory of Mercantilism 26
Theory of Absolute Advantage 2 7
Theory of Comparative Advantage 28
Factor Endowment Theory 29
Country Similarity Theory 30
New Trade Theory 30
Theory of International Product Life Cycle 31
Theory of Competitive Advantage 31
Reasons for Entering International Markets 32
Growth 32
Profitability 33
Reverse Leaming 34
Achieving Economies of Scale 34
Risk Spread 34
Access to Imported Inputs 35
Uniqueness of Product or Service 35
Marketing Opportunities due to Life
Cycles 35
Spreading R&D Costs 35
International Marketing Framework 35
Decision to Internationalize 37
Setting Marketing Objectives 37
Case Study. Essel Propack—World's Largest
Manufacturer of Laminated Tubes 40
49
United Nations Conference on Trade
51 and Development 61
World Intellectual Property
Organization 64
United Nations Industrial Development
Organization 65
Asian Development Bank 65
 Detailed Contents
United Nations Economic and Social
Commission for Asia and the Pacific 66
International Economic Integrations 67
Conceptual Framework of International
Economic Integration 67
Major Trade Croups 69
The European Union 69
North American Free Trade Area 71
MERCOSUR 71
Gulf Cooperation Council 72
Asia-Pacific Economic Cooperation 72
Association of Southeast Asian Nations 72
India's Participation in Preferential
Trade Agreements 73
SAARC Preferential Trading Agreement 74
Comprehensive Economic Cooperation
Agreement between India and Singapore 76
Framework Agreement on Comprehensive
Economic Cooperation between
ASEAN and India 77
Bay of Bengal Initiative for Multi-sectoral
Technical and Economic Cooperation 77
Indo-Sri Lanka Free Trade Agreement 78
Asia-Pacific Trade Agreement (Bangkok
Agreement) 79
Framework Agreement for Establishing Free
Trade between India and Thailand 79
Bilateral Preferential Trading Agreement with
Afghanistan 80
India-MERCOSUR PTA 80
India-Chile Framework Agreement on
Economic Cooperation 80
Indo-Gulf Cooperation Council PTA 80
India-Malaysia Comprehensive Economic
Cooperation Agreement 81
India-Korea Comprehensive Economic
Partnership Agreement 81
India-Japan CEPA 81
India's Other Economic Cooperation
Agreements under Negotiation 81
RTAs under the WTO: The Multilateral
Trading System 81
Case Study. Emerging Marketing Opportunities
and BRICS 84
World Trade Organization: International
Marketing Implications 91
Introduction 91
Security of Access to International Markets 92
Stability of Access to International
Markets 92
Implications for Importers of
Raw Materials and Other Inputs 92
From GATT to WTO 92
Functions of WTO 93
Structure of WTO 94
Principles of Multilateral Trading System
under the WTO 94
Trade without Discrimination 96
Gradual Move towards Freer Markets
through Negotiations 96
Increased Predictability of International
Marketing Environment 96
Promoting Fair Competition in International
Markets 97
WTO Agreements: An Overview 97
Increasing Opportunities for
Goods in International Markets 98
Creating Fairer Markets in
Agriculture Sector 99
Opening up Marketing Opportunities in
Textiles 101
Standards and Safety Measures
for International Markets 102
Bringing International Trade in Services under
Multilateral Framework 103
Protection and Enforcement of Intellectual
Property Rights 106
Curbing Unfair Marketing Practices 109
Emergency Protection from Imports 111
Attempts to Reduce Non-tariff Marketing
Barriers 112
Promoting Cross-border
Investments 115
Plurilateral Agreements 115
Ensuring Transparency in Trade Policy 116
Settlement of International
Trade Disputes 117
Procedure of Dispute Settlement 118
WTO: Over the Years 121
Implications of WTO on International
Marketing 122
Case Study: Darjeeling Tea—Global
Infringement and WTO 126

4. International Political and Legal
Environment 130
Introduction 130
International Political Environment 132
International Political Systems
and ldeologies 132
Trade Embargoes and Sanctions 136
Bureaucracy 136
Terrorism, Crime, and Violence 137
International Legal Environment 139
Judicial Independence and
Efficiency 140
International Legal Systems 142
Principles of International
Law 144
United Nations Commission on
International Trade Law 145
Case Study. Homologation of 'Motor Vehicles'
in International Markets 147
PART III MARKET IDENTIFICATION, EVALUATION, iND SELECTION
6. International Marketing Research 181
Introduction 181
International Marketing Research 183
Process of Marketing Research 183
Major Challenges to Successful International
Marketing Research 192
Cross-cultural Marketing Behaviour
and Research 192
Equivalences in Cross-country Research / 93
Emic vs Etic Dilemma: Cultural Uniqueness vs
Pan-culturalism 197
The Emic Approach 197
The Etic Approach 197
Operationalization of Emic and Etic 197
International Marketing Research and
Human Judgement 198
1. Exploring International Trade
Opportunities 202
Introduction 202
Background of International Trade Pattems 203
World Trade: An Overview 203
World Merchandise Trade 204
World Services Trade 210
Detailed Contents XV
5. International Cultural Environment 151
Introduction 151
The Concept of Culture 152
Constituents of Culture 153
Cultural Globalization 161
Comparison of Cross-cultural
Behaviour 162
Hofstede's Cultural Classification 162
Trompenaars' Cultural Classification 166
Other Cross-cultural Classification 169
Cultural Orientation in International
Marketing 173
Parochialism vs Simplification 173
Self-reference Criterion and Ethnocentrism:
Major Obstacles in International Marketing
Decisions 173
Case Study: Cross-cultural Misapprehensions
over the Swastika in the West / 76
179
India's Foreign Trade: An Overview 213
Direction of India's Merchandise Trade 214
Composition of India's Merchandise
Trade 216
India's Services Trade 220
India's Sluggish Export Performance:
An Evaluation 222
Balance of Payments 224
Balance of Trade 226
Gains from International Trade 227
Concept of Terms of Trade 227
Terms of Trade: Developed, Developing,
and Transition Economies 228
India's Terms of Trade 230
Strategie Measures to Promote India's
Exports 231
Developing a Proactive Approach to
International Trade 232
Promoting Foreign Direct Investments 233
Abolition of Indirect Taxes in Certain Sectors
for Export Production 233
Entrepreneurship Facilitation 234
Infrastructure Development 234
Promoting Services' Exports 235
XVi Detailed Contents
Case Study: Emerging Opportunities in
International Dairy Trade and India 237
8. Identification, Segmentation, and
Targeting of International Markets
Introduction 248
Identificaton of International Markets 249
Institutes Facilitating Identification of
International Markets 249
Segmentation of International
Markets 251
Geographie Segmentation 251
Demographic Segmentation 251
Psychographic Segmentation 256
Segmentation on the Basis of Stages of
Development 258
Segmentation on the Basis of International
Marketing Opportunity 258
Segmentation on the Basis of Market
Attractiveness 261
PART IV ENTRY MODE DECISIONS
9. Entering International Markets 285
Introduction 285
Concept of International Market Entry
Modes 286
Modes of Entry in International Markets 287
Production in Home Country 287
Production in a Foreign Country 293
Investment Entry Modes 302
Assembly or Mixing in Overseas
Markets 302
International Joint Ventures 303
Wholly Owned Foreign Subsidiaries 304
PARTY MARKETING MIX DECISIONS
10. Product Strategy for International
Markets
Introduction 325
Identification of Products for
International Markets 326
Preliminary Screening for Selection of
International Markets 261
Market Size 261
Accessibility to International Markets 264
248 Profitability 267
Assessing Market Potential 267
Tools for International Market Evaluation and
Selection 270
Trade Analysis Method 270
Analogy Methods 270
Opportunity-risk Analysis 270
Growth-share (Boston Consulting Group)
Matrix 271
Country Attractiveness-Company Strength
Matrix 272
Country Evaluation for Locating Services 274
Distance Model for Selection of International
Markets 276
Case Study. Identifying International Marketing
Opportunities in Medical Services 279
283
Selection of International Market Entry
Modes 309
Strategie Trade-ofifs in Selecting Entry
Modes 310
Factors Affecting Selection of Entry
Modes 310
Decision-making Model for Selecting
International Market Entry Modes 314
Choosing the Right Entry Mode Mix for
International Markets 316
Case Study: Indian Oil Corporation's
Internationalization Strategy 320
323
Developing Products for International
325 Markets 327
Ethnocentric Approach 327
Polycentric Approach 327
Regiocentric Approach 327
Geocentric Approach 328
 Detailed Contents XVÜ

Product Standardization vs Adaptation in Balance Brand Based on Tangible-Intangible

International Markets 329 Product Component 365
Product Standardization 329 Branding of Services 367
Product Adaptation 330
Trade-off Strategy between Product Strategy for Building Global Brands 367
Standardization and Adaptation 337 Selecting Brand Names for International
Markets 368
Product Quality Decisions for International
Markets 338 Key Concepts of Building Brands 369
Brand Image 370
Packaging and Labelling for International Brand Equity 371
Markets 339 Brand Identity 373
New Product Launch for International Markets 340 Brand Essence 376
Waterfall Approach 341 Brand Positioning 377
Sprinkler Approach 342 Brand Identity, Brand Image, and
New Product Diffusion in International Brand Positioning 377
Markets 343 Brand Revitalization 377
Brand Repositioning 377
Concept of International Product Brand Extension 378
Life Cycle Theory 343
Implications of Life Cycle Concept in
International Product Strategy 346 Brand Building 378
International Competitive Posture Life Cycle Concept and Product Categories 379
Matrix 346 Life Cycle Concept and Brand 380
Framework for Product-promotion
International Branding Strategy 381
Strategies for International Markets 347
Low CDI—Low BDI Markets 381
Straight Extension 348
Low CDI—High BDI Markets 381
Product Extension-Promotion Adaptation 349
High CDI-Low BDI Markets 382
Product Adaptation-Promotion Extension 349
High CDI—High BDI Markets 382
Dual Adaptation 349
Developing New Product 349 Case Study: Building Formidable Indian
Brands in Diamond Jewellery 384
Case Study: Barbie Faces Islamic Dolls 353

12. Pricing Decisions for International

11. Building Brands in International
Markets 393
Markets 358
Introduction 358 Introduction 393

Concept of Branding 359 Concept of Pricing in International Markets 394

Branding Alternatives for International Pricing Approaches for International
Markets 360 Markets 395
No Brand or Branding the Product 360 Cost-based Pricing 395
Manufacturer's Own Brand or Market-based Pricing 397
a Private Brand 361 Factors Influencing Pricing Decisions 398
Local, National, or Global Brand 361 Cost Jpg
Single or Multiple Brands 362 Competition 399
Strategies for Building Brands 363 Purchasing Power 400
Brand Based on Tangible Product Buyers' Behaviour 402
Component 363 Irregulär or Unaccounted Payments in
Brand Based on Intangible Product Export-Import 403
Component 364 Foreign Exchange Fluctuations 403
XVÜi Detailed Contents

Terms of Delivery (Incoterms) in International High Density ofMiddlemen 441

Transactions 405 Channel Control 442
INCOTERMS for Sea and Inland Business Culture 442
Waterways 406 Legal System 442
INCOTERMS for Any Mode or International Retailing 444
Modes of Transportation 407 Department Stores 444
Terms of Payment in International Supermarkts 444
Transactions 408 Convenience Stores 444
Advance Payment 408 Speciality Stores 444
Open Account 408 Discount Stores 444
Consignment Sales 409 Superstores 445
Documentary Credit 409 Hypermarkets 445
Counter Trade 409 Retailing in India 450
Simple Barter 410 Opening up of Indian Retail Sector
Clearing Arrangement 411 for Foreign Players 451
Switch Trading 411
International Retailing and Private Labels 456
Counter Purchase 412
Buy-back (Compensation) 412 Case Study: Channels of International
Offset 413 Distribution for Cut Flowers 459
Dumping 414 14. Communication Decisions for
Forms of Dumping 415 International Markets 467
Transfer Pricing 416 Introduction 467
Types of Transfer Pricing 417
Consumer Response Hierarchy Models 469
Legal Framework of Transfer Pricing 417
'AIDA' Model 469
Grey Marketing 418 Innovation-adoption Model 469
Types of Grey Marketing Channels 418
Marketing Communication Strategies 470
Case Study. Pricing Medicines: Profits, Push Strategy 470
Patents, and Poor Customers 422 Pull Strategy 471
13. International Distribution 428 Process of International Marketing
Communication 472
Introduction 428
Sender 472
Concept of International Distribution Encoding 472
Channels 429 Message 472
Types of International Distribution Channels 430 Medium 473
Indirect Channels 430 Decoding 473
Direct Channels 431 Receiver 473
Channel Intermediaries in International Noise 473
Markets 432 Feedback 473
Indirect Channels 432 Concept of International Marketing
Direct Channels 436 Communication Mix 474
International Franchising 440
E-channels 440 Tools for International Marketing
Communication 475
Selecting Channels of International Advertising 475
Distribution 441 Direct Marketing 481
Structure of Distribution Channels in Personal Selling 482
International Markets 441 Sales Promotion 484

Public Relations 484
Trade Missions 489
International Trade Fairs and
Exhibitions 489
Making Optimum Gains from Participation in
International Trade Fairs 490
ATA Gamet 491
Factors Influencing International Communication
Decisions 492
Culture 492
PART VI EXPORT-IMPORT MANAGEMENT
15. Institutional Infrastructure for Export
Promotion 503
Introduction 503
The Concept of Export Promotion 504
Organizations for International Trade
Promotion 505
International Trade Centre 506
Institutional Set-up for Export Promotion in
India 506
Department of Commerce 508
Subordinate Offices 509
Advisory Bodies 5/0
Commodity Organizations 511
Service Institutions 515
Indian Government's Trade Representatives
Abroad 519
Government Participation in Foreign
Trade 519
States' Involvement in Promoting Exports 520
Export Promotion in India: Need for Strategie
Reorientation 522
16. Framework of International
Trade Policy
Introduction 524
Concept of International Trade Policy 525
India's Foreign Trade Policy: An Overview 526
Export Prohibition; and Restrictions 528
Import Prohibitions and Restrictions 529
Policy Measures for Export Promotion 530
Policy Initiatives and lncentives by State
Governments 552
Detailed Contents xix
Language 494
Education 496
Media Infrastructure 496
Government Regulations 496
Strategie Framework for International
Product-promotion Decisions 497
Straight Adaptation 498
Product Extension-Promotion Adaptation 498
Product Adaptation-Promotion Extension 498
Dual Adaptation 498
501
WTO and India's Export Promotion
Measures 552
WTO's Trade Policy Review
Mechanism 554
17. Export Procedures and Documentation 557
Introduction 557
Export Documentation 560
Consequences of Poorly Completed
Documentation 561
Adaptation of Aligned Documentation System
in India 562
Commercial Documents 564
Commercial Invoice 564
Packing List 567
Transport Documents 567
Ocean (Marine) Bill ofLading 567
Airway Bill 569
Combined Transport Document 569
Certificate of Origin 570
Inspection Certificate 571
Insurance Policy/Certificate 571
Mate's Receipt 571
Bill of Exchange (Draft) 572
524 Shipment Advice 572
Regulatory Documents 572
Exchange Control Declaration Forms 572
Shipping Bill/Bill of Export 573
Bill of Entry 574
Documents for Central Excise
Clearance 574
Blacklist Certificate 575
Health/Veterinary/Sanitary Certificate 575
Electronic Processing of Export Documents 5 75
XX Detailed. Contents
Procedure for Export-Import 576
Compliance with Legal Framework 576
Obtaining Import-Export Code Number 578
Registration with Export Promotion
Council 578
Registration with Sales Tax and
Central Excise Authorities 578
Concluding an Export Deal 579
Arranging Export Finance 580
Procuring or Manufacturing of Goods 581
Packaging, Marking, and Labelling of
Goods 584
Appointment of Clearing and Forwarding
Agents 585
Arranging Cargo Insurance 585
Booking Shipping Space 585
Dispatch of Goods to the Port 586
Port Procedures and Customs Clearance 586
Dispatch of Documenta to the Exporter 588
Sending Shipment Advice 588
Presentation of Documents at the Negotiating
Bank 589
Claiming Export Incentives 589
Electronic Processing of International Trade
Documents 590
Electronic Trade Documentation System 590
Singapore's Electronic Trade Documentation
System 591
TradeNet 591
TradeXchange 591
Electronic Trade Documentation System in
India 594
Using SMTP (Simple Mail Transfer Protocol)
Option 596
Using the File Upload Option 596
Case Study: Examining a Letter of Credit 600
18. Trade Logistics and International
Shipping 603
Introduction 603
Concept of International Logistics 604
Logistics and the Value Chain
Concept 606
Logistics Performance Index 606
Managing International Logistics 608
Warehousing 608
Inventory Management 608
Packing and Unitization 609
Information and Communication
Technology 609
Transportation 609
Third Party Logistics 610
Maritime Transportation in International
Trade 611
Types of Ocean Cargo 612
Types of Commercial Vessels 612
Alternates for Ocean Shipment 618
Charter Shipping 618
Liner Shipping 621
Containerization and Multi-modal or
Inter-modal Transportation 623
Types of Containers 624
FCL vs LCL Containers 626
International Organizations Associated with
International Maritime Transportation 626
International Maritime Organization 627
United Nations Conference on Trade and
Development 627
World Customs Organizations 627
International Organization for
Standardization 628
International Labour Organization 628
Institutional Framework for Maritime
Transport in India 628
Ministry of Shipping 629
National Shipping Board 629
Directorate General of Shipping 629
Shipping Corporation of India Ltd 629
Container Corporation of India 629
India's International Shipping Activities 630
19. Modes of Payment and
International Trade Finance 635
Introduction 635
Modes of Payment in International Trade 636
Advance Payment 636
Documentary Credit 636
Consignment Sales 642
Open Account 642
International Trade Finance 643
Banker's Acceptance 643
Rediscounting 643
Accounts Receivable Financing 644
Factoring 644
Forfaiting 645

Letters of Credit 647
Counter-trade 647
Export Finance 647
WTO Compatibility of Trade Finance
Scheines 651
Case Study: Exim Bank's Credit to Facilitate
Imports from India 653
20. Managing Risks in International
Trade
Introduction 658
Types of Risks in International Markets 659
Political Risk 659
Economic Risk 660
Foreign Exchange Risks and Exposure 660
Foreign Exchange Risk 660
PART VII CONTEMPORARYISSUES
21. Global E-marketing
Introduction 689
Conceptual Framework of E-marketing 690
E-commerce 693
E-business 694
M-marketing 695
E-marketing Technology and
Environment 696
Electronic Data Interchange 697
Internet 697
Extranet 699
Intranet 699
Leveraging ICT to Enhance
Competitiveness 700
Prerequisites for Effective E-marketing
Transactions 700
Global E-marketing 701
E-marketing Communication 702
E-marketing Research 703
Global E-marketing of Services 703
E-marketing Models 704
Business-to-business 704
Business-to-consumer 706
Consumer-to-business 707
Consumer-to-consumer 707
Detailed Contents XXi
Foreign Exchange Exposure 661
Commercial Risk 662
Transit Risk 663
Measuring Risks in International Markets 664
Business Environment Risk Intelligence
Index 665
Economist Intelligence Unit's Risk
Indices 666
Global Risk Index 666
658 Failed States Index 666
Managing Risks in International Markets 669
Managing Political Risks 669
Managing Commercial Risks 670
Managing Foreign Exchange Risks 676
Managing Transit Risks: Marine Cargo
Insurance 678
687
689 Alternative E-marketing Strategies 708
Brick and Mortar 708
Pure Click 708
Brick and Click 708
E-enabled Marketing Process Transformations
and Challenges 709
Impact of ICT on New Products
and Services 710
Impact of ICT on Consumer Purchase Decision
Process 710
Problem Recognition 710
Information Search 710
Evaluation of Alternatives 711
Purchase Decision 711
Post-purchase Behaviour 711
Emergence of Reverse Marketing 711
Policy Framework and ICT
Laws for Global E-marketing 712
22. Emerging Issues 716
Introduction 716
Emerging Issues in International
Marketing 718
Accelerated Growth of Global Markets 718
Pervasiveness of Globalization 718
Rapid Integration of Global Markets 718
 Detailed Contents
Breaking down of Marketing
Boundaries 719
Emerging New Marketing Barners 720
Emergence of Global Customer
Segment 720
Growing Customer Expectation 720
Product Proliferation and Shortening
Product Life Cycles 721
Emergence of Knowledge Economy 721
Emergence of Global E-marketing 722
IGT Revolutionizes Marketing of
Services 722
Growing Strength of Retailers 723
Customer Relationship Marketing 724
Ethical Issues in International Marketing 724
Rising Concern for Unethical Marketing
Practices 724
Counterfeiting and Piracy 725
Index 741
A baut the Author 753
Piracy 727
Bribery 727
Smuggling 729
Growing Awareness of Corporate Social
Responsibility 729
Growing Significance of Emerging Economies
International Marketing 730
India: Emerges at the Global Stage 732
Manufacturing 734
Services 735
Foreign Direct Investment 736
India and China: David and Goliath 736
Internationalization of Indian Firms 737
Reaping India's Demographic
Dividend 737
India Posed to be the World's
Biggest Consumer Market 738