Prof. (Dr.

) Jui Banerjee
Department of BBA
St.Xavier’s College, Ranchi

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 INTRODUCTION
 The key difference between domestic marketing and international marketing is
the multi- dimensionality and complexity of the many foreign markets a
company may operate in.
 International marketing environment is a set of controllable (internal) and
uncontrollable (external) forces or factors that affect international marketing.
International marketing mix is prepared in light of this environment.
 An international marketing manager needs a knowledge and awareness of
these complexities and the implications they have for international marketing
decisions.
 The needs, preferences and expectations of buyers in different overseas
markets are not necessarily similar. The environmental differences influence
the international marketing decisions of a firm. Hence, to serve the
international markets effectively, a firm needs to have an understanding of
international marketing environment properly.

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 ECONOMIC ENVIORNMENT
 A nation’s economic situation represents its current and potential capacity to
produce goods and services. The key to understanding market opportunities
lies in the evaluation of the stage of a nation’s economic growth. As the degree
of economic development increases, so does the sophistication of the
marketing effort focused on the countries.
 A way of classifying the economic growth of countries is to divide them into
three groups: (a) industrialized, (b) developing, and (c) less-developed
nations. The industrialized nations are generally considered to be the United
States, Japan, Canada, Russia, Australia and most of Western Europe The
economies of these nations are characterized by private enterprise and a
consumer orientation. They have high literacy, modem technology, and higher
per capita incomes.
 Developing nations are those that are making the transition from economies
based on agricultural and raw materials production to industrial economies.
Many Latin American nations fit into this category, and they exhibit rising
levels of education, technology, and per capita incomes.

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 Economic Enviornment …Contd
 Finally, there are many less developed nations in today’s world. These
nations have low standards of living, literacy rates are low, and
technology is very limited.
 Usually, the most significant marketing opportunities exist among the
industrialized nations, as they have high levels of income, one of the
necessary ingredients for the formation of markets. However, they also
have stable population bases, and market saturation for many products
already exists.
 The developing nations, on the other hand, have growing population
bases, and although they currently import limited goods and services, the
long-run potential for growth in these nations exists.
 Dependent societies seek products that satisfy basic needs–food,
clothing, housing, medical care, and education.

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 SOCIAL ENVIORNMENT
 The cultural environment consists of the influence of
religious, family, educational, and social systems in the
marketing system. Marketers who intend to market their
products overseas may be very sensitive to foreign cultures.
 Failure to consider cultural differences is one of the
primary reasons for marketing failures overseas. A number
of cultural differences can cause marketers problems in
attempting to market their products overseas.
 Social factors include: (a) language, (b) color, (c) customs
and taboos, (d) values, (e) aesthetics, (f) time, (g) business
norms, (h) religion, and (i) social structures.

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 POLITICAL ENVIORNMENT
 The political system of a country comprise various
stakeholders, such as the government, political parties with
different ideologies, labour unions, religious organizations,
environmental activists, and various NGOs.

 Cordial political relations between the firm’s home country

and the host countries have a direct favourable impact on
FDIs.

 Besides, diplomatic channels are utilized to get improved

market access for imported goods in the target foreign
country markets, reduced import tariffs, compatible quality
regulations, etc. The dispute settlement mechanism, legal
framework, and judicial independence are also critical to
fair treatment expected in international business.
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 POLITICAL ENVIORNMENT
 Foreign governments can intervene in marketing
programs in the following ways:
• contracts for the supply and delivery of goods and
services
• the registration and enforcement of trademarks, brand
names, and labeling
• patents
• marketing communications
• pricing
• product safety, acceptability, and environmental issues

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DEMOGRAPHIC ENVIORNMENT
 Demographic factors such as size of the population,
population growth rates, age composition, family size,
nature of the family, income levels etc. have very significant
implications for business.
 Poor countries with small population are generally not
attractive for business. However, even such countries may
hold out opportunities for some companies. As these
markets may not be of interest for large companies, small
firms may find promising niches in these markets.
 Advanced countries, particularly with large population, are
generally attractive markets. The major part of the
international trade and foreign investment naturally take
place between these nations. Because of the large potential
of these markets, competition is generally strong in them.
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 DEMOGRAPHIC ENVIORNMENT
 Several high income nations, however, pose a problem for many
businesses. Because of the decline in the birth rates and the
consequent fall in the size of the baby population, the market for
baby products has shrunk. This has prompted some companies
to reposition their products (originally introduced as baby
products) and to pay more importance to international business.

 The declining birth rate has been a boon to certain industries.

For example, industries such as hotels, airlines and restaurants
have benefited from the fact that young childless couples have
more time and income for travel and dining out. Small families
have also similar advantages when compared with large families.

 Although birth rates have fallen in many developing countries,

the population growth rates are still very high. This coupled with
a steady increase in income drives fast the growth of the markets
of a number of developing economies.
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 DEMOGRAPHIC ENVIORNMENT
 When the population is very large, even if the country is generally poor,
there could be a sizeable market even for those goods and services
which are regarded luxuries in these countries. For example, if just 5%
of the Indian population is well to do, absolute number is larger than
the total population of many of the high income economies.

 High population growth rate also implies an enormous increase in the

labor supply. When the Western countries experienced industrial
revolution, the population growth was comparatively slow. Labor
shortage and rising wages encouraged the growth of labor intensive
methods of production. Capital intensive technologies, automation,
and even rationalization, are opposed by labor and many sociologists,
politicians and economists in developing countries. Cheap labor and a
growing market have encouraged many multinationals to invest in
developing countries like India and China.

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TECHNOLOGICAL ENVIORNMENT
 The international marketers must understand
technological development and its impact on its total
operations.
 The marketing intelligence system may help the
international firm to know technological orientations of
other enterprises and to update its own technologies to
remain competitive.
 New technologies create new markets and opportunities.
However, every new technology replaces an old technology.
Companies that do not keep up with technological
changes, soon find their products outdated.

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 TECHNOLOGICAL ENVIORNMENT
 The level of technological development of a nation
affects the attractiveness of doing business there, as
well as the type of operations that are possible.
Marketers in developed nations cannot take many
technological advances for granted. They may not be
available in lesser developed nations.

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 INTERNATIONAL TRADING
ENVIORNMENT
 International trade is carried out by means of a regulated negotiation
between exporter and importer.
 All traders are subject to the laws of their own country, and to
international agreements that have been made about trade. International
agreements have resulted from negotiations among governments at
regional, inter-continental and global levels. A number of regional
economic organizations exist, such as the European Union (EU), the
General Agreement on Tariffs and Trade (GATT), etc.
 Countries make laws about the movement of goods in and out of their
countries for three main reasons.
 First, they can raise revenues, through duties or taxes.
 Second, their own industries can be protected through restricting imports
of competitive products or charging duty on them.
 Third, the movement of certain products can be prohibited. These can
either be things which the government wants to keep in-such as works of
great historical importance-or keep out-such as animal products from
endangered species.
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INTERNATIONAL TRADING
ENVIORNMENT
Trade barriers

Multinational
Trade agreements
trade negotiations

Cartels Trading blocs

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 TRADE BARRIERS
 Trade barriers are government-induced restrictions on
international trade.
 These are man- made obstacles to the free movement of goods
between different countries and impose artificial restrictions on
trading activities between countries.
 Most trade barriers work on the same principle–the imposition
of some sort of cost on trade that raises the price of the traded
products. If two or more nations repeatedly use trade barriers
against each other, then a trade war results.
 There are broadly two types of trade barriers:
# Tariff Barriers
# Non- Tariff Barriers
 A country may use both tariff and non- tariff barriers in order to
restrict the entry of foreign goods

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 TRADE BARRIERS OBJECTIVE
 To protect domestic industries from foreign competition
 To promote new industries and indigenous research &
development
 To conserve the foreign exchange resources of the country
 To make the balance of payments position favorable
 To curb conspicuous consumption
 To mobilize revenue of the government
 To discriminate against certain countries
 To protect the national economy from dumping by other
countries with surplus production
 To protect the national economy from Dumping by other
countries with surplus production
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 TARIFF BARRIERS
 Tariffs in international trade refers to the duties or
taxes imposed on internationally traded goods when
they cross the national borders.
 Tariffs enhance the price of the imported goods,
thereby restricting their sales as well as their imports.
 The aim of a tariff is thus to raise the prices of
imported goods in domestic markets, reduce their
demand and thereby discourage their imports.
 These barriers are also sometimes known as import
restraints, because they limit the amount of goods
which can be imported into a country.
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 NON- TRADE BARRIERS
 A nontariff barrier is a way to restrict trade using trade
barriers in a form other than a tariff.
 Non-Tariff Barriers (NTBs) refer to restrictions that result
from prohibitions, conditions, or specific market
requirements that make importation or exportation of
products difficult and/or costly.
 NTBs arise from different measures taken by governments
and authorities in the form of government laws,
regulations, policies, conditions, restrictions or specific
requirements, and private sector business practices, or
prohibitions that protect the domestic industries from
foreign competition.

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TYPES OF NON- TARIFF BARRIERS

Import &
Import
Export
Licensing
Quotas

Voluntary Administered
Export Protection
Restraint

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