INTERNATIONAL

MARKETING MANAGEMENT
AIMS AND OBJECTIVES OF IMM.
◦ A clear understanding of the basic concepts of international
business/global business management, in the light of the
business scenario in this 21st century globalized business
environment. Why global business is studied as a different
field, yet encompassing itself into the body of marketing
management.
◦ Understanding of the complex and a dynamic definitions
related to international marketing/ trade etc.

INTRODUCTION
 ◦ Understanding the concept of globalization & why it is
Contd..
important and its definition.
◦ Why globalization is referred in the context of international
business.
◦ A brief historical background from modern times to assess
the role of globalization being not new in this 21st century
global business scenario.
◦ Overall competitive scenario, when markets and business
worldwide are facing a paradigm shift from monopoly to
oligopoly.
 ◦ Corporate examples from India and other world markets towards
understanding of the global business/ international marketing
management.
◦ Important mergers and acquisitions by Indian companies abroad.
◦ Exposure of the students to the global business activities.
◦ Focus on managing international business, operational as well as
strategic.
◦ Understanding the macro international business environment,
strategies to enter foreign market.
◦ Understanding of the global business policy and regulatory
measures in the light of emerging markets.
◦ Understanding the concept of international trade, balance of trade
and balance of payments. Definitions and importance on the terms.

Contd..
Continued…

IMPORTANT Books

Global Marketing Management by

Warren. J. Keegan
Other Important References:
Global Marketing Management-Kotabe Makadi
International Marketing Management- Varshney and
Bhattacharya.
The Worldly Philosophers- Robert. H. Heilbrowner
History of Economic Thought- Eric Roll
Economic Theory- Eric Roll
Syllabus - MODULE-1

Need, Scope, Tasks, Domestic vs.

International Marketing, International
Trade Theories, Importance of
International Marketing, The EPRG Concept
of Management Orientation.
MODULE-2
 International Marketing Environment– Economic
Environment- World Economy, stages of market
and economic development, income and
purchasing power parity, Economic risk analysis,
Balance of Payments concept, Trade patterns,
international trade alliances– GATT and WTO,
World Bank, IMF– Regional Economic Groups– EU,
NAFTA, SAFTA, G8, OPEC etc. Social and Cultural
Environment- Culture, analytical approaches to
cultural factors, cultural impact on industrial and
consumer products. Political, Legal and regulatory
environment– political risk, international law,
licensing and trade services, dispute settlement
and litigation, Embargoes and Sanctions
MODULE-3

International Entry and Expansion

Strategies– Decision criteria for entry,
International market entry strategies–
Exporting, sourcing, licencing, joint-
ventures, ownership and control,
ownership investment, Merger’s and
Acquisitions, Investment in developing
countries, Market expansion strategies,
Stages of development models– Domestic,
International, multinational, global,
transnational.
MODULE-4

Analyzing, segmenting, targeting and

positioning, international marketing
opportunities – regional market
characteristics, marketing in less
developed economies. Perspective on
international consumer behavior,
international market segmentation,
targeting and positioning.
MODULE-5

Developing product for international

market – Products, local, national,
international and global. The international
product and life-cycle, product positioning,
product design consideration, Geographic
expansion, global branding, and different
positioning, of the same brand I different
countries, new product development and
testing in national market. Dumping, Role
of services in global economy.
Module- 6

Promotion and pricing strategy for

International market – Channel
development and innovation, role of
international advertising and branding, PR,
Trade fairs, personal selling, sales
promotion, Exhibitions, Sponsorship
promotions, internet marketing. Global
pricing– objectives and methods, pricing
policies. Export payment methods– L/C,
Advance, DA/DP, FIBC, Counter trade,
transfer price.
Module- 7

India’s international policy and impact on

economy--- Government measures and
export incentives, EXIM policy, ECGC
services, Role of Indian banks and financial
institutions, FDI, FEMA, Foreign exchange
market and rate, services export from
India.
Module - 8

Emerging Trends– Integrating the concepts

with other functions of management.
Globalization means integrating the economy of the country
with the world economy. Under this process- goods,
services, capital, labor and resources move freely from one
nation to another, further implying one single market in a
global village.
Further, the thrust of globalization has been to increase
the domestic and external competition through extensive
application of market mechanism and facilitating forging of
dynamic relationships with the foreign investors and
Definition of Globalization
suppliers of technology.
Role of globalization and its effect in the business
environment.

Contd..
International business is the activity of engaging in business
operations across national boundaries/borders.
International business is the field of study that concerns
itself with the development, strategy and management of
multinational enterprises in the global context of complex
and dynamic business environments.
Actually the complete gamut of the whole context
and interest in international business lies in multinational
DEFINITION OF and
enterprises, culture INTERNATIONAL
communications-as BUSINESS
also the special
skills that are required to operate in global business
environment.
A corporation that has production operations in more
than one country, (e.g.:- Toyota having manufacturing
facility in India as also other parts of the world.) for
various reasons such as- securing supplies of raw
materials, utilizing cheap labor sources, servicing
local markets and bypassing protectionist barriers.
Important critical comment on multinationals and its
gravity in the light of marketing products in the ‘Third
World’DEFINITION
market. OF MULTINATIONAL
ENTERPRISES
Investment in the domestic economy by foreign
individuals or companies is called foreign investment
in generic terms.
Foreign investment takes the form of:-
◦ Direct investment in productive enterprises
◦ Investment in financial instrument such as portfolio of
shares.
Important critical comment on foreign investment in
the light of ‘societal marketing concept’ under the
principles of marketing management concepts.
Foreign investment is increasingly important in the
economy of the modern business world-explanation
as to how?

DEFINITION OF FOREIGN INVESTMENT

The acquisition abroad of physical assets such as
plant and equipment, with operating control residing
in the parent co-operation.

FOREIGN DIRECT INVESTMENT(FDI)

DOMESTIC MARKET
Part of a nation’s internal market
representing the mechanism for issuing
and trading securities of entities domiciled
within that nations.
Continued..

 Brief Historical Background of International

Business/Trade relations-
-- International business and trade has been there
from times immemorial,
-- Man is a social animal– wants different kinds of
goods/ commodities- required for the standard of
living.
-- The country is not self-sufficient in developing all
the products/ commodities etc.
-- Hence dependent on other country-
-- Thus international business and trade exists-
International trade is between nations, business is
between companies.
Continued..

Fundamental Questions that companies

tackle:
-- What market presence should be achieved
in own country/ continent.
-- Globally presence – yes/ no
-- Knowledge of Competitors.
-- What strategies to be adopted?
-- What resources to deploy?
Continued..

Factors that reinforces to take interest

in International Marketing in Modern
Times
-- Income growth of the consumers
-- Lower trade barriers
-- Desire for new products, around the world
-- Search for new markets/new
avenues/new segments
Continued..

-- Demand for new styled goods/ services–

innovative goods.
-- Integration of telecommunication
facilities/communication
-- Faster means of travel, transport,
technology.
-- Move towards reduction of international
marketing barriers.
Continued..

Definition of Global Industry:

A global industry is an industry, where the
strategic positions of competitors in major
geographic or national markets are
fundamentally affected by their overall
global positions.
Continued..

Definition of Global Firm:

A global firm is one that is operating in more
than one country- captures research and
development, production, logistical,
marketing and financial advantages in its
costs and reputation that are not available
to purely domestic competitors.
-- They rely on technological innovation.
-- Enhance their capabilities through
technology.
Continued..

Need/Factors for International

Marketing:

1. Business Factors
2. Competitive Factors
Continued..

BUSINESS FACTORS:
-- Profitability
-- Achieving Economies of Scale
-- Growth Factors
-- Marketing due to life-cycle
-- Uniqueness of Product / Services
-- Access to imported inputs
-- Spreading R and D cost
Continued..

In Continuance:
Competitive Factors/ Other Factors:
-- The company’s domestic market might be
attacked by global firm’s offering better products
or at lower prices.
-- Counterattack by the domestic firm in the
competitors home market.
-- Company discovering, some markets presenting
higher profit opportunities than the domestic
market.
-- Company wanting larger customer base in order
to achieve economies of scale.
Continued..

In Continuance:
-- Company wanting to reduce dependence
on anyone market.
-- Reducing risk
Continued..

Major decisions in International

Marketing:
The Major decisions are encircled as a step
by step calibrated process:
1. Deciding whether to go abroad?
2. Deciding which market to enter?
3. Deciding how to enter?
4. Deciding on the marketing program?
5. Deciding on the marketing organization?
Continued..

Major Concerns while Entering Foreign

Market:
1. Unstable Government, if any.
2. Foreign Exchange problems.
3. Foreign government entry requirements/
entry barriers.
4. Trade / Tariff barriers.
5. Corruption in the respective country
government, if any.
Continued..

6. Technological pirating.
(Explanation: A company locating its plant
abroad worries about foreign managers
learning how to make its product and
breaking away to compete openly or
clandestinely- for example in the diverse
area such as machinery, electronics,
chemicals, pharmaceuticals etc.)
7. High cost of product manufacturing and
communication adaptation.
Continued..

Environmental Differences when

marketing overseas:
1.Language
2. Tastes and Fashions
3. Religion
4. Physical Environment (temperature/
humidity etc)
5. Power sources
6. Security arrangements
7. Family structure and size
Continued..

In Continuance:
8. Times at which business is done
9. What is polite and impolite
10. Social priorities
11. Literacy levels
12. Communication infrastructure
13. Distribution facilities
14. Methods of transaction
Continued..

In Continuance:
15. Political differences
16. Legal differences
17. Regulatory differences
18. Different technical standards (may be
operating in the country)
19. Different taxation policy
20. Economic complications/situations – at a
particular time
Continued..

What to study finally – when company’s

going abroad:
1. Study each foreign market carefully
2. Study about the economic laws of
targeted countries
3. Know about the politics of that country
4. Know about the culture
5. Adapt that country’s products and
communication to foreign tastes
Continued..

Domestic VS International Marketing

-- Definition of Domestic Marketing

-- Definition of International Marketing
NB: Basic tenets of marketing concepts is
applied whether it is domestic or
international marketing. It revolves around
the controllable and uncontrollable factors
that governs the pragmatic marketing
scenario.
Continued….
Continued..

In Continuance:
Uncontrollable Factors:

1. Macro Environment- Uncontrollable Factors are:

-- Economic
-- Political
-- Logistics (controllable to a certain extent only, especially in
the domestic market )
-- Competition
-- Legal Affairs
-- Socio-cultural
-- Geography
Continued..

In Continuance:
Micro Environment-the Controllable Factors:
-- Product
-- Price (subject to certain limitations,
taking competitors offer prices into
consideration)
-- Place
-- Promotion
Management’s Orientation

Management’s orientation towards

international marketing- EPRG
Concept:

E---- Ethnocentric
P---- Polycentric
R---- Regiocentric
G--- Geocentric
Continued..

Importance of Global Marketing and the

EPRG Concept:
The importance of global marketing can be
gauged from the fact that:

-- Maximum growth potential opportunities

to be tapped.
-- Companies should go global/ motivation
required to go global.
Continued..

Management’s orientation- the EPRG

concept revolves around the grand fact
that any company’s response to global
market opportunities depend greatly on
the management’s assumptions and
beliefs, as to how it views the new market
opportunity, how it plans to enter the
foreign market, how it views the culture,
preferences of consumers in a foreign
market etc…..
Continued..

In Continuance:
The Ethnocentric Orientation:
-- It is a belief which considers- one’s own country/
culture, products as superior
-- It views similarities in all markets/ foreign
country market.
-- Product’s/ services/ management practices/
methods that is being offered/ followed in one’s
own country/ successful in one’s own country will
be acceptable in other world markets, anywhere.
-- Adaptation of the product is not required.
-- Shades of egoism encircled herewith
Continued..

In Continuation:
Criticism of Ethnocentrism
-- Ethnocentric oriented companies ignore foreign
market and therefore loose great opportunities.
-- the product of the ethnocentric oriented company
might be of a very high quality, and might be
accepted in other world markets- (this is accepted
in the first instance, subject to certain limitation),
but will the marketing methods/ practices that is
being followed in the home country does not need
any adaptation in any form? For example if a-
Benz Car or a Lincoln or a Ferrari or a BMW is to
be marketed in a ‘Third World’ country. A critical
examination is required.
Continued..

In Continuation:
The Polycentric Orientation:
-- Opposite of Ethnocentrism .
-- It views each country as unique.
-- Each subsidiary is to develop its own
unique business.
-- Each subsidiary to develop its own
marketing strategies to succeed in its own
right.
Continued..

In Continuation:
The Regiocentric Orientation:
-- Management views regions as unique.
-- Management seeks to develop an
integrated regional strategy, to market
product/services- in the particular
identified region.
-- Regions are considered to be one- i.e.
consumers having one taste, choices,
preferences, one regional identity etc.
-- NAFTA, EU, SAARC etc are examples.
Continued..

In Continuation:
The Geocentric Orientation:
-- The Company views the entire world as a
potential market.
-- Company strives to develop integrated
world market strategies.
-- It views similarities and differences in
markets and countries.
-- It seeks to create a global strategy-
responsive to local needs and wants.
Continued..

Definition of Global Localization:

The concept of global localization refers to
the explicit fact that – a successful global
marketer should have the ability to think
‘globally’ and act ‘locally’.
Continued..

Drivers for Global Integration (in the light of

Globalization)
-- Technology
-- Culture
-- Market Needs
-- Cost
-- Free Markets
-- Economic Integration
-- Management’s vision
-- Strategic Intent
-- Global Strategy and Action
International Trade

“Of all sorts of luggage man is the most

difficult to be transported”. – Adam Smith
Continued..

In Continuation:
International trade defined:
Simply explained international trade refers
to trade between countries/nations/state’s.
It is always compared with inter-regional
trade- meaning trade between different
regions within the same country.
NB: Here little attention is given to the
company level marketing methods and
strategies
International trade contd..

In continuation:
The Fundamental basis of International
Trade:
It lies on the fact that different countries of
the world are endowed by nature with
different elements of productive powers.
Factor endowments are unevenly
distributed among the countries of the
world. For example- West Bengal in India
for the production of Jute, Arab countries
for oil resources etc.
Continued..

In continuation:
Is International Trade Inevitable?

International trade is inevitable when there

are marked differences in the countries
regarding materials, natural resources,
natural vegetation, climate, soil etc.
Continued..

In Continuation:
Other Factors affecting International
Trade:
1. Stage of economic development
2. Accumulation of capital by a nation
3. Foreign investments by a nation
4. Technological progress
5. Trade
6. Finance regulations
7. Political affiliations- etc.
International Trade Theories

The Theories are:

A. Theory of ‘Mercantilism
B. Theory of Absolute advantage (of Adam
Smith)
C. Theory of Comparative advantage/
comparative cost (of David Ricardo)
D. Modern theory of international trade or
Factor Endowment theory
E. Theory of International Product life-cycle
F. Theory of Competitive Advantage
Continued..

A. Theory of Mercantilism:
-- An economic doctrine that flourished in the 17th and 18th
centuries.
-- It sought to maximize national wealth- in the form of
nation’s bullion reserves - especially in gold.
-- To this end tariff’s were applied to imports in the hope of
creating a ‘balance of trade’ surplus, and adding to bullion
reserves.
-- Exports were viewed favorably so long as they brought in
gold for the country.
GIST: Nations should accumulate financial wealth in the form
of gold by encouraging exports and discouraging imports.
Continued..

B. Theory of Absolute Advantage:

-- Forwarded by the great classical
economist, Adam Smith.
-- Repudiated the mercantile notions of
international trade.
-- Advocated the theory of Free Trade.
-- Advocated that the real wealth of a nation
is measured by the level of improvement
in the quality of living of a nation’s people.
Continued..

Gist of the Absolute advantage theory:

If one country has an absolute

advantage over another in one line of
production and the other country has
an absolute advantage over the first
country in another line of production,
then both countries would gain by
trading.
NB: A country’s advantage can be:-
A. Natural Advantage
B. Acquired Advantage
Continued..

C. Theory of Comparative Advantage

-- Forwarded by David Ricardo./
-- Extension of the theory of Absolute
advantage
-- Also known as the theory of comparative
cost.
-- The theory forwards that- a country tends
to specialize in the production of those
commodities in which it possesses a
comparative advantage by virtue of its
climate, natural resources, skill of its
people, capital equipment etc.
Continued..

Gist of the comparative advantage

theory

Any two countries can very well gain by

trading even if one of the countries is
having an absolute advantage in both
the goods over another, provided the
extent of absolute advantage is
different in the two commodities in
question.
Continued..

D. Modern theory of International Trade

-- Also called Factor Endowment Theory or
factor proportions theory.
-- Forwarded by Heckscher and Bertil Ohlin.
-- The immediate cause of International
trade is the difference in commodity
prices, which in turn is due to the
differences in factor prices.
-- Thus goods are purchased from outside
because it is cheaper to buy them outside.
Continued..

Gist of the Modern theory of

International trade:
A nation will export that commodity
whose production requires intensive
use of the nation’s abundant and
cheap factors, and import the
commodity whose production requires
intensive use of the nation’s scarce
and expensive factors.
Continued..

E. Theory of International Product Life

Cycle
-- Revolves around the concept of
international marketing of
product/services
-- Two paradigms on which the theory is
based:--
A. Shifting of market in the light of the size
of the market
B. Reaching the economies of scale by
location of production facilities.
F. Theory of Competitive Advantage:
-- Forwarded by ‘Michael Porter’
-- Concentrates on a firm’s home country
environment as the main source of
competencies and innovations.
-- Forwarded the famous ‘Diamond Model’
Continued..

The Diamond Model

Attributes of the Diamond model revolves
around:
A. Factor / Input conditions
B. Demand Conditions
C. Firm’s supporting industries
D. Firm’s Strategy, structure and rivalry
E. Chance i.e. occurrences that are beyond
the control of firm
F. Government- its policies regarding trade
etc.
Module --2

The World Economy – An Overview

- Brief Historical background of the World Economy
a. World Economic scenario has undergone a drastic
change, if we look it critically from the economic
paradigm’s point of view.
b. The development of economies of the different
regions/ countries of the world, has a strategic
effect from the angle of international business
scenario.
c. Finally we reach the year– 1945 (End of the
second World War)
Continued..

Year – 1945 and after (till late 1991)

--Signaled the end of ‘The Second World
War’.
-- The World divided into bi-polar world.
-- Start of the Cold War, meaning silent war
-- Cold war was but a silent war among the
two economic systems – Capitalism and
Socialism, led by USA and erstwhile USSR.
-- Fall of Socialism by 1991
-- Mixed Economic System
Continued..

Changes found in the World Economy

-- Emergence of global markets
-- New opportunities for the marketer’s
-- Global Competitors in the market place
-- Heavy Competitive environment
-- New players in the product line
-- Integration of the world economy
-- Globalization effects in the macro
environment of business.
-- Increased volume of capital movements
The World Economy– The Macro Dimensions of
the Environment
-- Economic Environment
-- Social Environment
-- Cultural Environment
-- Political Environment
-- Legal Environment
-- Technological Environment
NB:Most important of all, is the Economic
Environment from a global marketer’s point
of view. The Economic environment has the
shades of opportunity. And opportunity is
business. Business is for profit, and profit is
successful marketing.
Continued..

-- Relationship between productivity and

employment
-- The greatest economic change is the end
of the Cold War

NB: The success of the capitalist

market system has caused the
overthrow of communism as an
economic and political system, and the
role of ‘Mixed Economic’ system has a
role to play in the current business
scenario/ trade relations.
Continued..

The Economic Systems

The economic systems criteria has been
divided into three forces:
A. The Capitalist market allocation
economic system.
B. Socialist pattern of command
allocation economic system
C. Mixed economic system.
Continued..

Brief Explanations of the economic systems:

The Capitalist Economic system:

--The capitalist economic system, believed in the fundamental
fact of free market allocation system, where the role of
the state in a market economy is to promote competition
and ensure consumer protection.
-- It is the capitalist who will decide – What to produce?
How to produce? and For whom to produce?
NB:-- Basically the whole concept of ‘Capitalism’ is designed
around the concept of ‘Laissez Faire’- meaning ‘Leave
us alone’
Continued..
Capitalism continued:
--Under capitalism, all farms, factories and
other means of production are the property
of private individuals and firms. They are
free to use them, with a view to making
profit or not to use them, if it so suits
them.
-- Desire for profit is the main motive
behind the capitalist economy system.
-- In a capitalist economy everyone is free
to take up any line of production he likes
and is free to enter into any contract with
other fellow citizens for his profit.
Continued..

Socialism Defined:
Based on the command allocation system or
the so called Central Plan allocation
system, socialism is an alternative to
capitalism. In a nutshell, it implies social
ownership of means of production. Here
the major instruments of production is
under the state control, so that the
economy is run for social benefit rather
than private profit.
Continued-----
Continued..

Under Socialism as an economic system it is

the State that decides:
-- Which products are required
-- Which products are not required
-- How to make these required products
Continued..

Mixed Economic System:

It is neither pure capitalism nor pure socialism, but
a mixture of the previous two economic systems.
-- The characteristics of both capitalism and
socialism is found in this economic system.
-- It is operated both by private enterprise as well
as public enterprise.
-- The private enterprise is not permitted to
function freely and uncontrolled through price
mechanism’s– the government intervens to
regulate and control private enterprise in several
ways.
Continued..

How Mixed Economy?

-- Control and regulation of the government
over the private enterprise through its
monetary and fiscal policies.
-- The government institutes:
a. Price Control
b. Licensing System
c. Import control
d. Exchange control
e. Control over capital issues.
Continued..

Stages of Economic Development/

Market development:
In brief, the importance of the stages of
economic and subsequent market
development, rests on the fact that it
provides a useful basis for global market
segmentation and target marketing. It is a
first hand knowledge for a global marketer
towards meeting the desired goals.
Continued..

FOUR STAGES of Economic/Market

Development:
-- Stage 1. Low Income Countries
-- Stage 2. Lower Middle Income Countries
or Lesser Developed Countries.
-- Stage 3. Upper – Middle Income
Countries or the Industrializing
Countries.
-- Stage 4. High Income Countries.
Continued…

Characteristics of LOW- INCOME countries :

1. Political instability
2. Heavy reliance on foreign aids
3. High birth rates
4. Limited industrialization
5. High population growth
6. Low literacy levels
7. Very limited markets for products
NB: Importance of chief characteristics from
purchasing power point of view, as also
the probable growth in the market place.
Continued..

The BEM Concept :

BEM refers to “big emerging markets”-
an international marketing concept
forwarded by Jeffrey E. Carten, in his
famous treatise- ‘The Big Ten’. BEM’s are
those markets that are growing at a faster
rate than the world average market
growth, from the current stage where it is
at present. And here the marketers sees a
wonderful opportunity for growth in their
profitability and related issues. The BEM’S
are well positioned to move towards the
next stage of development – economic as
well as market.
Continued…

Income and purchasing power parity

-- The chief role of the income from

consumerism/ consumer buying behavior.
-- Explanation of the concept
Continued..

Balance of Payments :
-- Balance of Payment or BOP, is a
comprehensive record of economic
transactions of the residents of a country
with the rest of the world during a given
period of time.
-- The system generally adopted for
recording transactions is the ‘Double
Entry Book- Keeping System’
Continued..

Importance of BOP:
Every nation carrying out economic
transactions with foreign countries prepare
its BOP accounts periodically :
-- To know/taking stock of its assets and
liabilities.
-- To know its receipts from and payment
obligations to the rest of the world.
Continued..

Main Purpose of BOP:

The main purpose of BOP is to present an
account of all receipts and payments on
account of goods exported, services
rendered, and capital received by residents
of a country – and goods imported,
services received and capitals transferred
by the residents of the country.
Continued..

Division of BOP :-- Into two categories:

A. CURRENT ACCOUNT

B. CAPITAL ACCOUNT
Continued..

CURRENT ACCOUNT : (what is

recorded)
- Imports
- Exports
- Expenses on travel
- Transportation
- Insurance
- Investment income
NB: All these are related to current
transactions
Continued..

CAPITAL ACCOUNT: (What is recorded)

-Borrowing and lending of capital

-Repayment of capital
-Sale and purchase of securities and other
assets to and from foreigners – individuals
and governments
NB: Export of commodities to foreign
countries adds to the foreign receipts,
while imports adds to the payments,
that a resident have to make to the
foreigners.
Continued..

IF, EXPORT > IMPORT it is favorable balance

of trade

IF, IMPORT> EXPORT it is unfavorable

balance of trade.
Balance of Trade : The difference between
the value of commodity exports and
imports is known as the Balance of Trade.
Continued..

TRADE PATTERNS :
 Merchandise trade. i.e. trade in
commodities- a visible trade
 Services trade, i.e. intangible items for
example human resources skills etc, is
an invisible trade.
Continued..

DEGREE OF ECONOMIC COOPERATION: (Four

degrees)
a. FTA,(Free Trade Association) meaning to
remove all internal barriers to trade among the
member nations
b. Customs Union, meaning establishing a
common external barriers.
c. Common Market, meaning eliminating the
barriers to the flow of factors of production such
as labor and capital within the market.
d. Economic Union, meaning fulfilling the all the
chief characteristics of an economic union.
Continued…

Chief Characteristics of an
ECONOMIC UNION
1. Unified central bank.
2. Common policies on agriculture.
3. Social services and welfare.
4. Transport services requirement.
5. Regional development.
6. Taxation policy.
7. Single currency
8. Construction and building infrastructure.
9. Political unity requirements.
Continued..

Importance of Stages of Economic

Development :
-- For a global marketer or a multinational
company, when interested to enter a new foreign
market, the stage in which that targeted
region/country is matters most- in designing a
marketing plan and strategy.
-- The stage of economic development of a
particular country is directly related to the stage
of market development in that country.
-- The reference is towards the Income and the
purchasing power parity, context – revolving
round the international marketing opportunities.
Continued..

International Trade Alliances :

-- GATT and WTO
-- IBRD (The World Bank) and IMF
-- EU (The European Union)
-- NAFTA
-- SAFTA
-- G8
-- G10 and GAB i.e. General Agreement
to Borrow
-- OPEC
Continued..

The Autonomous and Accommodating items

in Balance of Payment :
--The autonomous items include all visible
or invisible items such as exports, imports,
remittances, reparations etc which enter
the balance of payments regardless of its
position or with motives quite other than
to put balance of payments into positive
balance. …..Continued…. next slide.
Continued…

They are in both current and capital

accounts.
NB:-- Accommodating items are meant
to offset balance of payments deficit or
surplus. They include movement of
monetary gold from the central bank or
sale of foreign currency or increase in
foreign liabilities to meet import bill or
taking foreign loan to finance deficit etc.
Continued…………..
Continued…

-- Accommodating movements may be

made by private or public authorities and
may be automatic, unplanned or
unforeseen. However, they take place only
when other items in the Balance of
Payments are such as to leave a gap to
be filled.
SDR and Its Importance

SDR Defined :--

--Special Drawing Right’s or SDR’s were
created as a new and additional form of
international reserves/liquidity in 1970,
under the International Monetary Fund.
-- Countries receive SDR’s as per their share
in reserve assets, and have an automatic
right to draw them from the IMF- over and
above other drawing facilities.
Continued…..
Continued..

-- A deficit country uses SDR’s for settling

deficit by exchanging SDR’s for whatever
currency it requires.
-- Other countries accept SDR’s as gold or
convertible currencies. Its value is based
on the values of a ‘Standard Basket’ of five
major currencies.
SDR Continued..

Basket Value of SDR—

A group of five currencies namely – US
Dollar, Deutsche Mark, Japanese Yen,
French Franc and Pound Sterling- included
proportionally on the basis of Country’s
size of exports of goods and services
during the previous five years. It is used
by IMF to determine the vale of SDR’s.
Continued..

GATT- General Agreement on Tariff’s

and Trade
-- A trade treaty that operated from 1948
until 1995, when it was replaced by World
Trade Organization (WTO).
-- GATT was technically an agreement,
rather than an organization, among
various countries called contracting
parties.
-- Secretariat at Geneva.-------
Continued…
Continued..

Objectives of GATT:
A. Establishing Standards for the non-
discriminatory commercial policies of the
contracting parties.
B. Settling trade disputes and encouraging
mutual consultation between nations.
C. Discouraging non-tariff barriers and
sponsoring tariff reductions.
D. Meeting the above through a series of
multilateral negotiations and rounds.
THE WTO

-- Set up in 1995, following the conclusion

of the long-running URUGUAY round of
trade negotiations and talk.
-- A body of organizing framework for the
smooth application of free trade rules
among the interested member nations.
--
Continued…

Primary functions of WTO:--

A. Administering WTO agreements.
B. Act as a forum for trade negotiations.
C. Handling trade disputes between
member nations.
D. Monitoring the national trade policies of
its members.
E. Providing technical assistance and
training for developing member
countries.
F. To act in coordination with other
international organizations.
Continued…

Of Particular Importance-- WTO

--- As far as the dispute settlement process
of WTO is concerned , countries may
complain to the WTO about the behavior of
another member, and a disputes panel will
then adjudicate. A country that does not
abide by the findings of the panel can be
subject to countermeasures.
Continued…

IMPORTANT
It should never be forgotten that
companies/firms/corporations/business
enterprises are not allowed to make
complaints to the WTO. They must
persuade a government to do so, for it falls
under the world trade laws of WTO, to be
accepted by one and all, and the
international economic protocol so desires,
to be respected in toto. NB: WTO is also
charged with advancing the agenda of
free-trade with new trade rounds.
Continued…

IBRD-International Bank for

reconstruction and Development
-- A specialized agency of the United
Nations, known as the World Bank, with
headquarters in Washington DC, its
function is to finance development in
member countries by making loans to
governments or under government
guarantee.
-- Set up in 1944 under Bretton Woods
agreement to facilitate reconstruction after
world war II.
-- All members of World Bank should belong
to the IMF.
Continued…

IMF- The International Monetary Fund

-- Established in 1945, to promote
international monetary harmony, monitor
exchange rates and monetary policies and
to provide credit for countries experiencing
problems in terms of deficits in their
‘balance of payments’.
-- The members of IMF have a quota, known
as the SDR or the special drawing rights.
-- IMF is funded through quotas paid by
members.
Continued…

GAB and G-10

Refers to ‘General Agreement to Borrow’ . Members of
GAB are:
1. Belgium
2. Canada
3. France
4. Germany
5. Italy
6. Japan
7. The Netherlands
8. Sweden
9. Switzerland
10. The United Kingdom and the US
SAARC

SAARC: --
-- South Asian Association for Regional
Cooperation. The first South Asian
summit held in Dhaka, Bangladesh in
December 1985, culminated in the
formation of the South Asian
Association for Regional Co-
operation.
-- Members of SAARC are: India,
Bangladesh, Pakistan,Sri Lanka, Bhutan,
Nepal and Maldives.
Continued…

-- The charter of SAARC provides for annual

meetings of the Heads of State and of
Governments, and a six monthly meeting
of a Council, of Ministers, which is the
organizations highest policy making body.
-- A permanent secretariat of the state has
been set up at Kathmandu in Nepal.
-- The chairmanship of the organization
remains with the country which had hosted
the last summit and is transferred to the
new host at the time of the next summit.
The EEC

EEC or the European Economic

Community :
--Created under separate treaties signed on
March 25, 1957– it became effective from
January 1, 1958.
-- EEC is currently a bloc of 15 west
European industrial nations, which through
a network of agreements are seeking to
pool their economies, while retaining their
separate national identities. ….
Continued….
Continued…

-- The ultimate goal is a complete customs

union, with free flow of goods, service and
labor- among all members.
-- Members of EEC currently are-
Belgium, France, Germany, Italy,
Luxembourg, Netherlands, Denmark,
Ireland, United Kingdom, Greece, Portugal
-- Headquarters of EEC is located in
Brussels, Belgium.
ASEAN

ASEAN Association of South East Asian

Nations : The ASEAN was formed on
August 8, 1967 by Indonesia, Thailand, the
Philippines, Malaysia and Singapore- to
promote active collaboration and mutual
assistance in matters of common interest
in the economic, social, cultural, technical,
scientific and development fields.
-- Currently under ASEAN, there are 10
members.
OPEC

OPEC Organization of Petroleum Exporting

Countries :
--OPEC was formed on November14,
1960, to control production and pricing of
crude oil. It has been successful in
determining world oil prices and in
advancing member’s interest in trade and
development dealings with industrialized
oil consuming nations. …. Continued..
Continued…

-- Membership of OPEC is open to any

country having a substantial net exports of
crude petroleum, which has fundamentally
similar interests to those of member
countries.
-- Members are– Algeria, Indonesia, Iran,
Kuwait, Libya, Nigeria, Iraq, Qatar, Saudi
Arabia, United Arab Emirates (UAE),
Venezuela.
-- Headquarters located at Vienna,
Austria.
OAPEC

OAPEC- Organization of Arab Petroleum

Exporting Countries
-- The OAPEC was established in 1968, to
safeguard the interests of its members and
encourage co-operation in economic
activity within the petroleum industry. Its
members are --- Algeria, Bahrain, Egypt,
Iraq, Kuwait, Libya, Qatar, Saudi Arabia,
Syria and the UAE.
-- Headquarters at Kuwait.
Group of Eight/G-8

G-8- Group of Eight originally consisted of

the seven wealthiest nations of the world-
The USA, UK, Japan, Germany, France,
Italy and Canada. However with the
admission of Russia at G-7 summit at
(DENVER – June 21, 1997) the group
was renamed as G-8 in May, 1998.
-- The heads of governments of G-8
countries meet annually at different
venues to discuss economic matters and
world problems.
NAFTA

NAFTA- North American Free Trade Agreement

:
-- A trade agreement between US, Canada and
Mexico. The objectives of NAFTA is to promote
economic growth and expand trade and
investment among member nations.
-- To meet economic challenges in the decades
to come.
-- Gradual elimination of trade barriers.
-- Protection of the Intellectual Property
Rights.
Continued…

Social and Cultural Environment:

--Culture has a major influence, in
international marketing/ global business
environment.
-- In global marketing scenario the concept
of consumer buying behavior has a definite
role to play.
-- Society and culture affects the consumers
decision making process
-- Trend conscious consumers, dictates
global marketing of products and services.
Continued…

Examples of affects of culture in global

marketing: (The American Culture)
-- Eating breakfast or sand-witch while
moving in a train.
-- Drinking coffee in public places etc.
NB: Marketing industrial or consumer goods
in targeted foreign markets is looked from
the angle of the stage of economic
development - the targeted county is in.
Reference is here to Stage 1 to Stage 4,
where the targeted market falls.
MODULE - 3

International Entry and Expansion

Strategies
Continued..

Decision Criteria for entry :

-- Major decisions in International Marketing

-- Decision criteria for international business
Continued..

Major Decisions in International

Marketing
1. Deciding whether to go abroad or not?
2. Deciding which market to enter?
3. Deciding how to enter the market?
4. Deciding on the marketing program.
5. Deciding on the marketing organization.
Continued..

Decision Criteria for International

Business
This rests on the following specific
questions:
-- Importance of the international macro
environment. The importance and scope.
-- Advantages and Disadvantages that have
to gained/lost, opportunities to be tapped.
Continued..

The Decision criteria’s are as follows :

1. Political Risk
2. Market Access
3. Factor Cost and Conditions
4. Shipping Consideration
5. Country Infrastructure
6. Foreign Exchange
7. Creating a Product Market Profile (The Nine
W’s)
8. Market Selection Criteria
Continued..

The NINE W’s of creating a Product Market

Profile :
1. Who buys our Product?
2. Who does not buy our product?
3. What need or function does our product serve?
4. What problem does our product solve?
5. What are customer’s currently buying to satisfy
the need/problem?
6. What price are they paying?
7. When is our product purchased?
8. Where is our product purchased?
9. Why is our product purchased?
Continued..

Strategies for Entering foreign market:

-- It refers to the different routes that is

undertaken to enter a foreign market
OR
-- The Modes of Entry
OR
-- Stages of Foreign Market entry
Continued..

Different routes to enter a foreign market

are the following:
1. EXPORTING – A. Indirect Exporting
-- B. Direct Exporting
2. FOREIGN PRODUCTION
-- A. Licensing
-- B. Contract

Manufacturing/Management
Contract
-- C. Local
Assembly/Investment
Continued…

Indirect Exporting is one when a third

party arranges the documentation,
shipping and selling of an organization’s
goods abroad.
-- Refers to the lowest level of commitment
to international marketing
(The third party refers to independent
middlemen – of four types )
Continued…

Indirect Export through four routes:

1. Domestic-based export merchant–
here the middlemen buys the
manufacturers products and sells them
abroad on its own account.
2. Domestic-based export agent– here
the agent seeks and negotiates foreign
purchases for a commission. Agents can
be in the form of individuals or a group
of people involved or trading companies
Continued…

3. Co-operative Organization– exporting

on behalf of several producers and is partly
under administrative controls.
4. Export Management Company–
manages export for its client for a fee.
Continued…

Advantages of Indirect Export :

1. Involves less investment
2. No spending on export department
3. No foreign/overseas sales force required
4. No foreign contacts required
5. Less risk
6. First hand knowledge of the foreign
market, through the middlemen
7. Fewer mistake by the seller.
Continued…

Direct Export:

As foreign sales grow, an organization often

begins to make a limited commitment,
frequently documenting itself/ deciding to
handle their own exports.
Continued…

Methods of Direct Export :

1. Domestic based export department.
2. Setting up an overseas sales branch
office/depot/subsidiary.
3. Appointing and utilizing the service of
export sales representatives.
4. Foreign brand distributors or agent
Continued…

Foreign Production:
A. Licensing represents a simple way for a
manufacturer to become involved in
international marketing. Here the licensor
licenses a foreign company to use a
manufacturing process, trademark, patent,
trade secret, or other item of value for a fee
or royalty.The licensor gains entry into the
foreign market at little risk; the licensee
gains production expertise or a well-known
product or name without having to start from
scratch.
Continued…

B. Management Contract -- A company

can enter a particular foreign market
through the management contract route.
Here a company can sell a management
contract to a party to manage a foreign
business such as hotel, hospital etc for a
fee. It is a low-risk method of getting into
a foreign market, since it yields income
from the beginning.
Continued…

C. Contract Manufacturing : An entry

method, where the firm engages local
manufacturers to produce the product.
Contract manufacturing’s disadvantage is
that there is less control over the
manufacturing process. Finally it offers the
company a chance to start faster, with less
risk, and with the opportunity to form a
partnership or buy out the local
manufacturer later.
Continued…

D. Joint Ventures: Joint ventures are a part of

foreign investment. It represents an extensive
form of participation and commitment towards
international marketing. Here foreign investors
may join with local investors to create a joint
venture in which they share ownership and
control. Forming a joint venture might be
necessary or desirable for economic or political
reasons. The foreign firm might lack the financial,
physical, or managerial resources to undertake
the venture alone or the particular foreign
government might require joint ownership as a
condition for entry.
Continued…

E. Direct Investment --(Ownership and

Control /Manufacturing Facilities)
The foreign investment is another route through
ownership or through a manufacturing facilities
presence.The foreign company can buy part or full
interest in a local company or build its own facilities.
As a company gains experience in export, and if the
foreign market appears large enough, foreign
production facilities offer distinct advantages- by
securing cost economies, gaining a better image in
the host country, developing deeper relationship
with the government, customers, local suppliers etc.
Foreign investments are undertaken in the light
of long term strategic goals and ambitions of
the company.
Continued…

Investment in Developing Countries:

--Rapidly growing economies, Expanding

purchasing power and Expanding markets etc of
the developing countries, provides opportunities
for the foreign companies to enter a new market.
It is linked with the basic tenets of the need of
international marketing and the opportunities that
any developing country offers.
-- Foreign investments in the developing country
can be through joint ventures, through equity
stakes in another company, mergers and
acquisitions etc.
Continued…

Market Expansion Strategies

1. Targeting few segments in few countries.

2. Country concentration and segment
diversification.
3. Country Diversification and market
segmentation concentration.
4. Country and segment diversification.
Continued…

Stages of Development Models

It refers to the stages in the evolution of the
global corporation from a domestic player
to international player to multinational
player to a global player to transnational
player.
Module- 5

Developing product for International

Market
Continued…

BASIC CONCEPTS

Product Defined :
-- A product is often considered in a
marketing sense that can be offered to a
market for attention, acquisition, use or
consumption – that may satisfy a want or
need. Continued……
Continued …

-- A product is something tangible that can

be described in terms of physical attributes,
such as shape of the product, dimensions of
the given product, important components in
making of the product, form color and so on.
-- A product is also intangible, which cannot
be touched and felt, only experienced of its
benefits, for example- engineering services,
restaurant services, hotel services etc.
Continued…

Marketing of Products
Products that are marketed include:
-- Physical Goods such as automobiles,
books etc.
-- Services such as engineering services,
marketing services.
-- Persons such as Amitabh Bacchan,
Aishwarya Rai, Sachin Tendulkar etc.
-- Places such as Delhi, Agra, Jodhpur etc.
-- Organizations such as AIIMS, Escort
Heart Research Institute, NGO’s etc.
Continued…

The best way to define a product is to

describe it as a bundle of UTILITIES or
SATISFACTION

A PRODUCT OFFER GIVES

-- Status Symbol- in the case with highly
niche product category
-- Benefits– whether it is any generic
product or any niche product
Continued …

FIVE LEVELS OF A PRODUCT

1. Core Benefits– The fundamental benefit or

service that the consumer is actually buying.
2. Generic Product– The basic version of the
product. For example a ‘car’, a solution for
easy transportation. A car can be of many
designs and models, and from different
manufacturers and of different brand
names.
Continued …

3.Expected Product– what the buyers

expect from a product offer, in terms of a
set of attributes and conditions.
4. Augmented Products– Expectation of
additional services and benefits by the
consumer, that distinguishes a company’s
offer from the competitors product.
5. Potential Product– meaning all the
changes and transformations that the
product may undergo in future. It is nothing
but a possible evolution of the product. It is
distinguishing the market offer.
Continued …

-- Focus is the Product offer.

-- Product is the most crucial element of
the marketing program.
-- A company’s product defines its
business.
-- Pricing, quality, promotion,
communication and distribution policies
has importance in product offering.
-- Firm’s competitors and customers are
determined by the products it offers.
--Research and Development
Continued…

Important: Whenever, we as a consumer

buy any product, to satisfy our need or
want, we are actually looking for a
solution. We thus end up buying a solution
and return with a brand. Brand is always
associated with any product offering –
tangible and intangible. This is a generic
fundamental fact enshrined with any
particular product being marketed or
sold in any part of the world.
Continued…

Brand Defined:
A particular product, or a line of products,
offered for sale by a single producer or
manufacturer and made easily
distinguishable from other similar products
by a unique identifying name and or a
symbol or term.
Continued…

Brand Image :
The perception of a product formed in the
mind of the consumer which is the result of
the symbols and meanings associated with
a particular brand. Advertising is often
employed to create brand image: e.g.
automobile advertising on television
commonly sells a lifestyle rather than a
mode of transportation.
Continued…

Brand Marketing :

A strategy in which each of a firm’s

product’s is marketed independently,
generally under the direction of a brand
manager.
Continued…

Brand Name :

That part of a brand consisting of the actual

letters or words; i.e. that part which can
actually be vocalized, which comprises the
name of the product or service as distinct
from other identifying signs, symbols, and
designs incorporated into the overall
design.
Continued…

Brand Position :

A products niche in the marketplace. The

term ‘position’ refers to the products
relationship to competing brands and is
generally measured in terms of how the
consumer perceives the various attributes
attached with the brand.
Continued…

Brand Positioning / Positioning :

Efforts aimed at establishing a product or
service in a particular niche or segment of
the market place.
Brand positioning is also referred to as
market positioning- where the strategy
usually includes those promotional
strategies which differentiate the product
from competitors and which vividly
establish the products image in the minds
of the potential customers. Also known as
Positioning, product positioning or
target positioning.
Continued …

Products – Local, National, International

and Global

The concept of products, when taken from an

international marketing perspective rests on
the fact that any product, whether it is a
national product of one country for use in
the same country– can it be marketed into
another foreign market? Can it be modified
into as per the requirements of the now
target country or for…. Continued….
Continued …

any other world market? These enigmatic

questions revolves around the EPRG
concept of global marketing management,
as also the stage of economic
development / market development
the particular targeted country is in, at the
particular period of time.
-- Should the company focus on the
production of products for each particular
market ?
LOCAL PRODUCTS :

-- Products available in the portion of the

national market
--Sometimes hailed under the category of
regional products
-- These products may be new products that
the company is introducing.
-- Local products are products exclusively
distributed in a particular region.

Continued…
Continued …

National products
-- Product that is offered in a single national
market
-- Product specially developed for a
particular country.
-- Products that are not sold outside the
home country.
Continued …

International Products :
-- Offered in multinational and regional
markets.
-- A multiregional product can become an
international product.
[The Gist is that initially a product can be a
great player in a regional market, and
having the quality to become an
international player, it can come out of the
regional market, and can also be a player
and thus marketed into other targeted world
markets- through the route of acquisition or
joint venture or any other specific route.]
Continued …

Global Products and Global Brands

-- The global products are offered in global
markets and in every part of the world –
and in every economic development stage
country.
-- Some products are specially designed to
target all the world market.
-- Some products specially made for a
particular national market, can also be
marketed in other country market.
Continued…

Important:
The concept of Global Products revolves
around the concept of Global Brands.
Please Note:
A product is not a brand. Any Global brand
like the generic concept of brand has a
general perception and image.
Continued…

Examples of Global Brand:

VOLVO
MERCEDES BENZ
AUDI
BMW
VOLKSWAGEN
TOYOTA
HONDA
MARLBORO
COKE
Continued…

A Global brand has :

-- SIMILAR IMAGE
-- SIMILAR POSITIONING
-- GUIDED BY THE SAME STRATEGIC
PRINCIPLES
-- MARKETING MIX MAY VARY FROM
COUNTRY TO COUNTRY
Continued…

Only Difference between a global product

and global brand is that --- it does not
carry the same name and image from
country to country.
-- A great global product can be sold in the
home country by a different name and the
similar product can be sold in other world
market by a different name.
Continued…

Should a global product be turned into

a global brand?
For this:
-- Name should be standardized
-- Image should be standardized

Please Note: The definition of standardized

product follows in the slides concerning
‘IPLC’ segment, later
Continued …

International Product Life cycle

Continued…

IPLC Theory

The international product life cycle

theory (IPLC) describes the ‘diffusion
process of an innovation’ across
national boundaries.
Continued…

The Whole game of IPLC, has the

following characteristics:
--The International product life cycle begins
when a developed country, having a new
product to satisfy consumer needs, wants to
exploit its technological breakthrough by
selling abroad.

-- Other advanced nations soon start up their

own production facilities, and before long
less developed countries do the same.
Continued…

Continued from last slide…

-- Efficiency/comparative advantage,
thus shifts from developed countries
to developing nations.

-- Finally, advanced nations, no longer

cost effective, import products from
their former customers.
Continued…

The understanding
The entire result of the great game of the
stages encircled with its particular
characteristics- is governed by the fact
that in the end the initiating country and
the advanced nations become a victim of
its own creation.
NB: The IPLC is examined from the marketing
perspective, and marketing implications for
both innovators and initiators are taken from
the paradoxical angle of marketing only.
Continued…

Stages of IPLC
The stages of international product life cycle
begins from Stage 0 to Stage 4.
STAGE 0 --- Local Innovation
STAGE 1 --- Overseas Innovation
STAGE 2 --- Maturity
STAGE 3 --- Worldwide Imitation
STAGE 4 --- Reversal
Continued…

The generic diagram concerning the IPLC

may be referred.

NB: The curves in the IPLC shows curves for

the same innovation: one for the initiating
country, one for other advanced nations,
and one for the Less developed countries.
-- For each curve, net export results when
the curve is above the horizontal line, and
when the curve is under the horizontal
line, net import results from that country.
Continued…

Why USA as a initiating country?

As far as the curves related to the international
product life cycle is concerned, it has been
universally accepted that a developed nation
having all the technical knowhow, expertise
etc that is required to develop a product---
after identifying the need and demands of a
particular product a company in a particular
country, initiates that product in its home
market initially. This is the beginning of the
diffusion of the innovation process concerning
the international product life-cycle.
Continued……………
Continued…

Why USA…….?
Since many of the products found in the
world’s markets were originally created in
the USA, before being introduced and
refined in other countries and in most
instances, regardless of whether a product
is intended for later export or not, an
innovation is initially designed with an eye
to capture the US market, the largest
consumer nation in the world.
Continued…

Stages of International Product Life

Cycle (IPLC) and their
Characteristics
Continued…

Stage 0 – Local Innovation

-- Represents a life cycle stage when any

initiating country takes the first leap in
manufacturing the product for the first
time in the world, thereby beginning the
story of the familiar life-cycle stage, in
operation within its original market.
-- Innovations are most likely to occur in a
highly developed countries because
consumers in such countries are affluent
and have relatively unlimited wants.
Continued…

Stage 0 …………….
-- At this stage firms in advanced
nations have both the technical know-
how as well as abundant capital to
develop new products.
Continued…

Stage 1 : Overseas Innovation

As soon as the new product is developed
and initiated by the initiating country
following syndromes will happen:
-- Original market will get well cultivated.
-- there will be demand for the all new offering.
-- Local demands of the product will be
adequately supplied.
-- Many prospective consumers/user of the
product will come to learn about the utilities
and satisfaction to be derived from the
product.
Continued…

Important:
It is at this stage only that, the innovating
firm will look to overseas market in order
to expand its sales and profit.
-- Stage 1 is also called as the
‘Pioneering Stage’ or ‘International
introduction’ stage.
Continued…

In the Stage 1, the technological gap is

first noticed in other Advanced nations due
to their similar needs and high income
levels.
(Concept of the Stages of Economic
Development runs here)
Continued…

Competition in Stage 1
--Competition at this stage usually
comes from US firms, since firms in
other countries may not have much
knowledge about the innovation.
-- Production costs tend to decrease at
this stage for the competitive firms,
because by this time the innovating
firm will normally have improved the
production process.
Continued…

-- Aggressive overseas sales also help

decline the production costs.
-- The scenario gives the intangible
feeling of the ‘Economies of Scale’.
-- the price of the product at this stage
is high, since because of the
technological breakthrough, costs
need to be recovered, in addition to
the recovering of the price incurred in
marketing efforts.
Continued…

The final word for Stage 1 is that– there

will be more exports from the USA, and
increase in imports by other developed
nations.
Continued…

Stage 2 – Maturity
-- Growing demand in advanced
nations, will lead firms to
conceptualize the product, and learn
to make it in their home country.
-- Local production will start in
advanced nations
Continued…

Stage 2 …… continued..
-- Competition grows more at this stage.
-- More players in the market place.
-- Innovating firm’s sales see the light of the
start of suffering, at the cost of advanced
nations products, but still the export level
remains stable.
-- The LDC’s now enter the imitation field.
-- Introduction of the product in LDC’s helps
offset any reduction in export sales to
advanced nations.
Continued…

Stage 3 – World Wide imitation

-- This stage is generally considered as the
beginning of heavy competition among the
advanced nations firms.
-- This is the stage where copy cats work, in
the form of re-engineering, me-too
products, made in different forms and
styles, having the same USP’s,
differentiation is tried at every angle of the
product make……
Continued…

-- Tough times for the initiating nation.

-- Loss of market share for the initiating
firm- to products from other
advanced nations and LDC’s.
-- No more new demand anywhere for
the initiating country to cultivate.
-- Effect on the economies of scale for
the initiating nation.
Continued…

-- Now the production cost for the

initiating nation rises, on account of
the new players using the comparative
advantage philosophy.
-- Firms in other advanced nations use
their lower prices, coupled with
product differentiation techniques in
place.
-- Worldwide imitation is faster at this
stage.
Continued…

-- The initiating country’s export declines

very fastly and rapidly reaching nil.

The Final word for Stage 3--- At this stage

US production or the initiating nation
production still remaining, is basically cornered
from the world market- and is left for the local
consumption only. Once an initiating country,
now only a small player in its national market
– facing competition from products from other
advanced nations. A great paradox of the
business macro environmental scenario.
Continued…

A great paradox of the business macro

environmental scenario. The greatest
Example for stage 3:

Among the 30 different companies

selling cars in the U.S.A., with several
more on the rise, of these only two
players – General Motors and Ford are
US firms. The rest are from Western
Europe, Japan, South Korea, and
others/
Continued…

Stage 4– Reversal
-- In this stage two functional characteristics
makes appearance
A. Product Standardization
B. Comparative Disadvantage
Continued…

-- The innovating country’s comparative

advantage becomes country’s
disadvantage.
-- The product is no longer capital –
intensive or technology – intensive.
-- The above becomes a comparative
advantage for LDC’s, for they possess
those advantage – looking from all point
of scale in the development of
international business, married to the
‘Economies of Scale’.
Continued…

The final word for Stage 4:

The Less Developed countries are the
last IMITATORS. They establish
sufficient productive facilities to
satisfy their own domestic needs as
well as to produce for the biggest
market in the world, USA. And also
targeting other advanced nations
market. Finally targeting world
market.
Continued…

STANDARDIZED PRODUCT Defined

A product developed for one national

market and then exported with no
change to international markets.
Continued…

The Moral of the Whole Game of

International Product Life Cycle

The initiating nation becomes a victim

of
its own creation
Continued…

PRODUCT POSITIONING
Continued…

Positioning defined

A marketing strategy that will position a

company’s products and services against
those of its competitors in the mind of the
consumers.
Continued…

Achieving Positioning Success

To achieve positioning success, three

generic competitive strategies are
employed which a particular company can
follow.
The three winning strategies are:
1. Cost Leadership-- the company tries to
achieve lowest costs of production and
distribution.
Continued…

2. Differentiation--- making use of specific

marketing mixes.
3. Focus--- paying attention to a few
market segments.
Differentiation defined- Differentiation is
the act of designing a set of meaningful
differences to distinguish the company’s
offer from competitor’s offer.
Continued…

Criteria for different positioning

1. Important- Product delivers a highly
valued benefit to a sufficient number of
buyers.
2. Distinctive: The difference is either isn’t
offered by others or is offered in more
distinctive way by the company.
3. Superior: The difference is superior in
other ways to obtain the same benefit.
Continued…

4. Communicable: The difference is

communicable and visible to buyers.
5. Pre-emptive: The difference cannot be
easily copied by competitors.
6. Affordable: The buyer can afford to pay
the price for the difference.
7. Profitable : The product is profitable for
the company.
Continued…

International Market positioning

The above criteria for differential
positioning is summed up in the context of
international marketing management also.
Thus the general strategies for product
positioning in international marketing /
global business are:
Continued….
Continued…

1.ATTRIBUTE OR BENEFIT
2.QUALITY / PRICE
3.USE / USER
4.HIGH-TECH POSITIONING
5.HIGH-TOUCH POSITIONING
NB: 1,2 and 3 are considered to be general
product positioning tenets, whereas 4
and 5 are two special positioning that is
considered for international product.
Continued…

Attributes in the form of

a. Features
b. Performance
c. Durability
d. Reliability
e. Reparability
f. Style
g. Design.
Continued…

Importance of high-tech positioning

High tech positioning can be applied under
two categories of product offers.
1. Technical Products such as Computers,
Chemical, Technical Financial products
requiring special; care and expertise
while selling, etc.
2. Special Interest Products such as
bicycles, Adidas Shoes etc.
Continued…

High-Touch Positioning
Here more emphasis is given on IMAGE.
Examples:
A. Products solving a common problem,
such as thirst problem solved by a cola
drink, coffee drink, etc. a birthday cake, a
birthday card etc. This category actually
uses ‘products important’ from day to day
particular important moments / special
moments of life.
Continued…

B. Global Village Products – i.e. those

products that enhance the consumers all
over the world. Examples can be: Levis
Jeans or other Jeans brands, Marlboro , Mc
Donald, Ferrari, Harley-Davidson etc.
NB: Global Village products are mostly
those products that has a
cosmopolitan touch, in its essence,
and the users have mostly
cosmopolitan nature/culture outlook.
Continued…

C. Products with a universal theme-

those product category that have a
universal acceptance such as:

--- Photographic Cameras- Yashika,

Canon, Sony, Panasonic
--- Electronic Gadgets etc – Casio
Calculating instruments, defence related
electronic gadgets,
Continued…

Product Design Considerations:

Product design is a key factor in determining
success in global marketing.
Questions that arise concerning product
design decisions:
1. Should there be an adaptation of the
product for various national
markets?
2. Should a company offer a single
design for the global market?
Continued…

Important factors to be considered in

product design:
1. PREFERENCES and TASTES / CHOICES.
2. COST – (talking about the economies of
scale)
3. LAWS and REGULATIONS – (i.e.
compliance with laws and regulations in
different countries, where the product is to
be made)
4. COMPATABILITY – (i.e. understanding the
products compatibility with the
environment)
Continued…

Geographic Expansion in
International
Marketing
(THE STARTEGIES)
Continued…

Introduction
Companies can pursue three generic basic
global strategies to penetrate foreign
markets:
1. STRAIGHT EXTENSION i.e. adapting the same
product or communication policy used in their
home market.
2. ADAPTATION STRATEGY i.e. adapting as per the
market situation. This enables the firm to cater to
the needs and wants of its foreign customers.
3. INVENTION STRATEGY i.e. products are
designed from scratch for the global market
place.
Continued…

Please Note--- The three basic strategies above

are further clubbed into five distinguished
strategic options:
A. Strategy 1– Product and Communication
Extension- Dual Extension.
B. Strategy 2 – Product Extension and
Communications Adaptation.
C. Strategy 3– Product Adaptation-
Communication Extension.
D. Strategy 4 – Product Adaptation and
Communication Adaptation (Dual Adaptation)
E. Strategy 5 – Product Invention
Continued…

Strategy 1. Product and Communication

Extension – Chief Characteristics
A. Marketing a standardized product using a
uniform communications strategy- i.e.
companies pursuing this strategy sell
exactly the same product with the same
advertising and promotional appeals as
used in the home country.
Continued……
Continued…

B. Best strategy for the new entrants in the global

arena.
C. Best strategy for the small companies with
limited / few resources.
D. Dual Extension also works when company
targets a ‘global segment’ with similar needs.
Important: Generally speaking, a standardized
product policy coupled with a uniform
communication strategy offers substantial savings
coming from economies of scale.
NB: This strategy is basically product driven rather
than market driven.
Continued…

Strategy 2- Product Extension and

Communications adaptation
Chief Characteristics: Due to differences in
the cultural or competitive environment:
A. Same product is often used to offer
benefits or functions, that dramatically
differ from those in the home market.
B. Gaps between the foreign and home
market drive companies to market the
same product using customized
advertising campaigns.
Continued…

D. Customized advertising campaigns is

adopted for this strategy for different
country market.
E. This strategy entails ‘the economies of
scale’ on the manufacturing side.
F. Potential savings of the firm is spent on
advertising front.
Continued…

Strategy 3 – Product Adaptation-

Communications Extension
Chief Characteristics:
A. Firms adapt their product, but market it
using a standardized communications
strategy.
B. Local market circumstances favour the
case of product adaptation.
C. Company’s expansion strategy is also the
reason for strategy 3. Continued………..
Continued…

Strategy 4- Product adaptation and

communications adaptation (Dual
Adaptation)
Important: Demand for a dual
adaptation strategy. Why?
Because of:
1. Difference in cultural environment
2. Differences in physical environments
Continued…

Strategy 5– Product Invention

Product invention means creating something
new. It can take two forms:
1. Backward Invention, reintroducing
earlier product offers that are well
adapted to a foreign country’s need.
2. Forward Invention, creating new
products to meet a need in another
country.
Continued…

Standardization versus Customization

A recurrent theme in global marketing is
whether companies should aim for a
standardized product offer or customized
or country tailored product strategy.
Continued…

Standardization means:
--- Offering a uniform product on a regional
or world wide basis.
--- Minor alternations are usually made to
meet local regulations or market conditions
-- A standardized / uniform product
capitalizes on the common platform
requirements across countries.
Continued…

Customization means
Under customization process management
focuses on cross-border differences in the
needs and wants of the firms target
customers. Under customization,
appropriate changes are made to match
local market conditions.
Continued…

New Product Development

Definition of New Product–
Any product offer that consumers regard as an
addition to their available choice can be regarded
as a ‘new product’. A new product can be:
-- an original invention.
-- a modification of an existing item.
-- the firm’s own version of a product already
supplied by a competitor or
-- merely a change in how an item is packaged and
presented.
Continued…

Process of product development

The process begins with the ‘Idea
Generation’
--- In considering the feasibility of an idea it is
necessary to define the concept of the
intended new item such as :
a. What it will do?
b. The benefits it will provide to customers
c. Its market position.
d. How will it differ from current or possible
future products offered by competing
businesses.
Continued…

International Test Marketing/Testing in

national market
Introduction: Prior to committing itself to
marketing a new consumer product on a
global scale, a company will usually select
a number of areas in different parts of the
world where it can test its entire marketing
program.
Continued…

Factors calling for testing new product

1. Testing lowers the risk of subsequent
failures.
2. Establishes or refutes the validity of the
basic concept of the new product.
3. Provides a basis for forecasting future
sales.
Continued…

Most important:
Each group of companies in which the
item is to be sold, the company needs
to identify towns, cities, or rural
locations that possess characteristics
as near as possible to the averages for
the region as a whole.
DUMPING

Dumping takes place when a firm or an

industry sells products in the world market
at prices below the cost of production.
REASONS
Generally a company dumps when it wants
to dominate a world market. After the
lower prices of the dumped goods have
succeeded in driving out all the
competition, the dumping company can
exploit its position by raising the prices of
its product.
Continued…

Important: Whatever the motivation for

dumping may be –
A. Disposal of surplus stock or
B. Penetration of markets etc.
Dumping is basically an unfair trading
practice under WTO regulations. Hence
the governments of affected countries
are allowed to impose special import
taxes on offending products.
Gray Market

Important characteristics
-- Gray market channels refer to the legal export /
import transactions involving genuine products into
a country by intermediaries other than the
authorized distributors.

-- From the importers side it is known as ‘Parallel

Imports’.

-- Distributors, wholesalers and retailers in a

foreign market obtain the exporters product
from other business entity. Thus the exporters
legitimate distributors and dealers face
competition from others who sell the product
at reduced prices in that foreign market.
Continued…

Conditions necessary for Gray Market:

Three Conditions are required:
1. Products must be available in other
markets.
2. Trade barriers such as tariff, transportation
costs and legal restrictions must be low
enough for parallel importers to move the
products from one market to another.
3. Price differentials among various markets
must be great enough to provide the basic
motivation for gray markets.
Continued…

Role of Services in global economy

SERVICE DEFINED– A service is an act or

performance that one party can offer to
another that is essentially intangible and
does not result in the ownership of
anything. Its production may or may not
be tied to a physical products
Examples: Restaurant / Hotel services,
Engineering services, services required for
manufacturing a product etc.
Continued…

Outsourcing of Service activities: It

refers to service procurement activities on
a global basis in the same way they
procure components and finished products.
-- Because the production and consumption
of some services do not need to take place
at the same location or at the same time,
global sourcing of services is a viable
strategy.
Continued…

Outsourcing of service activities relates to:

-- Reducing costs and improving the corporate
focus, that is concentrating on the core
activities of the firm.
-- Reducing time to implement internal
processes.
-- Sharing risk in an increasingly uncertain
business environment.
-- Improving customer service.
-- Improving access to expertise not available
in-house.
APPENDIX--a

Important Comment on ‘New’ Product

Inventing and bringing to the market a completely
new product can be enormously expensive, and
the risk of failure is high. For it has been seen
that the majority of new inventions with a
commercial application are financially
unsuccessful. Hence there is a strong incentive for
firms to develop current product offerings,
introduce complimentary products, diversify
product lines and duplicate competitors best
selling items rather than invest in basic technical
research leading to completely new product
concepts.
APPENDIX-- b

Standardization versus Customization

While the standardization has a product
driven orientation– lower your costs via
mass production- customization is inspired
by a market driven orientation- increase
customer satisfaction by adapting the
product to local needs.