International Marketing

What is Trade?
Exchange of goods and services within the
given geographical boundation.

What is Inter regional Trade?

Trade within national boundries, it can be
called as local trade or domestic trade also.

What is International Trade?

Trade between two countries
What is International Marketing ?
The term international marketing refers to
exchange across national boundaries for the
satisfaction of human needs and wants.
 A Firm’s overseas involvement may fall
into one of several categories:
• Domestic :Operating exclusively within a single
country.
• Regional Exporter: Operating within a
geographically defined region that crosses
national boundaries and market that are served
are economically and culturally homogeneous.
• Exporter: operating from a central office in the
home region and exporting finished goods to a
variety of countries. Some marketing, sales and
distribution is outside the home region
Conti….
International to global : Operating with
independent and mainly self sufficient
subsidiaries in a range of countries. While
some key functions , such as r & d, sourcing ,
financing are decentralized , the home region
is still the primary base for many functions.
Global: Operating as highly decentralized
organization across a broad range of
countries. No geographic area is assumed to
be the primary base for any functional area.
Each function e g r& d, is performed in the
location(s) around the world most suitable for
that function.
Importance of International Marketing
Globalization
Growing Internationalization
Changing competitors positions
Increased competitive strategies
Long term success
Maintain the maturity stage of the product
 Foreign Market Entry Strategies
It is one of the most critical decision bcaz the
entry decision is a macrodecision.
When the firm chooses a level of involvement
in foreign markets, it is also making choices
about its marketing program there.
For e.g. if the firm enters a market through a
distributor or licensee, it is limiting its
freedom in areas like pricing , promotion etc.
Decision criteria for Entry Method
The selection of the method of entry to foreign markets
depends on some factors peculiar to the firm and its
industry. For e.g.
1. Company goal regarding the volume of international
business desired, geographic coverage, and the time
span of foreign involvement
2. The size of the company in sale and assets
3. The company’s product line and the nature of its
products
4. Competition abroad.
 Other Criteria's
• Number of Markets: companies differ as to number of countries
they want to enter . Different entry methods offer different coverage of
international markets. E.g. wholly owned foreign operations are not
permitted in some countries , licensing may be impossible in other
markets . It is not single method which company can follow, it has to use
combination of different methods
• Penetration With Markets: Related to the number of markets
covered is the quality of coverage. An Export management company
might claim to give access to 60 countries. The producer must find out if
‘access’ is to whole national market or if it is limited to the capital or a
few large cities.
• Learning by experience: the firm can obtain more international
marketing experience the more directly it is involved in foreign market.
• Incremental Marketing Cost: the producer’s incremental
marketing outlays and working capital requirement vary with the
directness of the channel.
• Profit Possibilities : In evaluating the profit potential of different
entry methods, the long term sales and the costs associated with each
entry method must be estimated. Cost and profit margins are less
important than total profit possibilities .
• Administrative requirement
• Personnel Requirement Quality and Quantity both.
• Flexibility: if the firm expects to be in foreign markets for the long run,
some flexibility in its method of entry is important. Any entry method
optimal at one point in time maybe less than optimal five years later. Not
only do the environment and the market change, so , too, do the
company situation and goals.
• Risk: Risk is not only economic; there are also political risk. The political
vulnerability may differ from market to market.
 Modes of International Marketing
• Indirect Exporting
– Foreign sales through domestic sales organization
– Export Management Companies
– Cooperation in Exporting
– Piggyback Exporting
• Direct Exporting
– Foreign Manufacturing as foreign –market entry
– Joint venture
 Indirect Exporting
The firm is an indirect exporter when its product are
sold in foreign market but no special activity for this
purpose is carried on within the firm. The sale is
same as domestic sale.
“In indirect exporting the firm is not engaging in
international marketing in any real sense. Its
products are carried abroad by other. Although
exporting this way can open up new markets, the
firm’s control is very limited. The sale in such form
are less stable.
Foreign sales through domestic sales organization
Product are sold in the domestic market but used or resold
abroad in several ways:
1. Foreign wholesale or retail organization that have buying
offices in the firm’s home country may find the firm’s product
desirable for their market.
2. Manufacturers and firms extractive industries often have
offices in foreign to procure equipment and supplies for their
foreign operations. The firms in this category, would have
advantage if it is already supplying their domestic operations.
reaching the foreign firms in this group requires special
marketing.
3. Companies with multinational operations buy equipment and
supplies for them through their regular domestic purchasing.
 Export Management Companies(EMC)
EMC are often considered as constituting the export
department of the producer i.e. the producer gets
the performance of an export department without
establishing one. The economic advantage arises
because the EMC performs this function for several
firms at the same time.
In EMC generally means that the firm has closer
cooperation and increased control. The EMC uses the
letterhead of the manufacturer, negotiates on the
firm’s behalf. EMC is ideal for the medium sized or
small firms.
 Advantages of EMC
• The producer gains instant foreign market knowledge
and contacts through the operations and experience
of EMC
• The manufacturer is spared the burden of developing
in-house expertise in exporting and is cost saving as
EMC cost are spread over the sales of several
manufacturers.
• Consolidated shipments offer freight saving to the
EMC’s Client
• A line of complementary products can get better
foreign representation than the product of just one
manufacturer
• EMC accept the foreign credit responsibility.
 Cooperation in Exporting
Cooperation in exporting is another way to
enter foreign markets without bearing the
costs and burden of an in-house export
department.
Forms of cooperation in exporting :
Webb- Pomerene association
Export Trading Companies
Piggybacking
 Webb- Pomerene association
Webb- Pomerene association(WPA) can act as the
exporting arm of all member companies, presenting
a united front to world market and gaining
significant economies of scales.

• Exporting in the name of association

• Consolidating freight, negotiating rates and
chartering ships
• Performing market research
• Appointing selling agent in abroad
• Obtaining credit information and collecting debts
• Setting prices for export
 Export Trading Companies
ETCs permitted in the United Sates since 1982, are a U.S.
attempt to follow Japanese trading companies.
ETC act as the export arm of a number of manufacturers.
Because EMC’s and WPA plays a small role in export
from United States, the government wanted a more
powerful mechanism to assist U.S. Exporter. ETC’s
allows giant U.S. corporation or banks to form trading
with the size, resources, sophistication and international
network
more comparable to that of Japanese Trading
Companies.
 Piggyback Exporting
In piggyback exporting, one manufacturer uses its
overseas distribution to sell another company’s product
along with its own. Two parties with different interests-
the carrier and the rider-make up piggyback operation.
The Carrier, the firm actually doing the exporting , is
usually the larger firm with established export facilities
and foreign distribution. there are many reasons for
such venture may be it has certain gap in its product
lines or the new noncompetitive product may fill that
gap.
 Method of Operation
Piggybacking offers two type of arrangements
1.Carrier is selling the product of rider on
commission basis
2.Carrier buys the product of riders firm and act
as an independent distributor.
 Foreign Manufacturing
Contract Manufacturing
Licensing
Joint Venture
 Contract Manufacturing
Contract Manufacturing abroad is foreign manufacturing
by proxy. The firm’s product is produced by another
producer under contract with the firm. It covers only
manufacturing, marketing is handled by the firm. Any
firm can enter into CM but the producer firm must
have manufacturing capabilities in both quantity and
quality terms. .
It avoids various problems like labor, lack of familiarity
about the country.
But to find out satisfactory manufacturer is difficult and
quality controls becomes tough.
 Licensing
A licensing agreement is an arrangement
wherein the licensor gives something to the
licensee in exchange for certain performance
and payments from the licensee.
Licensor may give patent rights, trademarks,
copyrights, knowhow.
Modes of International Business
Merchandise Export and Import:
Merchandise export are tangible products-
goods-sent out a country; Merchandise
Import are goods brought in. Goods can be
seen leaving and entering in a country so it is
also called Visible Export and Import.
 Service Export and Import
Service Export and Import are non- product
international earning. Receiving payment is
making a service export and company or
individual paying is making a service import.
Tourism and transportation
Performance of services
Use of Assets
Conti….
Tourism and transportation: international tourism and
transportation are important sources of revenue for
airlines, shipping companies, travel agencies and
hotels. Some countries economies, too, depend
heavily on revenue from these economic sectors.
Performance of Services: banking, insurance, rentals,
engineering, management services and so on,
payment is received in form of fees.
Use of Asset: When companies allow other to use their
asset, such as trademarks, patents, copyrights, or
expertise under contract, also known as licensing
agreement, they received earnings called Royalties.
Franchising is also included in this.
 Investment
Foreign investment means ownership of foreign
property in exchange for financial return such
as interest and dividends. Foreign investment
takes two forms: Direct and portfolio.
A direct investment is one that gives the investor
a controlling interest in a foreign company
known as FDI. When two or more companies
share ownership of an FDI, the operation is
Joint Venture, When govt joins a company in an
FDI, the operation is Mixed Venture.
Conti….
Portfolio investment is a non controlling
interest in a company or ownership of a loan
to another party.