Chapter Five

International Marketing Mix

 5.1 Introduction
After an international marketer has decided to
enter a particular foreign market, further
marketing decisions must be made in
particular, international marketing mangers
must address four things:

1. How to develop the firm’s product(s)

2. How to price those products
 CONT.
3. How to sell those products
4. How to distribute those products to the firm's
customers

 These elements are commonly known as the

marketing mix and popularly known as 4 Ps.

 The marketing mix reflects the firm’s decisions

regarding how it will actually market its goods.
 5.2 Product Policy
5.2.1 Product
 The first 'P' of the international marketing mix
is the product itself.
 Here, product comprises both the set of
tangible factors (the physical product and its
packaging) that the consumer can see or
touch, and numerous intangible factors
(image, and warranties).
 CONT.
 Critical to a firm’s ability to compete
internationally is its success in developing
products with tangible and intangible features
that meet the wants and needs of customers in
diverse national markets.

 The important policy decision that international

marketer has to make are choosing standardized
products or adapted (customized) products. '
 CONT.
5.2.2: Standardized Products or Customized Products

 In deciding what products the company should sell overseas,

the basic question is whether to standardize or adapt the
product for foreign markets.

 Adaptation is more likely if the costs are low and do not

force the firm to raise prices.

 The extent to which products should be adapted to meet

local needs varies according to several factors.
 CONT.
5.2.3: Product's Target Customers
 One is the nature of the product's target
customers - those people, groups, and / or
organizations that are likely to purchase the
goods and services in question.

 Two broad groups of target customers exist:

industrial users and consumers.
 CONT.
i. Industrial Products

 Industrial products are goods and services

sold primarily for use by organizations.

 Examples of industrial products are machinery,

and heavy equipment.
 CONT.
ii. Consumer Products
 Consumer products are goods and services sold for use
by individual consumers.

 Consumer products are more likely to be adapted to

meet local market preferences.

 For example, Coca-cola modifies the sweetness and

flavoring of its soft drink to meet consumer preferences
in different markets.
 CONT.
 Factors encouraging standardization include
economies of scale in manufacturing, research
and development, and marketing; and
preserving the country -of - origin image.

 Factors encouraging adaptation include

greater profit potential, income levels,
consumer tastes, and competition.
 CONT.
5.2.4: Brand Policy

 An important decision in international markets is brand

policy.

 One element international firms often like to standardize

are the brand name of the product.

 A firm that does this can reduce its packaging, design,

and advertising costs.
 CONT.
5.2.5: Legal forces

 The laws and regulations of host countries may also

affect the product policies adopted by international
firms.

 For example, countries often impose detailed labeling

requirements and health standards on consumer
products that firms, both foreign and domestic, must
follow strictly.
 CONT.
2.2.6: Cultural influences

 Culture affects product policy in many ways.

 International marketers often must adapt their products

to meet the cultural needs of local markets.

 One typical adaptation is to change the labeling on the

products' package into the primary language of the host
nation.
 CONT.

 The ingredients of food products are often

modified to better please local palates.

 For example, McDonald's used chicken instead

of beef in India for preparing Mcburgers.
 CONT.
5.2.7: Economic Factors

 Economic factors may also induce and international

marketer to adapt its products to meet local market needs.

 A country's level of economic development may affect the

desired attributes of a product.

 Consumers in richer countries often favour products loaded

with extra performance features.
 5.3: Pricing Policy
 The-second P of the international marketing mix
is pricing.

 Developing effective prices and pricing policies is

a critical determinant of any firm's success.

 Pricing policies directly affect the size of the

revenues earned by the international marketer.
 CONT.
 Pricing policies also serve as an important
strategic weapon by allowing the firm to
shape the competitive environment in which
it does business.
 CONT.

 Differences in transportation charges and

tariffs cause the landed price of goods to vary
by country.

 Differences in distribution practices also affect

the final price the end consumer pays.
 CONT.
5.3.1: Pricing Policies
International marketers generally adopt one
of the three pricing policies:

1. Standard price policy

2. Two - tiered pricing
3. Market pricing
 1. Standard Price Policy
 An international marketer following a
geocentric approach to international
marketing will adopt a standard price policy.

 Under standard price policy the firm charges

the same price for its goods and services
regardless of where they are sold.
 CONT.
 First, firms whose products or services are
highly visible and allows price comparisons to
be readily made.

 For example, Boeing sells aircraft for

approximately the same price to airlines
worldwide, regardless of whether the customer
is United airlines, Ethiopian airlines, Air India or
British airways.
 2. Two- Tiered Pricing Policy
 An international firm that follows an
ethnocentric approach will use two-tiered
pricing policy.

 Under two-tiered pricing policy, the firm sets

one price for all its domestic sales and a
second price for all its international sales.
 3. Market Pricing Policy

 International marketers that follow a polycentric

approach to international marketing use market-pricing
policy.

 Market pricing policy is the most complex of the three

pricing policies and the one most commonly used.

 An international marketer utilizing market pricing policy

customizes its prices on a market - by - market basis to
maximize its profits in each market.
 CONT.
Two conditions must be fulfilled if a
international marketer is to successfully
practice market pricing:

1. The firm must face different demand and / or

cost conditions in which it sells its products.

2. The firm must be able to prevent arbitrage.

 CONT.
 For example, the firm can set higher prices
where markets will tolerate them and lower
prices where necessary in order to remain
competitive.

 International marketers most likely to use this

approach are those that produce and market
their products in many different countries. '
 5.4: Promotion Polices

 The third P of the international marketing mix

is promotion.

 Promotion encompasses all efforts by an

international firm to enhance the desirability
of its products among potential buyers.
 CONT.
 The international marketer must choose a
proper combination of the various
promotional tools - advertising, personal
selling, sales promotion, and public relations
- to create images among the intended target
audience.
 CONT.
5.4.1: Advertising
 The first element of promotion mix is advertising.
 As a firm develops its advertising strategy, it must consider three
factors:

i. The message it wants to convey

ii. The media available for conveying the message
iii. The extent to which the firm wants to globalize its advertising
effort.
NB: At the same time, the international marketer must take into
account relevant cultural and legal constraints found in various
national markets.
 CONT.
5.4.2: Personal Selling
 Personal selling has several advantages for an
international marketer:
i. Firms that hire local sales people can be reasonably
confident that those individuals understand the local
culture, norms, and customs.
ii. Personal selling promotes close, personal contact
with customers.
iii. Personal selling makes it easier for the firm to obtain
valuable market information.
 CONT.
5.4.3: Sales Promotion

 The third promotion of promotion mix is sales

promotion.

 Sales promotion is directed at both consumers

and intermediaries.
 CONT.
5.4.4: Public Relations,

 The fourth element of the promotion mix is

public relations.

 Public relations consist of efforts aimed at

enhancing a firm's reputation and image with
the general public.
 5.5: Distribution Policies.

 The fourth P of the international marketing

mix is Place - more commonly’ referred to as
Distribution.

 Distribution is getting products and services

from the firm into the hands of customers.
 Chapter Six

Marketing Research and Information System

NATURE OF MARKETING RESEARCH
• Marketing research involves the gathering and analysis of data
in order to determine such information as who will buy the
product? what price should be charged? and what is the
most effective promotion strategy?

The Marketing Research Process

1. Problem/opportunity identification and formulation
2. Definition of the research objectives
3. Choosing a basic method of research
4. Identifying the sample size and selecting the sampling procedures
5. Collecting the data
6. Analyzing the data
7. Preparing and writing the report
8. Follow up
NATURE OF MARKETING RESEARCH

According to the American Marketing Association,

marketing research involves the “systematic
gathering, recording, and analyzing of data about
problems relating to the marketing of goods and
services.” This definition provides a useful
description of the nature of marketing research,
but it fails to include pre-research analysis, which
is an important aspect of the research process.
 CONT.
 Before data collection, careful planning is
required to specify both the kind of
information needed and the purpose of such
information.

 Without pre-research activities, there is a great

danger that critical information may not be
obtained and that what is obtained may turn
out to be irrelevant or unsuitable
 MARKETING INFORMATION SOURCES

Once a researcher has identified the

marketing problem and has completed a pre-
research analysis, the relevant information
must be collected.

The two major sources of information are

primary data and secondary data.
 CONT.
 Primary data may be defined as information
that is collected firsthand, generated by
original research tailor-made to answer
specific, current research questions.

 The major advantage of primary data is that

the information is specific, relevant, and up-
to-date.
 CONT.
 The desirability of primary data is, however,
somewhat moderated by the high cost and
amount of time associated with the collection
of this type of data.
 CONT.
 Secondary data, in contrast, may be defined as
information that has already been collected for
other purposes and is thus readily available.

 Note that the advantages of primary data are

the disadvantages of secondary data, and that
the advantages of secondary data become the
disadvantages of primary data.
 SAMPLING
 As with virtually all consumer market studies, it is
neither feasible nor practical for a researcher to
contact all the members of the population.

 The general rule is to contact a select group of

consumers considered to be representative of the
entire population.

 This practice is known as sampling.

 BASIC METHODS OF DATA COLLECTION

There are two principal methods for the collection

of primary data:
(1) observation, and
(2) the administration of survey questions.
In the case of observation, respondents are visually
observed, regardless of whether they realize it or
not. When the survey question method is used,
respondents are asked certain questions relating to
their characteristics or behavior.
 Observation
 The principal advantage of the observation
method is that, on a theoretical basis, it is
supposed to be more objective than the use of
survey questions.

 When using observation, a researcher does

not have to depend on what respondents say
or are willing to say.
 CONT.
 Another reason why the observation method
tends to yield more objective information lies
in the fact that there is no influence exerted
by an interviewer, regardless of whether such
influence would be real or imagined by
respondents.
 Questioning
 Survey questions can be used more frequently
than observation because of speed and cost.

 With questioning, data can be collected

quickly and at a minimum cost because the
researcher does not have to waste time
waiting for an event to happen to be
observed.
 CONT.
 The survey question method is also quite
versatile, because it can be used to explore
virtually all types of marketing problems.

 Survey questions can be employed to acquire

information on the past, present, and future.
They are even useful to learn about a
consumer’s internal workings – such as motives
and attitudes
 CONT.
 When the personal interview is used, an
interviewer must know and understand the
local language.
 CONT.
 In addition, a great deal of personal and social
interaction occurs in a personal interview, and
the appearance of the interviewer must thus be
taken into account.

 If an interviewer is dressed too smartly, farmers

and villagers may be intimidated and may claim
to use expensive products just to impress the
interviewer.
 Interview
 Telephone interviews pose a special challenge
for international researchers.

 State-run telephone monopolies are usually

associated with poor service, and it is
therefore difficult and at times impossible to
conduct a telephone survey.
 CONT.
 Personal interview (face-t-face interview):
When the personal interview is used, a
interviewer must know and understand the
local language.

 This imperative can present a problem in a

country such as India, where there are
fourteen official languages.
 CONT.
 In addition, a great deal of personal and social
interaction occurs in a personal interview, and
the appearance of the interviewer must thus
be taken into account.
 Mail questionnaire
The mail questionnaire is a popular survey method due
to its low cost and high degree of standardization.
Despite these advantages, its effectiveness is
contingent on the country in which it is used. Unilever,
for instance, will not use the mail questionnaire in Italy.

Problems:
1. People do not report their addresses
2. Illiteracy: can not read and write.
 Questions
1. Discuss in detail how marketing bring peace and
improve the living standard of the society.
2. State the factors that affect international
marketing decision.
3. Discuss in detail the similarities and differences
between domestic and international marketing.
4. Discus in detail the stages of product
development.
 CONT.
5.What are the essence, objectives and features of
international marketing?
6.Can international marketing be understood as a
business philosophy?
7.What are political and legal dimensions of international
marketing?
8.Explain the impact of political environment on
international marketing.
9.Discuss in detail about market selection process with
examples.
 CONT.
10.What is the role of prices in international
marketing?
11.What are the principal difference between
absolute and comparative trade theories?
12.What are the roles of marketing research on
international marketing?