CHAPTER FIVE

INTERNATIONAL
MARKETING
 Contents
– Meaning and Objective/reasons of international
marketing
– Major International Marketing Decisions
– Techniques of international marketing
Meaning and Objective/reasons of international marketing

• International marketing is defined as the performance

of business activities designed to plan, price, promote,
and direct the flow of a company’s goods and services
to consumers or users in more than one nation for a
profit
• International marketing, according to Tim Friesner
(2014) is simply the application of marketing principles
to more than one country.
 Reasons of international marketing
• Why firms go international?
• Firms might go to international market for several
reasons.
• These include:
– The saturation of the domestic market,
– The emergence of new markets, particularly in the developing
world;
– Government incentives to export;
– Tax incentives offered by foreign governments to establish
manufacturing plants in their countries in order to create jobs;
– The availability of cheaper or more skilled labor; and
– An attempt to minimize the risks of a recession in home
country and spread risk.
Major International Marketing Decision
 1. Looking at Global marketing Environment
• 1. The International Trade System
– Tariffs charges, taxes, quotas, etc
– WTO, General Agreement on Tariffs and Trade
(GATT), Regional Free Trade Zone: EU(1957), NAFTA,
etc
 Looking at Global marketing Environment
• 2. Economic Environment
• The nations’ Industrial Structure shapes its product and
service needs, income levels and employment levels.
– a. Subsistence economies – Simple agri, most outputs are for
self consumption
– b. Raw Material exporting Economies – rich in one or more
natural resource
– c. Industrializing Economies - fast growth in manufacturing
results
– d. Industrial Economies – major exporters of manufactured
goods
 Looking at Global marketing Environment

• 3. Cultural Environment
– Each country has its own norms and prohibitions.
– A firm operating internationally comes across a wide range
of diverse cultural environments, which significantly
influence international business decisions.
– Managers operating in international business need to
appreciate the difference among cultural behaviors of their
business partners and consumers across various countries.
 Looking at Global marketing Environment
• 4. Political-Legal Environment
• Factors like:
– Countries attitude toward international buying,
– Government bureaucracy,
– political stability and
– monetary regulations, etc
• Many nations tended to bother foreign businesses with
import quotas, currency restrictions, etc.
• Singapore and Thailand court foreign investors with
incentives and favorable operating conditions.
 2. Deciding whether to go global

• Operating domestically is easier and safer.

– No need to learn foreign language and laws.

– No need to deal with unstable currencies, face political and
legal uncertainties.
• Home markets, however, might be stagnant and lessening where
as foreign markets may present higher sales and profit
opportunities.
• Must weigh risk and answer many questions about its ability to

operate globally.
 2. Deciding whether to go global
• Company should define its marketing objectives and
policies.
– Volume of foreign sales it wants.
– Stay with small share or go aggressive?
 3. Deciding how to enter the market
• Market entry Mode: Exporting
• Simplest way to enter a foreign market.
• A firm may Passively export its surpluses from time to
time or
• active commitment to expand exports to a particular
market
• Direct Exporting:
• Indirect Exporting: • Seller handles their own
• Working through exports.
independent • Can set up export Dpt. or
international marketing • overseas sales branch or
intermediaries. • find foreign based agents to
• Less risk do on behalf of company.
 3. Deciding How To Enter The Market
• Market entry Mode:
• Licensing
• For a fee or royalty, the Licensee buys the right to use
company’s manufacturing process, trademark, patent,
trade secret, etc.
• Coca-cola markets internationally by licensing bottlers
around the world and supplying them with syrup
needed to produce the product
 3. Deciding how to enter the market
Contract Manufacturing:
In which a company contracts with manufacturers in a foreign
market to produce the product or provide its service.
Management Contracting:
A management contract is an arrangement under which operational
control of an enterprise is vested by contract in a separate
enterprise that performs the necessary managerial functions in
return for a fee. Its not just selling a method of doing things (as
with franchising or licensing) but involve actually doing them.
Joint Ownership:
In which a company joins investors in a foreign market to create a
local business sharing joint ownership and control.
Joining with foreign companies to produce or market products or
services.
 3. Deciding how to enter the market
• Market entry Mode: Direct Investment
• Entering a foreign market by developing foreign-based
assembly or manufacturing facilities.

• Advantages
• Firm may have lower costs in
the form of labors or raw
materials, foreign gov’t
incentives, and freight savings.
• Firm may improve image by
creating jobs.
• Deeper relationships with the
foreign gov’t
• Disadvantages
• Firm may faces many risks
such as restriction or
devalued currencies, falling
markets or government
changes.
• Firm have no choice except
to accept risks.
4. Deciding on the global marketing program
Standardize
. Marketing mix Adapted Marketing mix
• An international • An international
marketing strategy for marketing strategy for
using basically the same adjusting the marketing
• product, mix elements to each
• advertising, international target
• distribution channels
market bearing more
and
• other marketing mix costs but hoping for a
elements larger market share and
• in all the company`s return..
international markets.
Deciding
4. Decidingon
onthe
the global marketingprogram
global marketing program
• Promotions
• Companies can either adopt the same communication
strategy they used in the home market or change it for each
local market.
• For instance, cultural implication of promotional
messages need to be underlined.
• Colors need to be changed sometimes to avoid prohibitions
in other countries.
– Purple is associated with death in most Latin America,
– White is mourning color in Japan, and
– Green is sickness in Malaysia.
Deciding
4. Decidingon
on the globalmarketing
the global marketing program
program
• Price
• Approaches to International Pricing
– Full Cost vs Variable Cost
• Full Cost is determined by combining the total cost plus a
profit margin to every unit
– Every unit must bear the total cost (including
international units sold)
• Variable cost is determined through the incremental
(marginal) cost associated with producing goods for selling
them in international markets
– Can appear to be “dumping”
4. Deciding on the global marketing program
• Price
– Skimming Vs. Penetration Pricing
• Skimming is used when the marketplace is insensitive to
price; therefore premium price is charged
– Market places high value on items either because of
it’s unique features; quality or it has little or no
competition
• Penetration Pricing is used to stimulate market growth;
therefore prices are set low
4. Deciding on the global marketing program
Distribution:
 A global company expanding across national
boundaries may utilize existing distribution channels
or build its own
 Channel obstacles are often encountered when a
company enters a competitive market where brands
and supply relationships are already established
 Direct involvement in distribution in a new market
can entail considerable expense.
 4. Deciding on the global marketing program
• International Channel-of-Distribution Alternatives
Home Country Foreign Country
The foreign marketer or producer
sells to or through
Foreign
Domestic producer consumer
or marketer sells to
or through

Open distribution via Foreign agent

Foreign
domestic wholesale Exporter Importer or merchant
retailers
middlemen wholesalers

Export management
company or company
sales force
5. Deciding on the global marketing organization
• Companies manage their international marketing
activities in at least three different ways:
– Export Department
– International division
– Then becomes, Global Marketing Organization
 we are Done
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