Chapter one – INTRODUCTION

What is International Marketing?

A definition adopted by the AMA (American Marketing
Association) is used as a basis for the definition of inter-
national marketing given here: International Marketing
is the multinational process of planning and executing
the conception, pricing, promotion, and distribution of
ideas, goods and services to create exchanges that satisfy
individual and organizational objectives.

1
 International Marketing takes care of functions like interna-
tional market research, selection of products, pricing, distribu-
tion channels, advertising and promotion in selected countries.

 The study of international marketing is more concerned with

the micro level of the market and uses the company as a unit
of analysis.

 The focus of the analysis is on how & why a product succeeds

or fails abroad and how marketing efforts affect the outcome.

2
 Internationalmarketing brings countries closer due to eco-
nomic needs, facilities, understanding and co-operation among
them.

 It is essentially a constructive economic and commercial activ-

ity, which is beneficial to all participating countries & acts as
an instrument of global growth and development.

 Internationalmarketing, unlike domestic marketing, requires

operating simultaneously in more than one kind of environ-
ment.

3
 International Trade covers the areas of imports and exports, in-
cluding transfer of technology and international financing for
projects.

 This economics approach provides a macro view of the market at

the national level, with no specific attention given to companies’
marketing intervention.

4
Domestic Vs. International Marketing
 Tosuccessfully compete globally, rather than simply operate
domestically, companies should emphasize.

 Global configuration of marketing activities i.e. where activities

such as new product development, advertising, sales promotion,
channel selection, marketing research and other functions
should be performed.

5
 Global coordination of marketing activities i.e. how global market-
ing activities performed in different countries should be coordi-
nated and

 Linkage of marketing activities i.e. how marketing activities

should be linked with other activities of the firm.

6
Similarities:
 In both the markets- domestic as well as international, satisfying
the basic needs of the consumers is prime importance. The suc-
cess of the company depends very much on this factor.

 Creation of goodwill - is necessary in both the markets. If a firm

is able and win the faith of consumers in the market, the task of
marketing will be much simpler and easier in comparison to
those who are not able to do so.

 Research & development with a view to product improvement

& adoption is necessary both for international and national mar-
keting.

 The technique of marketing(4ps) i.e. non-human factors such as

product, price, costs etc is similar to both markets.

7
Differences:
 Sovereign political entities- each country is a sovereign political
entity. Therefore they impose several restrictions for importing
and exporting the goods of services in order to safeguard their
national interest.
 Imposition of tariffs and customs duties, Quantitative restric-
tions, exchange controls and imposition of more local taxes on
imported goods.
 Legal systems – different countries operate different legal sys-
tems
 Monetary systems
 Market Characteristics – demand pattern, channels of distri-
bution, methods of promotion etc are different from market
to market.

8
Characteristics Of International Marketing
 Large- scale operations
 Dominance of multinationals
 International Restrictions and trading blocks
 Sensitive Character
 Need of marketing research
 Importance of Advanced Technology
 Keen and Acute competition
 Need for specialized Institution
 Need for long term planning
 Develops cultural relations and maintains world peace.

9
Scope Of International Marketing
 Establishing a branch in foreign market for processing, pack-
aging or assembling the goods according to the needs of the
markets.

 Joint ventures and Collaborations – International marketing

includes establishing joint ventures and collaboration in for-
eign countries with some foreign firms for manufacturing
and/or marketing the product.

 Licensing Arrangements – The Company under the system es-

tablishes licensing arrangements with the foreign enterprises
whereby they can use the exporting company patents, pro-
cesses or trademarks according to the terms of arrangement
with or without financial investment.
10
 Consultancy services- The exporting company sends its consul-
tants & experts in foreign countries who guide and direct the
manufacturing activities.

 Technical and managerial know-how – the technicians and man-

agerial personnel of the exporting company guide and train the
technicians and managers of the importing company.

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International Trade Concepts

WHY DO NATIONS TRADE WITH ONE ANOTHER?

 Trade is the voluntary exchange of goods, services, assets or

money between one person/organization and another. Because
it is voluntary, both the parties to the transaction must believe
that they will gain from the exchange or else they will not
complete it.

 Generally, in the first step of historical trade from the division

of labor stem the benefits of specialization and the need for
more effective means of trade.

12
International Trade Theory
 International trade is trade between the residents of two coun-
tries. The residents may be individuals, firms, non-profit orga-
nizations or other forms of associations.

 Usually, the emphasis of international trade is at macro level;

for e.g. a trade between nations rather than firms. Such a trade
is to be accounted in the national accounting.

 Whereas international marketing emphasize the micro level:

firm’s ability to anticipate, identify and satisfy the require-
ments of the consumer crossing the border.

13
Dimension
International trade International Marketing
Actors Nations Firms

Goods move across na- Yes Not necessarily

tional boundary
Impetus Competitive advantage Company decision (usually
profit motivated)
Information source Nations Balance of Pay- Company Records
ment

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 Strategic Concept of Marketing
Old New Strategic

Era Pre-1960 1960-1990 1990

Focus Product Customer Way of Doing Busi-

ness(ext’l env’t)
Means Telling & Selling Integrated marketing Knowledge & Experi-
mix ence
End Profit Value Mutually beneficial re-
lationship (stake-
holder)
Marketing is. Selling A Function Everything

15
 The new concept of marketing, which appeared about 1960, shifted
the focus of marketing from the product to the customer.

 The strategic concept of marketing, a major evolution in the history

of marketing thought, shifted the focus of marketing from the cus-
tomer or the product to the customer in the context of the broader
external environment.

 Knowing everything there is to know about the customer is not

enough. To succeed, marketers must know the customer in a context
including the competition, government policy and regulation, and
broader economic, social, and political macro forces that shape the
evolution of markets.

 In global marketing this may mean working closely with home-

country government trade negotiators and other officials and indus-
try competitors to gain access to a target country market.
16
 Another revolutionary change in the shift to the strategic
concept of marketing is in the marketing objective-from
profit to stakeholder benefits. Stakeholders are individuals
or groups who have an interest in the activity of a company.

 They include the employees and management, customers, soci-

ety, and government, to mention only the most prominent. There
is a growing recognition that profits are a reward for perfor-
mance (defined as satisfying customers in a socially responsible
or acceptable way).

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 Profitability is not forgotten in the strategic concept. Indeed, it
is a critical means to the end of creating stakeholder benefits.

 The means of the strategic marketing concept is strategic

management, which integrates marketing with the other man-
agement functions.

 One of the tasks of strategic management is to make a profit,

which can be a source of funds for investing in the business
and for rewarding shareholders and management.

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 Finally,the strategic concept of marketing has shifted the focus of
marketing from a microeconomic maximization paradigm to a fo-
cus of managing strategic partnerships and positioning the firm
between vendors and customers in the value chain with the aim
and purpose of creating value for customers.

 Thisexpanded concept of marketing was termed boundary less

marketing.

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Absolute Advantage & Comparative Advantage

 Below we shall describe the rationale for the existence of interna-

tional trade.

 Absolute Advantage: If a country or individual is absolutely more

efficient at production of a good than another country or individ-
ual, then we say that it has absolute advantage in the production of
that good.

 Comparative Advantage: If a country or individual is relatively

more efficient in the production of a good than another country or
individual then we say that it has comparative advantage in pro-
duction of that good.

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 Comparative advantage measures efficiency in terms of relative
magnitudes. Since countries have limited resources and level of
technology they tend to produce goods or services in which they
have a comparative advantage.

 ithas been said that price differences are the immediate basis of
international trade. But why do nations have different prices on
goods?

 Prices differ because countries producing these goods have differ-

ent costs.

 And why do countries have different costs? Different countries

have dissimilar prices and costs on goods because different goods
require a different mix of factors in their production and because
countries differ in their supply of these factors.

21
 Based on this basic fact, the theory of comparative advantage
states that a country should produce and export those goods and
services for which it is relatively more productive than are other
countries and import those goods and services for which other
countries are relatively more productive than it is.

22
 Comparative advantage (from now on CA) implies an
opportunity cost associated with the production of one
good compared to another.
 That is why countries tend to specialize in production of
certain products. This notion is called international divi-
sion of labor.
International Product Life Cycle
 Refers to the consumption pattern for a product. When
applied to international trade theory, it refers primarily
to international trade and production patterns.

 Outlined below are the four phases in the production and

trade cycle, with our country Ethiopia as an example.
We'll assume an Ethiopian firm has come up with a new
product.

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 Phase 1: New product : In Phase 1, product innovation
is likely to be related to the needs of the home market.
The firm usually serves its home market first.

 As it begins to fill home-market needs, the firm begins

to export the new product, seizing on its first-mover ad-
vantages. (We assume the Ethiopian firm is exporting to
say Europe, US and Asia.)

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Phase 2: Maturing product (Foreign production starts):
In Phase 2, importing countries gain familiarity with the
new product.

 Gradually, producers in wealthy countries begin produc-

ing the product for their own markets. (Most product in-
novations begin in one rich country and then move to
other: rich countries.)

 Foreign production will reduce the exports of the inno-

vating firm. (We assume that the Ethiopian firm's ex-
ports to Europe are replaced by production within Eu-
rope.)

25
 Phase 3: Standardized product (Foreign production
becomes competitive in export markets): In Phase 3,
foreign firms gain production experience and move
down the cost curve. If they have lower costs than the
innovating firm (the Ethiopian Firm), which is fre-
quently the case, they export to third-country markets,
replacing the innovator's exports there. (We assume that
European firms are now exporting to Asia and US taking
away the Ethiopian firm's export markets there.)

26
 Phase 4: More standardized product (Import competition
begins): In Phase 4, the foreign producers now have sufficient
production experience and economies of scale to allow them to ex-
port back to the innovator's home country. (We will assume the Eu-
ropean producers have now taken away the home market of the
original Ethiopian innovator).

27
Concepts of Foreign Exchange Market
 A market for the trading of currencies, for example, one
may buy dollars or sell pounds on a For-ex market. For-
eign exchange is one of the largest and most liquid mar-
kets in the world. Trading occurs over-the-counter, and
most of the major players are governments, banks, and
speculators.
 Exchange Rate: the price of one currency in terms of
another. In this course, unless otherwise indicated, the
exchange rate is defined to be the domestic currency
price of one unit of foreign currency. E.g., the exchange
rate between the Ethiopian Birr (ETB) and the Euro (€)
is S (ETB/€) = 28. The price of one Euro is 28
Ethiopian Birr.

28
 Higher S implies the Ethiopian Birr depreciates in its
value. Say, if S changed to S = 29, it now takes more
Ethiopian Birr to buy one Euro. It promotes export and
discourages import
 Lower S implies the Ethiopian Birr appreciates in its
value. That is, the foreign currency now costs less.

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Driving and Restraining Forces Affecting Global
Marketing
Driving Forces
1. Technology: Technology is truly “stateless”, there are
no cultural boundaries limiting its application.
2. Regional Economic Agreements:NAFT
3. Market Needs and Wants
4. Transportation and Communication Improvements:

30
5. Product Development Costs: The pressure for global-
ization is intense when new products require major in-
vestments and long periods of development time. The
pharmaceuticals industry provides a striking illustration
of this driving force.. AIRBUS

31
6.Quality: Global marketing strategies can generate
greater revenue and greater operating margins, which, in
turn, support design and manufacturing quality.
7.World Economic Trends: First, growth has created mar-
ket opportunities that provide a major incentive for
companies to expand globally.

At the same time, slow growth in a company's domestic

market can signal the need to look abroad for opportuni-
ties in nations or regions with high rates of growth.

32
 Leverage: A global company possesses the unique op-
portunity to develop leverage. Leverage is simply some
type of advantage that a company enjoys by virtue of the
fact that it conducts business in more than one country.
Types of leverage

 Experience transfers: A global company can leverage

its experience in any market in the world. It can draw on
management practices, strategies, products, advertising
appeals, or sales or promotional ideas that have been
tested in actual markets and apply them in other compa-
rable markets.

33
 Scale economies: The global company can take ad-
vantage of its greater manufacturing volume to ob-
tain traditional scale advantages within a single fac-
tory. Also, finished products can be produced by
combining components manufactured in scale-effi-
cient plants in different countries. Cost per unit be-
comes less

34
 Resource utilization: A major strength of the global com-
pany is its ability to scan the entire world to identify people,
money, and raw materials that will enable it to compete most
effectively in world markets.

 Global strategy: A global strategy’ is built on an informa-

tion system that scans the world business environment
to identify opportunities, trends, threats, and resources.
When opportunities are identified, the global company
leverages its skills and focuses its resources to create
superior perceived value for customers and achieve
competitive advantage.

35
Restraining Forces
1. Management Myopia and Organizational Culture: A
company that is "nearsighted" and ethnocentric will not
expand geographically. Executives and managers at suc-
cessful global companies have learned how to integrate
global vision and perspective with local market initiative
and input.

2. National Controls and Barriers: The only way Global

companies -can overcome these barriers is to become
"insiders" in every country in which they do business.

36
Management Orientations (EPRG)
A. Ethnocentrism Orientation: The ethnocentric orienta-
tion means company personnel see only similarities in
markets and assume the products and practices that suc-
ceeded in the home country will, due to their demon-
strated superiority, be successful anywhere.

they adhere to the notion that the products that succeed

in the home country are superior and, therefore, can be
sold everywhere without adaptation.

37
B. Polycentrism Orientation: The term polycentric de-
scribes management’s often-unconscious belief or as-
sumption that each country in which a company does
business is unique. This assumption lays the ground
work for each subsidiary to develop its own unique
business and marketing strategies in order to succeed;
the term multinational company is often used to describe
such a structure.
C. Region-Centrism and Geo-Centrism Orienta-
tions: In a company with a region-centric orienta-
tion, management views regions as unique and
seeks to deep an integrated strategy. For example, a
U.S. company that focuses on the countries in-
cluded in the North American Free Trade Agree-
ment (NAFTA) the United States, Canada, and
Mexico has a Regiocentric orientation

38
D. Geocentric orientation A company with a geocentric
orientation views the entire world as a potential market
and strives to develop integrated world market strate-
gies.

The geocentric orientation represents a

synthesis(combination) of ethnocentrism and polycen-
trism; it is a “worldview” that sees similarities and dif-
ferences in markets and countries and seeks to create a
global strategy that is fully responsive to local needs and
wants.

39
Stages of International Marketing Involvement
1. No Direct Foreign Marketing: A company in this stage
does not actively cultivate customers outside national
boundaries; however, this company’s products may
reach foreign markets.

Sales may be made to trading companies as well

as foreign customers who come directly to the firm.

40
2. Infrequent Foreign Marketing: Temporary sur-
pluses caused by variations in production levels
or demand may result in infrequent marketing
overseas.

no intention of maintaining continuous market

representation.
3. Regular Foreign Marketing: A firm may employ
foreign or domestic overseas middlemen or it
may have its own sales force or sales sub-
sidiaries in important foreign markets. The primary
focus of operations and production is to service do-
mestic market needs. However, as overseas demand
grows, production is allocated for foreign markets,
and products may be adapted to meet the needs
of individual foreign markets.
41
4.International Marketing: Companies in this stage are
fully committed and involved in international mar-
keting activities. Such companies seek markets all
over the world and sell products that are a result of
planned production for markets in various countries.
This generally entails not only the marketing but
also the production of goods outside the home
market. At this point a company becomes an inter-
national or multinational marketing firm.

42
5.Global Marketing: At this stage, companies treat the
world, including their home market, as one market.

Market segmentation decisions are no longer focused on

national borders. Instead, market segments are de-
fined by income levels, usage patterns, or other fac-
tors that often span countries and regions.

Often this transition from international marketing to

global marketing is catalyzed by a company's cross-
ing the threshold of more than half its sales rev-
enues coming from abroad.

43
Benefits Of International Marketing
 Survival
 Growth of overseas markets
 Sales and Profits
 Diversification of risk
 Inflation and price moderation
 Employment creation
 Enhance Standards of living

44
Chapter – II
International Marketing Environment
evaluate the factors affecting international market selec-
tion and the diversity in the environments of these fac-
tors must be considered before coming to any decision.
1. Economic Environment
The world Economy
 The world economy has changed profoundly since
World War II. Perhaps the most fundamental change is
the emergence of global markets; responding to new op-
portunities, global competitors have steadily displaced
local ones.

45
 The real secret of the economic success of Germany and
Japan is the fact that business leaders and policy makers
focus on the world economy and world markets; a top
priority for government and business in both Japan and
Germany has been their competitive position in the
world.

 Thegrowth of commerce via the Internet diminishes the

importance of national Barriers.

46
Economic Systems
 There are three types of economic systems capital-
ist, socialist, and mixed. This classification is based
on the dominant method of resource allocation mar-
ket allocation, command or central plan allocation,
and mixed allocation, respectively.

A. Market Allocation
A market allocation system is one that relies on con-
sumers to allocate resources. Consumers "write" the
economic plan by deciding what will be produced
by whom. The market system is an economic
democracy--citizens have the right to vote with their
pocketbooks for the goods of their choice.
47
 Therole of the state in a market economy is to promote
competition and ensure consumer protection.

B. Command Allocation
 In a command allocation system, the state has broad
powers to serve the public interest. These include decid-
ing which products to make and how to make them.

 Consumers are free to spend their money on what is

available, but decisions about what is produced and,
what is available are made' by state planners. Because
demand exceeds supply, the elements of the marketing
mix are not used as strategic variables.

48
C.Mixed System
 There are, in reality, no pure market or command alloca-
tion systems among the world's economies. All market
systems have a command sector, 'and all command sys-
tems have a market sector; in other words, they are
"mixed."

49
Degrees of Economic Cooperation
1.Free Trade Area: A free trade area (FTA) is a group of
countries that have agreed to abolish all internal barriers
to trade among themselves.

 Countries that belong to a free trade area can and do

trade policies with third countries.

 The system discourages importing goods in the member

country with the lowest tariff for shipment to countries
within the area with higher external tariffs.

50
2. Customs Union: Though similar -to a free-trade area in
that it has no tariffs on trade among members, a customs
union has the more ambitious requirement that members
also have a uniform tariff on trade with nonmembers.

 Thus, a customs union is like a single nation, not only in

internal trade, but also in presenting a united front to the
rest of the world with its common external tariff.

 Its advantage lies in making the economic integration

stronger and avoiding the administrative problems of a
free-trade area.

51
3. Common Market: A common market goes beyond the
removal of internal barriers to trade and the establish-
ment of common external barriers to the important next
stage of eliminating the barriers to the flow of factors
(labor and capital) within the market.

 It
seeks to coordinate economic and social policy within
the market to allow free flow of capital and labor from
country to country. Thus, a common market creates an
open market not only for goods but also for services and
capital.
EU

52
4. Economic union: The full evolution of an economic
union would involve the creation of a unified central
bank; the use of a single currency; and common policies
on agriculture, social services and welfare, regional de-
velopment, transport, taxation, competition and mergers,
construction and building, and so on.

• The European Union (EU) is approaching its target of

completing most of the steps required to create a full
economic union, but major hurdles remain.

53
 Stage of Integra- Abolition of Tar- Common Tariff & Removal of Re- Harmonization of
tion iffs & Quotas Quota System strictions on Fac- Economic, Social
tor Movements & Regulatory
Policies

Free trade area Yes

No No No
Customer union Yes
Yes No No
Common market Yes
Yes Yes No
Economic union Yes
Yes Yes Yes

54
2. Political Environment
 The political environment of international marketing includes any
national or international political factor that can affect a com-
pany’s operations. A factor is political when it is derived from the
government sector.
 In this regard, we can categorize the international political envi-
ronment in to three categories:

 the host country (foreign),

 the international politics and

 the home country (domestic) political environment. Below, we

shall try to see the dimension of each in brief.

55
International Political Environment
 It involves political relations between two or more countries.

 The international company inevitably becomes somewhat in-

volved with the host country’s international relations, no matter
how neutral it may try to be.

 inaddition to screening the host country’s environment, a com-

pany also needs to look into international happenings and as to
how the relations are going on in the host countries it operates its
business.

56
Home country political environment
 The firm’s home country political environment can constrain its
international operations as well as its domestic operations.

 At first glance, it would seem that domestic politics should pose

no threat and that a company should have minimal problems at
home. This is often not the case.

 For instance, the home country politics can limit the countries
that the home country international firm may operate.

57
 Apart from this, domestic criticism of the company’s interna-
tional activities may largely come from imports and direct in-
vestment abroad create unemployment at home.

 There may be many government regulations that interferes with

the free flow of trade and the actions taken by home country may
be motivated more by political consideration than by sound eco-
nomic reasoning. For decades Taiwan has refused to trade with
China even though China has what Taiwan needs: cheap labor.

58
Host country political environment
 These are the politics of foreign country within which a firm run
business. This part of international business can range from being
favorable and friendly to hostile and unfavorable.

 The host government most often views imports negatively claim-

ing that imports adversely contribute to the host country’s balance
of payment. For example it is for such and like reason that the
Ethiopian government charge higher tariff on products that are as-
sumed to be luxurious and non essential products that can be pro-
duced locally.

59
A government encouragement and discouragement of foreign in-
vestment is usually dictated by consideration of balance of pay-
ments, economic developments and political realities.

 Balance of payment problem results in policies favoring invest-

ment that improve the country’s export, stimulate employment.

 Therefore, any company doing business outside its home country

should carefully study nature of government in the target country
and analyze salient issues arising from the political environment.

60
Political Interventions & Risks
 Political intervention/risk can be defined as the risk of a change in
government policy that would adversely impact a company’s abil-
ity to operate effectively and profitably

61
 Entry Restrictions: if allowed to enter the country, the firm may
be restricted as to the industries it may enter. It may be prohibited
from acquiring national company or having 100% ownership.
 For e.g. the Ethiopian government has not allowed foreigners to
inter in the financial business of the country such as banking and
insurance institutions so far.
 Restrictions may take different forms. For e.g. import restrictions

62
 Price Controls: For the sake of the public interest in dif-
ficult economic times, countries often resort to price
controls. For Price controls may become special prob-
lems if they are imposed randomly-for e.g. if the price
limit is placed on a company’s finished product but the
prices of the raw materials used in the production of that
product are left to the market forces.

63
 Quotas & Tariffs: Whatever the case is taxes (tariffs) may be im-
posed for various reasons. It may be an indirect tool to warn for-
eigners that they are no longer wanted in a country any more.
 Or when a country is in need of new revenues for conducting some
activities, an additional tax burden on foreign companies or on im-
ports appears not only politically prudent but economically conve-
nient.

64
 Exchange control: many countries run chronic deficits in their
balance of payments. Thus they may ration the use of foreign ex-
change according to their priorities. Foreign firms may be low on
that priority list and have difficulty in getting foreign exchange for
needed imports of profit repatriation. Similarly, restrictions may
be placed on the remittance of profit from country involving hard
currency. Such actions may be parts of the effort to encourage
domestic industry.

65
 Nationalization refers to the transfer of the entire industry within a
given country from private to public ownership, without discrimi-
nation as to foreign ownership or local ownership.

 Confiscation is the process of a government's taking ownership of

foreign property without compensation.

 Expropriation differs somewhat from confiscation in that there is

some compensation, though not necessarily just compensation.

 Whereas domestication is a process by which controls and restric-

tions are placed on a foreign firm gradually to reduce control of
the owners.

66
 Thus, foreign companies relinquish control and ownership, either
completely or partially, to the nationals. The result is that private
entities are allowed to operate the confiscated or expropriated
property.

67
 When situations worsened in South Africa and political pressures
mounted at home, Pepsi sold its South African bottling operation
to local investors, and Coca-Cola signaled that it would give con-
trol to a local company. General Motors followed suit by selling
its operations to local South African management in 1986. Shortly
thereafter, Barclays Bank made similar moves.

68
Indicators of Political Instability and Risk READING AS-
SIGNMENT

69
3. The International legal Environment
 Government sets rules and regulations to normalize the business
activities under its territories while safeguarding the society’s
wellbeing.

 Many of the rules set by government may have an adverse effect

on the business. Hence forth, the business firm should be aware of
the government’s rules and regulations and accordingly abide by
it.

70
Bases for legal system READING ASSIGNMENT

71
Intellectual Property: Patents and Trademarks
• Intellectual property is a legal definition of ideas, inven-
tions, artistic works, and other commercially valuable
products created out of one’s own mental processes.

A patent is a government grant of certain rights given to

an inventor for a limited time in exchange for the disclo-
sure of the invention.

72
A trademark relates to any work, name, or symbol,
which is used in trade to distinguish a product from
other similar goods (e.g., "Coke"). Trademark laws are
used to prevent others from making a produced with a
confusingly similar mark.

A copyright protects the writings of an author against

copying literary, dramatic, musical, and artistic-and
more recently computer software-works are included
within the protection of copyright laws.

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 The term trade secret refers to know-how (e.g., manufacturing
methods, formulas, plans, and so on) that is kept secret within a
particular business. This knows how generally unknown in the in-
dustry, may offer the firm a competitive advantage

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 Counterfeiting

Counterfeiting is the practice of unauthorized and illegal copying

of a product. In essence, it involves an infringement on a patent or
trademark or both. It is spurious trademark, which is identical
with, or substantially indistinguishable from, a registered trade-
mark.

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Gray Market
 Gray market exists when a manufacturer ends up with an unin-
tended channel of distribution that performs activities similar to
the planned channel-hence the term parallel distribution.

 Through this extra channel, gray market goods move, internation-

ally as well as domestically. Products notably affected by this
method of operation include watches, cameras, automobiles, per-
fumes, and electronic good.

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4. Socio – Cultural Environment
 It is the most basic cause of human wants and behavior. It is a set
of symbols and artifacts created by a society and handed down
from generation to generation as determinants and regulators of
human behavior.

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Culture and Its Characteristics
 Culture is prescriptive: It prescribes the kinds of behavior con-
sidered acceptable in the society. The prescriptive characteristics
of culture simplify a consumer’s decision-making process by lim-
iting product choices to those, which are socially acceptable.

 Culture is socially shared: Culture, out of necessity, must be

based on social interaction and creation.

 Culture facilitates communication:

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 Culture is learned: Culture is not inherited genetically-it is
learned and acquired. Socialization or enculturation occurs when
a person absorbs or learns the culture in which he or she is raised.
The process of acculturation occurs when a person sets for a
move to some other country and start to live there.

 Culture is subjective: People in different cultures often have dif-

ferent ideas about the same object. What is acceptable in one cul-
ture may not necessarily be so in another. In this regard, culture is
both unique and arbitrary.

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 Culture is enduring: Because culture is shared and passed along
from generation to generation, it is relatively stable and somewhat
permanent. Old habits are hard to break, and people tend to main-
tain their own heritage in spite of a continuously changing world.

 Culture is cumulative Each generation adds something of its own

to the culture before passing the heritage on to the next genera-
tion.

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 Culture is dynamic: culture is constantly changing-it adapts itself
to new situations and new sources of knowledge.

 Hence, a marketer's task is to identify how the culture affects the

product's acceptability (positively or negatively), and then to de-
sign the product in such a way that it is commensurate with the
culture.

a marketer should also keenly look in to any cultural shifts in or-

der to find out if any kind of threat for the firm's product (to keep
up its products in line with the new trends of culture) or opportu-
nity such as for developing new product emerges thereof.

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Culture and Marketing
 Culture influences every aspect of marketing. A marketing ori-
ented firm should make decisions based on customer perspectives.
 the products that people buy, the attributes that they value are all
culture-based choices.

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5. Technological Environment
 The type of technology in use, the level of technological develop-
ments, the speed with which new technologies are adopted and dif-
fused the type of technologies that are appropriate, the technology
policy etc are important to business. Moreover, advances in tech-
nology may also cause relocation of production.

 For example, several companies in the advanced countries have

shifted the T.V. production to developing countries to take advan-
tage of the cheap labor. However, when further technological de-
velopments reduced the labor content of the T.V some firms relo-
cated their production back to the developed countries.

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