What is marketing?

Almost every marketing textbook has a different definition of the term marketing.
The American Marketing Association (AMA) uses the following: The 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. From this
definition, we see that:

Marketing involves an ongoing process. The environment is dynamic. This means

that the market tends to changewhat customers want today is not necessarily what
they want tomorrow. For example, sales of beef are declining in the United States
because consumers have become health oriented. Similarly, Tupperware parties are
less popular today than they once were because there are fewer housewives who do
not work outside the home.

This process involves both planning and implementing (executing) the plan.

Some of the main issues involved include:

o Marketers help design products, finding out what customers want and what
can practically be made available given technology and price constraints.

o Marketers distribute productsthere must be some efficient way to get the

products from the factory to the end-consumer.

o Marketers also promote products, and this is perhaps what we tend to think of
first when we think of marketing. Promotion involves advertisingand much
more. Other tools to promote products include trade promotion (store sales,
coupons, and rebates), obtaining favorable and visible shelf-space, and
obtaining favorable press coverage.

o Marketers also price products to move them. We know from economics that,
in most cases, sales correlate negatively with pricethe higher the price, the
lower the quantity demanded. In some cases, however, price may provide the
customer with a signal of quality. Thus, the marketer needs to price the
product to (1) maximize profit and (2) communicate a desired image of the
product.
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 o Marketing is applicable to services and ideas as well as to tangible products.
For example, accountants may need to market their tax preparation services to
consumers.

THE MARKETING ENVIRONMENT

ELEMENTS OF THE ENVIRONMENT:

The marketing environment involves factors that, for the most part, are beyond the
control of the company. Thus, the company must adapt to these factors. It is important to
observe how the environment changes so that a firm can adapt its strategies appropriately.
Consider these environmental forces:

Competition:

Competitors often creep in and threaten to take away markets from firms.
For example, Japanese auto manufacturers became a serious threat to American car
makers in the late 1970s and early 1980s. Similarly, the Lotus Corporation, maker of
one of the first commercially successful spreadsheets, soon faced competition from
other software firms. Note that while competition may be frustrating for the firm, it is
good for consumers. (In fact, we will come back to this point when we consider the
legal environment). Note that competition today is increasingly global in scope.

Economics:

Some firms in particular are extremely vulnerable to changes in the economy.

Consumers tend to put off buying a new car, going out to eat, or building new homes
in bad times. In contrast, in good times, firms serving those needs may have difficulty
keeping up with demand.

Political:

Businesses are very vulnerable to changes in the political situation. For

example, because consumer groups lobbied Congress, more stringent rules were made

2|International Marketing
 on the terms of car leases. The tobacco industry is currently the target of much
negative attention from government and public interest groups. Currently, the desire
to avoid aiding the enemy may result in laws that make it more difficult for American
firms to export goods to other countries.

Legal:

Firms are very vulnerable to changing laws and changing interpretations by

the courts. Firms in the U.S. are very vulnerable to lawsuits. McDonalds, for
example, is currently being sued by people who claim that eating the chains
hamburgers caused them to get fat. Some impacts of the legal environment.

Firms are significantly limited in what they can do by various lawssome laws, for
example, require that disclosures be made to consumers on the effective interest rates
they pay on products bought on installment. A particularly interesting group of laws
relate to antitrust. These laws basically exist to promote fair competition among firms.
Some principles involved here include:

o Collusion: Firms may not conspire to fix prices (agree that they will not sell
below an agreed upon price) or reduce services.

o Predation: Firms may not sell their products below their cost of production
for the purpose of driving competitors out of business so that they, themselves,
can raise prices when competition is reduced.

o Market share: Firms which have an unacceptably large market share may be
broken up by court order so that many smaller firms will be around to
compete. (This is what happened to AT&T, and at times, IBM has been
worried about this prospect). Tying: A firm that controls a valuable product
may not require the consumer to buy a more commonplace one to get the
scarce product. For example, Intel controls many of the newest
microprocessors (e.g., Pentium IV). Intel also makes motherboards for
computers; however, motherboards are made by a lot of firms. Intel would be
thought to abuse its effective monopoly power if it required consumers to buy
a motherboard in order to get its newest chips.

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 Technological:

Changes in technology may significantly influence the demand for a product.

For example, the advent of the fax machine was bad news for Federal Express. The
Internet is a major threat to travel agents.

Social:

Changes in customs or demographics greatly influence firms. Fewer babies

today are being born, resulting in a decreased demand for baby foods. More women
work outside the home today, so there is a greater demand for prepared foods. There
are more unmarried singles today. This provides opportunities for some firms (e.g.,
fast food restaurants) but creates problems for others (e.g., manufacturers of high
quality furniture that many people put off buying until marriage). Today, there are
more blended families that result as parents remarry after divorce. These families
are often strapped for money but may require duplicate items for children at each
parents residence.

Environmental scanning:

Its helps the firm understand developments in the market. Such developments may
involve changes in the market place due to social trends (e.g., Gerber, a manufacturer of baby
products, faces a serious challenge with declining U.S. birth rates), technology (e.g., VCR
makers are threatened by DVD players), or new or potential competitors (e.g., Internet
service providers are being threatened by increasing marketing efforts from MSN). Note that
environmental scanning must be performed continuously, since environmental change does
not cease.

Economic cycles:

The economy goes through cycles. In the late 1990s, the U.S. economy was quite
strong, and many luxury goods were sold. Currently, the economy is somewhat weak, and
many firms are facing the results. Car makers, for example, have seen declining profit
margins (and even losses) as they have had to cut prices and offer low interest rates on
financing. Generally, in good economic times, there is a great deal of demand, but this

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introduces a fear of possible inflation. In the U.S., the Federal Reserve will then try to prevent
the economy from overheating. This is usually done by raising interest rates. This makes
businesses less willing to invest, and as a result, people tend to make less money. During a
recession, unemployment tends to rise, causing consumers to spend less. This may result in a
bad circle, with more people losing their jobs due to lowered demands. Some businesses,
however, may take this opportunity to invest in growth now that things can be bought more
cheaply.

About VIP

V.I.P.
VIP Industries Ltd. is the flagship company of the DG Piramal Group. Established in 1971, it
is a leading luggage manufacturing company, which manufactures strollys, suitcases,
executive cases, backpacks and other hard and soft-sided luggage. It owns reputed brands
such as VIP, Alfa, Footloose and Buddy. It has two manufacturing units in India and various
subcontract operations in China and Indonesia. Currently, it has a workforce of nearly 2000
people.

VIP is a well-known and reputed brand name in India.VIP has been increasing its presence in
world markets in the luggage industry. The company has operations across the globe in five
continents. It has offices in the USA, South Asia, Middle East, Africa and Europe,
Worldwide, VIP products are sold across 1300 retail outlets in 27 countries. Currently, it
exports its product to West Asia, Europe, the USA, and select African and South East Asian

5|International Marketing
countries.

Product Portfolio
The product portfolio of VIP Industries Ltd. today includes a diverse range of hard-sided and
soft-sided luggage. The range includes strollys, suitcases, duffles and overnight travel
solutions, executive cases, backpacks, and even school bags. VIP Industries Ltd. has
renowned brands like VIP, Alfa, Footloose, and Buddy covering the entire spectrum of travel
products. VIP Industries Ltd. has a license and markets Delsey products in India and SAARC
countries.
These products reach over 8000 retail outlets across the country. Outside India, we have a

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network of over 1300 retailers across 27 countries. Our range includes injection moulded PP
cases; vacuum formed ABS cases as well as soft-side luggage in nylon, polyester and EVA
material.
Luggage Hard suitcase, soft Polypropylene,
suitcase, polycarbonate,
hard upright, soft ABS nylon.
upright, cabin
luggage.
Travel Bags Totes, travel bag, Nylon, leather
trekking
bag, trolley tote.
Backpacks School bag, trekking Nylon
bag, laptop
backpack.
Executive Briefcase, soft Nylon, synthetic
bag / executive bag, (foam),
Portfolio laptop bag, Laptop polyurethane,
trolley, leather.
messenger bag
Belts Pure Leather Leather
Reversal belt with
reversible buckle &
regular buckle
Regular belt with
fancy buckle &
regular buckle
Casual belts
Wallets Pure Leather Leather
3 to 10 credit card
holder with pockets
for coins and

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 identity card
Card holder with
pockets for coins
Zip pockets, 2 fold
wallet with pockets
for coins and cards 3
fold wallets with
pockets for coins
and cards
Credit card holder
with 10 to 20
pockets

VIP enjoys a legacy in India as far as the luggage category is concerned. How is the brand
planning to take this legacy forward? VIP has always been a market leader and a category-
defining brand. The growth of the brand continues as it remains relevant to the current
generation. The major strength behind VIP is the understanding of the Indian consumer; and
as the consumer has evolved, the product has also evolved. The basic strategy the brand has
been working on is bringing innovations and presenting it to the mass market. Over the past
three years, we have democratised the four-wheeler luggage market in India. Four-wheelers
have always existed in the market, but the benefits of four-wheelers have now been
communicated to the Indian consumer and those benefits were incorporated to the product
with a consideration of the Indian travel conditions. Currently we are seeing a global trend of
people moving from soft luggage to polycarbonate luggage. We are taking the lead in India in
polycarbonate luggage and launched Verve. This brand helps us connect with the new
consumer. The range of polycarbonate luggage is going to revolutionise the luggage category
in India and slowly the market will follow VIP and move to this. All the latest communication
from VIP is looking to connect to the young consumer, and is around the benefits of these
stylish polycarbonate bags. We are not a nostalgic brand and from the older generation. We
are moving with the times. More products are in the offing soon. How are the five brands in
the portfolio positioned differently? What is the TG for each? All the five brands are

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standalone brands and not a subset of VIP. We have the premium international brand from
England - Carlton. We are distributors for this brand in India. It is a distinct product which is
designed for the European market. With this brand we are targeting the premium end of the
market. VIP is in the middle of the market. This is in the mass premium segment as well as in
the popular market. It is a leadership brand and has the largest market share. It brings
breakthrough innovations for the benefit of Indian consumers. We are looking to target
younger consumers in various ways. Skybags is the stylish offering. Luggage is not seen as a
stylish product. People spend a lot on watches, clothes, mobile phones and other accessories
but are not bothered about the kind of luggage they are carrying. Skybags agenda is to
increase the style quotient of consumers. It has printed and coloured bags. We didnt expect
the overwhelming response we received from these bags. The Indian consumer has taken to
this style and the bold design. We are looking to launch more designs and looking to enter the
college backpacks, laptop bags categories here. With Skybags, we are not looking at the
youth, but the young workforce - people between 25 and 35 years. This is a very different
consumer. Skybags is not a new brand, but we reinvested in the brand three years ago. We got
in John Abraham as brand ambassador two years ago as he is an inspiration for our target
group. He has proven himself - that is what the young consumer is about these days. They are
globally travelled and want the best of the global products. That is why the Skybags - John
association makes sense. Aristocrat is our value for money product. People have bought it as
it is a big brand with strong equity. Alfa was earlier a sub-brand of VIP. Now it is a
standalone brand that stands for durability. It plays the penetration game and looks to convert
people investing in non-branded luggage to branded luggage. Does VIP Industries have
different creative agencies to handle the different brands? Ogilvy handles all the brands as
of now. We think that the category understanding is very important and that is why partnering
with one agency handling all the brands. Are there insights you can share on consumers
moving towards branded luggage? The branded category was at around 20 to 25 per cent (of
the total luggage market) two to three years ago. It has grown to 35 to 40 per cent now thanks
to these brands and the advent of competition into India. VIP Industries is the market leader
with 60 to 65 per cent share across all the brands in the organised segment. Competing brands
are available only in certain pockets and price points and cant compete with Aristocrat and
Alfa - the two are at value price points where brands cannot afford to compete with us.
Another strength that gives us our high market share is our distribution - which is huge. We
are available in a lot of towns which give us strength to hold up the brands without
cannibalising each other. We have seen the launch of brands like Giordano, American
9|International Marketing
Tourister and Samsonite in the segment over the past few years. How has VIP looked to
compete? Competition-wise, there are premium brands at the high end. Lots of players have
come and gone. Roncato, Giordano entered the market and left it. Our stable competition
would be American Tourister and Samsonite. They have really helped the category grow,
benefits us the most. Anyone looking to advertise in the luggage space is most welcome as
finally it helps us increase the branded pie size. If I go by the market share, 65 out of 100
times people will purchase a bag from VIP Industries. Once people enter the branded
segment, we are going to benefit as we are the market leaders and know that our offerings,
price equations, distribution will prevail. So other brands are most welcome to advertise.
Unfortunately only one big player other than us in this market is currently advertising. What
presence does VIP have in the semi-urban and rural markets? How much does each contribute
to sales? The travel market can be of three different kinds depending on the duration of the
travel. There is short haul travel (daily, routine); long haul (for a wedding or a vacation); and
permanent travel (a girl getting married and shifting, or simply someone shifting). If you look
at the rural market, there is a lot of permanent shifting through marriages etc, but the other
two types of travel are very limited. In SEC E, travel drops down by 35 per cent compared to
the other SECs. When you go below SEC E, travel is even more limited, so luggage is not
very huge. So viability becomes a big problem. We are in the rural market through the
marriage market and Alfas taking care of this. Girls moving in to houses in the rural area
dont normally get a cupboard. Their needs will not do with a soft bag; they need trunks. Alfa
bags step in to cater to this need. Other than this, as travel penetration improves, we will enter
the rural market. How much does e-commerce contribute to VIPs total sales? Is this
growing? We started our e-commerce portal a year ago. We have a website called
buytravelbags.com which sells many brands, but mainly VIPs brands. It is a one-stop
solution for all kind of bags; from premium to affordable. We have more than 2700 units that
can be bought from the site. We have a tie up with backend suppliers and deliver bags
anywhere in India. In terms of percentage of total sales, e-commerce would contribute one to
two percent. This is not very big currently, but we see it getting bigger as we go ahead. We
will be looking to promote the website in the near future. What is the brands retail presence?
How is it growing? We sell through seven to eight verticals, one of which is traditional multi-
brand outlets. We have got three types of exclusive outlets The Carlton Store, VIP Lounges
and a VIP Industries store. Weve got more than 600 exclusive stores. We also sell through
lifestyle stores, hypermarkets, army canteens and wholesale networks. So, almost every
possible point of sale is covered. Are people moving towards premium bags? They are not
10 | I n t e r n a t i o n a l M a r k e t i n g
exactly moving to premium bags, but are moving to branded bags for sure. We have tried to
do a lot of correlation between sales data and travel data. We find that the growth in airline
travel and the sale of branded luggage sales are directly interlinked. The correlation
coefficient for this is almost 0.95. Along with growth in airline travel, international exposure
and a lot of innovative work with branded goods has helped the industry grow. How big is the
childrens segment for VIP? We had a brand called Buddy till 2007-08. We had tried to tap
the young kids school bags market through this. The segment is a different ball game
altogether, for us to participate in currently. We will look at re-entering this market at the
right time. We may evaluate something which is for the long haul travel of the kid instead of
school bags. This has more adjacency for the brand. What are the marketing plans over the
next year? We are looking to launch a lot of new products, which cannot be revealed
currently. We recently launched a niche eco-friendly bag called Acura. People are getting
conscious about carbon footprint. Our Acura range in partnership with Du-Pont is very eco-
friendly. We are also launching new polycarbonate range under VIP and Skybags. Advertising
will continue on the brands this year as per our regular marketing calendar. Quarter three is a
big travel season coming. We are also looking to launch a range of luggage for women called
Diva, given the rise in women travellers. These are lightweight bags specially designed for
women travellers. As a market leader, we are looking to enter more niche markets and in due
course make them bigger. VIP Industries' 'Happy Journey' BTL campaign Shahid Kapoor
in VIP's advertisements VIP Skybags' association with John Abraham to associate with the
youth.

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12 | I n t e r n a t i o n a l M a r k e t i n g
13 | I n t e r n a t i o n a l M a r k e t i n g
 Travel Security leg wallet, hip money
Accessorie belt, neck safe pouch,
s secret wallet, shoe bags,
passport control with 7
compartments, hands free CD
case, MP3 player case, iPod
case, eye glass holder, cell
pouch, foldable bag, key lock,
number lock, luggage tag,
travel pillow, toilet kit, luggage
strap, key pouch, travel
security with number lock etc
Handbags Office / Everyday bag, mess Leather,
bag, shopping bag, leather bag, Nylon
leather purses, leather wallets,
jewel bag, fancy, vanity hard,
vanity soft

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The company entered the nineties with four sub-brands, segmented on form and customer
profile. Market Positioning :
Skybags - soft luggage range, for the business traveler.

Alfa - economy range, for the first-time buyer or the up grader to the branded
segment.

VIP range - priced twice as much as Alfa, for the stereotypical Indian luggage
customer.

Odyssey - for the exclusive, lifestyle buyer.

VIP Industry is Asias largest luggage manufacturers & worlds second largest luggage
manufacturer. It has some of the finest brands & has been ranked second in the recent brand
awareness survey. The growth rate and sales in each of these brands in 1992 indicate the
skewed growth towards the upper end of the market.
BRAND Contribution Growth Rate
to sales (%) (%)
Skybags 10 35
Alfa 40 3
VIP range 35 10
Odyssey 15 30

These all brands are found in the lower segment. It has manufacturing facilities in Nasik,
Nagpur, Jalgaon & Sinner. It proposes to start manufacturing units in Sri Lanka & other

15 | I n t e r n a t i o n a l M a r k e t i n g
SAARC countries. VIP manufactures 280 models. The manufacturing long-term objective
capacity is 12000 units per day. VIP has a strong 4000 dealer network in place.
Long Term Objectives:
To achieve 50% of the turn over from exports & become a major player in the
International market by the year 2005.

To get a major chunk of the unorganized sector through their product MANTRA.

Short Term Objectives:

To have a volume & value growth of 15%.

Segmentation
VIP is catering to income group of 5000-10000 for the standard & popular segment product
& their premium product is targeted to an income group of 10000+. They are catering to all
the four zones.

Distribution Network
VIP has 21 branches & a strong dealer network of approximately 5000.

Market Distribution in India

Sales Channel Share (%)
Army canteens 30-40%
Luggage shops 60%

Market Distribution World over

Sales channel Share (%)
Department Stores 41
Luggage shops 21
Catalogue stores 16
Variety stores 15
Mail order 2
Others 5

Product Differentiation
VIP has made a dent into the unorganized sector as the only branded product present in the
standard segment.

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 Premium Segment :-

There is hardly any differentiation in the product offered by VIP. Product is almost same as to
the product of their competitors Samsonite in features. The differentiation is only in terms of
prices (VIP is @ 20% cheaper than Samsonite.)
Popular Segment:-

It is the segment where VIP makes money. This segment provides a better margin. The
luggage is of the frameless type & the company has a large market share. The product is
promoted as sturdy & enduring hard knocks of travel in India.

Standard Segment:-

Product has the bare minimum features & is differentiated on low prices. Product is promoted
as value for money.

Positioning
It positions itself as an A-Z luggage company without diffusion of the mother brand.
V.I.P. is looking at tapping the lucrative European market where people are buying more
luggage

Strategy
VIP has established itself in the Indian market using product innovations, stress on quality
and brand building. VIP was the first to introduce non reversible multi safe lock, soft grip
handle, dual action lock and central locking system. These innovations together with brand
building made VIP a market leader.

Then VIP faced the problem faced by most of the giants: the brand becoming generic to the
category and local brands eating into the share of the company.
In 1997 came a formidable threat to VIP Samsonite. With in short time Samsonite
established its presence in the luxury segment of the market. While VIP was very dominant in
the mid- segment, it had no presence in the luxury segment. Samsonite posed a major threat
to VIP and garnered a market share of about 35% in the luggage market within a short period
of time. This forced VIP to seriously reconsider its marketing strategy. To counter the threat

17 | I n t e r n a t i o n a l M a r k e t i n g
of Samsonite, VIP launched Elanza range of premium luggages. Samsonite meanwhile also
wanted to enter the popular segment (800- 2000 range). It launched the brand American
Tourister to enter this segment posing a major threat to the market leader. More over
Samsonite had an international contemporary look and appealed to the new generation than
VIP which was not perceived as a vibrant brand.

In order to attract the new generation and create a new brand identity, VIP embarked on a
rebranding exercise. The usual ads of VIP was appealing to the middle class and focusing
more on emotion. The Kal Bhi, Aaj Bhi ads were very powerful and appealed to the
middleclass. But since the consumers changed, in order to succeed, the brand had to have a
contemporary look.

The new strategy of VIP is focusing on capturing or owning the concept of Travel. The
logo was changed to a more contemporary logo and the ads were changed to communicate
the new positioning. The agency thought of the most appropriate moments of travel and
decided that the time of departure are the most critical constituents of travel. The ads aimed
to tie the brand to Travel. Thus originated the Bye- Bye campaign with a very youthful
imagery that appealed more the new generation travelers. The baseline was changed to
Happy journey thus attempting to own the concept of traveling.

The new campaigns were supported by new ranges of products. The sub brands of VIP
include Delsey (international brand from France) to capture the premium segment, Footloose:
the trendy bags for the youth, Buddy: school bags and Alfa: value for money segment.
VIP is a market leader that is trying hard to retain its leadership position. It had failed to
create barriers for competition by keeping many categories open for competition to enter.
Now also leather bag category is now seeing lot of action with big players like Hidesign
taking the lead. VIP does not have a presence in this segment. But with its strong brand
equity and ability to change with the consumer trends will help VIP in its future battles.

Advertising Strategy
Their advertising strategy is to promote image of sturdiness, value for money & toughness.
Plan to spend RS 20 cr. for the same. Its price ranges from RS 225 to Rs.8000. The company
has also been in fresh talks with French company Delsey, for marketing the latter's premium
luggage range.
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Pricing Strategy
Market Segmentation
Segment Price range Market share
(Rs) (%)
Premium 1500+ 15
Popular 700-1500 30

Standard 300-700 55
The premium segment is at the top of the rung in India. It is followed by the popular segment
which is slightly larger than the premium segment but smaller than the premium segment, the
latter segment is the largest and contributes to maximum sales in developing countries. In
contrast, the standard segment in the developed countries is very small.
Such constitution of the customer profile is aiding the unorganized sector in India which
manufactures low cost goods. The high quality manufacturers are finding it difficult to
penetrate the market due to high production costs. The target customers at the high end
(premium segment) form just 15% of the total customers while the low end standard segment
constitutes 55%.
The premium segment is controlled by the Apollo group (US) company, Samsonite (I). The
popular segment is dominated by the domestic giant, VIP Industries. The standard segment,
the largest segment, is serviced by VIP Industries and Universal. The unorganized players
price their products at around Rs 300 per piece.
Apart from competition and undercutting by the unorganized sector, the moulded industry is
facing a tough fight from the soft luggage segment as well. This segment has caught customer
fancy in the last few years. Even though the soft luggage segment forms just 15-20% of the
total industry. It is growing at the rate of 25% which is much higher than the moulded
luggage segment growth.
The industry majors differ in opinion on the growth rate of hard luggage or moulded luggage.
VIP Industries optimistically puts the growth rate at 10% while the multinational Samsonite
says the hard luggage market has shrunk by 4%. But, both the companies are not ready to
ignore the hard luggage market for soft luggage. Abroad, most of the luggage manufacturers
are into both hard and soft luggages. In India too, VIP and Samsonite manufacture both soft
and hard luggage.
Universally, the luggage business is seasonal in nature. In India, luggage sales depends on
two factorstourism development and on the marriage season. The marriage season extends

19 | I n t e r n a t i o n a l M a r k e t i n g
from March June and from October December. These months see good luggage sales.
Also, the domestic tourists usually plan their yearly trips during the holiday season between
April June. During this period, there is fierce competition among the luggage manufacturers
to grab the market share.
However, socio-political turmoil in the last few years has affected the Indian tourism
industry. Market sources say all such problems have retarded the cumulative annual growth
rate of the moulded luggage industry to 5%. However the Kargil issue at Kashmir has
worsened the chances of revival of the Indian tourism industry, thereby reducing the chances
of improvement in the growth rate of the luggage industry.

SWOT Analysis
1 Strengths:-

Very high brand awareness (2nd in India).

52% market share in organized sector (largest in Asia).

11% through Universal luggage.

Form 31 years it has been in this market.

It has 21 branches & a strong dealer network of about 5000 outlets.

Low raw materials cost.

Real Value for money.

Money power & aggressive management.

All plants are ISO Certified (government recognized R & D unit in Nasik).

2 Weakness:-

Less Research & Development expenditure.

3 Opportunities:-

20 | I n t e r n a t i o n a l M a r k e t i n g
 Scope to increase exports.

Economy is reviving.

Untapped lower segment area.

4 Threats:-

Worsening situation in Kashmir for tourism.

Unorganized sectors are cheaper by 25% due to less amount of excise duty.

Excess capacity in the South East Asian countries.

The players in the unorganized sector getting them organized and coming out with
branded products.

Criteria for effective marketing plans:

Marketing plans should meet several criteria:

The plan must be specific enough so that it can be implemented and communicated to
people in the firm. Improving profitability is usually too vague, but increasing net
profits by 5%, increasing market share by 10%, gaining distribution in 2,000 more
stores, and reducing manufacturing costs by 2% are all specific.

The plan must be measurable so that one can see if it has been achieved. The above
plans involve specific numbers.

The goal must be achievable or realistic. Plans that are unrealistic may result in poor
use of resources or lowered morale within the firm.

The goals must be consistent. For example, a firm cannot ordinarily simultaneously
plan improve product features, increase profits, and reduce prices.

Consumer Behavior:

21 | I n t e r n a t i o n a l M a r k e t i n g
 Consumer behavior involves the psychological processes that consumers go through
in recognizing needs, finding ways to solve these needs, making purchase decisions (e.g.,
whether or not to purchase a product and, if so, which brand and where), interpret
information, make plans, and implement these plans (e.g., by engaging in comparison
shopping or actually purchasing a product).

Sources of influence on the consumer:

The consumer faces numerous sources of influence. Often, we take cultural influences
for granted, but they are significant. An American will usually not bargain with a store owner.
This, however, is a common practice in much of the World. Physical factors also influence
our behavior. We are more likely to buy a soft drink when we are thirsty, for example, and
food manufacturers have found that it is more effective to advertise their products on the
radio in the late afternoon when people are getting hungry.

THE GLOBAL MARKETPLACE

Globalization of Markets and Competition:

Trade is increasingly global in scope today. There are several reasons for this. One
significant reason is technologicalbecause of improved transportation and communication
opportunities today, trade is now more practical. Thus, consumers and businesses now have
access to the very best products from many different countries. Increasingly rapid technology
lifecycles also increases the competition among countries as to who can produce the newest
in technology. In part to accommodate these realities, countries in the last several decades
have taken increasing steps to promote global trade through agreements such as the General
Treaty on Trade and Tariffs, and trade organizations such as the World Trade Organization
(WTO), North American Free Trade Agreement (NAFTA), and the European Union (EU).

Stages in the International Involvement of a Firm:

We discussed several stages through which a firm may go as it becomes increasingly

involved across borders. A purely domestic firm focuses only on its home market, has no
current ambitions of expanding abroad, and does not perceive any significant competitive
threat from abroad. Such a firm may eventually get some orders from abroad, which are seen

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either as an irritation (for small orders, there may be a great deal of effort and cost involved in
obtaining relatively modest revenue) or as "icing on the cake." As the firm begins to export
more, it enters the export stage, where little effort is made to market the product abroad,
although an increasing number of foreign orders are filled. In the international stage, as
certain country markets begin to appear especially attractive with more foreign orders
originating there, the firm may go into countries on an ad hoc basisthat is, each country
may be entered sequentially, but with relatively little learning and marketing efforts being
shared across countries. In the multi-national stage, some efficiencies are pursued by
standardizing across a region (e.g., Central America, West Africa, or Northern Europe).
Finally, in the global stage, the focus centers on the entire World market, with decisions made
optimize the products position across marketsthe home country is no longer the center of
the product. An example of a truly global company is Coca Cola.

Note that these stages represent points on a continuum from a purely domestic
orientation to a truly global one; companies may fall in between these discrete stages, and
different parts of the firm may have characteristics of various stagesfor example, the
pickup truck division of an auto-manufacturer may be largely domestically focused, while the
passenger car division is globally focused. Although a global focus is generally appropriate
for most large firms, note that it may not be ideal for all companies to pursue the global stage.
For example, manufacturers of ice cubes may do well as domestic, or even locally centered,
firms.

Some forces in international trade:

The text contains a rather long-winded appendix discussing some relatively simple
ideas. Comparative advantage, discussed in more detail in the economics notes, suggests
trade between countries is beneficial because these countries differ in their relative economic
strengthssome have more advanced technology and some have lower costs. The
International Product Life Cycle suggests that countries will differ in their timing of the
demand for various products. Products tend to be adopted more quickly in the United States
and Japan, for example, so once the demand for a product (say, VCRs) is in the decline in
these markets, an increasing market potential might exist in other countries (e.g., Europe and
the rest of Asia). Internalization/transaction costs refers to the fact that developing certain

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very large scale projects, such as an automobile intended for the World market, may entail
such large costs that these must be spread over several countries.

SEGMENTATION, TARGETING, AND POSITIONING

The importance of STP:

Segmentation is the cornerstone of marketingalmost all marketing efforts in some

way relate to decisions on who to serve or how to implement positioning through the
different parts of the marketing mix. For example, ones distribution strategy should consider
where ones target market is most likely to buy the product, and a promotional strategy
should consider the targets media habits and which kinds of messages will be most
persuasive. Although it is often tempting, when observing large markets, to try to be "all
things to all people," this is a dangerous strategy because the firm may lose its distinctive
appeal to its chosen segments.

In terms of the "big picture," members of a segment should generally be as similar as

possible to each other on a relevant dimension (e.g., preference for quality vs. low price) and
as different as possible from members of other segments. That is, members should respond in
similar ways to various treatments (such as discounts or high service) so that common
campaigns can be aimed at segment members, but in order to justify a different treatment of
other segments, their members should have their own unique response behavior.

Approaches to global segmentation:

There are two main approaches to global segmentation. At the macro level, countries
are seen as segments, given that country aggregate characteristics and statistics tend to differ
significantly. For example, there will only be a large market for expensive pharmaceuticals in
countries with certain income levels, and entry opportunities into infant clothing will be
significantly greater in countries with large and growing birthrates (in countries with smaller
birthrates or stable to declining birthrates, entrenched competitors will fight hard to keep the
market share).

There are, however, significant differences within countries. For example, although it
was thought that the Italian market would demand "no frills" inexpensive washing machines

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while German consumers would insist on high quality, very reliable ones, it was found that
more units of the inexpensive kind were sold in Germany than in Italyalthough many
German consumers fit the predicted profile, there were large segment differences within that
country. At the micro level, where one looks at segments within countries. Two approaches
exist, and their use often parallels the firms stage of international involvement. Intra-market
segmentation involves segmenting each countrys markets from scratchi.e., an American
firm going into the Brazilian market would do research to segment Brazilian consumers
without incorporating knowledge of U.S. buyers. In contrast, inter-market segmentation
involves the detection of segments that exist across borders. Note that not all segments that
exist in one country will exist in another and that the sizes of the segments may differ
significantly. For example, there is a huge small car segment in Europe, while it is
considerably smaller in the U.S.

Inter-market segmentation entails several benefits. The fact that products and
promotional campaigns may be used across markets introduces economies of scale, and
learning that has been acquired in one market may be used in anothere.g., a firm that has
been serving a segment of premium quality cellular phone buyers in one country can put its
experience to use in another country that features that same segment. (Even though segments
may be similar across the cultures, it should be noted that it is still necessary to learn about
the local market. For example, although a segment common across two countries may seek
the same benefits, the cultures of each country may cause people to respond differently to the
"hard sell" advertising that has been successful in one).

The international product life cycle suggests that product adoption and spread in some
markets may lag significantly behind those of others. Often, then, a segment that has existed
for some time in an "early adopter" country such as the U.S. or Japan will emerge after
several years (or even decades) in a "late adopter" country such as Britain or most developing
countries. (We will discuss this issue in more detail when we cover the product mix in the
second half of the term).

Positioning across markets:

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 Firms often have to make a tradeoff between adapting their products to the unique
demands of a country market or gaining benefits of standardization such as cost savings and
the maintenance of a consistent global brand image. There are no easy answers here. On the
one hand, McDonalds has spent a great deal of resources to promote its global image; on the
other hand, significant accommodations are made to local tastes and preferencesfor
example, while serving alcohol in U.S. restaurants would go against the family image of the
restaurant carefully nurtured over several decades, McDonalds has accommodated this
demand of European patrons.

ENTRY STRATEGIES

Methods of entry:

With rare exceptions, products just dont emerge in foreign markets overnighta firm
has to build up a market over time. Several strategies, which differ in aggressiveness, risk,
and the amount of control that the firm is able to maintain, are available:

Exporting is a relatively low risk strategy in which few investments are made in the
new country. A drawback is that, because the firm makes few if any marketing
investments in the new country, market share may be below potential. Further, the
firm, by not operating in the country, learns less about the market (What do
consumers really want? Which kinds of advertising campaigns are most successful?
What are the most effective methods of distribution?) If an importer is willing to do a
good job of marketing, this arrangement may represent a "win-win" situation, but it
may be more difficult for the firm to enter on its own later if it decides that larger
profits can be made within the country.

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 Licensing and franchising are also low exposure methods of entryyou allow
someone else to use your trademarks and accumulated expertise. Your partner puts up
the money and assumes the risk. Problems here involve the fact that you are training a
potential competitor and that you have little control over how the business is operated.
For example, American fast food restaurants have found that foreign franchisers often
fail to maintain American standards of cleanliness. Similarly, a foreign manufacturer
may use lower quality ingredients in manufacturing a brand based on premium
contents in the home country.

Contract manufacturing involves having someone else manufacture products while

you take on some of the marketing efforts yourself. This saves investment, but again
you may be training a competitor.

Direct entry strategies, where the firm either acquires a firm or builds operations
"from scratch" involve the highest exposure, but also the greatest opportunities for
profits. The firm gains more knowledge about the local market and maintains greater
control, but now has a huge investment. In some countries, the government may
expropriate assets without compensation, so direct investment entails an additional
risk. A variation involves a joint venture, where a local firm puts up some of the
money and knowledge about the local market.

MARKET ANALYSIS TOOLS:

Country Map - (Country Map is free to all users worldwide and does not require a login or
password.)
Benchmarking national and sectoral trade performance and competitiveness. Profiles
of 184 countries and territories, freely available. Country Map provides a wide range of
analytical tools, including the Trade Performance Index on export competitiveness, National
Export Performance and Import Profile, the econometric trade simulation model Trade Sim
on bilateral trade potential and an assessment of the reliability and characteristics of national
trade statistics. Country Map also includes links to Trade Information Sources, Trade
Support Institutions and current ITC projects for the country concerned.

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Trade Map:
Trade statistics for international business development.
An online database of global trade flows in goods and services and tariff measures for
international business development and trade promotion, providing detailed export and
import profiles and trends for over 5,300 products in over 200 countries and territories.
Based on the worlds largest database COMTRADE, Trade Map presents import/export
values and quantities, growth rates, market shares and market access information. It allows
users to analyze markets, select priority countries for export diversification, review the
performance of competing countries and assess opportunities for product diversification by
identifying existing and potential trade between countries.

Product Map
Business information for going global a Web portal presenting business information
and intelligence in a product context for 72 product clusters. The product clusters range from
agricultural machinery to wood products. Product Map includes market studies, price
indicators, links to product information, trade data and links to over 20,000 companies and
organizations. Companies can also create their own basic web site, which is hosted on the
portal.

Market Access Map:

Making market access barriers transparent Market Access Map is an interactive
database of tariffs and market access barriers. It contains the market access conditions
applied at the bilateral level by over 170 importing countries to the products exported by over
200 countries and territories. Market Access Maps strength lies in its wide geographical
coverage; its taking into account of almost all multilateral, regional and bilateral trade
agreements; the integration of ad valorem equivalents of specific tariffs; as well as certificates
and rules of origin. Market Access Map allows users to analyze the protection of any
geographic grouping and sectoral aggregation. It also offers the possibility of simulating
tariff reductions using various negotiation formulae. Developed by ITC in collaboration with
CEPII, UNCTAD and WTO, Market Access Map aims to enhance market transparency,
support international trade promotion, and to facilitate the analysis of related trade policy
issues.

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Investment Map:
Identifying foreign investment opportunities
Investment Map is an interactive web-based tool that combines statistics on foreign direct
investment (FDI), international trade and market access into a single portal. It allows
analyses by country, partner and industry. It also includes information on the location, sales,
employment and parent company for over 70,000 foreign affiliates located in developing
countries and economies in transition. Investment Map, the foreign direct investment with
foreign companies, international trade and tariffs is available online free to Sub-Saharan
Africa users.

MAJOR PLAYERS IN THE ORGANIZED SECTOR

V.I.P.
Samsonite
Aristocrat
Safari
Giordano
Delsey
American Tourister
Rimowa
Kipling
Jansport
Blue & Blues
Jang
Fiorelli
Others

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30 | I n t e r n a t i o n a l M a r k e t i n g
 Conclusion
A product faces competition in a global market.
Political instability affects International market.
Environmental challenges create hurdles like natural calamities.
International marketing decisions are differ than others.
Quality products are necessary for global market.
Advance changes in communication system bring market closer.
Fastest movement of goods and proper logistic management is possible.

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Bibliography:
https://www.google.co.in/search?
q=international+marketing+of+vip+bahs&oq=international+marketing+
of+vip+bahs&aqs=chrome..69i57.10733j0j7&sourceid=chrome&ie=UTF-8
http://www.campaignindia.in/article/the-vip-journey-growing-the-pie-growing-with-
it/417295
http://www.marketing-schools.org/types-of-marketing/international-marketing.html
https://www.scribd.com/doc/55072732/Marketing-Project-on-Indian-Luggage-
Industry

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