INTERNATIONAL

MARKETING

1
 Growing Significance of International
Marketing
As a strategic response to globalization of
markets, business enterprises need to adopt
a proactive approach and learn to transform
emerging marketing threats and challenges
into viable business opportunities.
Therefore, developing a thorough
understanding of international marketing
has become inevitable not only for operating
in international markets but also a pre-
condition for success even for operating
domestically. 2
 International Marketing

Marketing carried out across national

boundaries.

3
 Setting Marketing Objectives

Once a firm decides to enter international

markets, it needs to set objectives, as to

what it aspires to achieve, both in the

short- as well as the long-term.

4
Market Identification, Segmentation, and
Targeting
A firm has to identity countries, which

offer relatively higher opportunities to

market its products. The approaches used

may be either:

Reactive approach or

Pro-active approach
5
 Market Size
A cross-country comparison of market size
and its growth rate are the key indicators
that determine market potential for
targeting the market.

Market Size = (production)

+ (Value of imports of goods and
services)
(value of exports of goods and
services).

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 Entry Mode Decisions

Entry mode: The institutional mechanism

so as to make the companys products and
services available in international markets.

The entry mode may vary from simple

indirect exports through a merchant
intermediary to owning overseas operations.

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International Marketing Mix Decisions

Marketing mix: The set of marketing tools a

firm uses to pursue its marketing objectives in a

target market. These may be classified into the

four Ps of marketing:
product
price
place and
promotion.
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 Product Decisions
Product: Anything that can be offered to
a market to satisfy a want or need.
Products that are marketed include
physical goods, services, experiences,
events, persons, places, properties,
organizations,information,and ideas.

Perceptions and expectations about the

products differ to a varied extent across
countries which makes decision-making
about products much more complex for
international markets.

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 Product Standardization vs. Adaptation
A firm operating in international markets
has to make a crucial decision whether to
sell a uniform product across countries or
customize products in view of individual
market requirements.
Although no readymade solution can be
prescribed for the decision to standardize
or adapt the product in international
markets, firms are required to carry out a
careful cost-benefit analysis before
arriving at a decision.
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 Product Standardization

Product standardization: Marketing a product in

the overseas markets with little change except

for some cosmetic changes such as modifying

packaging and labelling.

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 Major Factors Favouring Product Standardization

High level of technology-intensity

Formidable adaptation costs

Convergence of customer needs worldwide

Country of origin impact

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 Product Adaptation
Making changes in the product in response
to the needs of the target market.

Adaptation of a product may vary from

major modifications in the product itself to
minor alterations in its packaging, logo, or
brand name.

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Mandatory Factors Influencing Product Adaptation

Government regulations

Standards for electric current

Operating systems

Measurement systems

Packaging and labelling regulations

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Voluntary Factors Influencing Product Adaptation

Consumer demographics

Culture

Conditions of use

Price

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 Trade-off Strategy between
Product Standardization and Adaptation
A firm operating in international markets

has to carefully carry out the cost-benefit

analysis of the decision to market the

standardized product across countries or

customize it, depending upon the market

requirements.
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New Product Launch for International
Markets

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 Waterfall Approach
Under the waterfall approach a product
trickles down in the international markets in
a cascade manner and are launched
sequentially.

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 Sprinkler Approach

Under this approach, the product is

simultaneously launched in various
countries.

19
 Branding Decisions in International
Markets
Brand: A name, term, sign, symbol or design, or a
combination of these, intended to identify the
goods or services of one seller or group of sellers
and to differentiate them from those of
competitors.

A global brand should have a minimum level of

geographical spread and turnover in various
markets worldwide.
20
 International Pricing Decisions

Price: The sum of values exchanged from

the customer for the product or service.

Price is generally referred to the in terms of

amount of money but it may also include

other tangible and intangible items of utility.

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Pricing Approaches for International Markets

Cost-based pricing
Full cost pricing

Marginal cost pricing

Market-based pricing

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 Factors Influencing Pricing Decisions

Cost

Competition

Purchasing power

Buyers behaviour

Foreign exchange fluctuations

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 International Distribution Channels

Set of interdependent organizations

networked together to make the product or

services available to the end consumer in

international markets.
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 Types of International Distribution
Channels

Indirect
Agents
Merchant Intermediary
Direct
Agents
Merchant Intermediary
e- channels

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 International Retailing
The retailer buys the goods from
wholesalers or distributors and sells it to
the ultimate customers in the
international market. The retailers serve
the important function of carrying
inventories, displaying products at sales
outlets, providing points for purchase
promotions, and extending credit. The
retailing system varies widely among
various countries.
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 Communication Decisions for
International Markets
Communication is crucial to a firms success
in international markets. While marketing
across countries, a firm has to communicate
to the customers and the channel
intermediaries located in overseas markets
that considerably differ in terms of the
characteristics of their marketing
environments.
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 International Trade Fairs and Exhibitions

Trade fairs are organized gatherings

wherein the buyers and sellers come into

contact and establish communication These

are the oldest and most effective tools to

explore marketing opportunities..

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 Public Relations

It aims at building a corporate image and

influencing media and other target groups to

garner favourable publicity.

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Factors Influencing International
Communication Decisions
Culture
Language
Level of education
Media infrastructure
Government regulations

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 Framework for International
Product-Promotion Strategies

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 Straight Adaptation

In cases, when the need satisfied and the

conditions of product use is the same, the

product as well as the marketing

communication is extended across markets.

32
 Product ExtensionPromotion
Adaptation

When the condition of product use remains

the same whereas the needs satisfied or the

product function is different, the product is

extended as such but the promotion

strategy is adapted.

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 Product AdaptationPromotion
Extension

In markets where the condition of product

use is different but the product performs the

same function or satisfies the same needs,

the strategy of product adaptation

promotion extension is employed.

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 Dual Adaptation

In countries where the functions of the

product and need satisfied are different and

the conditions for the product use is also

different, a firm has to customize both the

product and the promotional strategies.

35
 Developing New Product

In markets where the product function and

need satisfied remain the same, but the
conditions of product use differ and also the
consumers do not necessarily possess the
ability to pay for the product, it requires
product invention and developing new
marketing communication.

36
 Reviewing Performance and
Consolidating International Marketing
Operations
Once a business enterprise implements
international marketing decisions, it needs
to periodically review the performance to
assess whether the desired marketing
objectives are met.
The reasons for the performance gaps need
to be identified and remedial actions
initiated which include modification in
various components of marketing mix.
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INTERNATIONAL HUMAN

RESOURCE

MANAGEMENT

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 Globalization and HRM
The rapid globalization of business has resulted in new
challenges for cross-country management of human
resources which include
HRM has become a crucial determinant to a firms success
or failure in international business.
Growing significance of trans-national experience for top
management jobs in global corporations.
Off-shoring of business operations to low-cost locations
has augmented the complexity of staffing, performance
monitoring, and differential compensations.
Human resource practices followed in the West may not be
very relevant in other countries due to differences in socio-
cultural and regulatory environments.
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Human Resource Management (HRM)
All those activities undertaken by an

organization to utilize its human resources

effectively. It includes activities, such as

staffing, training and development, expatriate

management, performance management,

compensation, fulfillment of regulatory

obligations, such as labour relations, human

welfare and safety etc., and industrial relations.

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 International HRM

Comprising diverse requirements of

various subsidiaries and developing and

sustaining human resource capabilities to

achieve organizational goals.

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 Domestic vs. International HRM

Increased functional activities

Functional heterogeneity
Increased involvement in employees
personal lives
Enhanced risks
Increased influence of external
environment

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Strategic IHRM
Orientations
and Practices

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 Ethnocentric IHRM Orientation

The company tends to follow the parent

companys home country HRM practices for its
employees across the world. Key managerial
and technical personnel are recruited from the
parent country nationals (PCNs). Locals are
employed only for supporting or lower level jobs
with limited opportunities to grow.

44
 Polycentric IHRM Orientation

Different HR strategies are adopted for different

countries depending upon the need. Host
country nationals (HCNs) are often employed in
foreign subsidiaries whereas the headquarters
are generally managed by the PCNs. Host
country nationals have higher opportunities for
career advancement. Besides, performance
evaluation measures and compensation also
vary considerably from subsidiary to subsidiary.

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 Regiocentric IHRM Orientation

Most HR strategies are adopted

regionally. Depending upon the nature of

business and marketing strategy,

employees are transferred within a region

rather than across the region.

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 Geocentric IHRM Orientation

The HR policies and practices of the firm

are globally integrated leading to

development of a real global corporation.

The best talented personnel are posted

throughout the MNE irrespective of their

nationalities.

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Managing International Human
Resource Activities

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 Staffing

The process of determining the organizations

current and future human resource requirements
to meet the organizational goals and taking
appropriate steps so as to fulfill those
requirements. The process involves identifying
the human resource requirement of an
organization, and recruitment, selection, and
placement of human resources
49
 Manpower Availability
Availability of desired manpower affects a firms
decision to hire locals or expatriates. MNEs often
hire locals for lower level jobs except for some
Middle East countries which import people even for
labour and other low-paid jobs. However, for most
skilled and professional assignments, quality of
educational system, availability of scientists and
engineers, and quality of management schools
plays an important role in a firms decisions to hire
locals or expatriates
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 Types of International Assignments
Short-term (upto three months):
Assignments related to small project work, machinery
or plant repairing, or an interim arrangement till a
suitable permanent arrangement is made
Extended (Upto one year):
Involving similar activities as for short-term
assignments for a relatively longer duration
Long-term (one to five years):
Also referred to as traditional expatriate assignment,
involve a well-defined role in foreign operations.
Assignments, such as production or marketing manager
or a managing director of a subsidiary
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 Sources of Human Resources for
International Staffing
Local citizens or HCNs

Local employees hired by an MNE of the

host country are known as Host Country

Nationals (HCNs). A large number of

MNEs engage host country citizens for

middle and lower level jobs.

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 Expatriates

Employees who temporarily reside and

work outside their home country are

commonly known as expatriates or

expats. Expatriates are often used as

agents of direct control, socialization,

network trade, and gathering market

business intelligence.
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 Parent country nationals (PCNs)

Employees who are citizens of the

country where the MNE is

headquartered. Historically MNEs filled
up key positions in their foreign affiliates
with PCNs.

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 Third country nationals (TCNs)

Employees, who are citizens of countries

other than the country in which they are

assigned to work or the country where the
MNE is headquartered.

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 Off-shoring

Transferring jobs to foreign countries which

were previously carried out domestically.

The breakthroughs in ICT have made it

possible to off-shore various service

activities too.
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 Characteristics of Global
Managers
Global mindset
Strategic vision and long-term
perspective
Ability to work in diverse culture
Willingness to relocate for international
assignments
Ability to manage change and transition

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 Selection Criteria for International
Assignments
Technical and managerial competence
Ability to perform under cross-cultural
environments
Family attitude towards international
assignments
Regulatory framework in host countries
Language
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 Managing Expatriates
People working out of their home countries,
also known as expatriates, form an integral
part of a firms international staffing
strategy, especially for higher management
positions.

Beside identifying and recruiting the right

personnel with desired skills for
international assignments, it is also
extremely important to provide them with a
conducive environment to get their optimum
output
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Reasons for Expatriate Failure
Inability to adjust in alien cultures
Career apprehensions on repatriation
Relocation anxieties
High costs of living and income gaps
Problems related to lifestyle
adjustments, such as uncomfortable
living conditions
Family problems, such as spouse
dissatisfaction, childrens education,
and safety concerns
Health and medical concerns
Adaptation problems to different
management styles
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 Expatriate Adjustment Process

The series of phases expatriates undergo while

adjusting to a foreign culture that include:

Initial euphoria

Cultural shock

Adjustment

Re-entry
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 Repatriation

The process of returning home by an

expatriate after completion of foreign
assignment that include:
Preparation

Physical relocation

Transition

Re-adjustment

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Pre-departure Training for Overseas
Assignments
Cultural sensitization programmes

Preliminary visit

Language training

Practical training

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 Compensation
The financial remuneration that employees
receive in exchange of their services
rendered to the organization. It includes
wages, salaries, pay rise, and other
monetary issues.
A good compensation system should be
designed within the regulatory framework of
the country of operation of an MNE and
should be able to attract and retain the best
available talent
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 Key Components of International
Compensation Systems
Base salary:
Foreign service premium:
Allowances:
Hardship allowance
Cost of living allowance (COLA)
Housing allowance
Home leave allowances
Education allowances
Relocation allowances
Assistance for tax equalization
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 Regulatory Framework and
Industrial Relations
International firms are required to adhere to
various legislative provisions under the
labour laws; compensation and benefit laws;
and individual rights laws related to civil
rights, immigration, discrimination, and
sexual harassment at workplace in countries
of their operations which often have
considerable differences.
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