IMCEE

International Marketing In The Changing Economics Environment
International Marketing
Global Marketing Marketing carried out by companies overseas or across national borderlines It includes:

market identification Targeting entry mode selection marketing mix and strategic decisions to compete in international markets
It 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
AMA (American Marketing Association)
It is the application of marketing principles to more than one country
Many American and European authors see international marketing as: a simple extension of exporting adapting the marketing mix 4P's, taking into account differences in consumers and segments Global marketing takes a more standardised approach to world markets
Global Marketing
The process of conceptualizing and then conveying a final product or service worldwide with the hopes of reaching the international marketing community. Proper global marketing has the ability to catapult a company to the next level, if they do it correctly Different strategies are implemented based on the region the company is marketing to.
Global Vs International Marketing

In global marketing, marketers look at the globe as ONE MARKET They offer only a single line of product with a very minimal adaption of the local market. Examples of it are McDonald s, Microsoft, IBM, Ford and so on. Products are standardized wherever you go., it is homogenized.

Unlike International Marketing they offer their product across national boundaries that specifically meet the preferences of the local market. Products are produced based upon the culture, customs and sets of value of the specific country.
Stages of Global Marketing

International Marketing is a stage in the evolution of Global Marketing.
Stage 1: Domestic Marketing

Companies manufacturing products and selling those within the country itself. So, no international phenomenon at all
Stage 2: Export Marketing

Company starts exporting products to another countries also. It is the very basic stage of global marketing. Approach of marketer in this stage is said to be ethnocentric because although he is selling goods to foreign countries, product development is totally based upon the taste of local customer. So, focus is still on domestic market
Stage 3: International Marketing

Now, company starts selling products to various countries and the approach is Polycentric i.e. making different products for different countries.
Stage 4: Multinational Marketing

The number of countries in which the company is doing business gets bigger than that in earlier stage. So, instead of producing different goods for different countries, company tries to identify different regions for which it can deliver same product. So, same product for countries lying in one region but different from product offered in countries of another region. e.g. a company may decide to offer same product to India, Sri lanka and Pakistan if it thinks the taste of people of these countries is same but at the same time offering different product for American countries. This approach is called Regiocentric approach .
Stage 5: Global Marketing

This is the final stage of evolution. In this stage company really operates in a very large number of countries and for the purpose of achieving cost efficiencies it analyses the requirement and taste of customers of all the countries and come out with a single product which can satisfy the needs of all. This approach is called Geocentric approach .

A truly global company instead of offering different products to different countries (as in International Marketing), develops and offers a single product to the world.
Impact of Globalization
on International Marketing
5 Areas Effected
There are five main areas affected by globalization: globalization of and by the economy globalization of and by information/communication technology globalization of and by politics globalization of and by business and globalization of and by education
Globalization of and by the economy

The General Agreement on Tariffs and Trade (GATT) simulates free trade between countries by encouraging the reduction of tariff and non-tariff barriers This allows firms to more easily trade and move around the world Increased mobility is the increasingly large scope of money and capital markets and looser regulations on foreign direct investment Multinationals now have more freedom and are more dominant in the international business environment then ever before. Adam Smith s theory of the invisible hand is now a global reality.
Globalization of and by information technology

The convergence of information and communication technologies has resulted in: a lower cost for information, furthering globalization. miniaturization and products have become smaller, weighing less, as a result transportation costs have dropped dramatically and global sourcing has become common practice.
Globalization of and by communication technology

Furthering global standardization, English is becoming the world language. Notwithstanding this, there remain important language barriers. For example, Chinese and Japanese users prefer software that is in their log language.
Globalization of and by politics

In the recent past (1945-1990) the world was divided into three economic blocks: the first world (the free world), the second world (the communist block) and the third world (developing countries). The fall of the communist block ended this division. After 1990, everyone aspired to join the first world with its system of market economy and democracy. Globalization implies that there are forces that are global, objective and universal which restrict not only diversity, but also the scope for national governments policy formulations.
Globalization of and by business

The globalization of markets is one of the most important developments of this century. Its impact on the economic transactions, processes, institutions, and players is dramatic and wide ranging. It challenges established norms and behavior and requires different mindsets. Yet, globalization creates opportunities for the well-prepared participants who are visionary and have insight.
Globalization of and by business

The globalization of markets reflects the growing interdependency among the economics of the world and the multinational nature of sourcing, manufacturing, trading, and investment activities. It also reflects the increasing frequency of cross -border transactions and financing and the heightened level of competition.
Globalization of and by education

In addition to implying a different nature to economic transactions and a diverse set of players, globalization of markets causes the individual firm to operate within a more complex political, legal -regulatory, and cultural context. To operate successfully in less familiar environments, managers must develop an understanding of the government sector, regulatory framework, and cultural idiosyncrasies of the markets where they wish to do business. Not only will management need to develop knowledge of country specific factors, but must also understand the interplay among these factors.
Globalization of and by education

Management needs local knowledge but also global knowledge of business, law, politics, and societies. Managers study the best practices of leading companies and then try to implement them in their own organizations. Often managers must further their formal education in order to keep up with and understand the new trends that are emerging with international business and globalization.
Global Marketing
Advantages and Disadvantages
Advantages
The advantages of global market we can introduce our product by using advertising Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices Helps to establish relationships outside of the "political arena" Helps to encourage ancillary industries to be set up to cater for the needs of the global player Benefits of eMarketing over traditional marketing
Disadvantages
Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to marketing mix elements Differences in brand and product development and the competitive environment Differences in the legal environment, some of which may conflict with those of the home market Differences in the institutions available, some of which may call for the creation of entirely new ones (e.g. infrastructure) Differences in administrative procedures Differences in product placement. Differences in the administrative procedures and product placement can occur
Localization Vs Globalization
Localization
Localization is a process which reverses the trend of globalization by discriminating in favour of the local. It ensures that all goods and services that can reasonably be provided locally should be.
Corporate Globalization
This is the ever-increasing integration of national economies into the global economy through trade and investment rules and privatization, aided by technological advances.
Why Global?
The greatest comparative advantage is the cost advantage in labour and even in fixed costs at home. Perhaps the most important reason is ambition
10 Tips for going global

MAKE IT YOUR COMPANY STRATEGY IDENTIFY THE DESTINATION DO THE RESEARCH VISIT THE MARKET WRITE A BUSINESS PLAN FORM STRONG ALLIANCES CONSULT THE EXPERTS BE CULTURALLY SENSITIVE CONSIDER THE LOGISTICS Local regulations, currency fluctuations,
tax implications, immigration issues for transferring staff and others
BE PATIENT
International Trade
An Overview
Overview
One of the most important phenomena in post-war economic history has been the enormous expansion of world trade. Indian trade grew poorly from 1950 to 1980 as compared with the world. From 1980 onwards, Indian exports have been rising at one and a half times the pace of growth in world exports. In 1993, India ranked 33rd in top exporting countries and 32nd in top importing countries
Indian Economy
An Overview
Overview
India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries like China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework.
Overview
With the economic pace picking up, global commodity prices have staged a comeback from their lows and global trade has also seen healthy growth over the last two years.
Economic Prospects for 2010
Prospects
The global economy seems to be recovering after the recent economic shock. The Indian economy, however, was hit in the latter part of the global recession and the real economic growth witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring.
Prospects
It is expected that the global economies will continue to sustain in the short-term, as the effect of stimulus programs is yet to bear fruit and tax cuts are working their way through the system in 2010. Due to the strong position of liquidity in the market, large corporations now have access to capital in the corporate credit markets.
Global Economy
Global Economy
It refers to an integrated world economy with unrestricted and free movement of goods, services and labour transnationally. It projects the picture of an increasingly interconnected world with free movement of capital across countries, also.
Global Economy
A global economy is characterized as a world economy with an unified market for all goods produced across the world. It gives domestic producers an opportunity to expand and raise capacity according to global demands Likewise, it also provides an opportunity to domestic consumers to choose from a vast array of imported goods. A global economy aims to rationalize prices of all products globally.
Basis for Trade
Basis for Trade

It means that if you can fish better then you pick coconuts, you should fish, and trade your fish for coconuts.
The Economics Basis for Trade
Why do nations trade?

Trade allows nations to consume beyond their maximum domestic production possibility curve There is an uneven distribution of natural, human and capital resources among nations. Therefore different countries have comparative advantages (NOT absolute) on different products.

Efficient production of various goods requires different technologies and combinations of resources. Thus it may be more efficient if countries specialize.

Products are differentiated as to quality and non-price attributes (eg. French wine as opposed to Californian wine). People may prefer imported goods rather than domestic manufactured goods.

Regardless of labor, land, or capital intensity in a nation, any nation may have a niche in trading certain products based on the unique qualities of those products. Thus, by allowing specialization to occur through trade, in which countries produce goods according to their resource availability, each trading country can acquire more goods and services.

The distributions, technology, and product distinctiveness can change. As changes occur, the relative efficiency with which a nation can produce specific goods will also change.
Basis for Trade

Two principles
Principles
The basis of trade between two nations is built upon two principles: Absolute advantage Comparative advantage
Absolute Advantage
Among other things and technicians we need a carpenter and a mason to build a house. One can find a mason who also has some carpentry skills or a carpenter who knows a bit about masonry When comparing the two it is obvious that the mason has an absolute advantage in doing masonry while the carpenter has an absolute advantage, when compared to the mason, in taking care of the carpentry. Thus it will benefit both of them if the mason specializes in masonry work while the carpenter sticks to carpentry.
Absolute Advantage
Similarly Iran and Pakistan produce oil (petroleum) and cotton. Yet we all know Iran is one of the world's largest producers of oil while Pakistan is known for growing high quality cotton. Rather than both nations try producing both cotton and oil, it will benefit Iran to specialize in oil production, in which it has absolute advantage while Pakistan utilizes its absolute advantage in growing cotton. It will benefit both countries if Iran exchanges its oil for Pakistan's cotton.
Comparative Advantage
Now suppose the mason that we mentioned above has also better skills in carpentry than the carpenter. However, his skills as a mason far exceed his skills as a carpenter. Moreover, his hourly wages as a mason may be higher than his wages as a carpenter. Thus, between the two skills he has a comparative advantage in masonry.
Comparative Advantage
Just for example if suppose America is able to produce better quality oil and wheat at a lower cost than Canada, then why it may still be to its benefit to import oil from Canada and export wheat? Because within a given time and cost America can produce much more wheat than oil. Thus it has a comparative advantage in producing cotton. Therefore, it will benefit America to import oil in exchange for its surplus cotton.
Absolute advantage in trade
Absolute advantage in trade

Whenever a nation can produce a particular product (good or service) at a lower cost than another nation, it has then an absolute advantage in producing that particular product as compared to another nation. Absolute advantage compares the cost of producing the same product by two different nations. Absolute advantage is the ability of a nation to produce a specific product with fewer resources, per unit of output, than other nations
Comparative advantage in trade
Comparative advantage in trade

Whenever a nation can produce a product (good or service) at a lower cost than another product, it has then a comparative advantage in producing that particular product as compared to another product. Comparative advantage compares the cost of producing two different products by the same nation. Comparative advantage is the ability of a nation to produce a specific product at a lower opportunity cost than other nations
Economic Integration
It is the elimination of tariff and non-tariff barriers to the flow of goods, services, and factors-of-production between a group of nations, or different parts of the same nation Economic integration is a process where barriers to trade are reduced or eliminated to facilitate trade between regions or nations This causes the volume of trade to increase
There are varying degrees of economic integration ranging from theoretically completely free trade to the use of preferential trade agreements to stimulate relationships between specific trade partners. Removing trade barriers comes with costs and benefits, depending on the degree of economic integration and the level of cooperation between member regions or nations
Benefits of Economic Integration
Benefits
Progress in trade Ease of agreement Improved political cooperation Opportunities for employment Beneficial for financial markets Increase in Foreign Direct Investments
Opportunities for employment

The various options available in economic integration help to liberalize and encourage trade which results in market expansion due to which high amount of capital is invested in a country s economy. This creates higher opportunities for employment of people from all over the world.
Increase in Foreign Direct Investments

Economic integration helps to increase the amount of money in Foreign Direct Investment (FDI). Once firms start FDI, through new operations or by merger, takeover, and acquisition, it becomes an international enterprise
Disadvantages of Economic Integration
Disadvantages
Creation Of Trading Blocs Trade Diversion National Sovereignty
Creation Of Trading Blocs

It can also increase trade barriers against nonmember countries
Trade Diversion
Because of trade barriers, trade is diverted from a non-member country to a member country despite the inefficiency in cost. For example, a country has to stop trading with a low cost manufacture in a non-member country and trade with a manufacturer in a member country which has a higher cost.
National Sovereignty
Requires member countries to give up some degree of control over key policies like trade, monetary and fiscal policies. The higher the level of integration, the greater the degree of controls that needs to be given up particularly in the case of a political union economic integration which requires nations to give up a high degree of sovereignty.
Sovereignty of Nations
In the context of International law, a sovereign state is: Independent and free from all external control Enjoys full legal equality with other states Governs its own territory Selects its own political, economic and social systems And has the power to enter into agreements with other nations
Sovereignty refers to both: the powers exercised by state in relation to other countries And the supreme power exercised over its own members
A state sets requirement for Citizenship Defines geographical boundaries Controls trade And the movement if people and goods across its borders It is with the extension of national laws beyond a country s border that much of the conflict in international business arises This is especially true when another country consider its own sovereignty to be compromised
Nations can and do abridge specific aspects of their sovereign rights in order to coexist with other nations. Following represents the examples of nations voluntarily agreeing to give up some of their sovereign rights in order to participate with members nations for a common, mutually beneficial goal:
The European Union
The European Union North America Free Trade Agreement (NAFTA) North Atlantic Treaty Organization (NATO) World Trade Organization (WTO)
Foreign investments can also be perceived as s threat to sovereignty
WTO
WTO by some is considered by some as the biggest threat to national sovereignty. Adherence to the WTO inevitably means loss of some degree of national sovereignty because the members nations have pledged to abide by national covenants and arbitration procedures that can override national laws and have far-reaching ramification for citizens
Covenant - an agreement, usually formal, between two or more persons to do or not do something specified. Arbitration - the application of judicial methods to the settlement of international disputes.
National Security
National Security
the requirement to maintain the survival of the nation-state through the use of economic, military and political power and the exercise of diplomacy."
National Security
National security is the requirement to maintain the survival of the nation-state through the use of:
economic military & political power and the exercise of diplomacy
The concept developed mostly in the United States of America after World War II.
National Security
Security threats involve not only conventional foes such as nation-states but also non-state actors such as terrorist organizations, narcotic cartels and multi-national organizations Some authorities including natural disasters and events causing severe environmental damage in this category
National Security
Measures taken to ensure national security include: using diplomacy to rally allies and isolate threats marshalling economic power to facilitate or compel cooperation maintaining effective armed forces implementing civil defense and emergency preparedness measures (including anti-terrorism legislation)
National Security
Measures taken to ensure national security include: ensuring the resilience and redundancy of critical infrastructure using intelligence services to detect and defeat or avoid threats and espionage, and to protect classified information using counterintelligence services or secret police to protect the nation from internal threats
Elements of NS
Military Security Political Security Economic Security Environmental Security Security of Energy and Natural Resources National security and rights & freedoms
Technical Aspects of NS
This ranges from information protection related to state secrets to weaponry for militaries to negotiations strategies with other nation states. The national security aparatus depends largely on combinations of management practices, technical capabilities, the projection of images both internally and externally, and the capacity to gain enough of the will of the people to gather taxes and spend them on useful efforts.
Analyzing global marketing opportunities
Global Market
The activity of buying or selling goods and services in all the countries of the world, or the value of the goods and services sold
Marketing Research
MR is traditionally defined as the systematic gathering, recording and analyzing of data to provide information useful in marketing decision making The research process and methods are basically the same whether applied in any country
Marketing Research
International marketing research involves two additional complications: 1. Information must be communicated across cultural boundaries 2. The environments within which the research tools are applied are often different in foreign markets
Domestic and Foreign Market Research

Difference: The basic difference is the broader scope needed for foreign research, necessitated by higher level of uncertainity
Marketing Research
Research can be divided into three types based on information needed: 1. General information about the country, area, and/or market 2. Information necessary to forecast future marketing requirements by anticipating social, economic, consumer and industry trends within specific markets or countries 3. Specific market information used to market product, promotion, distribution, and price decision, and to develop marketing plans.
Marketing Research
Following information is for sound assessment of a foreign market: Economic growth of economy, inflation, business cycle trends, profitability
analysis for the division s products: specific industry economic studies.
Cultural, sociological and political climate Overview of market conditions Summary of the technological environment Competitive situation competitor s sales revenue, methods of market
segmentation, products, and apparent strategies on an international scope
Research Process
Define the research problem and establish research objectives Determine the sources of information to fulfill the research objectives Consider the costs and benefits of the research efforts Gather the relevant data from secondary or primary source, or both Analyze, interpret and summarize the results Effectively communicate the results to decision makers
Primary Market Research

Information that comes directly from the source--that is, potential customers When conducting primary market research, you can gather two basic types of information:
exploratory or specific
Primary Market Research

Exploratory research is open-ended. It helps you define a specific problem, and usually involves detailed, unstructured interviews in which lengthy answers are solicited from a small group of respondents. Specific research, on the other hand, is precise in scope and is used to solve a problem that exploratory research has identified. Interviews are structured and formal in approach.
Secondary Market Research

Market research that's already compiled and organized for you. Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within your industry. Secondary sources include the following:
Public sources Commercial sources Educational institutions
Quantitative Research
Usually a large number of respondents are asked to reply either verbally or in writing to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices Qs are designed to obtain specific responses regarding aspects of the respondents behavior, intentions, attitudes, motives, and demographic characteristics
Qualitative Research
QR provides the marketer with responses that can be presented with precise estimations The structures responses received in a survey can be summarized in a percentages, averages or other statistics
Research on the Internet

A growing opportunity
Research on the Internet

There are 8 different uses for the Internet in the international research: 1. Online surveys and buyer panels incentives for participation 2. Online focus group 3. Web visitor tracking 4. Advertisement measurement 5. Customer identification system many companies are installing registration
procedures that allow them to track
6. 7.
8.
E-mail marketing list customers can be asked to sign-up on email lists to receive future
direct marketing mails
Observational research chat rooms, blogs and personal websites can be

systematically monitored to assess consumers opinions about product and services Embedded research
Cultures are just different, not right or wrong or better or worse
We must not make value judgments as to whether cultural behaviour is good or bad, better or worse There is no cultural right or wrong, just difference People around the world feel as strongly about their culture as we about ours. Every country thinks its culture is the best And for every foreign peculiarity that amuses us, there is an Indian peculiarity that amuses others
NAFTA
North American Free Trade Agreement
NAFTA
It is a comprehensive trade agreement that addresses, and in most cases improves, all aspects of doing business within North America The elimination of trade and investment barriers among Canada, Mexico and the US creates one of the largest and richest markets in the world It has improved the other long-standing conflicts such as legal and illegal immigrations
NAFTA
NAFTA has paved the way for Wal-Mart to move in Mexico and Mexican supermarket giant Gigante to move into the US Other cross-border services are also thriving, including entertainment and health care
NAFTA
Key Provisions
NAFTA
Market Access Elimination of Non-Tariff Barriers Rules of Origin Customs Administration Investment Services Intellectual Property Rights Government Procurement Standards
CAFTA
Central America Free Trade Agreement
CAFTA
It is a free trade agreement between the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, and was called CAFTA. In 2004, the Dominican Republic joined the negotiations, and the agreement was renamed DR-CAFTA.
ASEAN
The Association of Southeast Asian Nations
Indonesia Malaysia Singapore Thailand Philippines Brunei Vietnam Myanmar Laos Cambodia
ASEAN
It is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 If ASEAN were a single country, it would rank as the 9th largest economy in the world and the 3rd largest in Asia in terms of nominal GDP
ASEAN
Its aims include: the acceleration of economic growth, social progress, cultural development among its members, the protection of the peace and stability of the region, and to provide opportunities for member countries to discuss differences peacefully.
South Asia Region

India Afghanistan Bangladesh Bhutan Maldives Nepal Pakistan Sri Lanks
SAARC
South Asian Association for Regional Co-operation
SAARC
Non-Least Developed Countries (NLDCSs)
India Pakistan Sri Lanka
Least Developed Countries (LDCSs)

Bangladesh Bhutan Maldives Nepal
SAPTA
The SAARC Preferential Trading Agreement
SAPTA
It was signed by the seven countries during the Seventh SAARC summit held in Dhaka in April, 1993 It provides a framework for exchange of tariff concessions and also for liberalization in paratariff and non-tariff concessions with a view to promoting trade and economic cooperation among the SAARC member countries
Tariffs are taxes on imported goods
European Union
Member states of the EU

Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom
Non-Tariff
Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff It is a covert restriction to imported goods. Governments may not wish to be seen to restrict trade but can do so by introducing regulations, such as product labeling laws, which make it more difficult and more expensive for overseas producers to operate in the market.
Barriers to entering global markets for consumers Services
Barriers
Most of the services automobile rentals, airline services, entertainment, hotels and tourism to name a few are inseparable and require production and consumption to occur almost simultaneously Thus exporting is not a viable entry method for them. The vast majority of services (some 85 percent) enter foreign markets by licensing, franchising or direct investment.
Barriers
Four kinds of barriers face consumer services marketers in this growing sector of the global marketplace: Protectionism Restrictions on Trans-border Data Flows Protection of Intellectual Property Cultural Barriers and adaptations
Protectionism
The European Union is making modest progress toward establishing a single market for services However, exactly how foreign services providers will be treated as unification proceeds is not clear A directive regarding trans-frontier television broadcasting created a quota for European programs, requiring EU member states to ensure that at least 50 per cent of entertainment air tome is devoted to European works. The European Union argues that this set aside for domestic programming is necessary to preserve Europe s cultural identity
Restrictions on Trans-border Data Flows

The European Commission is concerned that data on individuals (such as income spending preferences debt repayment histories, medical conditions and employment data) are being collected manipulated and transferred between companies with little regard to the privacy of the affected individuals A proposed directive by the Commission would require the consent of the individual before data are collected or processed.
Protection of Intellectual Property

An important form of competition that is difficult to combat arises from pirated trademarks, processes copyrights and patents. Computer design and software trademarks, brand names and other intellectual properties re easy to duplicate and difficult to protect. The protection of intellectual properly rights is major problem in the services industries. Countries seldom have adequate or any legislation and any laws they do have are extremely difficult to enforce.

The Trade Related Intellectual Property Rights (TRIPs) part of the GATT agreement obligates all members to provide strong protection for copyright and related, patents trademarks; trade secrets industrial designs, geographic indications and layout designs for integrate circuits. The TRIPs agreements are helpful, but the key issues are that enforcement is very difficult without the full cooperation of host countries.

The situation in China has been particularly bad because that country has not been active in combating piracy of intellectual property. The annual cost of pirated software, CDs books and moves in China alone is estimated to be more than $1 billion. Worldwide industry estimates are that US companies lose $ 60 billion annually on piracy of all types of intellectual property. In Thailand for example illegal copies of movies are available within 10 days of their release in the United States. In Russia pirated movies are sometimes available before their (legal) US debut!
Cultural Barriers and adaptations

Because trade in services frequently involves people to people contact, culture plays a much bigger role in services than in merchandise trade Eastern Europeans are perplexed by Western expectations that unhappy workers put on a happy face when dealing with customers. But McDonald s requires polish employees to smile whenever they interact with customers. Such a requirement strikes many employees as artificial and insincere.

The company has learned to encourage managers in Poland to probe employee problem and to assign troubled workers to the kitchen rather than to the food counter. Japanese internet purchasers often prefer to pay in cash and in person rather than trust the internet transaction or pay high credit card fees.

Students in Japan listen to lectures, take notes and ask questions only after class. Spaniards are used to large undergraduate classes (hundreds rather than dozens), they tend to talk to their friends even when the instructor is talking

Healthcare systems and doctor patient interactions reflect cultural differences. Americans ask questions and get second opinions. Innovative healthcare services are developed on the basis of extensive marketing research. In Japan the social hierarchy is reflected heavily in the patient s deference to their doctors. While Japanese patient compliance is excellent and longevity is the best in the world, the healthcare system there is relatively unresponsive to the expressed concerns of consumers.

Japanese also tend to take a few long vacations 7 to 10 days is the norm. Thus vacation packages designed for them are packed with activities. Phoenix, Las Vegas and San Diego or Rome, Geneva, Paris and London in 10 days make sense to them. The Four Seasons hotel chain provides special pillows, kimonos, slippers and teas for Japanese guests. Virgin Atlantic Airways and other long haul carriers now have interactive screens available for each passenger allowing viewing of Japanese (or American, French etc) movies and TV.

Managing a global services workforce is certainly no simple task. Just ask the folks at UPS. Some of the surprises UPS ran into included indignation in France when drivers were told they couldn t have wine with lunch, protests in Britain when drivers dogs were banned from delivery trucks, dismay in Spain when it was found that the brown UPS trucks resembled the local hearses, and shock in Germany when brown shirts were required for the first time since 1945.
a vehicle for conveying a dead person to the place of burial brown shirts of the German Nazis

And while tips of 10 to 15 per cent are an important part of services workers incentives in the United States, this is not the case in Germany where tips are rounded to the nearest deutsche mark. Thus closer management of service personnel is required in those countries to maintain high levels of customer satisfaction
Planning for Global Market
What is Planning
Planning is a systemized way of relating to the future It is an attempt to manage the effects of external, uncontrollable factors on the firm s strengths, weaknesses, objectives, and goals to attain a desired end In other words, planning is the job of making things happen that might not otherwise occur
Planning for Domestic Vs International Market

Any difference?
Planning for Domestic Vs International Market Principles of planning are the same But the intricacies of the operating environment of the multinational company, its organizational structure, and task of controlling a multi-country operation creates differences

Planning allows for rapid growth of the international function, changing markets, increasing competition, and the turbulent challenges of different national markets Planning relates to formulation of goals and methods of accomplishing them. So it is both a process and philosophy

Structurally, planning may be viewed as corporate, strategic or tactical International corporate planning is essentially long term, incorporating generalized goals for the enterprise as a whole trategic planning is conducted at the highest levels of management and deals with products, capital, and research, and long and short term goals of the company

Tactical planning or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions
Market Entry - Strategies

When a company plans to go global, it must chose an entry strategy This decision should reflect:
market characteristics:
Potentials Sales Strategic importance Strengths of local resources Cultural differences and country restrictions

Company capabilities and characteristics Including the degree of near-market knowledge Marketing involvement And commitment that management is prepared to make

The approach to foreign marketing can range from minimal investment with frequent and indirect exporting to large investments of capital and management in an effort to capture and maintain a permanent, specific share of world markets Depending on the firm s objectives and market characteristics, either approach can be profitable

Companies most often begin with modest export involvement As sales grow the firms often proceed down through the series of steps listed in next slide
Modes of market entry
Modes of market entry

1. 2. 3. 4. Exporting Contractual Agreement Strategic Alliances Direct Foreign Investments
Exporting
Internet Exporter Importer Distributor Direct Sales Licensing & Franchising Strategic Alliances Joint ventures and consortia Direct Foreign Investment Greater control and greater risk
Contractual Agreement Strategic Alliances
Ownership
Exporting
Exporting
Direct Exporting The company sells to a customer in another country This is the most common approach First step towards international marketing since the minimal risk of financial loss Indirect Exporting The company sells to a buyer (importer or a distributor) in the home country who in turn exports the product Customers like Wal-Mart, wholesale supply houses, trading companies & others that buy to supply customers abroad
Exporting
Early motive of exporting is to:
skim the cream from the market Or gain business to absorb overhead
Early enquiry maybe opportunistic and come in the form of an enquiry from a foreign customer or initiatives from an importer in the foreign market Exporting is also a common approach for mature international companies with strong marketing capabilities
It is increasingly becoming an important foreign market entry method
Internet
Initially internet marketing focused on domestic sales
Dell Computer Corporation expanded its strategy of selling computers over the internet to foreign sites as well Dell began selling computers via internet to Malaysia, Australia, Hong Kong, New Zealand, Singapore, Taiwan, and other countries through:
virtual stores or internet
The same selling module has been launched in Europe
Contractual Agreement
These are long-term, non-equity association between a company and another in a foreign market. It generally involve the transfer of technology, processes, trademarks, or human skills. In short, they serve as a means of transfer of knowledge rather than equity
Licensing Franchising
Licensing
Licensing is a means of establishing a foothold in foreign market without large capital outlay Followings are granted in foreign licensing:
Patent rights Trademark rights Right to use technological processes
It is a favourite strategy for small and mediumsized companies
Licensing
Common Examples: Television Programs Pharmaceuticals Licensing is generally viewed as a supplement to exporting or manufacturing, rather than only means of entering into foreign markets
Licensing
Advantages of licensing are most apparent, when: When capital is scarce Import restrictions forbid other means of entry A country is sensitive to foreign ownership Patents and trademarks must be protected against cancellation for nonuse
Licensing
Risks of licensing are: Choosing wrong partner Quality and other production problem Payment problems Contract enforcement Loss of marketing control
Licensing
Licensing may be least profitable way of entering market But the risks and headaches are less than direct investments It is a legitimate means of capitalizing on intellectual property in a foreign market Such agreements also benefit the economies of the target countries
Franchising
It is a rapidly growing form of Licensing Franchiser provides:
Standard package of products, systems and management services
Franchisee provides:
Market knowledge Capital Personal involvement in management
Franchising
Franchises include:
Soft drinks Motels Retailing Fast foods Car rentals Automotive services Recreational services Variety of business services from print shops to sign shops
Franchising
More than 30,000 franchises of US firms are located in countries across the world Canada is the dominant market for US franchisers With Japan and the UK second and third in importance The Asia Pacific Rim has seen rapid growth as companies look to Asia for future expansion
Asia Pacific Rim

The Pacific Rim refers to places around the edge of the Pacific Ocean
Asia Pacific Rim

Australia Brunei Cambodia Canada Chile China Colombia Costa Rica Ecuador El Salvador Fiji Guatemala Honduras Hong Kong Indonesia Japan Malaysia Marshall Islands Mexico Federated States of Micronesia Nauru New Zealand Nicaragua North Korea Palau Panama Papua New Guinea Peru Philippines Russia Samoa Singapore Solomon Islands South Korea Taiwan Thailand Timor-Leste Tonga Tuvalu United States Vanuatu Vietnam
Franchising
Franchises were often among the first types of foreign retail business to open in emerging market economies of Eastern Europe, the former republics of Russia, and China McDonald's first store in Moscow had 700 seating capacity with 27 cash registers KFC in Beijing has the highest sales volume of any KFC store in the world
Franchising
Franchising is an attractive form of corporate organisation for companies wishing to expand quickly with low capital investment Foreign laws and regulations are friendly towards franchising because it tends to foster local ownership, operations and employment
Franchising
Two types: 1. Master franchise 2. Licensing Either of which can have a country s government as one partner
Master Franchise
Master Franchise is the most inclusive agreement It gives the franchisee the rights to a specific area (many are for an entire country), with the authority to sell or establish sub franchises The McDonald s franchise in Moscow is a master agreement owned by a Canadian firm and its partner, the Moscow City Council Department of Food Services
Licensing
Licensing a local franchisee the right to use a product, good, service, trademark, patent, or other asset for a fee Coca-Cola Company licenses local bottlers in an area or region to manufacture and market Coca-Cola using syrup sold by Coca-Cola
Strategic International Alliances

SIA is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective Its importance is in the competitive strategy in global marketing It is sought as a way to shore up weaknesses and increase competitive strength

Firms enter into SIA for:
Opportunities for rapid expansion into new markets Access to new technology More efficient production and innovation Reduced marketing costs Strategic competitive moves Access to additional sources of products and capital

Most visible SIAs are now in the airlines industry American Airlines Cathay Pacific British Airways Canadian Airlines Aer Lingus They are partners in the Oneworld Alliance, which integrates schedules and mileage programs
International Joint Ventures

It serves as a means of lessening political and economic risks by the amount of the partner s contribution to the venture IJVs provide a way to enter markets that pose legal and cultural barriers that is less risky than acquisition of an existing company

A JV is differentiated from other types of SIA or collaborative relationships It is a partnership of the two or more participating companies that have joined forces to create a separate legal entity JV are different than minority holdings by an MNC in a local firm

Four characteristics define JVs:
JVs are established, separate, legal entities They acknowledge intent by the partners to share in the management of the JV They are partnership between legally incorporated entities such as companies, chartered organizations, or governments, and not between individuals, and Equity positions are held by each partners
Consortia
Consortia are similar to joint ventures and could be classifies as such except for two unique characteristics: 1. They typically involve a large number of participants 2. They frequently operate in a country or market in which none of the participants is currently active
Consortia
They are developed to pool financial and managerial resources and to lessen risks Often huge construction projects are built under a consortium arrangement in which major contractors with different specialties form a separate company One firm usually acts as the lead firm or the newly formed corporation may exist independently of its originator
Consortia
Airbus is the most prominent international consortium It is Boeing s European competitor in the global aircraft market Airbus Industrie was originally formed with four partners:
France s Aerospatiale Matra Germany s Dasa aerospace unit of DaimlerChrysler Britain s BAE Systems Spain s Construcciones
Direct Foreign Investment

This is the fourth means of foreign market development and entry It means investment within a foreign country Companies may manufacture locally to:
Capitalize on low-cost labor To avoid high import taxes To reduce the high costs of transportation to market To gain access to raw material Or as a means of gaining market entry

Firms may either:
Invest in, or Buy local companies, or Establish new operations facilities

Several factors have influenced the structure and performance of DI:
Timing
First movers have advantages but are more risky
The growing complexity and contingencies of contracts Transaction cost structures Technology transfers Degree of product differentiations The previous experiences and cultural diversity of acquired firms Advertising and reputation barriers

As legal restrictions continue to ease with WTO and other international agreements, more and more large firms are choosing to enter market via direct investment

Similar to its Japanese competitors, Korea s Samsung has invested some $500 million to build television tube plants in Tijuana, Mexico, to feed the already huge NAFTA TV industry centered there Kyocera Corporation, a Japanese high-tech company, bought Qualcomm s wireless consumer phone business as a means of fast entry into the American market

Yahoo! Recently paid $1 billion for a 40 percent stake in Chinese competitor Alibaba Nestle is building a new milk factory in Thailand to serve the ASEAN Free Trade Area
Global Product
Quality
Global competition has shortened the product life cycle It has shifted the focus mainly on quality, competitive price and innovative products More competition, more choices has put more power in the hands of the consumer. The power in the marketplace is shifting from a sellers to a customers market Quality, as a competitive tool is not new to the business world. But it is the deciding factor in the world market
Quality
It can be defined on two dimensions: 1. Market-perceived quality 2. Performance quality Both are important concepts But consumer perception of a quality product often has to with market-perceived quality than performance quality
Example in Airlines
1. Performance quality
An airlines has achieved quality conformance with a safe flight and landing
2. Market-perceived quality
Consumer expects performance conformance quality to be more than safe flight and landing cost, timely service, frequency of flights, comfortable seating, performance of flight personnel from check-in to baggage claim, etc.
Maintaining Quality
Maintaining performance quality is critical But a product that leaves a factory frequently its performance quality is damaged, as it passes through the distribution chain This is a special problem for which production is distant than the market
Packaging
A product may have to change in number of ways ranging from simple packages to total redesign of the physical core product Electrolux offers cold-wash-only washing machines in Asian countries where electric power is expensive or scarce
Packaging
Product adaptation is often dictated by: Legal Economic Political Technological & climatic requirement of the local marketplace
Packaging
In India when Govt. strongly opposed foreign investment Pepsi-Cola changed its name to LeharPepsi to gain as much local support When the political climate turned favourable, the name returned to Pepsi-Cola Cheetos, a PepsiCo s Frito-Lay, is packaged in 15gram boxes in China so it can be priced at 1 yuan (12 cents). At this proce, even children with little spending money can afford Cheetos
Green Marketing
It is a term used to identify concern with the environmental consequences of a variety of marketing activities Two critical issues that affect product development are the:
control of the packaging component of solid waste Consumer demand for environmentally friendly products
Green Marketing
The European Commission has issued guidelines for ecolabeling that became operational in 1992 Under the directive, a product is evaluated on all significant environment effects throughout its life cycle, from manufacturing to disposal
Green Marketing
The EU law requires that packaging material through all levels of distribution, from the manufacturer to the consumer, be recycled or reused Each level of distribution chain is responsible for returning all packaging, packing, and other waste materials up the chain
Green Marketing
P&G in Germany introduced Lenor, a fabric softener in a super-concentrated form And it sold it in a plastic refill pouch that reduced packaging by 85% This move increased brand sales by 12% It also set a positive tone with the government regulators and activists The success of Lenor was replicated in US where P&G faced similar environmental pressure
Product & Culture

Cultural influences are interwoven with the perceived value and importance of market place on a product A product is more than a physical item It is a bundle of satisfaction (or utilities) that the buyer receives
Product & Culture

Only recently have Japanese consumers have taken an interest in dishwashers they simply didn t have room in the kitchen due to compact designs by Mitsubishi and others Financial companies have found it difficult to enter Muslim countries because they believe it promotes gambling
Product & Culture

When instant cake mixes were introduced in Japan there was no enthusiastic response Reason:
Japanese reserve cakes for special occasions They prefer cakes to be beautifully wrapped and purchased in pastry shops Many Japanese home do not have ovens
Innovative Products & Adaptations

An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market How people react to newness and how new a product is to a market must be understood From a sociological viewpoint any idea perceived as new by a group of people is a innovation

In evaluating the newness of a product, the international marketer must be aware that many products successful in the United States having reached the maturity or even decline stage in their life cycles, may be perceived as new in another country or culture and thus must be treated as innovations

Products new to a social system are innovations and knowledge about the diffusion (i.e. the process by which innovation spreads) of innovation is helpful in developing a successful product strategy. Sony s marketing strategies for the US introduction of its PlayStation 2 were well informed by its wild successes achieved six months earlier during the product s introduction in Japan Conversely mid 1990s dips in Japanese sales of Apple computers were preceded by dips in Apple s home US market.

A critical factor in the newness of a product is its effect on established patterns of consumption and behavior

A US cake mix company entered the British market but carefully eliminated most of the newness of the product. Instead of introducing the most popular American cake mixes the company asked 500 British housewives to bake their favorite cake Since the majority baked a simple very popular dry sponge cake, the company brought to the market a similar easy mix

The sponge cake mix represented familiar tastes and habits that could be translated into a convenience item and did not infringe on the emotional aspects of preparing a fancy product for special occasions. Consequently after a short period of time, the second company s product gained 30 to 35 per cent of the British cake mix market. Once the idea of a mix for sponge cake was acceptable the introduction of other flavors became easier.

The goal of a foreign marketer is to gain product acceptance by the largest number of consumers in the market in the shortest span of time New products are not always readily accepted by a culture; indeed they often meet resistance
Diffusion of Innovation
Diffusion of Innovation
The more innovative a product is perceived to be, the more difficult is to gain acceptance
Analyzing Product Components for Adaptation
Analyzing Product Components for Adaptation

A product is multidimensional Sum of all its features determines the amount of satisfaction received by the consumer To identify all the possible ways, a product may be adapted to a new market, its many dimensions have been divided into three distinctive dimensions Please refer to Product Component Model
Product Component Model
Core Component
It consists of physical product, which contains:
Its essential technology Its designs Its functional features
Here, product variations can be added or deleted as per local differences Major adjustments may be costly and require additional capital investment
Packaging Component
It includes : (See Fig) Apple computer found this out the hard way when it first entered Japanese market Some of its computers were return unused after customers found the wrapping on the instruction manual damaged
Support Service Component

It includes : (See Fig) Many otherwise successful marketing programs have failed due to little attention given to product component Repair and maintenance are specially difficult problems in developing countries
Global Brands
Global Brands
It is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors
Global Brands
It is the most valuable resource a company has Brand image is at the very core of business identity and strategy Brand name encompasses:
the years of advertising, Good will, Quality evaluation, Product experience And other beneficial attributes the market associates with the product
Global Brands
Even perceived globalness appears to lead to increase in sales Internet and other technologies accelerate the process of globalisation of brands A global brand gives company a uniform worldwide image that enhances cost savings & efficiency But not all companies believe that single global approach is the best
Global Brands
Companies such as Apple, Kellogg, Coca-Cola, Caterpillar and Levi s use the same brand worldwide Multinationals like Nestle, Mars, P&G and Gillette have some brands that are promoted worldwide and others that are country specific
Channel of Distribution Structure
Channel of Distribution
All consumer and industrial products go through a distribution process It includes:
Physical handling and distribution of goods Passage of ownership (title) Buying and selling negotiations between producers & middlemen and middlemen and customers
The structure of a distribution channel is determined by the marketing functions that specific organizations perform. Some channel members perform single functions - carriers transport products, and public warehouses store them. Others, such as third party logistics providers and wholesalers, perform multiple functions.
Channel structure affects: 1. Control over the performance of functions, 2. The speed of delivery and communication, and 3. The cost of operations
A direct manufacturer-to-user channel usually gives management greater control over the performance of marketing functions, distribution costs normally are higher, making it necessary for the firm to have substantial sales volume or market concentration With indirect channels, the external institutions or agencies (e.g. carriers, warehouses, wholesalers, retailers) assume much of the cost burden and risk, so the manufacturer receives less revenue per unit
Integrated Marketing Communications
Sales Promotions in International Markets

SP are marketing activities that simulates consumer purchases and improves retailer or middlemen effectiveness and cooperation In-store demo, samples, coupons, gifts, contests, sponsorships, sweepstakes, POPs are types of sales promotions
Sweepstakes
It is marketing promotions to generate enthusiasm and provide incentive to customers A consumers needs to submit free entries into drawings of chance (and not skill) that are tied to product or service awareness The featured prizes are given away by sponsoring companies. Prizes can vary in value from less than one dollar to more than one million U.S. dollars and can be in the form of cash, cars, homes, electronics, etc.
International PR
It is creating good relationship with press and other media to generate positive messages for customers, general public and government regulators It also manages unfavorable rumors, stories and events
International Advertising
Creating an international advertising campaign with the cultural uniqueness of market is the challenge which an international or global marketer faces
7 steps which are the basic framework and concept of international marketing: 1. Perform marketing research 2. Specify the goals of communication 3. Develop the most effective message(s) for the market segments selected 4. Select effective media 5. Compose and secure a budget 6. Execute the campaign 7. Evaluate the campaign relative to the goals specified
Advertising Strategy & Goals

Goals of advertising across the goal vary substantially. E.g. Chinese manufacturers are establishing new brands as their economy expands Unilever is introducing a new product-line extension for Dove shampoo in East Asian markets Russia s Aeroflot is trying to upgrade its quality image

All these marketing problem require:
Careful marketing research Thoughtful & creative advertising campaigns in country, regional and global markets, respectively
Due to increased competition and increasing sophistication of foreign consumers, it has led to more sophisticated advertising strategies

MNCs faces problems like:
Increased costs Problems of coordinating advertising programs in multiple countries Desire for a broader company or brand image
Hence, MNCs seek greater control and efficiency without sacrificing local responsiveness

In the quest for more effective and responsive promotion programs, MNCs have Policies covering centralised or decentralised authority Use of single or multiple foreign or domestic agencies Appropriation and allocation procedures Copy, media and research are being examined

More and more multinational companies can be seen to be managing the balance between standardization of advertising themes and customization
Legal Constraints
Legal Constraints
Law that control advertising vary from country to country In Germany it is illegal to use any comparative terminology, you can be sued by a competitor if you do Belgium and Luxembourg have banned comparative advertising. Whereas it is authorized in UK, Ireland, Spain and Portugal It allows implicit comparison without naming the competitor but bans explicit comparisons between named products
Legal Constraints
In Asia, an advertisement showing chimps choosing Pepsi over Coke was banned The phrase the leading cola was accepted only in Philippines
Legal Constraints
An Indian court ordered to stop claiming that its new Pepsodent toothpaste was 102% better than the leading brand. Colgate was not mentioned in the ad but a model was shown mouthing the word Colgate and the image was accompanied by a ting sound recognized in all Colgate ads
Legal Constraints
Advertising of pharmaceuticals is restricted in many countries China is relaxing some regulations while strengthening others. For example, Only recently government has begun to require concrete proof of ad claims In Kuwait, government controlled TV network allows only 32 minutes of advertising per day in the evening

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International Marketing In The Changing Economics Environment

It is the application of marketing principles to more than one country

Global Vs International Marketing

Global Vs International Marketing

Stages of Global Marketing

Stage 1: Domestic Marketing

Stage 2: Export Marketing

Stage 3: International Marketing

Stage 4: Multinational Marketing

Stage 5: Global Marketing

Global Vs International Marketing

Globalization of and by the economy

Globalization of and by information technology

Globalization of and by communication technology

Globalization of and by politics

Globalization of and by business

Globalization of and by business

Globalization of and by education

Globalization of and by education

10 Tips for going global

Economic Prospects for 2010

Basis for Trade

Basis for Trade

The Economics Basis for Trade

Why do nations trade?

Why do nations trade?

Why do nations trade?

The Economics Basis for Trade

The Economics Basis for Trade

Basis for Trade

Absolute advantage in trade

Absolute advantage in trade

Comparative advantage in trade

Comparative advantage in trade

Benefits of Economic Integration

Opportunities for employment

Increase in Foreign Direct Investments

Disadvantages of Economic Integration

Creation Of Trading Blocs

Foreign investments can also be perceived as s threat to sovereignty

Analyzing global marketing opportunities

Domestic and Foreign Market Research

Primary Market Research

Primary Market Research

Secondary Market Research

Research on the Internet

Research on the Internet

Observational research chat rooms, blogs and personal websites can be

Cultures are just different, not right or wrong or better or worse

South Asia Region

Least Developed Countries (LDCSs)

Member states of the EU

Barriers to entering global markets for consumers Services

Restrictions on Trans-border Data Flows

Protection of Intellectual Property

Protection of Intellectual Property

Protection of Intellectual Property

Cultural Barriers and adaptations

Cultural Barriers and adaptations

Cultural Barriers and adaptations

Cultural Barriers and adaptations

Cultural Barriers and adaptations

Cultural Barriers and adaptations

Cultural Barriers and adaptations