Transcript
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FRAMEWORK OF
INTERNATIONAL MARKETING
Prof. A.K. Sengupta
Former Dean, Indian Institute of Foreign Trade
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Core Concept of Marketing
NeedWant
Demand
Product
Exchange
Transaction
Market
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The Concept of International Marketing
Philip Kotler defines marketing as the human activity
directed at satisfying needs and wants through exchange
process
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Anticipative marketer looks ahead at customers needs
and wants in the near future.
Creative Marketer discover and produces solutions
that a customer did not ask for but would
enthusiastically respond to (eg. Walkman, VCR, CD,
ATMs, Cellular Phones.
International Marketing is defined as marketing
activity carried out across national boundaries.
Every firm has to operate in a given set up
environmental factors over which it has little control.
These are social, economic, political, legal and
technological environment uncontrollable elements
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Controllable elements product, price,
distribution and promotion.
Consequent to economic liberalization, a firm
operating in domestic market can no longer
rely upon its home market because the firmshome market is now and export market for
everybody else
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Domestic and International Environmental
Challenges
Domestic Environmental challenges
Economic Environment:
Domestic Tariff Structure
Import Duty Exemption Schemes offered by home
government determine cost of imported inputs affectsfinal cost of production affects competitiveness
Exchange rate and foreign exchange regulations
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Infrastructure
Development of physical, financial, human andinstitutional infrastructure
Physical Infrastructure roads, telecommunications,port handling cost of logistics
Trading hubs Singapore, Hong Kong, Dubai
Overseas Environmental Challenges
Political
Stability of Government
Pakistan no MFN status to India
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CIS countries transition phase unpredictable
environment
Economic
Economic uncertainty and hyper inflation CIS
Brazil, Argentina
Soundness of financial institutional system
Foreign Exchange RiskLegal
Well defined, sound, legal systems in target
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Country's at higher stage of a economic
development and democratic form of
government, provide, relatively
independently and more just legal system
CIS and China transition phase fromplanned economy to market economy
Cultural and social
Countries with cultural similarity easily
approachable
Affects product modifications especially in
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Social environment
Buying decision
Communications strategies to be adjusted
according to social traits
Social beliefs and aspiration vary significantly
among countries. Marketing mix to be tailor
made to suit social norms
Socio cultural factors affects buyer seller
relationship
e . Americans result oriented
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Competition:
Product Imported
Produced locally
Exporters own country
Products imported from competing countries
if have different business environment affects
competitiveness
Marketing barriers (Tarrifs and Non Tarrifs)
make marketing mix decision complex
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Marketing Channels
High Income Countries organized and largescale retail outlets have higher stake in
business negotiations
Packaging customers attention
Developing and Least Developed Countries
size of retail outlets are small
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Technology
Variation in availability of technology between developed and emerging markets of
India (Mainly developing countries)
Transfer of technology
Opportunities for developing countries likeIndia and China to market products atcompetitive price in other developing countries
and LDCEg. Indian Bajaj Three Wheelar to Bangladeshand Indonesia
Indian turn key projects to Africa and Middle
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Why Should a Firm
Enter International
Markets?
Growth
Profitability
Economies of
scale
Spreading Risk
Access to
Imported inputs
Uniqueness of
Product or
services
Marketing
Opportunities
Due to life
Cycle
Spreading
R & D
Cost
Competition inDomestic
market
Govt. Policies &
Regulations
Spin - off
benefits
Strategic
Vision
Reasons for Entering International Markets
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WHYCOMPANIES GO
INTERNATIONAL?
Two Factors: Pull factors
: Push Factors
Pull factors: Proactive reasons forces of attraction pulls the
business to foreign markets profit, growth etc.
Push factors: Reactive reasons compulsion of domestic market
prompts companies to internationalize saturation etc.
Profit Motive:
International business profitable than domestic market
investment in low cost locations.
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Growth Opportunities
Economic growth in many foreign countries strong attraction.
Domestic Market Constraints
Market for product tends to saturate or decline (happens frequently in
advanced countries) Transfer of technology to developing countries.
Scale economies Need to enter foreign market in addition to domesticmarket Korea economic size plants
Competition
Competition driving force behind internationalization A protected
market motivates domestic sales
Economic liberalization in 1991 increased competition from foreign
firms as well as domestic firms many Indian companies going
international.
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Government Policies and Regulations
Incentives:
Incentives offered by government to export and invest in foreigncountries.
Governments of many countries offer incentives to foreign investors.
Obligations:
Foreign exchange needed to finance imports, payment of royalty etc.
Companies are subject to specific export obligations export house,
EOUs,
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International Marketing vs Domestic
Marketing
Similarities
Both in domestic marketing as well as in international
marketing success depends upon satisfying the basicrequirements of the consumer
It is necessary build goodwill both in domestic and
international market Research & Development for product improvement is
necessary in both the market
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Lower Mobility of Factors of Production
Differences in market characteristics Differences in procedures and documentation
Grater degree of risk Cultural dimensions of international marketing
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International Marketing vs Domestic
Marketing
Similarities
Both in domestic marketing as well as in international
marketing success depends upon satisfying the basicrequirements of the consumer
It is necessary build goodwill both in domestic and
international market
Research & Development for product improvement is
necessary in both the market
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