Frame Work of International Marketing-

8/8/2019 Frame Work of International Marketing-

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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

Frame Work of International Marketing-

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