International Marketing

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Scope of International Marketing

The scope of international marketing identifying needs and wants of customers in different markets and cultures,

providing products, services, technologies and ideas to give the firm a competitive marketing advantage plus

distributing and exchanging products and services internationally through one or a combination of foreign market

entry modes.

EPRG model

Ethnocentrism Polycentrism Geocentrism

Definition Based on ethnicity Based on political orientation Based on geography

Strategic Orientation/Focus Home Country Oriented Host Country Oriented Global Oriented

Function Finance Marketing R&D

Product Industrial products Consumer goods -

Geography Developing countries - US and Europe

1. ETHOCENTRIC (home country orientation)

The general attitude of a firm's senior management team is that nationals from the organisation's home country are

more capable to drive international activities forward than non-native employees working at its headquarters or

subsidiaries. The practices and policies of headquarters and of the operating company in the home country become

the default standard to which all subsidiaries need to comply. This mind set has as advantages that it overcomes a

potential shortage of qualified managers in host nations by expatriating managers from the home country, creates a

unified corporate culture and helps transfer core competences more easily by deploying nationals throughout the

organisation. The main disadvantages are that an ethnocentric mindset can lead to cultural short-sightedness and to

not promoting the best and brightest in a firm. Ex. Surf – Super washout in Japan- Unilever enters Japan Detergent

Market

• It releases Surf Super concentrate washing powder in Japan

• Measured sachets for Convenience

• Fresh Smell

• WHAT WENT WRONG??

Un explored market

• Washing powder did not dissolve completely due to weather conditions

• Low agitation washing machines were more popular in Japan, in which the super concentrate surf washing

powder did not wash completely

• Fresh smell was not very significant

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Overseas marketing is looked after by home country nationals

No systematic research is conducted overseas

No major modifications are made to products sold in overseas markets

Prices are calculated on the same basis as in the home market with the addition of overseas distribution

costs

Promotion and distribution strategies are similar to that employed in the home country

Strong reliance on export agents

Costs and Benefits of Ethnocentrism

Costs Benefits

Ineffective Planning due to poor feedback Simple organization

Subsidiary ‘valuable’ executive flight Greater communication and control

Fewer innovations

Inability to build a high caliber local org.

Lack of flexibility and responsiveness

2. POLYCENTRIC (host country orientation)

This world view has as dominant assumption that host country cultures are different making a centralised, one-size-

fits-all approach unfeasible. Local people know what is best for their operation and should b given maximum

freedom to run their affairs as they see fit. This view alleviates the chance of cultural myopia and is often less

expensive to implement than ethnocentricity because it needs less expatriate managers to be send out and

centralised policies to be maintained. The drawbacks of this attitude are that it can limit career mobility for both

local and foreign nationals, isolate headquarters from foreign subsidiaries and reduces opportunities to achieve

synergy. Ex- McDonalds – Veg burgers in India

Subsidiaries are established in overseas market

Each subsidiary operates independently with its own marketing objectives and plans

Marketing activities are organized on country by country basis

Marketing research is conducted independently in each country

Separate product lines are developed in each country

Home country products are modified to meet local needs.

Each subsidiary will have its own pricing and promotion policy

Sales personnel from those countries

Traditional channels of distribution of those countries

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Costs and Benefits of Polycentrism[edit]

Costs Benefits

Waste due to duplication Intense exploitation of local markets

Localization costs of “universal” products Better sales due to better-informed local

management

Inefficient use of home-country experience More initiative for local products

Excessive regard for local traditions at expense of global

growth More host government support

Good local managers with high morale

3. REGIOCENTRISM - A regional orientation--Recognizes regional commonalities and leads to the design of regional

strategies. In regiocentric approach, the firm accepts a regional marketing policy covering a group of countries which

have comparable market characteristics. The operational strategies are formulated on the basis of the entire region

rather than individual countries. The production and distribution facilities are created to serve the whole region with

effective economy on operation, close control and co-ordination.

For Example a US company that focuses on the countries included in the NAFTA is a Regiocentric Orientation.

Similarly, a European company that focuses its attention on the Europe is Regiocentric.

4. GEOCENTRIC (world orientation)

This orientation does not equate superiority with nationality. Within legal and political limits, executives try to seek

the best men, regardless of nationality, to solve the company's problems wherever in the world they occur. This

attitude uses human resources efficiently and furthermore helps to build a strong culture and informal management

networks. Drawbacks are that national immigration policies may put limits to its implementation and it might be a bit

expensive compared to polycentrism. It attempts to balance both global integration and local responsiveness

Costs and Benefits of Geocentrism[edit]

Costs Benefits

High communication and travel costs Integrated global outlook

Educational costs at all levels More powerful total company throughout

Time spent in consensus decision-making Better quality of products and services

International headquarters bureaucracy Worldwide utilization of best resources

“Too wide” distribution of power Improved local country management

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Personnel problems, especially those of international executive reentry Greater commitment to global objectives

Higher global profits

Regiocentric and Geocentric

• Region or entire world as potential market

• Firm develops policies and organizes activities on a regional or worldwide basis

• Marketing personnel from the region or from any country

• Standardized product lines for regional or worldwide markets

• Regional or Global channels of distribution are also developed

Global Segmentation and Positioning

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Market segmentation involves grouping your various customers into segments that have common needs or will

respond similarly to a marketing action. Each segment will respond to a different marketing mix strategy, with each

offering alternate growth and profit opportunities

Positioning is developing a product and brand image in the minds of consumers. It can also include improving a

customer's perception about the experience they will have if they choose to purchase your product or service. The

business can positively influence the perceptions of its chosen customer base through strategic promotional

activities and by carefully defining your business' marketing mix.

Effective positioning involves a good understanding of competing products and the benefits that are sought by your

target market. It also requires you to identify a differential advantage with which it will deliver the required benefits

to the market effectively against the competition. Business should aim to define themselves in the eyes of their

customers in regards to their competition.

“We are saying you've got to understand and choose the customers you want to serve. Don't just go after everyone.

Define the target market carefully through segmentation and then really position yourself as different and as

superior to that target market. Don't go into that target market if you're not superior.” --Phillip Kotler

Global Market Segmentation Strategies

Five criteria must be present for a group of customers to be a ‘segment.’ Each segment must be:

Measurable

Different enough to warrant changes in the marketing mix

Accessible through marketing and distribution channels

Large enough to be profitable

Stable enough to allow for proper targeting and measurable response

Three Broad Categories of Global Segmentation

Country-based, or macro, segmentation

Uses geographic, demographic and socioeconomic variables such as location, GNP per capita, population size

or family size to group countries intro market segments

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• Enables a company to centralize its operations and save on production, sales, logistics and support

functions

• Doesn’t take into consideration consumer differences within each country and among the country

markets that are clustered together

• Fails to acknowledge the existence of segments that go beyond the borders of a particular

geographic region

Consumer based, or micro, segmentation

Consumers are grouped based on common characteristics such as cultural preferences, values and attitudes, or

lifestyle choices

• Employs psychographic and behavioristic segmentation variables

• Certain segments identified to have the same characteristics may be present on a global scale, while

others may be particular to a specific country or region

Business to Business Segmentation

• Company-based segmentation in the case of business to business market scenarios

Several major differences are apparent between the consumer and business-to-business segmentation

processes

• The B2B market rarely exceeds several hundred company clients, while consumer markets number

literally millions of customers

• Business volume far outstrips individual consumer purchasing

• The dynamics of the B2B purchasing process are far more complex

• Segmenting B2Bs Based on Behavior

Industry

Geography

Decision maker demographics and lifestyle

Surveyed data

Firmographics and payment behavior

Segmentation Scenarios

Universal or global segments

Regional segments

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Unique (diverse) segments

Positioning

The formulation of a positioning strategy (local or global) includes the following steps:

1. Identify the relevant set of competing products or brands.

2. Determine current perceptions held by consumers about your product/brand and the competition.

3. Develop possible positioning themes.

4. Screen the positioning alternatives and select the most appealing one.

5. Develop a marketing mix strategy.

6. Over time, monitor the effectiveness of your positioning strategy and if needed, conduct an audit.

Uniform versus Localized Positioning Strategies

Universal Positioning Appeals

Positioning themes:

Specific product features/attributes

Product benefit, solutions for problems

user category

user application

heritage

lifestyle

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Contract manufacturing

Contract manufacturing is a process that establishes a working agreement between two companies. As part of the

agreement, one company custom produces parts or other materials on behalf of their client. In most cases, the

manufacturer also handles the ordering and shipment processes for the client. As a result, the client does not have to

maintain manufacturing facilities, purchase raw materials, or hire labor in order to produce the finished goods.

A contract manufacturer ("CM") is a manufacturer that contracts with a firm for components or products. It

is a form of outsourcing. Many industries use this process, especially the aerospace, defense, computer,

semiconductor, energy, medical, food manufacturing, personal care, and automotive fields.Ex- The iPad and

iPhone, which are products from Apple Inc., are manufactured in China by Foxconn. Hence, Foxconn is a

contract manufacturer and Apple benefits from a lower cost of manufacturing devices. Ex:

◦ Nike : South east Asia (athletic footwear's)

◦ Mega Toys : China

Business model

In a contract manufacturing business model, the hiring firm approaches the contract manufacturer with a design or

formula. The contract manufacturer will quote the parts based on processes, labor, tooling, and material costs.

Typically a hiring firm will request quotes from multiple CMs. After the bidding process is complete, the hiring firm

will select a source, and then, for the agreed-upon price, the CM acts as the hiring firm's factory, producing and

shipping units of the design on behalf of the hiring firm.

Benefits

Cost Savings – Companies save on their cost of capital because they do not have to pay for a facility and the

equipment needed for production. They can also save on labor costs such as wages, training and benefits.

Some companies may look to contract manufacture in low-cost countries, such as China, to benefit from the

low cost of labor.[1]

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Mutual Benefit to Contract Site – A contract between the manufacturer and the company it’s producing for

may last several years. The manufacturer will know that it will have a steady flow of business until then.[1]

Advanced Skills – Companies can take advantage of skills that they may not possess, but the contract

manufacturer does. The contract manufacturer is likely to have relationships formed with raw

material suppliers or methods of efficiency within their production.[2]

Quality – Contract Manufacturers are likely to have their own methods of quality control in place that helps

them to detect counterfeit or damaged materials early.

Focus– Companies can focus on their core competencies better if they can hand off base production to an

outside company.[2]

Economies of Scale – Contract Manufacturers have multiple customers that they produce for. Because they

are servicing multiple customers, they can offer reduced costs in acquiring raw materials by benefiting

from economies of scale. The more units there are in one shipment, the less expensive the price per unit will

be

Risks

Lack of Control – When a company signs the contract allowing another company to produce their product,

they lose a significant amount of control over that product. They can only suggest strategies to the contract

manufacturer; they cannot force them to implement them.

Relationships - It is imperative that the company forms a good relationship with its contract manufacturer.

The company must keep in mind that the manufacturer has other customers. They cannot force them to

produce their product before a competitor’s. Most companies mitigate this risk by working cohesively with

the manufacturer and awarding good performance with additional business.

Quality concerns – When entering into a contract, companies must make sure that the manufacturer’s

standards are congruent with their own. They should evaluate the methods in which they test products to

make sure they are of good quality. The company has to rely on the contract manufacturer for having good

suppliers that also meet these standards.

Intellectual Property Loss – When entering into a contract, a company is divulging their formulas or

technologies. This is why it is important that a company not give out any of its core competencies to contract

manufacturers. It is very easy for an employee to download such information from a computer and steal it.

The recent increase in intellectual property loss has corporate and government officials struggling to improve

security. Usually, it comes down to the integrity of the employees.

Outsourcing Risks – Although outsourcing to low-cost countries has become very popular, it does bring along

risks such as language barriers, cultural differences and long lead times.[2] This could make the management

of contract manufacturers more difficult, expensive and time-consuming.

Capacity Constraints – If a company does not make up a large portion of the contract manufacturer’s

business, they may find that they are de-prioritized over other companies during highproduction periods.

Thus, they may not obtain the product they need when they need it.

Loss of Flexibility and Responsiveness - Without direct control over the manufacturing facility, the company

will lose some of its ability to respond to disruptions in the supply chain. It may also hurt their ability to

respond to demand fluctuations, risking their customer service levels.

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Joint venture

A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and

new assets by contributing equity. They exercise control over the enterprise and consequently share revenues,

expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by

guarantee with partners holding shares.

With individuals, when two or more persons come together to form a temporary partnership for the purpose of

carrying out a particular project, such partnership can also be called a joint venture where the parties are "co-

venturers".

The venture can be for one specific project only - when the JV is referred to more correctly as a consortium (as the

building of the Channel Tunnel) - or a continuing business relationship. The consortium JV (also known as a

cooperative agreement) is formed where one party seeks technological expertise or technical service arrangements,

franchise and brand use agreements, management contracts, rental agreements, for one-time contracts. The JV is

dissolved when that goal is reached.

Joint ventures are collaborative arrangements between unrelated parties, which exchange or combine

various resources while retain their separate and legal status.

Types

◦ Equity – each partner taking an equity stake in the venture, by setting up a joint subsidiary with its

own share capital and legal status as a corporate equity.

◦ Contractual – there is an agreement for knowledge sharing, mutual licensing and other

arrangements for resource sharing

Some major joint ventures include Dow Corning, MillerCoors, Sony Ericsson, Penske Truck Leasing, Norampac, and

Owens-Corning.

A successful joint venture can offer:

access to new markets and distribution networks

increased capacity

sharing of risks and costs with a partner

access to greater resources, including specialised staff, technology and finance

The risks of joint ventures

Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems

are likely to arise if:

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the objectives of the venture are not totally clear and communicated to everyone involved

the partners have different objectives for the joint venture

there is an imbalance in levels of expertise, investment or assets brought into the venture by the different

partners

different cultures and management styles result in poor integration and co-operation

the partners don't provide sufficient leadership and support in the early stages

Advantages

◦ Firms can expand into several foreign markets simultaneously.

◦ Local partner provides valuable knowledge of local market.

◦ By sharing distribution network premises and employees of local partner, cost and start time can be

reduced.

◦ Business failures are shared.

◦ In case when govt. does not allow 100% FDI, JVs are good mode of entering foreign market.

Disadvantages

◦ JV risks giving control of its technology to its partner.

◦ JV does not give a firm the tight control over its subsidiaries.

◦ Shared ownership arrangements can lead to conflicts and battles for control between the investing

firms.

◦ It may difficult to withdraw from a JV agrements.

◦ Not successful if there is lack of close coordination and trust between firms.

◦ Profits are required to be shared.

Mergers and Acquisitions

Merger is defined as a combination of two or more companies into a single company. A merger can take

place either as an amalgamation or absorption.

Acquisition involve buying the assets of another company. These assets may be tangible assets like a

manufacturing unit or intangible assets like brands. In such acquisitions, the acquirer company can limit its

acquisitions to those parts of the firm that coincide with the acquirer’s needs.

The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects

(particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all

situations. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas

an acquisition occurs when one company takes over another and completely establishes itself as the new owner (in

which case the target company still exists as an independent legal entity controlled by the acquirer). Either structure

can result in the economic and financial consolidation of the two entities. In practice, a deal that is an acquisition for

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legal purposes may be euphemistically called a "merger of equals" if both CEOs agree that joining together is in the

best interest of both of their companies, while when the deal is unfriendly (that is, when the target company does

not want to be purchased) it is almost always regarded as an "acquisition".

Types of M&A by functional roles in market[edit]

The M&A process itself is a multifaceted which depends upon the type of merging companies.

A horizontal merger is usually between two companies in the same business sector. The example of

horizontal merger would be if a health care system buys another health care system. This means that

synergy can obtained through many forms including such as; increased market share, cost savings and

exploring new market opportunities.

A vertical merger represents the buying of supplier of a business. In the same example as above if a health

care system buys the ambulance services from their service suppliers is an example of vertical buying. The

vertical buying is aimed at reducing overhead cost of operations and economy of scale.

Conglomerate M&A is the third form of M&A process which deals the merger between two irrelevant

companies. The example of conglomerate M&A with relevance to above scenario would be if health care

system buys a restaurant chain. The objective may be diversification of capital investment.

Arm's length mergers[edit]

An arm's length merger is a merger: 1. approved by disinterested directors and 2. approved by disinterested

stockholders:

″The two elements are complementary and not substitutes. The first element is important because the directors

have the capability to act as effective and active bargaining agents, which disaggregated stockholders do not. But,

because bargaining agents are not always effective or faithful, the second element is critical, because it gives the

minority stockholders the opportunity to reject their agents' work. Therefore, when a merger with a controlling

stockholder was: 1) negotiated and approved by a special committee of independent directors; and 2) conditioned

on an affirmative vote of a majority of the minority stockholders, the business judgment standard of review should

presumptively apply, and any plaintiff ought to have to plead particularized facts that, if true, support an inference

that, despite the facially fair process, the merger was tainted because of fiduciary wrongdoing.″[16]

Strategic Mergers[edit]

A Strategic merger usually refers to long term strategic holding of target (Acquired) firm. This type of M&A process

aims at creating synergies in the long run by increased market share, broad customer base, and corporate strength of

business. A strategic acquirer may also be willing to pay a premium offer to target firm in the outlook of the synergy

value created after M&A process.

So-called 'Acqui-hires'[edit]

An acquisition is sometimes referred to as an acqui-hire when the acquiring company seeks primarily to obtain the

target's staff, which may have expertise in a particular area in which the acquiring company sees itself as weak. This

type of acquisition is common in the technology industry.

Advantages of Mergers

Reducing competition

Getting access to proprietary products or services

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Gaining access to new products and services

Access to technical expertise

Access to an established brand name

Economies of scale

Diversification of business risk

Disadvantages of Mergers & Acquisitions

Incompatibility of top management

Clash of corporate cultures

Operational problems

Increased business complexity

Loss of organizational flexibility

notable M&A deals from 2010 to 2013 include

Year Purchaser Purchased Transaction value (in USD)

2011 Google Motorola Mobility 9,800,000,000

2011 Microsoft Corporation Skype 8,500,000,000

2011 Berkshire Hathaway Lubrizol 9,220,000,000

2012 Deutsche Telekom MetroPCS 29,000,000,000

2013 Softbank Sprint Corporation 21,600,000,000

2013 Berkshire Hathaway H. J. Heinz Company 28,000,000,000

2013 Microsoft Corporation Nokia Handset & Services Business 7,200,000,000

Wholly Owned Subsidiary ( pg 2.27 maheshwari)

A company whose common stock is 100% owned by another company, called the parent company. A company can

become a wholly owned subsidiary through acquisition by the parent company or spin off from the parent company.

In contrast, a regular subsidiary is 51 to 99% owned by the parent company. One situation in which a parent

company might find it helpful to establish a subsidiary company is if it wants to operate in a foreign market. This

arrangement is common among high-tech companies who want to retain complete control and ownership of their

technology.

Wholly owned subsidiaries allow the parent company to retain the greatest amount of control, but also leave the

parent with all the costs and risks of full ownership. When a lesser number of costs and risks are desirable, or when it

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is not possible to obtain complete or majority control, the parent company might introduce an affiliate, associate or

associate company in which it would own a minority stake.

In a wholly owned subsidiary, the parent company owns all of the shares of the company and there are no minority

shareholders. The subsidiary continues to operate with the permission of the parent company. The parent company

may or may not have direct input into the subsidiary operations and management.

A company may continue the operations of a wholly owned subsidiary rather than merge and integrate their

operations for a variety of reasons. For example, the subsidiary may be located in a country different from that of

the parent company. Having a subsidiary may be important for a variety of tax and tariff reasons. Another reason

may be to preserve the brand and identity in of the wholly owned subsidiary.

Why It Matters:

Wholly owned subsidiaries enable holding companies (i.e. the parent company) to maintain operations in diverse

geographic areas, market areas, and even entirely separate industries, creating an important hedge against changes

in the market, geopolitical and trade practice changes, and declines in industry sectors.

For example, American Broadcasting Company (better known as ABC TV) is a wholly owned subsidiary of The Walt

Disney Company since Walt Disney is the sole owner of ABC.

This is different from National Broadcasting Company (better known as NBC) which is jointly owned by Comcast and

General Electric or CBS Corporation which is a corporation owned by shareholders.

Strategic Alliance(more on chap-6 maheshwari)

In a strategic alliance both parties contribute to their joint venture their respective resources and capability

Aim is to add greater value to their respective positions

By doing so, to

◦ Increase their financial return

◦ To access the capability of their partner which they themselves lack

◦ To acquire skills that they themselves may lack

Characteristics of Inter’l Strategic Alliance

1. Number of partners may be two or more

2. Industry characteristics of partners may or may not be different

3. Size of partners: same or divergent

4. Nationality of partners: Local or Foreign

5. Formality of alliance ; Formal/Informal

6. Equity or non-equity

7. Nature and extent of commitment of parties to an alliance: Equity or Commitment (Intensity)

8. 8. Length of association: depends on mutuality

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9. 9. Number of foreign markets for joint activity depends on agreement

10. 10. Initiating source: from inside the alliance or Govt Intervention

11. 11. Importance of alliance partners: Minor/ significant

12. 12. Nature of alliance goals: Technological, market entry/expansion, competition, and access to resources,

etc.

Stages of Alliance Formation

1. Strategy Development: feasibility, objectives and rationale

2. Partner Assessment

3. Contract Negotiation

4. Alliance Operation

5. Alliance Termination

Objectives of a SA

1. To Enhance Capability and Competence: Nissan sources Maruti’s A-Star small car from its Manesar factory

and sells them as Nissan Pixo in Europe

2. To Enhance Value Creation: Maruti & Volks Wagon have planned joint action in product development & mfg.

in India.

• To Leverage Resources – Hamel & Prahlad have suggested that strategic alliances may be used to -

• concentrate resources

• accumulate resources

• Complement resources

• Conserve resources

• Recover resource

• 4. To Enhance Market Position and Achieve Business Development

• 5. To Achieve Globalisation

• 6. Risk Management: to maximize the inputs of competence and experience to projects that are novel,

uncertain or ambiguous

Types of Strategic Alliances

• Equity and Non-equity Alliances (cooperative alliances)

• Equity alliance can be in the form of separately contributing in the equity of a joint venture or reciprocal

minority participation in one or each other’s equity.

• Functional or cooperative Alliances:

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– Product and Service Alliances - jointly market complementary products or a new product/service,

Star Alliance

– Promotional Alliances: PepsiCo forged alliance with Adidas, Microsoft, Yahoo! And Indian Partners

for World Cup Cricket 2007

– Logistical Alliances: Ford Motor Company’s alliance with United Parcel Company to facilitate the

delivery of vehicles from Ford plants to dealers and customers in North America.

– Research and Development Alliances: Hero Motocorps has joined hands with the US-based Eric Buel

Racing (EBR) and Austria-based AVL to source technology for building products and engines of

different categories.

– Acquisition Alliance: Shell and the Indian Consortium led by state-run ONGC have entered into an

alliance to acquire 20% stake in a giant offshore field in Mozambique.

Benefits of SA

• Flexibility through collaboration – Small funds

• Risk and cost are also shared

• Synergy leads to achieve co-specialisation: IBM-Cisco alliance

• Scope of internationalisation broadens due to Cheaper and comfortable market entry

• Achieving necessary cost and differential advantages by reconfiguring its value activities

• Brings in technology to the marketplace faster

• Facilitate the learning experience

• To position against a potential powerful rival: Yahoo & e-bay against Google

Costs associated with Strategic Alliances

1. Cost of coordinating the often divergent interests of the partners.

2. Alliance may create potential competitors.

3. Alliance can create an adverse bargaining position when one partner captures a greater share of the value added.

4. Alliances may consume an inordinate amount of management time to sort out likely differences.

Conflicts in SA

• Language and cultural differences may lead to differences in communication styles and conflict handling.

• Staff appointments to the alliance.

• Disagreements over alliance autonomy, strategy and policy, and a host of operational aspects.

• Use of transfer pricing and profit remittances by foreign partner as damaging to the performance of alliance.

• The utilization and security of technology and intellectual property.

• Conflict between the ‘parents’.

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Suitability of International SA

• Local Partners Knowledge Pool - Honda entered India, it formed a joint venture with Hero group, Samsung

entered India in December 1996, it formed a joint venture with Videocon.

• Host country’s Regulations and Requirements – MBRT Cap of 51%

• Sharing Risks among the Partners: Airbus

• Sharing technology : Ericson & Soni

• Economies of Scale : Toyota with Kirloskar

• Different Objectives: CItoh Japan), Tyson Foods (United States) and Provemex (Mexico) for yakitori.

Managing Strategic Alliances

• Partner Selection: Strategic fit (complementary skills and resources), organisational fit (in terms of structures,

processes, and history), & cultural fit (sharing norms and values), level of internationalisation, broader scope

of products, and competitive intensity (levels of competition)

• Developing Appropriate processes –designing structures and processes include the extent to which

management addresses the level of internalisation of the partners, scope economies and competitive

intensity. Assessment of learning trajectories fostering transparency, and building trust.

• Designing controls and coordination mechanisms.

Some examples of Strategic Alliances

In R&D:

Microsoft and Nokia-a software partnership for Nokia’s Windows Phones.

CISCO Systems’ agreement with China’s biggeston- line commercial company Alibaba, to explore business

services for SMEs.

Claris (India) manufacturer of sterile injectables has an out-licensing agreement with pfizer to develop

products for the US.

Manufacture :Chrysler–Fiat partnership to build compact and subcompact jeeps

GSK- Dr.ReddyLabs: The Indian company will manufacture nearly100 products mainly under GSK brand name

for sale in some emerging markets.

Marketing: Abbott(US)’s alliance with Zydus-Cadila of Ahmadabad whereby Abbott will license 24 branded

generics of Zydus in 15 emerging markets.

WIPRO-GE jointventure to distribute approximately 85% of GE’s healthcare products and solutions in India.

Pfizer and Biocon: To market Biocon’s insulinbiosimilar products in world markets.

For Market Entry:

Tommy Hilfiger/PHV group last October acquired a stake in Murjani group’s Arvind Murjani Brands in a

possible move to bring the former’s brands in to India

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Transcend Information Inc, a global player in many telecom accessories has an agreement with Bharti

Teletech to distribute the entire portfolio of Transcend products in India

For Sales:

Nestle and General Mills (US) agreement whereby the product Honey net Cheerios was made in General

Mills’ US plants,

Theory of International Product Life Cycle (IPLC)

During the introduction stage, the product is new and not completely understood by most consumers.

Customers that do understand the product may be willing to pay a higher price for a cutting-edge good or

service. Production is dependent on skilled laborers producing in short runs with rapidly changing

manufacturing methods. The innovator markets mostly domestically, occasionally branching out to sell the

product to consumers in other developed countries.

International competition is usually nonexistent during the introduction stage, but during the growth stage

competitors in developed markets begin to copy the product and sell domestically. These competitors may

also branch out and begin exporting, often starting with the county that initially innovated the product. The

growth stage is also marked by an emerging product standard based on mass production. Price wars often

begin as the innovator breaks into an increasing amount of developed countries, introducing the product to

new and untapped markets.

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At some point, the product enters the maturity stage of the international product life cycle and even the

global marketplace becomes saturated, meaning that almost everyone who would buy the product has

bought it, either from the innovating company or one of its competitors. Businesses compete for the

remaining consumers through lowered prices and advanced product features. Production is stable, with a

focus on cost-cutting manufacturing methods, so that lowered prices may be passed on to value-conscious

consumers.

Product innovators must guard both foreign and domestic markets from international competition, while

finally breaking into riskier developing markets in search of new customers. When the product reaches the

decline stage, the innovators may move production into these developing countries in an effort to boost

sales and keep costs low. During decline, the product may become obsolete in most developed countries, or

the price is driven so low that the market becomes close to 100% saturated.

• Developed and verified by economist to explain trade in context of comparative advantage.

• Describes the diffusion process of an innovation across national boundaries.

• Life cycle begins when a developed country, having new product to satisfy customer needs, wants to exploit

its technological break through by selling abroad.

• Other advanced countries soon start up their production facilities before less developed countries (LDCs) do

the same.

• Efficiency/comparative advantage shifts from developed countries to developing nations.

• Finally, advanced nations, no longer remain cost-effective, import products from their former customers.

• Advanced nations becomes a victim of own creation at the end.

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Stage ‘O’ – Local Innovation:

• Represents PLC in operation within its original market.

• Innovations take place in most advanced nation like USA – due to technology capital and affluent consumers.

Stage 1 – Overseas Innovations:

• On local demand adequately supplied, innovating firm look to overseas markets to expand sales and profits.

• This stage is also known as ‘international introduction’ stage.

• Technological gap is noticed in other advanced nations due to similar needs and high income level. Export is

done to these countries like U.K., Australia, Japan.

• Production cost decreases due to economy of scale.

• Export increases to other developed countries.

Stage 2- Maturity

• Local production starts in other advanced countries.

• Innovating country’s sales and export volumes are kept stable.

• LDCs (Less Developed Countries) start importing.

Stage 3- Worldwide imitations

• Tough time for innovating nation due to declining exports.

• Production cost of innovating firm begin to rise.

• Other Advance countries use their lower prices.

• US export declines to zero.

Example: U.S. automobiles.

Stage 4- Reversal:

• Product becomes labour intensive and LDCs start production.

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• LDCs start export to advanced countries. Example: IT services, PCs etc.

INTERNATIONAL DISTRIBUTION CHANNELS

Factors responsible for increased complexity and higher cost in International trade :

• Distance

• Exchange rate fluctuation

• Foreign intermediary

• Regulation

• Security

• Ocean shipping

• Airfreight

• Intermodal transportation

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Functions of Channel Members

1. Making Products Available to Customers.

2. Physical Possession

3. Reducing Exchange Time

4. Financing

5. Help in Logistics

6. Risk Taking

7. Negotiation with Customers

8. Value-Added Services- After Sales Service, Warranties, customer claim settlement , branding ,etc,.

9. Information Provider

Product standardization vs product adaptation

Standardization: means offering a uniform product on world wide or regional basis. It has product driven

orientation. Lowers cost via mass production.

Customization: Management focuses on cross-border differences in the needs and wants of the firm’s target

customers. It is inspired by market-driven mindset.

- Increase customer satisfaction by adapting products to local needs.

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Standardization

WHEN?

Commonalities in customers’ needs across countries

“Made in” image is important to a product’s perceived value e.g. France for perfumes, Sheffield for

stainless steel

Homogeneity of markets, in other words markets available without adaptation e.g. denim jeans

Cultural insensitivity

WHY?

Economies of scale in production, marketing/communications, research & development

Minimizing costs

Easier management and control

HOW?

Usually considered in the context of product, pricing, marketing communications; particularly

advertising, branding, packaging

Mandatory Adaptation: Adapting products to local requirements so that they can legally and physically

operate in the respective countries – for example: Left-hand driving in the United Kingdom

Local Non-Mandatory Adaptation: Adapting a product to better meet the needs of the local market, or

developing new brands for individual local markets, even though such adaptation is not required

Pricing for International Markets

Price: is the marketing mix that brings value to company in terms of sales turnover and profit. Other components of

marketing mix are part of cost of product.

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Pricing Objectives: Price decisions may be viewed two ways:

(1) Prices may be viewed as an active instrument of accomplishing marketing objectives.

(2) As a static element in a business decision:

Export only excess inventory, places low priority on foreign business and views its export sales as passive

contributions to sales volumes.

• In first approach prices are controlled in such a way that its meets marketing objectives:

- Increased turnover/sales volume profit

- Return on Investment

- Market share

- Liquidity

Ways of pricing

First Time Pricing: 3 Alternatives:

Skimming: Objective is to achieve highest possible contribution in a short time period.

- To use this approach, product has to be unique and some segment to customers must be willing to pay the

high price.

- As more segments are targeted, more product is made available and price is lowered .

- Success of skimming depends on ability and speed of competitive reaction.

Follow Market Pricing

- Can be used if similar products already exist.

- Price depends on competitive prices by adjusting product and marketing factors.

- Exporters are expected to have thorough knowledge of products’ costs and confidence that Product Life

Cycle is long enough to warrant entry into market.

Penetration Pricing:

- Product is offered at a low price intended to generate volume sales and achieve high market share, which

would compensate for a lower per-unit return.

- This approach typically requires mass markets, price-sensitive customers, and decreasing production and

marketing costs as sales volume increase.

2. Changing Pricing:

- Price changes are called when a new product is launched in the market and when change occurs in overall

market conditions.

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- If new stage of PLC occurs, the price changes become inevitable.

3. Multiple-product Pricing

- In case of various items in product line, the pricing objectives of different may be different to meet overall

marketing objective of a company.

Export Pricing Strategy

1 Standard Word wide Price: Same price for domestic and ex: gold export, standard pricing is based on

average cost: fixed, variable and export related cost.

2 Dual Pricing: Differentiates domestic and export prices.

- Two methods:

(i) Cost driven

(ii) Market driven

If cost based approach is decided upon, market may choose:

- Cost plus methods

- Marginal cost method

Market Differential pricing: According to dynamic condition of market place.

Global Pricing Policies

Polycentric Pricing

Multi-Domestic firms give wide leverage for subsidiaries on pricing resulting in different prices in

different countries – Results in gray markets

Geocentric Pricing

Use a regional (global) standard pricing Plus a local markup.

Base price is derived from cost plus formula

Affected by local tax laws leading to gray markets

Pricing an entire product line is a problem. Markup on one product in one country may not be inline

with other products

Ideal for FTA zones

Geocentric Pricing

E.g: HP uses a global standard price in USD plus regional markup. This avoids gray trade but loses

competitive position when competitors discount their products

IBM discounts products where they have competition, but to prevent gray market, IBM sells services

at a higher price for gray goods

Ethnocentric Pricing

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Have a common price all over the world

A global standard price

Ideal for big-ticket industrial items such as Aircrafts, computers etc.

Homogeneity of prices eliminated gray markets

Not suitable when there is competition from local manufacturers

Factors affecting Foreign Market Pricing

Global Pricing is lot more complex than domestic pricing due to:

International Currency Fluctuations

Price Escalations due to Tariffs

Difficulties to access credit risks

Price controls, Anti-dumping laws

Regulation on transfer pricing

Methods of payment

1. Company Goals

2. Company Cost- Rigid Cost Plus Flexible Cost Plus

3. Customer Demand: Buying power, testes, habits, substitutes.

4. Competition

5. Distribution Channels – EDLP (Everyday Low Pricing): To retailer/ultimate stopper. Super market chains may

not appreciate this. Even they delisted P&G brands for this reason.

6. Parallel imports (Grey markets)

7. Government Policies: Car prices vary in European countries due to sales tax differences.

NEW PRODUCT DEVELOPMENT PROCESS

new product development (NPD) is the complete process of bringing a new product to market.

The eight stages[edit]

1. Idea Generation is often called the "NPD" of the NPD process.[1]

Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths,

Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&Ddepartment,

competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic

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discovery methods (searching for user patterns and habits) may also be used to get an insight into

new product lines or product features.

Lots of ideas are generated about the new product. Out of these ideas many are implemented. The

ideas are generated in many forms. Many reasons are responsible for generation of an idea.

Idea Generation or Brainstorming of new product, service, or store concepts - idea generation

techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in

the Idea Screening Phase (shown in the next development step).

2. Idea Screening

The object is to eliminate unsound concepts prior to devoting resources to them.

The screeners should ask several questions:

Will the customer in the target market benefit from the product?

What is the size and growth forecasts of the market segment / target market?

What is the current or expected competitive pressure for the product idea?

What are the industry sales and market trends the product idea is based on?

Is it technically feasible to manufacture the product?

Will the product be profitable when manufactured and delivered to the customer at the

target price?

3. Concept Development and Testing

Develop the marketing and engineering details

Investigate intellectual property issues and search patent databases

Who is the target market and who is the decision maker in the purchasing process?

What product features must the product incorporate?

What benefits will the product provide?

How will consumers react to the product?

How will the product be produced most cost effectively?

Prove feasibility through virtual computer aided rendering and rapid prototyping

What will it cost to produce it?

Testing the Concept by asking a number of prospective customers what they think of the idea -

usually[citation needed] via Choice Modelling.

4. Business Analysis

Estimate likely selling price based upon competition and customer feedback

Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation

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Estimate profitability and break-even point

5. Beta Testing and Market Testing

Produce a physical prototype or mock-up

Test the product (and its packaging) in typical usage situations

Conduct focus group customer interviews or introduce at trade show

Make adjustments where necessary

Produce an initial run of the product and sell it in a test market area to determine customer

acceptance

6. Technical Implementation

New program initiation

Finalize Quality management system

Resource estimation

Requirement publication

Publish technical communications such as data sheets

Engineering operations planning

Department scheduling

Supplier collaboration

Logistics plan

Resource plan publication

Program review and monitoring

Contingencies - what-if planning

7. Commercialization (often considered post-NPD)

Launch the product

Produce and place advertisements and other promotions

Fill the distribution pipeline with product

Critical path analysis is most useful at this stage

8. New Product Pricing

Impact of new product on the entire product portfolio

Value Analysis (internal & external)

Competition and alternative competitive technologies

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Differing value segments (price, value and need)

Product Costs (fixed & variable)

Forecast of unit volumes, revenue, and profit

CONCEPT GENERATION PROCESS FOR NEW PRODUCT DEVELOPMENT

1. Clarify the Problem

- Understanding

- Problem decomposition

- Focus on critical sub problems

2. Search externally

- Lead users

- Experts

- Patents

- Literature

- Benchmarking

3. Search Internally

- Individual

- Group

4. Explore Systematically

- Classification tree

- Combination table

5. Reflect on solution and process

- Constructive feedback

Planning for trade shows and exhibitions

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Promoting your business at trade shows and exhibitions can be a rewarding experience for small business owners

looking to market their products and services. However, without careful planning and research, these events can be

a waste of your time and money.

Create an events budget

Review your marketing and promotion budget to determine whether participating in a trade show or exhibition is a

viable option. You need to look at the benefits, both direct and indirect (e.g. sales, lead generation, brand

recognition), and make sure they outweigh the costs (e.g. booth hire, promotional collateral, staff costs, registration

fees).

Work with your financial adviser or accountant to create a budget for trade shows and exhibitions, and include this in

your overall marketing plan. The idea is to carefully choose events that match your specific needs and finances. It

may be more beneficial to focus on one important and expensive show than to go to several smaller shows.

Research upcoming events

Before you decide to exhibit at a trade show or exhibition, you will first need to do some research. Search the

internet for upcoming trade shows and exhibitions that relate to your business and industry. Your industry

association can advise you about future events and whether your particular business might benefit from them.

Attend other trade shows and exhibitions

An important way to decide if a trade show is the right promotional tool for your business is to attend trade shows

that relate to your industry. This will give you a first-hand view of the level of involvement and the types of people

attending these events. It will also give you a chance to ask questions of other business owners and attendees and

find out what works and doesn't work.

Research your audience

Research your customers to find out the best way to showcase your products and services. Your display should cater

to your customers' needs and expectations. These will be different for industry specialists and the general public.

Get some quotes from visual display companies. They can help with the design of your trade booth, making it stand

out to your customers. Learn more about creating effective retail displays.

Also think about what you want to say about your business. Write down the key points about your business and

practise saying them out loud.

Select and manage Overseas Intermediaries

An overseas intermediary buys your product and in turn sells it directly to customers in his or her market. This is

considered an indirect exporting method. Intermediaries can be a wholesaler, distributor or trading company, for

example. Under these circumstances, you will not know who your end consumers are. When selling by this method,

you are normally responsible for collecting payment from the overseas intermediary and for coordinating the

shipping logistics. In some instances, the overseas intermediary might request that it be allowed to handle the

shipping, usually because it receives special transportation rates from carriers with which it has done volume

business for years. In this case, you will need to arrange for thecargo to be ready by the shipment date. You must still

collect payment from the intermediary, but your actual involvement in the transaction is minimal. It is nearly as easy

as a domestic sale.

You can choose to use an agent, a distributor or an export management company, and all three carry obvious

advantages. They will take many of the more time-consuming aspects of overseas trade out of your hands, provide a

local point of contact for your customers, and can draw on first-hand knowledge of your target market.

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On the other hand, an intermediary will usually demand a commission, a salary or a share of the profits made your

product. They may also wish to take control of marketing your product in their local market, so you could lose

control of your brand image. And, if they don’t fully understand your product, they could end up mis-selling to your

clients, and damaging your company’s reputation in the process.

Below we have outlined the most common types of intermediary for overseas trade, and listed the benefits and

disadvantages of each one – so you can make an informed decision about which is best for you.

Using a commission agent. This involves finding a buyer working on behalf of a foreign firm. A commission agent can

be a private company, a government agency, or a purchasing mission.

Pros: You won’t have to pay this person any form of commission, as they are working for the customer rather

than you.

Cons: A commission agent wants to find the best price possible for their client, so they’ll try and drive you to

as low a price as possible.

Using an export management company. An export management company (or EMC) is specifically set up to sell

producers’ goods overseas, and they typically work on either a commission or a salary basis.

Some EMCs will provide instant funding by buying your goods off you and then selling them on themselves, or

providing export finance – however, only the bigger firms can usually afford to do this.

Pros: EMCs usually specialise on particular sectors or markets, so they’ll have great knowledge in that area,

and they’ll have strong relationships with customers.

Cons: EMCs will often want to take control of a client’s marketing and communications strategy in their

market – if you want to keep close control over your brand image, this may not be the option for you.

Using a sales agent. In this case, you will hire the agent yourself and they will work for you; hence they’re trying to

secure the highest possible price for your product, rather than the lowest one.

Pros: An agent may secure a higher price for your product than you might secure yourself, and they will

know the local market inside out.

Cons: The Ebsi Export Academy (www.ebsi.ie) recently published an article which claimed that only 20% of

sales agents are successful in their attempts to win business – so you may have to hire and fire several agents

before you find a good one.

Using a distributor. A distributor will typically buy your product from you and sell it on to their clients, using their

local knowledge to handle the sales process.

Pros: You’ll receive money for your product upfront, without having to wait for payment from a customer,

and you won’t have to worry about issues such as shipping, customs and publicity – the distributor usually

takes care of these.

Cons: You won’t have control over where your product ends up – so the distributor could sell your product

on to a dodgy or disreputable company. It’s likely they’ll also expect generous discounts and credit terms.

How to choose the right intermediary

It’s crucial that you find the right intermediary for your job. Whether you’re hiring an agent, distributor or EMC, you

need to make sure they know the local market, will maintain your reputation, and can get a good price for your

product.

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Initially, you can test out their market knowledge by asking them some questions about local business conditions;

maybe ask them who your competitors will be, and whether the market has potential for growth. You’ll soon find out

if they know their stuff or not.

It’s also crucial that you find out whether the intermediary has the resources to service your product effectively. Do

some research on the company; find out how many staff they have at their disposal, and whether their staff can offer

English language, technical and after-sales skills. Find out whether they possess full trading rights for your target

market, and, if possible, get some details on their financial background.

You can also ask the intermediary how they plan to sell your product, and how they’ve promoted similar products in

the past. If possible, take a look at their existing customers – if they’re selling to firms with bad reputations, you may

want to steer clear of them.

Don’t forget to take a good look at how they promote themselves – if they can’t sell their own product, there’s a

good chance they won’t be able to sell yours. Examine their website, they marketing literature, their business cards

and the way they structure their correspondence with you. If they look sloppy or unprofessional, don’t use them.

Never be afraid to ask questions – before you make your final selection decision, you need to have all the facts and

figures at your disposal, and it’s unlikely that an intermediary will be offended if a potential client asks about their

business.

Building brands in international markets

1. Research the markets that hold the most potential for your brand. Seem obvious enough? Maybe — but it's easy

to take for granted that the fastest growing economies such as India and China are a sure bet for your brand. A little

research may indicate that Eastern Europe would be more fertile ground for your initial launch. Surveys are an

excellent way to get a pulse for the local population. You could also consider hiring an international marketing

specialist to conduct an attitude and usage study in order to gauge the purchasing decisions of consumers in your

target countries.

Also consider:

Unique marketing trends

What your differentiator in that market will be

How you want to position your brand

2. Get to know your target customer in these markets. What language do they speak? What are their likes and

dislikes? Who are the influencers? What are their hobbies? Where do they shop?

3. Establish your international brand voice. You have your U.S. voice. Is it casual, formal, or somewhere in

between? Determine what you want your international voice to be and if you would like the tone to vary from

country to country as a function of local communication norms.

4. Conduct a global brand assessment study. Take a look at your logo and visuals and consider how the colors,

shapes and font choices (typography) will be perceived in other cultures. Could any of the shapes in your brand

elements be confused with cultural symbols? Try to see your brand identity through the eyes of a local.

If necessary, work with a designer or your marketing department to refresh your brand in the context of the

new global stage where your products will have a multicultural following.

Keep one logo for all countries but vary your slogan if necessary.

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Leave your brand name in English if the words are not crucial to the message your brand communicates.

5. With knowledge from your global brand assessment study, adapt your U.S. brand manual for use overseas, or

develop a completely new international manual with a verbal style guide and brand guidelines for visuals. In brand

communications, consistency is the key, no matter what the country is — so set boundaries for communication

between your employees and consumers or clients that are in line with your company culture.

Also, make your logos and brand elements unbreakable — meaning they can't be modified or altered at the whim of

personnel in other countries. This will spare you unwanted surprises and will ensure your logo is always the same

quality in every market.

6. Translate your company values for your international employees, including your mission statement and core

values. By doing this, your employees will understand how to represent you appropriately in their respective

countries. They will also feel responsible for the company's image and therefore share in building the brand

internationally.

7. Localize your search engine marketing components, website and marketing collateral to the new language

markets. Pay attention to imagery in all mediums such as photos, videos, and Flash. Select inoffensive content and be

respectful of sensitive male/female relationships in different cultures. Decide which content on your website will be

translated and which will remain in English (i.e. your corporate blog). And don't forget about multilingual SEM —

consider doing this even before website localization begins. Remember that marketing translation — collateral, ad

campaigns and the like — is often fairly tricky due to clichés and clever idioms, so account for extra time to have this

done right.

8. Monitor your global brand online to measure attitudes and the impact of your initiatives. Use social media to

connect with consumers and ask their opinions. Allow for two-way communications and establish a dialogue. Be

responsive when customers post comments and recommendations. Try to compile a list of testimonials and

accolades in each language market to post on your website. Your localization partner can help with international

social media monitoring and translation of these communications so you stay on top of what is being said about you.

9. Give your corporation a local face. Interview C-suite members on topics of local interest and post the interview

on your website with a photo of the officer. Demonstrate an understanding and appreciation of the local culture in

all that you do. Make local customer service accessible and easy. Put your local address/contact info on the website.

List local events you are participating in. Write locale-relevant press releases in the local language and release them

on your website and on in-country online wire services. Keep your content fresh and dynamic.

10. Review. Your marketing department, along with your localization vendor can conduct a quarterly review of your

international brand messages, collateral materials, and language-related business practices in each market. This is to

make sure they remain consistent with your brand voice and that your communication is focused. Continually seek

client, vendor and employee feedback regarding how your brand delivers on its promises and the evolution of your

brand's image.

The following steps may help you in building an international brand:

Make sure you have a market. "Proven success with your current target audience doesn't automatically

mean that your new target will connect in the same way with your products or services," Williams says. "Ask

your new market the questions you used to build your initial business plan." First and most important, he

says, you'll want to determine if a market exists for your product. If so, make sure the want or need isn't

already being well met by someone else. If there are existing competitors, what (in the perspective of your

potential customers) makes you remarkably different? If there is a market and there are no competitors,

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make sure you find out why -- are there laws against distributing your products or can consumers buy them

through other means?

Make sure you can deliver. Make sure you can get your product to, or manufactured within, the new

market. "Import and manufacturing laws vary from country to country," Williams says. "Ensure you can make

your products reliably and consistently available to your new target markets." Investigate the local laws. You

need to make sure your products meet the local standards for construction of components, use of chemicals,

disposal of goods, proper labeling of products, etc.

Re-examine your business and/or product names. In choosing a name for your business or product, you

need to be culturally sensitive if you intend to sell in foreign markets. Make sure product names make sense

to customers in your new markets, both in English and in the local translation. Williams, who has done

international branding work with Starbucks, recalls how a holiday favorite in the U.S., the Gingerbread Latte,

didn't sell well in Germany even though gingerbread was a favorite holiday cookie in that country. Sales of

the drink increased dramatically when Starbucks began using the German word for gingerbread and

rebranded the drink, the Lebkuchen Latte. If you are considering translating names, don't rely on computer

translation. "You don't want what you think is an effective name to mean something opposite or offend

potential customers," Williams says. "Work with someone locally who can help make sure you communicate

what you intend."

Give your logo another look. Similarly, review your logo to make sure that you don't use any wording or

symbols that would offend in a foreign market. "Ensure that any logos or symbols you use make sense and

don't offend," Williams says. "Do an international search to make sure your logo isn't similar to that of

another international company." For example, if you are selling products in some Middle Eastern markets, a

logo featuring the face of a woman might not be appropriate. The best way to understand these cultural

sensitivities is to consult a branding or design firm -- either a local one or an international firm that can

research cultural sensitivities.

Understand packaging requirements. If you're selling a product, you need to consider the laws and customs

and packaging requirements in your new markets before deciding on packaging for your products. Your

packaging may use a clear plastic shell that hangs from a rod, but your competition may package their

product in a box that can go on a shelf, Williams says. This may put you at a disadvantage. "If you're selling a

packaged product around the world there are incredible hurdles," Roth adds. Shipping food across borders

may require you to provide more nutritional information on packaging, in more languages, and there may be

laws prohibiting the use of certain products in some markets -- even New York City has a ban on trans fatty

acids, for example. Learn the local standards and ensure your packaging includes any necessary regulatory

information and meets transportation standards.

Register trademarks and domain names. Follow the process in your new market to ensure you preserve

patent and trademarks. Thanks to the NAFTA Treaty your marks should already be protected in Mexico and

Canada, Williams says. If you're doing business in the European Union filing for a Community Trade Mark

(CTM) will protect you. Another consideration is making sure the Internet domain name for your company

and product are available. You still want to register a dot-com, which is the most popular domain worldwide

for businesses

How to Build a Brand Internationally: Building International Brand Awareness

Craft your message. Having done your homework and researched the new foreign markets, and perhaps

engaged the help of a local firm or representative, you have hopeful honed your domestic branding for this

new audience. Be sure to note what the competition and other businesses are doing. "What may have seemed

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witty or charming in the U.S. may be misunderstood in your new market," Williams says. "Be careful

playing the 'old and established' angle. An 'old' company in the U.S. can sound impressive, but you may be

doing business in a country that has bottles of wine and rounds cheese older than your company."

Deliver this message through the right channels. Don't rely on radio advertisements if your new market is

a city in which people commute by subway or bicycle. Make sure you are communicating your message

where it will be seen. Think about advertising inside the subway. "What are the habits your customer base in

that other country? Where are they found? What is their lifestyle? What are they doing?" Williams says.

There is no secret answer. It's up to you to connect the dots and find the right approach.

Communicate in the right manner. The manner and tone in which you engage your potential and new

customers is as important as the words you choose, Williams says. "Manner and tone will come across

through your packaging, advertising, online, through your sales people, and even the way you answer the

phone," he says. What types of interaction you will have with customers? What will be the tone you choose?

What types of sales process and policies will you use? Even though you are based thousands of miles away,

this is still a reflection on you and your brand. Remember that.

International Promotional mix (pg 478 cateora)

From Wikipedia, the free encyclopedia

Not to be confused with Marketing mix.

There are five main aspects of a promotional mix.[1] These are:

Advertising - Presentation and promotion of ideas, goods, or services by an identified sponsor. Examples:

Print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters,

motion pictures, Web pages, banner ads, and emails.

Personal selling - A process of helping and persuading one or more prospects to purchase a good or service

or to act on any idea through the use of an oral presentation.Examples: Sales presentations, sales meetings,

sales training and incentive programs for intermediary salespeople, samples, and telemarketing. Can be face-

to-face selling or via telephone.

Sales promotion - Media and non-media marketing communication are employed for a pre-determined,

limited time to increase consumer demand, stimulate market demand or improve product

availability. Examples: Coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating

premiums, trade shows, trade-ins, and exhibitions.

Public relations - Paid intimate stimulation of supply for a product, service, or business unit by planting

significant news about it or a favorable presentation of it in the media.Examples: Newspaper and magazine

articles/reports, TVs and radio presentations, charitable contributions, speeches, issue advertising, and

seminars.

Direct Marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to

communicate straight to the customer, with advertising techniques such as mobile messaging, email,

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interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and

outdoor advertising.

Corporate image Corporate image may also be considered as the sixth aspect of promotion mix. The image of an

organization is a crucial point in marketing. If the reputation of a company is bad, consumers are less willing to buy a

product from this company as they would have been, if the company had a good image. Sponsorship is sometimes

added as an seventh aspect.[1]

Advertising regulation

Advertising regulation refers to the laws and rules defining the ways in which products can be advertised in a

particular region. Rules can define a wide number of different aspects, such as placement, timing, and content. In

the United States, false advertising and health-related ads are regulated the most. Many communities have their

own rules, particularly for outdoor advertising. Sweden and Norway prohibit domestic advertising that

targets children. Some European countries don’t allow sponsorship of children’s programs, no advertisement can be

aimed at children under the age of twelve, and there can be no advertisements five minutes before or after a

children’s program is aired. In the United Kingdom advertising of tobacco on television, billboards or at sporting

events is banned. Similarly alcohol advertisers in the United Kingdom are not allowed to discuss in a campaign the

relative benefits of drinking, in most instances therefore choosing to focus around the brand image and associative

benefits instead of those aligned with consumption. There are many regulations throughout the rest of Europe as

well. In many non-Western countries, a wide-variety of linguistic (Bhatia 2000, pp. 217–218) and non-linguistic

strategies (e.g. religion; Bhatia 2000, pp 280–282) are used to mock and undermine regulations.

Two of the most highly regulated forms of advertising are tobacco advertising and alcohol advertising.

Regulatory authorities[edit]

New Zealand[edit]

In New Zealand, the Advertising Standards Authority (ASA) regulates advertising content. The ASA's complaints board

(ASCB) consists of public representatives and representatives of media, advertising agencies, and advertisers,[1] and

its decisions are based on the ASA's Advertising Codes of Practice. The ASCB considers complaints submitted by

members of the public (a different procedure is followed for competitor complaints[2]). In the event that a complaint

is upheld, the ASA requests that the advertiser voluntarily withdraw the advertisement.[3]

South Africa[edit]

In South Africa, advertising content is self-regulated and is governed according to standards contained in a Code of

Advertising Practice established by the Advertising Standards Authority (ASA) of South Africa, whose members are

advertisers, advertising agencies, and media sources that carry advertising.[4] The ASA of South Africa's Code of

Advertising Practice is based on the International Code of Advertising Practice prepared by the International

Chamber of Commerce.[5]

United Kingdom[edit]

In the United Kingdom, advertising content regulation is governed by the Advertising Standards Authority whereas in

the UK most forms of outdoor advertising such as the display of billboards is regulated by the UK Town and County

Planning system. Currently the display of an advertisement without consent from the Planning Authority is a criminal

offence liable to a fine of £2500 per offence. All of the major outdoor billboard companies in the UK have convictions

of this nature.

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United States of America[edit]

In the United States, the Federal Trade Commission is the highest authority on the subject.[citation needed] States and

more local political divisions can have their own laws on the subject.[citation needed]

Unit- 4

Regionalism and Multilaterism( pg 16.11 maheshwari)

Regionalism : is a term used in International Relations. It also constitutes one of three constituents of international

commercial system ( along with multilateralism and unilateralism. )

It refers to expression of a common sense of identity and purpose combined with creation and

implementation of institutions that express a particular identity and shape collective action within a

geographic region .

A new wave of political initiatives prompting regional integration took place world wide during last two

decades . Regional and bilateral deals have also mushroomed after failure of Doha Round .

European Union can be classified as a result of regionalism . Aim is to have economic integration within

Europe.

Multilateralism : is a term in international relations that refers to multiple countries working in concert on a given

issue .

Multilateralism was defined by Miles Kahler as “ international governance of the many” and its central

principle was “ Opposition of bilateral discriminatory arrangements that were believed to enhance the

leverage of the powerful over weak and to increase international conflict .

In 1990 , Robert Keohane defined multilateralism as “ the practice of coordinating national policies in groups

of three or more states”.

International organisations such as UNO , WTO , NATO , etc,. Main proponents have been nations with

middle power such as Canada , Australia , Switzerland , etc,.

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Regionalism and Multilateralism

Advantages of multilateralism :

It ensures participation of all members in management of world affairs.

It is guarantee of legitimacy and democracy , specially in case of use of force or laying down universal norms.

It has allowed us to overcome clashes between different nations .

It created sense of African Nations bearing promise for future.

It allows us to apprehend contemporary problems globally and in all their complexity.

Factors to favour regionalism over multilateralism :

Countries may hope to maximise their benefits through so called first-mover advantages . They focus on

gains they could obtain from signing an agreement with a large trading partner before competing countries

do so .

Countries may seek to guarantee permanent access to particular markets . Signing of agreement bilaterally

or regionally may be quickest and easiest way of achieving the goals.

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A bilateral agreement may be used as leverage to facilitate domestic reforms , particularly in areas that are

not dealt with multilaterally such as investment , competition and environmental and labour standards.

Regional Trade Agreements ( RTAs)

Characteristics of most successful RTAs :

Low external Most Favoured Nation ( MFN) tariffs .

Few sectoral and product exemption.

Non restrictive rules-of-origin tests that build. toward a framework common to many agreements .

Measures to facilitate trade.

Large ex post markets.

Measures to promote new cross- border competition , particularly in services

Rules governing investment and intellectual property that are appropriate to the development context.

trade bloc An agreement between states, regions, or countries, to reduce barriers to trade between the participating regions.

The most well known trade bloc is NAFTA, between the United States, Canada, and Mexico. Some opponents of

trade blocs believe that such agreements are detrimental to global free trade.

Trade blocs can be stand-alone agreements between several states (such as the North American Free Trade

Agreement (NAFTA) or part of a regional organization (such as the European Union). Depending on the level

ofeconomic integration, trade blocs can fall into different categories, such as:[7] preferential trading areas, free trade

areas, customs unions, common markets and economic and monetary unions.

MAJOR TRADE BLOCKS

1) EUROPEAN UNION (EU)

2) NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

3)SINGAPORE –AMERICAN FREE TRADE AGREEMENT(SAFTA)

4) ORGANISATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)

5) ASSOCIATION OF SOUTH EAST ASIAN NATION (ASEAN)

6) SOUTH ASIAN ASSOCIATION OF REGIONAL CO-OPERATION (SAARC)

DEBATE ON TRADING BLOCKS

THERE ARE TWO VIEWS :

1)ANALYST LIKE PREEG ARGUE THAT TRADE BLOCS ARE DESIRABLE BECAUSE THEY COMPLIMENT GLOBAL

TRADE.

2)OTHER ANALYST ARGUE THAT TRADE BLOCS ARE NOT DESIRABLE BECAUSE THEY ARE THREAT TO FREE

TRADE AND NEED TO PROTECTIONISM

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WHY TRADE BLOCS ARE DESIRABLE

TRADE BLOCS COMPLIMENT GLOBAL TRADE

THEY PROTECT INTRA REGIONAL TRADE FORM OUTSIDE FORCES.

THEY ESTABLISH REGIONAL SECURITY.

WHY T. B. ARE UNDESIRABLE

IMPORT QUOTAS(LIMITING THE AMOUNT OF IMPORTS INTO THE COUNTRY SO THAT DOMESTIC

CONSUMERS BUY PRODUCTS MADE BY THEIR COUNTRIES IN THEIR REGION).

CUSTOM DELAYS (ESTABLISHING BUREAUCRATIC FORMALITIES THAT SLOW DOWN TRADE FROM THE OTHER

REGION)

SUBSIDIES BARRIER (GIVING HEAVY SUBSIDIES TO PROTECT REGIONAL TRADE )

VOLUNTRY BOYCOTTS AND TECHNICAL BARRIERS.

The Organization of the Petroleum Exporting Countries (OPEC)

Functions:

The OPEC MCs coordinate their oil production policies in order to help stabilise the oil market and to

help oil producers achieve a reasonable rate of return on their investments. This policy is also

designed to ensure that oil consumers continue to receive stable supplies of oil.

ITS HEAD QUARTER IS IN VIENNA.

ITS OBJECTIVE IS TO COORDINATE AND UNIFY PETROLEUM POLICIES AMONGS THE MEMBER

COUNTRIES

TO SECURE FAIR AND STABLE PRICES FOR PETROLEUM PRODUCERS.

PROPER PRICE AND REGULAR SUPPLY OF PETROLEUM FOR CONSUMING NATIONS

Members: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE, Venezuela

ASEAN

ESTABLISHED IN 1967 .

5 FOUNDING MEMBERS : INDONESIA , MALAYASIA, PHILLIPINES, SINGAPORE AND THILAND.

LATER ON JOINED BY BRUNEI, MYANMAR,VIETNAM ETC.

ASEAN FREE TRADE AREA (AFTA) .

ASEAN BEYOND TRADE HAS POLITICAL ROLE AS VISIBLE BY THE FORMATION OF ASEAN REGIONAL FORUM OF

WHICH CHINA, INDIA AND USA ARE MEMBERS.

ASEAN AS A TRADING BLOC HAS BEEN A HUGE SUCCESS LEADING TO PROSPERITY AND ELIMINATION OF

POVERTY IN THE MEMBER COUNTRY

SAARC (SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION)

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The South Asian Association for Regional Cooperation (SAARC) was established when its Charter was formally

adopted on December 8, 1985 by the Heads of State or Government of Bangladesh, Bhutan, India, Maldives,

Nepal, Pakistan and Sri Lanka.

SAARC provides a platform for the peoples of South Asia to work together in a spirit of friendship, trust and

understanding. It aims to accelerate the process of economic and social development in Member States.

AREAS OF COOPERATION

Agriculture and Rural Development;

Health and Population Activities;

Women, Youth and Children;

Environment and Forestry;

Science and Technology and Meteorology;

Human Resources Development; and

Transport.

Recently, high level Working Groups have also been established to strengthen cooperation in the areas of

Information and Communications Technology, Biotechnology, Intellectual Property Rights, Tourism, and

Energy.

North American Free Trade Agreement

The North American Free Trade Area is the trade bloc in North America created by the North American Free

Trade Agreement (NAFTA) and its two supplements, the North American Agreement on Environmental

Cooperation (NAAEC) and the The North American Agreement on Labor Cooperation (NAALC), whose

members are Canada, Mexico and the United States. It came into effect on 1 January 1994.

The agreement was initially pursued by conservative governments in the United States and Canada

supportive of free trade, led by Canadian Prime Minister Brian Mulroney, U.S. President George H. W. Bush,

and the Mexican President Carlos Salinas de Gortari.

The three-nation NAFTA was signed on 17 December 1992, pending its ratification by the legislatures of the

three countries.

There was considerable opposition in all three countries, but in the United States it was able to secure

passage after Bill Clinton made its passage a major legislative initiative in 1993.

BORN IN JANUARY 1994.

MEMBER NATIONS:US,CANADA AND MEXICO.

it’s the WORLD LARGEST FREE TRADE AREA.

UNDER NAFTA, ALL NON TARIFF BARRIERS TO AGRICULTURE WERE ELIMINATED.

MANY TARRIFFS ARE BEING ELIMINATED OVER A PEROID OF 5-15 YRS.

TWO WAY TRADE BETWEEN US & MEXICO HAS INCREASED BY MORE THAN 55%.($11.6 BILLION).

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TWO WAY TRADE BETWEEN US &CANADA INCREASED MORE THAN 50%(16.3 BILLION.)

HUGE BENEFITS HAVE ACCRUED TO THE NAFTA MEMBER COUNTRIES.

NAFTA HAS BEEN A ROARING SUCCESSS.

EU

IT IS A FAMILY OF DEMOCRATRIC EUROPEAN COUNTRIES.

COMMITED TO WORKING TOGETHER FOR PEACE AND PROSPERITY.

ITS HISTORICAL ROOTSLIE IN THE SECOND WORLD WAR.

IDEA OF EUROPEAN INTEGRATION WAS CONCEIVED TO PREVENT SUCH KILLING AND DESTRUCTION FROM

EVER HAPPENING AGAIN.

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

The Euro: Our Currency

The euro is the currency of 13 European Union countries: Belgium, Germany, Greece, Spain, France, Ireland,

Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland.

Euro banknotes and coins have been in circulation since 1 January 2002 and are now a part of daily life for

315 million Europeans living in the euro area

The Eurosystem, which consist of the European Central Bank (ECB) and the national central banks of the 13

countries belonging to the euro area, has the exclusive right to issue euro banknotes. All decisions on the

designs, the denominations, etc. of the euro banknotes are taken by the ECB.

The Eurosystem is in charge of defining and implementing the monetary policy of the euro area. Its primary

objective in this respect is to maintain price stability in the euro area. It furthermore conducts foreign-

exchange operations (consistent with the exchange-rate policy defined by the Council), holds and manages

the official foreign reserves of the euro-area Member States and promotes the smooth operation of

payment systems

Role of International Organizations (IMF and WTO)(more in both

books,check ifwant

International Monetary Fund (IMF)

The purposes of the IMF are clearly expressed in Article I of its constitution, the Articles of

Agreement:

To promote international monetary cooperation

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To facilitate the expansion and balanced growth of international trade

To promote exchange stability

To assist in the establishment of a multilateral system of payments

To give confidence to members by making the general resources of the Fund temporarily

available to them under adequate safeguards

To shorten the duration and lessen the degree of disequilibrium in the international balances

of payments of members

World Trade Organization (WTO)

The World Trade Organization (WTO) is the only international organization dealing with the global

rules of trade between nations. Its main function is to ensure that trade flows as smoothly,

predictably and freely as possible.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to

open markets for trade. But the WTO is not just about opening markets, and in some circumstances

its rules support maintaining trade barriers — for example, to protect consumers or prevent the

spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading

nations. These documents provide the legal ground rules for international commerce. They are

essentially contracts, binding governments to keep their trade policies within agreed limits. Although

negotiated and signed by governments, the goal is to help producers of goods and services,

exporters, and importers conduct their business, while allowing governments to meet social and

environmental objectives. The system’s overriding purpose is to help trade flow as freely as possible.

The 10 Internet Marketing Channels

1. Search Engine Optimization

When you type a keyword into Google, two types of results come up: paid and unpaid. Unpaid search results rely on

algorithms that determine the relevancy of your website compared to the search terms. Where you land on these

unpaid search results depends on search engine optimization (SEO). Solid SEO can determine how high up you

appear in the search results, often called your page rank. According to Forrester Research and Lee Odden, search

marketing outlays (pay per click and SEO) will reach $20.7 billion in 2011.

2. Pay Per Click Campaigns

In 2008, search industry stats showed that paid ads accounted for 30 percent of search traffic click through. Â When

your website’s SEO doesn’t lead to a high page rank, pay per click (PPC) advertising can get your site above

the fold. Just be careful. PPC campaigns can burn through a ton of cash and generate a negative ROI unless you know

what you’re doing. Also keep in mind that success in 2011will require that you leverage both SEO and PPC efforts

to lower click costs and increase page rank by having both channels work in sync.

3. Social Media Marketing

Facebook, Twitter, Flickr, and YouTube. Heard of em? That’s because they are the type of marketing tools that

can reach millions of your target market. For example, if you aren’t advertising on Facebook, at minimum you

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need to set up a corporate profile page that engages with current and potential customers. To use these tools to

their full advantage, you need to understand the demographics and mind sets of each of the major social media

channels. Choosing the correct strategy for each channel matters since social campaigns used incorrectly can create

a backlash. In 2011, Forrester predicts that companies will invest $1.2 billion in social media marketing.

4. Affiliate Marketing

The 2010 holiday season generated a record return of $32.6 billion for retail ecommerce. A huge chunk of those

returns went to affiliate marketers. However, many merchants are unaware of the potential for performance-based

marketing.

Commission Junctions (CJ), a leading affiliate marketer, recently shared its numbers for Black Friday and Cyber

Monday in 2010. The results show that businesses are missing sales opportunities if they fail to include performance-

based marketing in their internet marketing strategy. Â Comparing same store sales, sales driven through CJ

outpaced overall comScore sales numbers.

Performance-based marketing comes with few risks at a low cost since companies only pay out if a desired action is

met. Success, however, requires that companies hire an experienced affiliate manager to manage their program and

to create a positive experience for you and your affiliates. Without proper management, performance-based

marketing can dilute your brand, misrepresent your products, not perform at all or override other marketing efforts

entirely.

5. Shopping Channel Management

The recession and its economic challenges change the way people buy. Customers look for the lowest possible price,

daily deals, coupons, and any other potential savings. People also have less time to shop around. Shopping search

engines like Nextag.com, Google Product Search, and Shopzilla.com remain popular picks for buyers who want to

simplify their shopping experience. With one click, potential customers can see all the merchants who sell the

desired product filtered by tags such as price, rating, description, and image in one convenient location. Google

Product Search remains the most popular, according to SearchEngineLand.com, followed recently by TheFind.com.

6. Mobile Marketing

In 2011, we’ll see mobile marketing make its breakthrough. Still in its infancy, millions of smartphone users are

clamoring to get the best applications and mobile technologies available. Huge opportunities await the companies

that understand the potential of affordable mobile stores, advanced applications, and wide-spread usage. Even

banks now understand the power of mobile. In 2011, over 150 million people will use their mobile devices

for banking. This channel and others like it, show huge growth potential over the next three to five years. You can set

yourself apart from your competitors by getting brand into the hands of your biggest fans.

7. Video Marketing

Billions of people share and view original videos at YouTube, Founded in 2005, YouTube stands as the third highest

ranked search engine in the world, after Google and Facebook.YouTube’s serious sticking power comes with the

benefit of being free. But how do you create that one video that goes viral? What elements do you need to take your

video from 100 views to 10 million views? This question gets asked by marketers every day and companies spend

hundreds of thousands, if not millions trying to master the medium. Despite the challenges, you can’t ignore

video. For 2011, TechCrunch projects that online video advertising will grow by 50 percent and hit $11.4 billion in the

next five years, outpacing the growth of traditional TV advertising.

8. Email Marketing

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According to MarketingSherpa, when integrated with emerging marketing channels such as social media, email

appears to have unlimited potential especially when combined with multiple improvement tactics now available

through various sources. As one of the most simple, effective, and sometimes overlooked marketing channels, email

marketing is inexpensive, highly lucrative, and does a great job of solidifying brand loyalty for current customers.

Dozens of email distribution networks offer exceptional services, including free templates, ongoing support, and

recommendations for high delivery, open, and click through rates. MailChimp.com’s service still stands out from

its competitors with its free monthly options, easy-to-use interface, high-converting templates, and useful reporting

tool. If email marketing is not something you’ve tried, now is the time to get help and get it done.

9. Display Advertising

Display advertising can be a great option for companies with a larger online marketing budget. Also referred to as

banner ads, you find a site with high traffic (calculated as unique visitors) whose audience fits your target market.

You then pay the site to put up a featured banner ad for your brand. Display ads drive targeted traffic back to your

website and help establish your brand in buyers’ minds. Placing banner ads can also help with search engine

rankings since the ads create a link back to your site, increasing your website’s authority in search engine

algorithms. Google predicts that by 2015 display advertising will reach $50 billion.

10. Online PR and Article Marketing

According to PR Newswire, 84 percent of journalists like to get pitched via email. In addition to email, these

journalists also use Facebook (79 percent), LinkedIn (64 percent), and Twitter (58 percent) to search out potential

stories. Beyond full-time journalists, a few million bloggers also want good stories to publish. Taking the time to

create and distribute press releases and articles can help promote your business through these channels, both online

and offline.