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Page 1: SLM-Unit-15-MB0046

Marketing Management Unit 15

Sikkim Manipal University Page No. 306

Unit 15 International Marketing Management

Structure:

15.1 Introduction

Learning Objectives

15.2 Nature of International marketing concept

15.3 International marketing concept

15.4 International market entry strategies

15.5 Approaches to international marketing

15.6 International product policy

15.7 International promotions policy

15.8 International branding

15.9 Country of origin effects

15.10 International pricing

15.11 Summary

15.12 Terminal questions

15.13 Answers

15.1 Introduction

In the previous units our study was focused on how marketing strategies are

formulated, implemented and controlled in the Indian marketing. After the

globalization and liberalization of the Indian economy in the year 1991,

Indian enterprises started facing the competition from the global brands. In

this context it has become inevitable for all the companies small or big to

analyze the international marketing environment and strategies to adapt to

it. The companies which were operating in the domestic market are also

aggressively redrafting their policies and strategies to suit the global needs.

Companies express their desire to enter into the international market

because of the following reasons:

1. It identified potential growth opportunities in the foreign markets for its

products.

2. The domestic market is matured.

3. Existing customers‟ demand for the international availability of

organization‟s products and services.

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Learning Objectives

After studying this unit, you will be able to:

Understand the nature of international market.

Analyze the appropriate entry strategies for the firm in international

market.

Examine the approaches to the international market.

Asses the importance of components of marketing mixes in the

international market.

Bring out the importance of country of origin effects.

15.2 Nature of International Marketing Concept

International marketing is defined as “The performance of business activities

designed to plan, price, promote and direct the company‟s flow of goods and

services to consumers or users in more than one nation for a profit”.

A company that wants to sell their product in other than domestic market

should understand the environmental factors, consumer behavior, market

forces and other characters relevant to the international market. After

understanding the definition, several questions may arise in your mind like

why marketer should go to the international market? And what is the

difference between international marketing and domestic marketing? As we

discussed in the introduction part, companies enter into the international

market to tap the potential, to support the customer requirements or to avoid

the unprofitable domestic market. The differences between domestic

marketing and international marketing are listed below:

Characteristics International Marketing Domestic Marketing

1. Culture Multi culture Single culture and in some cases multi culture

2. Data accessibility Very difficult Easy

3. Data reliability Very Low High

4. Control Difficult Relatively easy

5. Consumer preferences

Vary from country to country

Vary in small extent

6. Product mix Adaptability required Standardization required

7. Business operation

More than one country Home country only

8. Currency exposure Required Required only if there is importing

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Advantages of International marketing:

1. International marketing provides growth opportunities for the companies

whose domestic market is maturing. For example, General Motors

focuses its strategies on the emerging markets like India

2. It brings the major portion of sales and profits to the company. For

example, Unilever‟s major revenue comes from the Asian markets.

3. It generates employment: Indian textile sector which exports majority of

the product produced is a large employer after agriculture and retail.

4. International market also acts as survival place for the companies. If one

market becomes unattractive, either they establish their operations in

another country or outsource the major functions to streamline the

businesses.

5. It helps in improving the standard of living in the country.

15.3 The International Marketing Concept

The marketing concept is the idea that a firm should seek to evaluate

market opportunities before production, assess potential demand for goods,

determine the product characteristics desired by the consumers, predict the

prices consumers are willing to pay and then supply goods corresponding to

the needs and wants of target markets. Adherence to marketing concept

means the firm conceives and develops products to satisfy consumer wants.

In international marketing this means the integration of the international side

of the company‟s business with all aspects of its operations and the

willingness to create new products and adapt existing products to satisfy the

needs of world markets. Products may have to be adapted to suit the tastes,

needs and other characteristics of consumers in specific regions, rather than

to assume that an item which sells well in one country will be equally

successful elsewhere.

15.4 International Market Entry Strategies

Organizations that plan to go for international marketing should know the

answers for some basic questions like -

a. In how many countries would the company like to operate?

b. What are the types of countries it plans to enter?

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That‟s why companies evaluate each country against the market size,

market growth, and cost of doing business, competitive advantage and risk

level.

Checklist for country evaluation

Characteristics weightages score

1. Political rights

2. Civil liberties

3. Control of corruption

4. Government effectiveness

5. Rule of law or legal issues

6. Health expenditure

7. Education expenditure

8. Regulatory quality

9. Cost of starting a business

10. Days to start a business

11. Trade policy

12. Inflation

13. Fiscal policy

14. Consumption patterns

15. Competition

Once the market is found to be attractive, companies should decide how to

enter this market. Companies can enter the international market by

adoptingany one of the following strategies. They are

a. Exporting

b. Licensing

c. Contract manufacturing

d. Management contract

e. Joint ownership

f. Direct investment

Exporting is the technique of selling the goods produced in the domestic

country in a foreign country with some modifications. For example,

Gokaldas textiles export the cloth to different countries from India. Exporting

may be indirect or direct. In case of indirect exporting, company works with

independent international marketing intermediaries. This is cost effective

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and less risky too. Direct exporting is the technique in which organization

exports the goods on its own by taking all the risks. Maruti Udyog Limited,

India‟s leading car manufacturer exports its cars on its own. Company can

also set up overseas branches to sell their products. Adani Exports, another

leading exporter from India has international office in Singapore.

Licensing: According to Philip Kotler, licensing is a method of entering a

foreign market in which the company enters into an agreement with a

license in the foreign market, offering the right to use a manufacturing

process, trademark, patent, or other item of value for a fee or royalty. For

example, Torrent Pharmaceuticals has license to sell the cardiovascular

drugs of Chinese manufacturer Tasly. Licensing may cause some problems

to the parent company. Licensee may violate the agreement and can use

the technology of the parent company.

Contract manufacturing: Company enters the international market with a

tie up between manufacturer to produce the product or the service. For

example, Gigabyte Technology has contract manufacturing agreement with

D- link India to produce and sell their mother boards. Another significant

manufacturer is TVS Electronics; it produces key boards in its own name as

well as for other companies too.

Management contracting: In this case, a company enters the international

market by providing the know how of the product to the domestic

manufacturer. The capital, marketing and other activities are carried out by

the local manufacturer, hence it is less risky too.

Joint ownership: A form of joint venture in which an international company

invests equally with a domestic manufacturer. Therefore it also has equal

right in the controlling operations. For example, Barbara, a lingerie

manufacturer has joint venture with Gokaldas Images in India.

Direct Investment: In this method of international market entry, Company

invests in manufacturing or assembling. The company may enjoy the low

cost advantages of that country. Many manufacturing firms invested directly

in the Chinese market to get its low cost advantage. Some governments

provide incentives and tax benefits to the company which manufactures the

product in their country. There is government restriction in some countries to

opt only for direct investment, as it produces the jobs to the local people.

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This mode also depends on the country attractiveness. It may become risky

if the market matures or unstable government exists.

Exhibit 1

Shale Gas – the next big global opportunity in the fuel market

Reliance Industries, which has executed the world‟s single largest

refinery complex at one place, and one of the most complex gas projects

in the depth of the Bay of Bengal on the East coast of India, may join

global oil majors in search of shale gas.

RIL has been studying the break-throughs and the new technologies that

are being used in producing shale gas, which is now a huge rage in US.

“We are studying the prospects and we will take a decision on the

investment in the next six months. RIL is looking at the overseas market

and it plans to go big in new technology. We now have the balance sheet

to support such a move,” said a senior RIL executive.

Shale gas is natural gas produced from shale – a fine grained

sedimentary rock composed of flakes of clay and minerals such as quartz

and calcite. “The future of energy is a low-carbon regime. Shale gas is

one such example. It is somewhat like coal bed methane and is on land.

US has made major strides in technology in shale gas, which has made it

now a commercial proposition,” said the same executive.

According to Vijay Kelkar, former petroleum secretary and chairman of

the thirteenth finance commission, it is innovative technology using

horizontal drilling (allowing the gas to be brought out easily) that made

this fuel a commercial possibility. Kelkar had floated a paper on how such

non-conventional possibilities existed in gas hydrates-deposits in sea –

near the Andaman Nicobar islands.

RIL which has used advanced technology in its exploration projects in the

Krishna Godavari basin, is betting on its expertise in technology to tap

unconventional energy sources in the energy value chain.

The conglomerate has been eyeing unconventional energy sources such

as solar for some time now. But industry analysts are of the view that a

fuel like Shale gas is perhaps the best bet as it has already been proved

as a viable commercial proposition.

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RIL has had technological collaboration with several international oil

companies and a tie up with one of them for making a foray is a

possibility. What looks certain is that RIL is planning to make its next big

stride in overseas market.

According to energy analyst in a brokerage firm, RIL is now set to reap

the benefits of its investments in refinery and gas projects within the

country. Since it has the necessary balance sheet strength, the company

would now look to scaling up in new geographies. “We are looking at

overseas investments and now that we have the expertise, we want to

use it,” the senior company executive said.

This unconventional gas has caught the fancy of every big oil company

ever since new technology made the fuel commercial. According to an

energy analyst the cost of production of shale gas has come down by as

much as 80% over the last five years in the US with new technologies

and fiscal incentives provided by that country to encourage exploration.

The largest known reserves of this gas are found in Canada and the US

followed by Australia and some parts of Europe. Royal Dutch Shell,

Exxon Mobil, Chevron and British Petroleum are among the latest

entrants in shale gas exploration.

“It is estimated that almost 50% of North America‟s energy consumption

would be met by Shale gas b 2020,” said Rick Bott COO of Carin India.

Large finds and lowered costs have had implications for the entire gas

market in the US as this new unconventional gas has come as a major

alternative at a cheaper price.

Back in India, early steps are being taken for this new age fuel as well.

Cairn India, which recently started producing oil from its field in Barmer,

Rajasthan has begun work on Shale gas in its fields. Bott, who has come

as the new COO, is leading a team of technologists and explorers to

search through the layers of rock in the Barmer hills. “We are very

excited with the studies and possibilities and are hoping to have pilot

projects over the next 12 to 18 months before we submit a detailed plan.

The early signs are very positive.”

(Source: The Economic Times - 16th November 2009)

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15.5 Approaches to International Marketing

The orientation towards the market varies from company to company. Each

one adopts different approaches on the basis of their expertise or strength

of the company. Some companies adopt same product for all the markets

while others differentiate for each country. In this context, we would like to

know what are the common approaches adopted by the company in

international marketing. The three common approaches used in the

international market are -

a. Domestic market extension approach.

b. Multi domestic market orientation.

c. Global market orientation.

Domestic market extension approach: Companies that adopt this strategy

think international markets are secondary to its domestic markets. For

example, HSBC advertises its banking services with a tag line “the world‟s

local bank”.

Multi domestic market orientation: In the international market each country

has its uniqueness. Their preference varies. The consumer profile is

different from domestic operation. Companies develop different market

plans for such markets. For example, in France, men use more cosmetics

than the women, whereas in India women use more cosmetics than men. A

cosmetics company should change the product positioning differently.

Global market orientation: In this approach, company thinks that products‟

needs are universal in nature irrespective of country where they work. Here

company tries to standardize their products or services. For example, Sony

Walkman is same across the world. The product information brochure

contains explanation in different languages of different countries. The final

product is same in all the countries.

15.6 International Product Policy

Customer satisfaction towards company offerings will be positive if they are

able to meet their needs. Therefore product planning becomes an integral

part of the international marketing plan. The distinctiveness in the different

countries forces companies to think in different ways of product offerings

and support promotion programs. These organizations adopt five different

types of product strategies in the international markets. They are

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1. Product extension

2. Communication adaptation

3. Product adaptation

4. Product and communication adaptation

5. Product invention.

1. Product extension is marketing a product in the international market

without change in the product and promotion activities. Microsoft office

2007 and Microsoft servers are similar to USA market and

communication is also unaltered.

2. Communication adaptation: Company does not change the product but

adopts a different communication strategy in the foreign market. Colgate

sells its toothpaste in the same way all over the world. Their

communication strategy varies in different countries. In India and USA,

white teeth are preferred by the consumers, while in Indonesia yellow

teeth are preferred. Hence Colgate changed its communication

strategies for these countries.

3. Product adaptation: Marketer understands the different needs of the

consumer and adopts the product according to the local tastes but

keeps the communication strategies same. Majority of the Indian

consumers are vegetarians. KFC started selling vegetarian burgers in

India though it is famous for chicken. The communication strategies of

KFC remain the same all over the world.

4. Product and communication adaptation: The product will be modified

according to the needs of local market. Nokia, world‟s largest cell phone

manufacturer increased the volume options in India as most of the

places are overcrowded. Consumers in India are not so familiar with

English language. Hence Nokia changed its promotion to regional

languages also. This is adaptation of product and communication by the

company. This strategy is also known as dual strategy.

5. Product invention: Here, marketer develops entirely new product to suit

the requirements of the local customers. Nokia manufactured 1100 cell

phone only for the Indian market and promoted it as made for India. In

this strategy, company may adopt same communication strategy as in

the other country or change according to the local market.

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Self Assessment Questions

1. The method in which management know-how is transferred

a. Exporting

b. Licensing

c. Management contract

d. Contract manufacturing

2. Global market orientation focuses on product standardization.

a. True b. False

3. The strategy in which a company does not change the product but

adopts a different communication strategy in the foreign market is

known as __________.

4. Product and communication adaptation is also known as

a. Product invention

b. Straight product extension

c. Dual adaptation

d. All the above.

5. ____________ is a method of international market entry in which

company invests in manufacturing or assembling directly.

15.7 International Promotion Policy

Communication in the international market is very challenging. There exists

many languages and dialects and different perceptions about

communication strategies. In some countries there are regulations on the

advertisements and sales promotions. For example in India, alcohol

advertisements are banned. In this section we deal with the communication

strategies that the company should adopt and what are the barriers to it.

The marketer may face the language barriers, cultural barriers and legal

barriers in some countries. In Saudi Arabia using women in advertisements

is prohibited. Vodafone has to change its promotion program to Tamil in

Tamilnadu, a state in India. Organizations also face the problem of media

and production cost in different countries.

Global promotional program will have three sets of objectives. First of all, in

setting the global objectives, Secondly, formulating the regional objectives

and finally setting the local objectives. The media decisions depend on the

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objectives of the promotion program. As we discussed in the promotion unit,

media budget in the international marketing is also determined by

percentage sales method, competitive parity, resource allocation and

objective and task method.

Global promotion program may be standardized or adapted. Standardization

will help the company to reduce cost and add the value to the product. The

pitfall of standardization is local customers who cannot understand global

messages. One of the famous companies in the world was showing its

advertisements on supply chain management software in India in the same

way as in the USA. The advertisement evaluation results were very strange.

People can recall only the horse word in the advertisement. As we

discussed in the earlier section of the unit, company can adapt its

communication strategy only to the local market, or both product and

communication can be adapted.

Advertisements will have modifications. If marketer wants to sell their

products in Japan, he should not use white color as it is considered only for

mourning. Communication should not contain anything using cow in Nepal

as it is considered as sacred. The following examples of the United Colors

of Benetton and Microsoft depict the different advertisements strategies

adopted by them.

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Global marketers also use sales promotion, public relations and direct

marketing techniques to communicate it to the consumer. Amway direct

marketing company adapts same strategy in India, while Cadbury and

Microsoft also use public relations and sales promotion techniques to

communicate the messages.

Sales promotion covers the issue of coupons, the design of competitions,

special offers, and distribution of free samples. International businesses

who want to employ sales promotions for cross border campaigns face a

number of serious practical difficulties, because in many nations the use of

certain sales promotion techniques is regarded as unfair competition and as

such is subject to stringent legal control. Indeed conflicting laws sometimes

apply to these matters in various countries. Money off vouchers is legal in

Spain but not in Germany; Lower price for the next purchase are legal in

Belgium but illegal in Denmark. In Germany and certain other countries free

gifts are forbidden if they constitute a genuine incentive to buy.

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15.8 International Branding

Brand names used in foreign markets need to be internationally acceptable,

distinct and easily recognizable, culture free, legally available and not

subject to local restrictions. Brand name communicates its messages and

appeals to consumers. They create the stimulus in the minds of consumers

to purchase the product. Brand name should be small, easy to pronounce

and should have proper meaning. Such brand names can be used in

several countries simultaneously for family branding and may be supported

within the advertisements by a wide variety of pictorial illustrations.

Brand positioning: As we discussed in the product standardization, the

debate exists for brand communication standardization or adaptability. We

will discuss the various factors that influence the opting for the single or

multiple positioning strategies.

a. The influence of local substitutes as against the foreign brand

b. The coverage of the brand( mass versus niche)

c. Acceptability for product uniqueness in all purchase points

d. Brand name suitability in the particular market.

Now we will discuss the advantages of brand standardization in the global

markets.

1. Firms‟ concentration on the positioning will be effective.

2. It helps in saving the costs.

3. A standardized product and standardized promotion helps to have same

packaging.

But all the companies will not go for standardizing the brand.

Standardization of branding strategies has its own limitations. They are

1. Stereotype image of the national products (Germany for engineering,

China for low price product). If the customer thinks that any product

coming from China is of low price and low quality, whatever the effort the

Chinese company does in other markets will considerably fail.

2. Patriotism of the people and their perception that their national brand is

superior to others.

Brand valuation in the international markets: Brand valuation in one country

helps it to leverage the same brand in the other country. It also helps it to

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acquire different brands in the international markets. Brand valuation can be

done based on the following factors

1. Brand image in the market.

2. Consumer lifestyle and brand influence

3. Branded sales versus unbranded sales

4. Brand‟s contribution to the corporate image.

5. Length of brand loyalty.

6. Market share of brand in each category it operates.

7. Adaptability and standardization of the brand in different countries.

8. Brand‟s ability to be extended to other lines or category.

The top 10 brands of 2007 (Source: Business week)

INTERBRAND TAKES lots of ingredients into account when ranking the

world's most valuable brands. To even qualify for the list, each brand must

derive about a third of its earnings outside its home country, be recognizable

outside of its base of customers, and have publicly available marketing and

financial data. One or more of those criteria eliminate such heavyweights as

Visa, Wal-Mart, Mars, and CNN. Interbrand doesn't rank parent companies,

which explains why Procter & Gamble doesn't show up. And airlines are not

ranked because it's too hard to separate their brands' impact on sales from

factors such as routes and schedules.

BUSINESSWEEK CHOSE Interbrand's methodology because it evaluates

brands much the way analysts value other assets: on the basis of how much

they're likely to earn in the future. The projected profits are then discounted

to a present value, taking into account the likelihood that those earnings will

actually materialize.

THE FIRST STEP IS figuring out what percentage of a company's revenues

can be credited to a brand. (The brand may be almost the entire company,

as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on

reports from analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley,

Interbrand projects five years of earnings and sales for the brand. It then

deducts operating costs, taxes, and a charge for the capital employed to

arrive at the intangible earnings. The company strips out intangibles such as

patents and management strength to assess what portion of those earnings

can be attributed to the brand.

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Finally, the Brand‟s strength is assessed to determine the risk profile of

those earnings forecasts. Considerations include market leadership,

stability, and global reach – or the ability to cross both geographic and

cultural borders. That generates a discount rate, which is applied to brand

earnings to get a net present value. Business Week and Interbrand believe

this figure comes closest to representing a brand's true economic worth.

15.9 Country of Origin Effects

Country of origin is the country of manufacture, production, or growth where

an article or product comes from. There are differing rules of origin under

various national laws and international treaties.

Country of origin as a marketing strategy

From a marketing perspective, "country of origin" gives a way to differentiate

the product from the competitors. It is believed that the country of origin has

an impact on the willingness to buy a product, and studies have shown that

consumers may tend to have a relative preference to products from their

own country or may tend to have a relative preference for or aversion to

certain products that originate from certain countries. The effect of country

of origin is however debated as studies have shown that the origin of design

(for instance Apple computers or Nike shoes) can be more important than

the country of origin. So, when products have been labeled as „made in

Brand Country of

origin Sector

Valuation (in Million$)

1. Coca cola USA Beverages 65,324

2. Microsoft USA Software 58,709

3. IBM USA Software 57,091

4. GE USA Diversified 51,569

5. Nokia Finland Telecommunication 33,696

6. Toyota Japan Automobiles 32,070

7. Intel USA Computer Hardware 30,954

8. McDonalds USA Restaurants 29,398

9. Disney USA Media 29,210

10. Mercedes Germany Automotive 23,568

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China‟ or „made in USA‟ it may or may not have effect on the people of

another country.

Ambiguous country of origin labeling

While many products made within the European Union carry the country of

origin label or marking "Made in EU" or "Made in EC", some non-EU

manufacturers in Europe and some others outside the continent of Europe

use ambiguous markings, such as "Made in Europe" (made anywhere else

in Europe, but not in the EU or EC; this may constitute any country

geographically close to Europe or the EU that also wishes to be in) or "Made

for Europe" (made anywhere else in the world, but not in Europe or the

European Union). These tactics appear to be intended for consumer

deception, whereby a buyer not proficient in English may come to believe

from looking at the label that the non-EU product he is interested in is made

in the EU.

Country of origin in international trade

When shipping products from one country to another, the products may

have to be marked with country of origin, and the country of origin will

generally be required to be indicated in the export/import documents and

governmental submissions. Country of origin will affect its admissibility, the

rate of duty, its entitlement to special duty or trade preference programs,

antidumping, and government procurement.

Today, many products are an outcome of a large number of parts and

pieces that come from many different countries, and that may then be

assembled together in a third country. In these cases, it's hard to know

exactly what the country of origin is, and different rules apply as to how to

determine their "correct" country of origin. Generally, articles only change

their country of origin if the work or material added to an article in the

second country constitutes a substantial transformation, or, the article

changes its name, tariff code, character or use (for instance from wheel to

car). Value added in the second country may also be an issue.

15.10 International Pricing

Determination of selling prices:

The price of an organization may change for its output depends on many

factors. They are

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a) Customer perception towards the product.

b) Total demand for the good

c) The degree of competition in the market.

d) Competitors‟ price reactions

e) Substitute products and its effect on the product.

f) Products‟ brand image

g) Cost of production and distribution.

h) Price elasticity of demand for the product

Special problems apply to international pricing, particularly in relation to lack

of information, uncertain consumer response, and foreign exchange rate

influences and the difficulty of estimating all the extra costs associated with

foreign sales. These extra costs might include translating and interpreting

fees, export packaging and documentation costs, insurance payments,

clearing agents‟ fees, pre-shipment inspection and many other items. Credit

periods are very long in some countries. Government price controls apply in

certain states. A company may adopt penetration pricing, skimming pricing,

cost plus pricing and product life cycle pricing. (As discussed in Pricing Unit)

Transfer pricing:

Transfer pricing means the determination of the prices at which an MNC

moves goods between its subsidiaries in various countries. A crucial feature

of large centralized MNCs is their ability to engage in transfer pricing at

artificially high or low prices. To illustrate, consider an MNC which extracts

raw materials in one country, uses them as production inputs in another,

assembles the party finished goods in a third and finishes and sells them in

a fourth. The governments of the extraction, production, and assembly

countries will have sales or value added taxes; while the production

assembly and finished goods countries will impose tariffs on imports of

goods. Suppose the MNC values its goods at zero prior to their final sale at

high prices. The government of the extraction country receives no revenue

from sales taxes because the MNC‟s subsidiary in that country is selling its

output to the same MNC‟s subsidiary in the production country at a price of

zero. Equally the production country raises no income from import tariffs on

this transaction, because the raw materials are imported at zero prices! The

only tax the MNC pays is a sales tax in the last country in the chain.

Transfer pricing at unacceptably low values has been major problem for

many developing nations. itself. Thus the government of host country will

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ensure that it receives an appropriate amount of sales tax. Similarly

importing countries might impose quantity based instead of price based

import duties to ensure reasonable revenues from taxes on imports of an

MNC‟s goods.

Tax considerations aside, transfer prices need to be realistic in order that

the profitability of various international operations may be assessed.

Possible criteria for setting the transfer price include

1. The price at which the item could be sold in the open market.

2. Cost of production or acquisition.

3. Acquisition/ production cost plus a profit mark up

4. Senior management‟s perceptions of the value of the item to the overall

international operations.

5. Political negotiations between the units involved.

Normally the solution adopted is at which profits maximized for the company

taken as a whole and which best facilities the parent control over

subsidiaries operations. Arm‟s length pricing is the method generally

preferred by national governments and is recommended in a 1983 code of

practice on the subject drafted by the organization for economic cooperation

and development. Note how subsidiary that charges a high transfer price will

accumulate cash which might be invented more profitability in the selling

country than elsewhere. There are some problems with setting a realistic

transfer price that are as follows.

1. Differences in the accounting systems used by subsidiaries in different

countries.

2. Executives in operating units deliberately manipulate the transfer to

enhance the book value of subsidiary profits.

3. Disparate tax rates and investment subsidy levels in various countries.

4. Possible absence of competition in local markets at various stages in the

supply chain. Thus a market price in such an area may be artificially high

in consequences of the lack of local competition.

5. There might not be any other product directly comparable to the item in

question, again making it difficult to establish a market price.

6. If the price is set too high, the selling unit will be able to attain its profit

targets too easily and lead perhaps to idleness and inefficiency in the

selling subsidiaries.

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Self Assessment Questions

6. Money off vouchers is illegal in

a. Spain

b. Brazil

c. Germany

d. Denmark.

7. ___________ means the determination of the prices at which an

MNC moves goods between its subsidiaries in various countries.

8. Country of origin need not be marked on the shipping goods but

should be entered in the export/import documents

a. True b. False.

9. ___________ is World‟s No 1. Brand on the basis of its valuations.

10. Which of the following is not used while setting the transfer pricing

a. The price of the product

b. Political negotiations

c. Cost of production

d. Competitors‟ price.

15.11 Summary

International marketing is defined as “The performance of business

activities designed to plan, price, promote and direct the company‟s flow

of goods and services to consumers or users in more than one nation for

a profit”.

International market entry strategies are exporting, licensing, contract

manufacturing, management contract, direct investment and joint

ownership.

International marketing approaches are of three types. They are

domestic market orientation, multi domestic market orientation and

global market orientation.

Country of origin is the country of manufacture, production, or growth

where an article or product comes from. There are differing rules of

origin under various national laws and international treaties.

Transfer pricing means the determination of the prices at which an MNC

moves goods between its subsidiaries in various countries.

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List of Key terms:

Information system

Data warehousing

Data Mining

Marketing Intelligence system

Marketing research

Report

15.12 Terminal Questions

1. Define international marketing.

2. Discuss the advantages of international marketing.

3. Explain the different modes of market entry strategies available for a

company in the international market.

4. Write a note on international product policy

5. What is country of origin effects/ explain its role in the international trade.

6. Explain transfer pricing with example.

15.13 Answers

Answers to Self Assessment Questions:

1. Management contract

2. True

3. Communication adoption.

4. Dual adaptation

5. Direct investment

6. Germany

7. Transfer pricing

8. False

9. Coca cola

10. Competitors‟ price

Answers to Terminal Questions:

1. Refer 15.2

2. Refer 15.2

3. Refer 15.4

4. Refer 15.6

5. Refer 15.9

6. Refer 15.10

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Acknowledgement and References:

1) Aaker David, Managing Brand Equity and Building Strong Brands

2) Adrian Palmer (2004), Introduction to Marketing -Theory and Practice

(Indian edition), Oxford University Press

3) Arun Kumar and N. Meenakshi (2006), Marketing Management

(First edition), Vikas Publishing House Pvt. Ltd.

4) Borne and Kurtz (2007), Contemporary Marketing, Thomson

5) Etzel, Walker, Stanton (2007), Marketing: Concepts and Cases

(13th edition), McGraw-Hill

6) Keller and Kotler, Marketing Management

7) Kotler and Armstrong (2008), Principles of Marketing (11th Edition),

PHI

8) Lamb, Hair, and McDaniel (2008), Marketing, Thomson

9) Masaki Kotabe and Helsen (2008), Marketing management,

John Wiley & Sons

10) Rajan Saxena (2002), Marketing Management (Second edition),

Tata McGraw-Hill

11) Sommers and Barnes (2007), Fundamentals of Marketing, McGraw

Hill

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