Transcript International Marketing vs Domestic Marketing Similarities

FRAMEWORK OF
INTERNATIONAL MARKETING
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Core Concept of Marketing
Need
Want
Demand
Market
Product
Transaction
Exchange
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The Concept of International Marketing
Philip Koler defines marketing as ‘the human activity
directed at satisfying needs and wants through exchange
process
The American Marketing Association defines marketing as
the process of planning and executing the concept, pricing,
promotion and distribution of goods and services to create
exchanges that satisfy individual and organizational goals.
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Anticipative marketer looks ahead at customer’s needs
and wants in the near future.
Creative Marketer discover and produces solutions
that a customer did not ask for but would
enthusiastically respond to (eg. Walkman, VCR, CD,
ATMs, Cellular Phones.
International Marketing is defined as marketing
activity carried out across national boundaries.
Every firm has to operate in a given set up
environmental factors over which it has little control.
These are social, economic, political, legal and
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technological environment – uncontrollable elements
Controllable elements –
distribution and promotion.
product,
price,
Consequent to economic liberalization, a firm
operating in domestic market can no longer
rely upon its home market because the firm’s
home market is now and export market for
everybody else
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Domestic and International Environmental
Challenges
Domestic Environmental challenges
Economic Environment:
 Domestic Tariff Structure
 Import Duty Exemption Schemes offered by home
government – determine cost of imported inputs – affects
final cost of production – affects competitiveness
 Exchange rate and foreign exchange regulations
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• Options available for making and receiving
payments from International Markets
• National Policies of FDI – determine kind and
magnitude of foreign investment and entry mode
Political and Legal Environment
Political priorities of government
Trade Policy
Fiscal Policy
Matters relating to bilateral and multilateral trade
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Infrastructure
• Development of physical, financial, human and
institutional infrastructure
• Physical Infrastructure – roads, telecommunications,
port handling – cost of logistics
• Trading hubs – Singapore, Hong Kong, Dubai
Overseas Environmental Challenges
Political
 Stability of Government
 Pakistan – no MFN status to India
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CIS countries – transition phase – unpredictable
environment
Economic
Economic uncertainty and hyper inflation – CIS
Brazil, Argentina
Soundness of financial institutional system
Foreign Exchange Risk
Legal
Well defined, sound, legal systems in target
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 Country's at higher stage of a economic
development and democratic form of
government,
provide,
relatively
independently and more just legal system
 CIS and China – transition phase from
planned economy to market economy
Cultural and social
Countries with cultural similarity – easily
approachable
Affects product modifications especially in
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Social environment
Buying decision
Communications strategies to be adjusted
according to social traits
Social beliefs and aspiration vary significantly
among countries. Marketing mix to be tailor
made to suit social norms
Socio – cultural factors affects buyer – seller
relationship
eg. Americans – result oriented
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Competition:
Product Imported
Produced locally
Exporter’s own country
Products imported from competing countries
if have different business environment – affects
competitiveness
Marketing barriers (Tarrifs and Non Tarrifs)
make marketing mix decision complex
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Marketing Channels
High Income Countries – organized and large
scale retail outlets – have higher stake in
business negotiations
Packaging – customer’s attention
Developing and Least Developed Countries –
size of retail outlets are small
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Technology
Variation
in availability of technology
between developed and emerging markets of
India (Mainly developing countries)
Transfer of technology
Opportunities for developing countries like
India and China to market products at
competitive price in other developing countries
and LDC
Eg. Indian Bajaj Three Wheelar to Bangladesh
and Indonesia
Indian turn key projects to Africa and Middle
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Reasons for Entering International Markets
Strategic
Vision
Growth
Spin - off
benefits
Profitability
Economies of
scale
Govt. Policies &
Regulations
Why Should a Firm
Enter International
Markets?
Competition in
Domestic
market
Spreading Risk
Access to
Imported inputs
Spreading
R&D
Cost
Marketing
Opportunities
Due to life
Cycle
Uniqueness of
Product or
services
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WHY COMPANIES GO
INTERNATIONAL?
Two Factors: Pull factors
: Push Factors
Pull factors: Proactive reasons – forces of attraction – pulls the
business to foreign markets – profit, growth etc.
Push factors: Reactive reasons – compulsion of domestic market
prompts companies to internationalize – saturation etc.
Profit Motive:
•International business – profitable than domestic market –
investment in low cost locations.
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Growth Opportunities
•Economic growth in many foreign countries strong attraction.
Domestic Market Constraints
•Market for product tends to saturate or decline (happens frequently in
advanced countries) – Transfer of technology to developing countries.
•Scale economies – Need to enter foreign market in addition to domestic
market – Korea – economic size plants
Competition
•Competition – driving force behind internationalization – A protected
market motivates domestic sales
•Economic liberalization in 1991 increased competition from foreign
firms as well as domestic firms – many Indian companies going
international.
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Government Policies and Regulations
Incentives:
•Incentives offered by government to export and invest in foreign
countries.
•Governments of many countries offer incentives to foreign investors.
Obligations:
•Foreign exchange needed to finance imports, payment of royalty etc.
•Companies are subject to specific export obligations – export house,
EOUs,
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International Marketing vs Domestic
Marketing
Similarities
• Both in domestic marketing as well as in international
marketing success depends upon satisfying the basic
requirements of the consumer
• It is necessary build goodwill both in domestic and
international market
• Research & Development for product improvement is
necessary in both the market
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Differences
• Sovereign political entities
Tariffs or custom duties
Quantitative restrictions
Exchange control
Local taxes
•Different Legal Systems
•Different Monitoring Systems
Each country has its own monitory system and
the exchange value of each countries currencies20
• Lower Mobility of Factors of Production
• Differences in market characteristics
• Differences in procedures and documentation
• Grater degree of risk
• Cultural dimensions of international marketing
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International Marketing vs Domestic
Marketing
Similarities
• Both in domestic marketing as well as in international
marketing success depends upon satisfying the basic
requirements of the consumer
• It is necessary build goodwill both in domestic and
international market
• Research & Development for product improvement is
necessary in both the market
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