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Reasons for internationalisation
Domestic Marketing
Export Marketing
International Marketing
Global Marketing
• Least international commitment
• Domestic focus
• Limited international commitment
• Involves direct or indirect export
• Ethnocentric
• Substantial internationalcommitment
• Focus on individual countries or regions
• Polycentric or Regiocentric
• Extensive internationalcommitment
• Focus on segments, rather than countries or regions
• Geocentric
At its simplest level, international marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe.
International marketing consists in identifying and satisfying consumer needs abroad; better than the national and international competitors, under the constraints of the internationalization stage of the firm and the global environment. » (Nathalie Prime
Marketing products that have been manufactured or assembled in the target country
Establishing a permanents presence in the foreign country
Licensing and franchising Sourcing components from foreign
states
Economies of scale and scope Existence of lucrative markets in
foreign countries Saturated markets in the home country High R&D costs International opportunities Less competition New trade agreements
Competition Regional Economic & Political Integration Technology Improved Transportation &
Telecommunication Economic Growth
Huge Foreign indebtedness Unstable governments Foreign-exchange problems Foreign entry and government
bureaucracy Tariffs and other trade barriers Corruption Technological pirating High cost of product and
communication adaptations
High Cost of Distance Trade Restrictions Differences in language
Survival and Growth Sales and Profits Diversification Employment Standards of Living
Domestic InternationalResearch data is available in a single language and is usually easily accessed
Research data is generally in foreign languages and may be extremely difficult to obtain and interpret
Business is transacted in a single currency
Many currencies are involved, with wide exchange rate fluctuations
Head office employees will normally possess detailed knowledge of the home market
Head office employees might only possess and outline knowledge of the characteristic foreign markets
Promotional messages need to consider just a single national culture
Numerous cultural differences must be taken into account
Market segmentation occurs within a single country
Market segments might be defined across the same type of consumer in many different countries.
Domestic InternationalCommunication and control are immediate and direct
International communication and control might be difficult
Business laws and regulations are clearly understood
Foreign laws and regulations might not be clear
Business is conducted in a single language
Multilingual communication is requires
Business risks can usually identified and assessed
Environments may be so unstable that it is extremely difficult to identify and assess risks
Planning and organizational control systems can be simple and direct
The complexity of international trade often necessitates the adoption of complex and sophisticated planning, organization and control systems
Domestic InternationalFunctional specialization within a marketing department is possible
International marketing managers require a wide range og marketing skills
Distribution and credit control are straightforward
Distribution and credit control may be extremely complex
Selling and delivery documentation is routine and easy to understand
Documentation is often diverse and complicated due to meeting different border regulations
Distribution channels are easy to monitor and control
Distribution is often carried out by intermediaries, so is much harder to monitor
Competitors’ behavior is easily predicted
Competitors’ behavior is harder to observe, therefore less predictable
New product development can be geared to the needs of the home
New product development must take account of all the markets the product is sold in.
International expansion helps firm: › Keep pace with competition › Reach a larger market› Reap higher profits› Prolong the lifecycle of their
products
Ethnocentric Orientation domestic market extension concept: Domestic strategies, techniques, and
personnel are perceived as superior International customers, considered
secondary International markets regarded as
› outlets for surplus domestic production International marketing plans
› developed in-house by international division
multidomestic market concept: Focuses on importance and uniqueness of each
international market May establish businesses in each target country Fully decentralized, minimal coordination with
headquarters Marketing strategies = specific to each
country Result:
› No economies of scale, › duplicated functions, › higher final product costs
global marketing concept: World regions that share economic,
political, and/or cultural traits are perceived as distinct markets
Divisions are organized based on location
Regional offices › coordinate marketing activities
global marketing concept: world is perceived as a total market with identifiable, homogenous segments
Targeted marketing strategies › aimed at market segments, › rather than geographic locations
Achieve position › as low-cost manufacturer & marketer of product line
Provides standardized product or service › throughout the world
Marketers must understand how economic conditions influence purchasing decisions.
Economic environment Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation and deflation, unemployment, income, and resource availability.
Refers to all economic trends & conditions outside the country
Changes in IEE affect the1. Level of exports and hence the
aggregate demand for the products produced by business units
2. Cost of production of domestic enterprises as many of the imported commodities are used as inputs in the process of production
Through imports the inflation abroad gets imported in to the domestic market
The decisions taken on the platform of bilateral and multilateral organizations and regional trade agreements affect the trading relations of the country with the foreign country
STAGES IN THE BUSINESS CYCLE Prosperity—Consumer spending is brisk,
growth in services sector.
Recession—Consumers focus on basic, fundamental products
Depression—Consumer spending sinks to its lowest level.
Recovery—Caution often restrains willingness to buy
Changes in consumer and business buying habits, in exchange rates, in labor costs, and other factors around the world influence the decisions marketers make.
Regional Economic Integration : Important mode of economic development
Level of Economic Integration
• Free Trade Area (FTA) : Goods and Services are freely traded among member countries, example : NAFTA, AFTA, APEC • Customs Union (CU) : FTA + Common trade policy with respect to nonmembers • Common Market (CM) : CU + Free flow of factors of production (Labor, Capitol and Technology) between member countries
• Economic Union : CM + Integration of economic policies.Harmonize monetary policies, Taxation and Government spending • Political Union : Economic union + Political Unification
Economic Union
Free trade area
Free trade among members
Common External Trade Policy
Customs Union
Factor Mobility
Common Market
Harmonization of Economic Policies
Economic Union
• Regional Economic Trading Blocs Free Trade Area (FTA) Customs Union (CU) Common Markets Economic Union Political Union
Major Regional Trading Blocs NAFTA (North American Free Trade Agreement) : Canada, Mexico, US EU ( European Union) : Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden United Kingdom
EFTA ( European Free Trade) : Iceland, Liechtenstein, Norway, Sweden LAIA (Latin American Integration Association) : Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela
CARICOM (Caribbean Community) : Anguilla, Antigua, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat Jamaica, St. Kitts-Nevis, St. Vincent and the Grenadines, Trinidad CACM (Central American Common Market) : Costa Rica, El Salvador Guatemala, Honduras, Nicaragua MERCOSUR (Southern Common Market) : Argentina, Bolivia, Brazil, Chili, Paraguay, Uruguay
(Continue)• Major Regional Trading Blocs APEC (Asia Pacific Economic Cooperation) : Austria, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia,Mexico, New Zealand, Papua New Guinea, Philippines, Singapore, South Korea, Taiwan, Thailand, United States
SAARC (South Asian Association for Regional Cooperation): Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
ANCOM (Andean Common Market) : Bolivia, Colombia, Ecuador, Peru, Venezuela
ECOWAS (Economic Community of West African States) : Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Mali,Guinea-Bissau, Ivory Coast, Liberia, Mauritania, Niger, Nigeria, Togo, Senegal, Sierra Leone
GCC (Gulf Cooperation Council) : Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates
Market assessment Product Price Place Promotion
A. Assess alternative foreign markets 1. The number, size of and financial
strength of competitors 2. Their market share, apparent
marketing strategies 3. Their market coverage
1. COST Direct Opportunity
2. BENEFIT3. Risk
SWOT analysis of firmMultiple site visits Developed or Developing country
STANDARDISATION VS ADAPTATION
FACTORS ENCOURAGING STANDARDISATION
1. High Cost Of Adaptation2. Industrial products 3. similar taste 4. Country of origin effects
5. economies of scale 6. Economies in R & D 7. Economies in marketing FACTORS ENCOURAGING ADAPTATION1. Differences in technical standards 2. Consumer tastes 3. Differing use conditions4. Variations in ability to buy5. Cultural differences 6. Influence of governments `
Pricing decisions Pricing policies Dumping counter trade
Supply and demand cost Exchange rates Culture Competition Product differentiation
Standard Price policy Market Pricing Standard Pricing policy Marketing Pricing policy
Sporadic Predatory Persistent Reverse
Barter counter Trade Counter purchase Compensation Trade Switch Trading Offset
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