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