What is International Marketing?

International Marketing can be defined as the act of marketing the products and services outside the
domestic boundary. International Marketing is also known as Global Marketing. When the business
decides to go beyond the domestic audience to reach the foreign audience, the concept of
international marketing arises. International Marketing includes understanding the culture, language,
values, and beliefs of the international audience and making one’s products and services useful for
them. Practices to overcome language barriers, different cultural norms, and other barriers are
undertaken with effective marketing strategies. The main objectives of international marketing
involve interaction with a foreign audience, growth and expansion of business and customer base,
etc.

Features of International Marketing

1. Scope: As under the practice of international marketing, the business tries to communicate and
interact with international audiences, the scope of international marketing is wide in comparison to
domestic marketing. Various activities, like product packaging and branding, market research, etc.,
are to be customised as per the needs of foreign audiences.

2. Foreign Exchange: International marketing and trade brings foreign exchange inside the domestic
borders. The inflow of foreign exchange is a positive sign for the economy. The inflow of foreign
exchange balances the exchange rates and redefines the country’s financial health in the
international market.

3. Research: International marketing requires a lot of research about the country in which the
business wants to enter. International Marketing is a long-term process, and businesses should do it
with intense care as internal marketing involves so much time and cost.

4. Market Access: International Marketing offers a wide variety of markets for the business.
Businesses can effectively use international marketing to grow their business and to get global
recognition in the international market. This can further help in expanding the business and
customer base, as well as in generating higher revenues and profits.

Scope of International Marketing

International Marketing involves interaction with foreign audiences, and as the business tries to go
beyond the domestic boundaries, the scope of international marketing becomes wide too. It
includes,
1. Exporting/Importing: Selling goods and services to a company in a foreign country is referred to as
Exporting. For instance, Gulab sold sweets to a store in Canada. Purchasing goods from a foreign
company is known as Importing. For instance, the purchase of dolls from a Chinese company by an
Indian dolls dealer. Exports and imports are the typical way through which businesses begin their
activities overseas before moving on to other kinds of international trade. Important ways to Export
and Import are:

 Direct Importing/ Exporting: The company handles all of the necessary paperwork for the
shipment and financing of goods and services and deals directly with foreign suppliers or
purchasers.
 Indirect Importing/ Exporting: The company uses a middleman to handle all the paperwork
and negotiate with foreign suppliers or customers. The firm’s involvement is limited.
2. Contractual Manufacturing: According to this, every well-known company in a nation accepts
responsibility for promoting the goods and services created by a business in another nation. Here,
the company is specialised in the manufacturing process but lacks marketing skills, whereas the
other company, due to its established reputation, is capable of selling those items and services.
Offering these items and services is not the primary business of these organisations, but they do it
for the benefit of their name and reputation, as well as to provide high-quality products at a low cost
to their customers. Multinational firms, like Maybelline, Loreal, Levi’s and others use contract
manufacturing to have their products or component parts produced in developing nations. Contract
manufacturing is also known as International Outsourcing.

3. Licensing: When a corporation from one country (the Licensor) grants a license to a company from
another country (the Licensee) to use its brand, patent, trademark, technology, copyright, marketing
skills; etc., to assist the other firm sell its products, this contractual agreement is referred to
as Licensing. The licensor corporation receives returns in proportion to sales. For instance, Pepsi and
Fanta are made and distributed globally by local bottlers in other nations under the licensing system.

The company that provides such authorisation is known as the Licensor, while the other company in
a different country that receives these rights is known as the Licensee. The mutual sharing of
knowledge, technology, and/or patents between the companies is called Cross-licensing.

4. Franchising: The franchise is the unique right or freedom that a producer grants a certain person
or group of people to establish the same business at a specific location. The producers use this
contemporary business model to market their products in far-off locations. In general, producers
who have a good reputation use this system. Individuals are motivated by their goodwill and try this
mode of business in order to earn profit. Franchising is a contractual agreement that involves the
grant of rights by one party to another for the use of technology, trademarks, and patents in return
for the agreed payment for a certain period of time. The business that gives the rights (i.e., the
parent company) is referred to as the Franchisor and the business that purchases the rights is
referred to as the Franchisee.

5. Joint Ventures: A joint venture is formed when two or more businesses decide to work together
for a common goal and mutual benefit. These two commercial entities could be private, public, or
foreign-owned. Joint ventures are those types of businesses that are established in international
trade where both domestic and foreign entrepreneurs are partners in ownership and management.
The trade is carried out in collaboration with the importing nation’s firm. For instance, the Joint
venture of the Indian company Maruti with the Japanese Company Suzuki.

6. Wholly Owned Subsidiary: When a foreign company establishes a business unit or acquires a full
stake in any domestic company, then they are called a Wholly-owned Subsidiary. Wholly owned
subsidiaries are set by a foreign company to enjoy full control over their overseas operations. A
wholly-owned subsidiary in a foreign country may be established in two ways: Setting up a wholly-
owned new firm in the foreign land, also called Green Field Venture. Acquiring an established firm in
a foreign country and using that firm to do business in a foreign country.
I. Significance of International Marketing to Marketers

1. Market Access: International Marketing offers a wide variety of markets for the business.
Businesses can effectively use international marketing to grow their business and to get global
recognition in the international market. This can further help in expanding the business and
customer base, as well as in generating higher revenues and profits.

2. Utilisation of Surplus Production: In case the domestic business is producing more than what is
demanded by the domestic consumers, the business can export its excess production to other
countries through international marketing. In this way, there will be no wastage of resources.

3. Competitive Advantages: International marketing can help businesses gain a competitive

advantage. Businesses operating in the international markets will have access to the latest
technologies, advanced knowledge, skilled staff, etc.

II. Significance of International Marketing to the Economy

1. Foreign Exchange: International marketing and trade brings foreign exchange inside the domestic
borders. The inflow of foreign exchange is a positive sign for the economy. It balances the exchange
rates and redefines the country’s financial health in the international market.

2. Prevention of Economic Downturn: Today’s time is more dynamic than ever. There are multiple
external, internal, micro, and macro variables that can affect the domestic economy anytime.
International marketing can provide an extra source of income that the country can use to avoid an
economic downturn and ensure economic stability.

3. Increased Standard of Living: In the presence of international marketing, people of any country
can consume goods and services produced in some other countries. It helps in improving the
standard of living of those people and the country in general.

Market Orientations of International Marketing

Different attitudes towards company’s involvement in international marketing process are called
international marketing orientations. The EPRG framework addresses the way strategic decisions are
made and how the relationship between headquarters and its subsidiaries is established. There are
four broad types of orientation of a firm towards foreign marketing:

ETHNOCENTRIC:

 The ethnocentric orientation of a firm considers that the products, marketing strategies and
techniques applicable in the home market are similar to that in the overseas market.
 In such a firm, all foreign marketing operations are planned and carried out with little or no
difference in product formulation and specifications, pricing strategy, distribution and
promotion measures.

 For example, Walmart’s offerings remain the same throughout.

REGIOCENTRIC:
 In regiocentric approach, the firm accepts a regional marketing policy covering a group of
countries which have comparable market characteristics such as economic, cultural or
political similarities and formulates operational strategies based on region instead of
countries.
  For example, countries like Pakistan, India and Bangladesh are very similar. They possess a
strong regional identity.

GEOCENTRIC:

 In geocentric orientation, the firms accept a worldwide approach to marketing and target
“global consumers” with similar tastes.

 There are similarities between geocentric and regiocentric approaches in the international
market except that the geocentric approach calls for a much greater scale of operation.

 For example, Nokia offers products to a similar kind of consumer worldwide.

POLYCENTRIC:
 When a firm adopts polycentric approach to overseas markets, it attempts to organize its
international marketing activities on a country-to-country basis.

 Polycentric approach works better among countries which have significant economic,
political and cultural differences.

 For example, McDonald’s tailoring its offerings to the country of operation such as Maharaja
Mac in India, McItaly in Italy, McLobster in Canada.