UNIT 1

INTERNATIONAL MARKETING
As technology creates leaps in communication, transportation,
and financial flows, the world continues to feel smaller and
smaller. It is possible for companies and consumers to conduct
business in almost any country around the world thanks to
advances in international trade.
International marketing is firm level marketing practice that is
used across the border, including market identification, targeting,
entry mode selection, marketing mix and strategic decision to
compete international market.
OR
According to the American Marketing Association the
"international marketing is a multinational process of planning
and executing the conception, put price, promotion and
distribution of ideas, goods and services to create exchanges that
satisfy individual and organizational objectives."
OR
International Marketing is the provision of commercial activities
that directs the flow of goods and services of the company to
consumers or users in more than one nation by the gain.
OR
International marketing is the marketing for the customers of
other countries.
International marketing is often not the same as selling the
product simply to several countries. Companies need to take care
of the language barrier, the ideals and habits in the markets in
which approaching. Adapting marketing strategies to attract a
specific group that is trying to sell is very important and can be
the cause number one a failure or a success.
Features of international marketing:

1. Marketing activities are undertaken across the borders.

2. It is directed to facilitate exchange between the firm and the

customers of foreign countries.

3. It is aimed at satisfying needs of international/global

customers.

4. International marketing decisions are taken with reference to

the global business environment.

5. It involves two or more nations.

6. Tailor-made marketing mix is necessary for each of the nations.

7. It is more complex and, hence, difficult.

8. Role of international trade agencies seem very critical in

marketing products in other countries.
9. It offers attractive opportunities along with challenges and
threats.

Main forces led to need of international marketing are:

1. Unequal distribution of natural resources

2. Specialization and need for marketing surplus

3. Craze for global political empowerment

4. Rapid means of communication and transportation

5. Liberalization

6. Globalization or global thinking

7. Trend for privatization

8. Improved understanding and cooperation among nations for

mutual benefits

9. Satisfactory functioning of several international organisations

or agencies such as International Monetary Fund (IMF), World
Bank, United Nations Organisation (UNO), UN Security Council,
etc.

10. Growth and Development of Multinational Companies

(MNCs)
11. Emergence of global marketing opportunities

12. Technological advancement and transfer of technology.

ADVANTAGE OF INTERNATIONAL MARKETING

The main advantages of international marketing are discussed
below −
Provides higher standard of living
International marketing ensures high standard life style & wealth
to citizens of nations participating in international marketing.
Goods that cannot be produced in home country due to certain
geographical restrictions prevailing in the country are produced
by countries which have abundance of raw material required for
the production and also have no restrictions imposed towards
production.

Ensures rational & optimum utilization of resources

Logical allocation of resource & ensuring their best use at the
international level is one of the major advantages of international
marketing. It invites all the nations to export whatever is
available as surplus. For example, raw material, crude oil,
consumer goods & even machinery & services.
Rapid industrial growth
Demand for new goods is created through international market.
This leads to growth in industrial economy. Industrial
development of a nation is guided by international marketing.
For example, new job opportunities, complete utilization of
natural resources, etc.
Benefits of comparative cost
International marketing ensures comparative cost benefits to all
the participating countries. These countries avail the benefits of
division of labor & specialization at the international level
through international marketing.
International cooperation and world peace
Trade relations established through international marketing
brings all the nations closer to one another and gives them the
chance to sort out their differences through mutual
understanding. This also encourages countries to work
collaboratively with one another. This thereby designs a cycle
wherein developed countries help developing countries in their
developmental activities and this removes economic disparities
and technological gap between the countries.
Facilitates cultural exchange
International marketing makes social & cultural exchange
possible between different countries of the world. Along with the
goods, the current trends and fashion followed in one nation pass
to another, thereby developing cultural relation among nations.
Thus, cultural integration is achieved at global level.
Better utilization of surplus production
Goods produced in surplus in one country are shipped to other
countries that have the need for the goods in international
marketing. Thus, foreign exchange of products between
exporting country & importing countries meets the needs of each
other. This is only possible if all the participating countries
effectively use surplus goods, service, raw material, etc. In short,
the major advantages of international marketing include effective
utilization of surplus domestic production, introduction of new
varieties of goods, improvement in the quality of production &
promotion of mutual co-operation among countries.
Availability of foreign exchange
International marketing eases the availability of foreign
exchange required for importing capital goods, modern
technology & many more. Essential imports of items can be
sponsored by the foreign exchange earned due to exports.
Expansion of tertiary sector
International marketing promotes exports of goods from one
country to another encouraging industrial development.
Infrastructure facilities are expanded through international
marketing. It indirectly facilitates the use of transport, banking,
and insurance in a country ensuring additional benefits to the
national economy.
Special benefits at times of emergency
Whenever a country faces natural calamities like floods &
famines, it is supported by other countries in the international
market. The international market provides emergency supply of
goods and services to meet urgent requirements of the country
facing the calamity. This distribution can only be facilitated by a
country which has surplus imports.
A company exporting goods to other foreign countries earns
substantial profit through export operation as domestic
marketing is less profitable than international marketing. The
loss a company suffers in domestic marketing can be
compensated from the profit earned through exports in
international marketing. Foreign exchange can be earned by
exporting goods to foreign countries. Thus, the profit earned can
be used for the import of essential goods, new machinery,
technology, etc. This would further facilitate large-scale export
in future.
Problems Faced by International Marketing
International marketing is not as easy as domestic marketing.
International marketing environment poses a number of
uncertainties and problems. As against, national markets,
international markets are more dynamics, uncertain, and
challenging. Especially, cultural diversities and political realities
in several nations create a plenty of barriers that need special
attention. In the same way, geographical constraints cannot be
totally undermined. Widespread terrorism has created a new
threat to international trade.
1. Tariff Barriers:
Tariff barriers indicate taxes and duties imposed on imports.
Marketers of guest countries find it difficult to earn adequate
profits while selling products in the host countries. Sometimes, to
prevent foreign products and/or promote domestic products,
strategically tariff policies are formulated that restricts
international marketing activities. Frequent change in tariff rates
and variable tariff rates for various categories of products create
uncertainty for traders to trade internationally. Antidumping
duties levied on imports and defensive strategies create difficulty
for exporters.
2. Administrative Policies:
Bureaucratic rules or administrative procedures – both in guest
countries and host countries – make international (export and/or
import) marketing harder. Some countries have too lengthy
formalities that exporters and importers have to clear. Unjust
dealings to get the formalities/ matters cleared create many
problems to some international players. International marketers
have to accustom with legal formalities of several courtiers where
they wants to operate.
3. Considerable Diversities:
Different countries have their own unique civilization and culture.
They pose special problems for international marketers. Global
customers exhibit considerable cultural and social diversities in
term of needs, preferences, habits, languages, expectations,
buying capacities, buying and consumption patterns, and so forth.
Social and personal characteristics of customers of different
nationalities are real challenges to understand and incorporate.
Compared to local and domestic markets, it is more difficult to
understand behaviour of customers of other countries.

In the same way, as against domestic markets, to design and

modify marketing mix over time for international markets seem
more difficult. Market segmentation, product design, pricing, and
distribution need more information and efforts. Promoting
products in international markets is a formidable task. Message
preparation and execution in suitable media in international
markets is not easy game to play.
Language and religious diversities are the real challenge for
international business players. There are 6000 languages in the
world. China (20%) is the largest in term of native speakers,
followed by English (6%), and followed by Hindi (5%). Yet
English is recognized as global business language.

English speaking countries can contribute the largest share (40%)

in global business. Religious diversities seem difficult to cope
with as they determine needs and wants of people. At present
Christianity is the largest in the world (1.7 billion), followed by
Islam (1.0 billion), followed by Hinduism (750 millions), and
followed by Buddhism (350 millions).
4. Political Instability or Environment:
Different political systems (democracy or dictatorship), different
economics systems (market economy, command economy, and
mixed economy), and political instability are some of real
challenges that international markers have to face. Political
atmosphere in different courtiers offer opportunities or pose
challenges to international marketers.

Governments in different nations have their priorities,

philosophies, and approaches to the international trades. They
may adopt restrictive (protectionist) or liberal approach to
international business operations. Especially, political approaches
of dominant nations have more influence in international
marketing activities.
Long-term trend of global political environment is unpredictable
and uncertain. Economic policies of different nations (industrial
policies, fiscal policies, agricultural policies, export-import
policies, etc.,) do have direct impact on international trade.
Drastic change in these policies creates endless difficulties to
international traders. While dealing with international markets,
international political and legal environment needs a special
attention.
5. Place Constraints (Diverse Geography):
Trade in foreign countries of far distance itself practically
difficult. In case of perishable products, it is a real challenge.
Exporting and importing products via sea route and making
arrangements for effective selling involves more time as well
risks. Segmenting and selecting international markets require the
marketers to be more careful.
6. Variations in Exchange Rates:
Every nation has its currency that is to be exchanged with
currencies of other nations. Currencies are traded every day and
rates are subject to change. Indian Rupee, European Dollar, US
Dollar, Japanese Yen, etc., are appreciated or discounted at
national and international markets against other currencies. In
case of extraordinary and unexpected moves (ups and downs) in
currency/exchange rates between two courtiers create serious
settlement problems.
7. Norms and Ethics Challenges:
Ethics refers to moral principles, standards, and norms of conduct
governing individual and firm’s behaviour. They are deeply
reflected in formal laws and regulations. In different parts of the
world, different codes of conduct are specified that every
international business player has to observe. However,
globalization process has emphasized some common ethics
worldwide. Corruption is another issue relating to business ethics.
8. Terrorism and Racism:
Terrorism is a global issue, a worldwide problem. People of the
world are living under constant fear of terrorists attracts anywhere
in the world. To trade internationally is not economically risky,
but there is the threat to life. Racism also restricts international
trade activities.
9. Other Difficulties:
Besides these problems, there are many obstacles in
international markets, such as:
a. Changing ecological environment and global warming

b. Difference in weathers and natural climates

c. Inappropriate or inadequate role of international agencies

supporting and regulating international trades

d. Natural and man-made calamities

e. Difference in currencies, weights, standards, measures, and
marketing methods

f. Protectionist approach of some countries

g. Economic crisis across the globe.

Modes of entry in International Market

1. EXPORTS: Export deals with physical movement of goods
and services from one place to another through a customs
port followings the rules of both the country of origin and
country of destination. Exports can be classified as direct or
indirect.
Direct exporter: export their goods and services in their own
name and the buyer directly remit proceeds, in a proper
manner and through a proper channel.
Indirect exporter: supply goods to direct exporters. Lack of
expertise, international contacts and manpower cause them
to depend upon direct exporters.
2. INTERNATIONAL LICENSING: International licensing
is an agreement between the licensor and the licensee over a
period of time for the use of brand name, marketing, know-
how, copyright, work method and trade mark by paying a
license fee. Licensing specifies the territory as well as
period. The licensor gives such permission after establishing
 such a command-able position globally. It has a brand
command. For example Microsoft Office
3. FRANCHISING: Franchising is a form of licensing
wherein the franchiser exercises more control over
franchisee. The franchiser supplies the main part of the
product, and provides the following services to the
franchisee:
• TRADEMARKS
• OPERATING SYSTEMS
• PRODUCT
• BRAND NAME
Company support systems like advertising, training of
employees, quality assurance are also involved in franchising.
McDonald, Dairy Queen, Domino’s Pizza and KFC are the
known franchise brands.
4.CONTRACT MANUFACTURING: Many companies
outsource their products and concentrate mainly on marketing
operations. Contract manufacturing is the strategy of identifying
a manufacturing unit to produce items at a competitive price in
any part of the world. Nike is procuring its athletic footwear in a
number of factories in South East Asia.
Contract manufacturing with a dimension in the service sector
offer ample opportunities for Indian companies in the form of
BUSINESS PROCESS OUTSOURCING (BPO) and
KNOWLEDGE PROCESS OUTSOURCING (KPO).
4. CONTRACT MARKETING: All the companies, which
are strong in production, may not have equal marketing
strengths. However, they may be comfortable dealing with
marketing outlets around the world such as TESCO, ‘K’
Mart, Wal-Mart and Spinneys. Such manufacturing units
enter in to a marketing agreement and concentrate more on
production at lower costs.
5 MANAGEMENT CONTRACTS: Companies with a low
level of technology and managerial expertise may seek the
assistance of foreign countries. A management contract is an
agreement between two companies whereby one company
provides managerial and technical assistance for which
proper monetary compensation is given, either as a flat lump
sum fee or a percentage on the sales or a share in the profits.
6 JOINT VENTURE: A joint venture is a binding contract
between two venture partners to set up a project either in
home country or host country or a third country. In this case
both parties are committed to joint risk taking and joint profit
sharing. For example Mahindra & Mahindra has recently
entered in to a joint venture with Renault to manufacture
cars.
7 FOREIGN DIRECT INVESTMENT: The flow of funds
from one destination to another is called investment.
Companies, which are constantly involved in international
business, invest their money in manufacturing and
marketing bases through ownership and control.
 8 MERGERS AND ACQISITIONS: In this case the
company in the host country selects a foreign company
merges itself with it. The foreign company acquires the
control of ownership
9 TAKE-OVERS: This is a strategy whereby a company
identifies a healthy unit with strong brand name and network
and brings it under the management of another unit in order
to become a leader in the field and guarantee success.
10 TURNKEY PROJECTS: A turnkey project is a
contract under which a company is fully involved from
concept to completion. It covers right from supply of
manpower, capital, and erection of plant, installation and
commissioning up to the trial operation of a project.
ALTERNATIVE STRATEGIES IN INTERNATIONAL
MARKET

Every successful company has a thorough strategy process, which

is usually gone through annually, bi-annually, or every three
years.
An agile and flexible company that can adapt quickly to changes
in market and business environment variables usually stays ahead
of its competitors.
Broadly there are three alternative product strategies in
foreign markets that are as follows:
1) Product Extension:
Companies here extend the same product marketed successfully
in the home country to other parts of the world without many
modifications. Such a move is often adopted when enough loyalty
has been earned by the product in the home markets and
companies can depend on the similarities of tastes and product
use conditions by a large segment of customers abroad.
Generally, the food and beverages industry has been adopting this
line of extension wherever the laws of the land do not insist on
significant modifications to the products.

MTR spices and their other products, Mother’s Recipes pickles,

particularly Pachranga Pickles, are marketed in many countries
abroad to cater to the Indian ethnic population settled there.
Similarly, some of the rice polishing and packing companies like
Satnam Overseas, owners of Kohinoor brand of rice and LT
Overseas, owners of Dawat Rice sell various varieties of Indian
rice to take care of the palate of the non-resident Indians settled
across different countries.

These firms are basically ethnocentric in their approach and adopt

their own niches in foreign countries to sustain a large chunk of
business. However, the globalization of economies has opened
wonderful opportunities for geocentric companies, which, as a
deliberate strategy, adopt standardized products for global
promotions to grow into large international conglomerates just
like the Pepsis and Cokes of the world have grown.
2) Product Adaptation:
Product Adaptations come in several forms. Marketing strategies
in a country-by-country basis are tailored with the peculiarities of
the local market. By this, product adaptations are considered as
necessary strategy in order to cater to the different needs of
customers in various countries. Following the concept of “logical
incrementalism”, it can be argued that continual changes can
foster flexibility and experimentally. However, strategic drift is
likely to result if the management effectiveness fails to keep pace
with the environmental change. Product adaptation tends to
become a reactive response to the market.

With this, a high level of adaptation is likely to become difficult

to coordinate the network of activities by the multinational in a
global scale. Mandatory adaptations involve changes that have to
be made before the product can be used, For example, appliances
made for the U.S. and Europe must run on different voltages, and
a major problem was experienced in the European Union when
hoses for restaurant frying machines could not simultaneously
meet the legal requirements of different countries

Another distinction involves physical product vs. communication

adaptations. In order for gasoline to be effective in high altitude
regions, its octane must be higher, but it can be promoted much
the same way. On the other hand, while the same bicycle might
be sold in China and the U.S., it might be positioned as a serious
means of transportation in the former and as a recreational tool in
the latter.

In some cases, products may not need to be adapted in either way

(e.g., industrial equipment), while in other cases, it might have to
be adapted in both (e.g., greeting cards, where the occasions,
language, and motivations for sending differ). Finally, a market
may exist abroad for a product which has no analogue at home.
For example, hand-powered washing machines.
3) Product Development:
Many firms now develop new products with global markets in
mind. These global products are based on cores and derivatives.
The product core might be the same for all products in all regions.
An extended core might apply for each region but differ across
regions. Each region might launch product derivatives specific to
the regional conditions. This core strategy allows for maximizing
the appeal of different configurations, while maintaining a stable
product base and thus reducing basic development costs.

The shift from local to global development requires that the

company consider the unique or special concerns for major
markets from the outset, rather than later attempting to make
various adaptations to the initial model or prototype. A global
product ‘hen, is not identical in all countries. Instead, a global
product is designed from the outset with the goal of maximizing
the percentile of identical parts to the point where local needs can
be met quit . y with a minimum of additional costs.
 CHANGES IN GLOBAL MARKET ENVIRONMENT
Factor effecting the international market have a significant effect
on micro and marco environment which can be understood by
following diagram:
CHANGES IN GLOBAL MARKET ENVIRONMENT

MICRO MACRO
ENVIRONMENT ENVIRONMENT
• Intermediaries • Demographic
environment:
• Customer
• Economic
• Public environment:
• Competitors: • Technological
environment
• Suppliers
• Political environment
• Legal environment:
• Cultural
environment:

Micro environment of marketing:- It is the job of the marketer

to establish good relationship with their micro environment as the
success of the company depends upon the micro environment.
Company:- in company marketer must discuss all the plans and
policies with the top management, r&d, purchasing,
manufacturing, selling and other departments to give satisfaction
to the consumer.
1. Suppliers:- Suppliers are the persons who provide the company
necessary raw material. If the company is not having cordial
relations with the supplier then it may result into short run loss
in sale and damage the customer relations
2. Marketing intermediaries:- they help in promoting, selling and
distributing the goods to the ultimate consumer. They
include middleman like agents, dealers, whole-sellers,
retailers, brokers; physical distribution firms which help the
manufacturer in moving the goods from the factory to their
destination; warehousing firms which help in storing and
protecting the goods; transportation firms which help in
moving the goods; market service agencies which help in
consultancy, research, advertising etc; financing firms provide
help in insuring the risk associated with the buyer.
3. Customers:- as likes of customer changes very fast so for the
growth of the company the marketer must keep studying the
customer related factors and their demand regular basis.
4. Competitors:- it is necessary for the marketing manager to have
the knowledge about the competitors status, strength,
weakness to take the competitive advantage.
5. Public:-the company must have good public relation
department to maintain good relations with the public.

Macro environment of marketing:- the Micro environment

discussed above are controllable but the Macro environment are
uncontrollable.
1. Demographic environment:- it includes the life style, income,
qualification, age, marital status, sex, family structure etc. so
the marketer must have the knowledge about it. Like teenage
market, kids market.
2. Economic environment:– it means the purchasing power of the
consumer the marketer must have the knowledge about the
inflation, changing consumer pattern, real income, low saving
etc.
3. Natural environment:- the marketer must have the knowledge
about natural resources, their shortage if any, government
policies etc.
4. Technological environment:-it is the technology which is
changing the life of the people. So the marketer must keep an
eye on the changing technology.
5. Political environment:- political stability is very important for
the growth of any economy it include the law, government
agencies etc. marketing decisions are affected by the political
environment.
6. Legal environment:- the marketer must function as per the legal
formalities and should not work against them.
7. Cultural environment:– it include the values, beliefs,
perceptions of the consumer which also affect the marketing
environment. So the marketer must have the knowledge about
it.
So the marketer can not always control the environment but
whenever possible they can take proactive approach to the
marketing environment.
PESTLE ANALYSIS
PESTLE analysis, which is sometimes referred as PEST
analysis, is a concept in marketing principles. Moreover, this
concept is used as a tool by companies to track the environment
they’re operating in or are planning to launch a new
project/product/service etc.
PESTLE denotes P for Political, E for Economic, S for Social, T
for Technological, L for Legal and E for Environmental. It gives
a bird’s eye view of the whole environment from many different
angles that one wants to check and keep a track of while
contemplating on a certain idea/plan.

1. Political: These factors determine the extent to which a

government may influence the economy or a certain
industry. [For example] a government may impose a new tax
or duty due to which entire revenue generating structures of
organizations might change. Political factors include tax
policies, Fiscal policy, trade tariffs etc. that a government
may levy around the fiscal year and it may affect the business
environment (economic environment) to a great extent.
2. Economic: These factors are determinants of an economy’s
performance that directly impacts a company and have
resonating long term effects. [For example] a rise in the
inflation rate of any economy would affect the way
companies’ price their products and services. Adding to that,
it would affect the purchasing power of a consumer and
change demand/supply models for that economy. Economic
factors include inflation rate, interest rates, foreign exchange
rates, economic growth patterns etc. It also accounts for the
 FDI (foreign direct investment) depending on certain
specific industries who’re undergoing this analysis.
3. Social: These factors scrutinize the social environment of
the market, and gauge determinants like cultural trends,
demographics, population analytics etc. An example for this
can be buying trends for Western countries like the US
where there is high demand during the Holiday season.
4. Technological: These factors pertain to innovations in
technology that may affect the operations of the industry and
the market favorably or unfavorably. This refers to
automation, research and development and the amount of
technological awareness that a market possesses.
5. Legal: These factors have both external and internal sides.
There are certain laws that affect the business environment
in a certain country while there are certain policies that
companies maintain for themselves. Legal analysis takes
into account both of these angles and then charts out the
strategies in light of these legislations. For example,
consumer laws, safety standards, labor laws etc.
6. Environmental: These factors include all those that
influence or are determined by the surrounding environment.
This aspect of the PESTLE is crucial for certain industries
particularly for example tourism, farming, agriculture etc.
Factors of a business environmental analysis include but are
not limited to climate, weather, geographical location, global
changes in climate, environmental offsets etc.