What is International Marketing?

 International marketing, though it has certain distinct characteristics, is similar

to domestic marketing in terms of certain technical attributes. Marketing can be
concerned as an internal part of two processes, viz. technical and social.
International marketing and domestic marketing are identic.al, so far as technical
process is concerned.
 It includes non-human factors such as product, price, cost, brands etc. The basic
principles regarding these variables are of universal applicability. But the social
aspects of marketing are unique in any given stratum, because it involves human
elements, namely, the behavior pattern of customers and the given characteristics
of a society, such as consumers attitude, values etc. It is obvious that marketing,
to the extent it is visualized as a social process, will be different from domestic
marketing.
 Kotler has defined marketing as, “Marketing is the analysis, planning,
implementation and control of programs designed to bring about desired
exchanges with target audiences for the purpose of mutual or personal gain. It
relies heavily on the adoption and coordination of product, price, promotion and
place for achieving effective response.”
 There are two sets of variables in this definition. One is markets and other one is
human needs and wants and a process or techniques to convert potential
exchanges into realized exchanges. The techniques involved are more or less
similar in both domestic and international marketing. But the variables involved
are totally different in case of International Marketing.
 International marketing can, therefore, be defined as, “marketing carried on
across national boundaries.”
 The International marketing is different from domestic marketing both in the
way of exchange and needs and requirements of international buyers. Therefore
the knowledge of and the ability to perceive basic pattern in consumer behavior
in different environments is a particularly vital element in the makeup of the
international marketing.
 The role of marketing manager becomes very important in this context. To work
successfully in an international environment, the marketing manager must have
the ability to seek to understand the environment and way of thinking regarding
the consumers, competitors, suppliers or employees in the new country.
Major dimensions to international
marketing:
1. Competence in marketing, with a sound grasp of marketing concepts, tools and
techniques.
2. Ability to perceive patterns of consumer behavior in different countries and the ability
to evaluate the essential differences and similarities between markets.

3. Management skill to organize, plan, co-ordinate and control an operation of

considerably greater complexity particularly in its human relationships – than that
involved in the home market.

The skills involved in marketing have been aptly summed up by J.B. Mckitterick of the
General Electric Company as,” the principal task of the marketing function in a
management team wedded to the marketing concept is not so much to be skillful in
making the customer to what suits the interests of the business as to be skillful, in
conceiving and then making the business to what suits the interests of the customer.”
Therefore, it is apparent that the job of International marketing involves an additional
dimension and requires a unique combination of skills.

International marketing is the marketing across the national frontiers. It refers to the
strategy, process, and implementation of the marketing activities in the international
arena.

International marketing may be defined as an activity related to the sale of goods and
services of one country in the other, subject to the rules and regulations framed by the
countries concerned. In simple words, it refers to marketing activities and operations
among the countries of the world following different political and economic systems.

International marketing is marketing abroad i.e., beyond the political boundaries of the
country. International marketing brings countries closer due to economic needs and
facilitates understanding and co-operation among them. It is essentially a constructive
economic and commercial activity which is useful and beneficial to all participating
countries. International marketing act as an instrument of global growth and
development.
According to Hess and Cateora international marketing is ‘the performance of business
activities that direct the flow of goods and services to consumers or users in more than
one nation.’ Marketing may be understood as human activity directed at satisfying needs
and wants through exchange process.

It means working with markets. It means attempting to actualize potential exchange for
the purpose of satisfying human needs and wants. It includes analyzing the markets for
their potentials in order to assess the needs of the customers. International marketing is
a part of total marketing process.

It is marketing activities carried on by a marketer in more than one nation. It may be

defined as – ‘marketing carried on across national boundaries.’ Marketing activities, i.e.,
buying, selling, transportation, storage and warehousing, financing risk bearing,
pricings, standardizing, advertising and sales promotion etc., may be called
international marketing when performed in foreign markets across the national border.

Scope of International Marketing

The scope of international marketing essentially includes exporting of goods and
services in foreign markets. The exporter performs various activities, other than
exporting the goods and services.

These activities are:

1. Establishing
A branch in foreign market for processing, packaging or assembling the goods according
to the needs of the markets. Sometimes complete manufacturing is carried out by the
branch through direct investments.

2. Joint Ventures and Collaborations

International marketing includes establishing joint ventures and collaboration in
foreign countries with some foreign firms for manufacturing and/or marketing the
product. Under these arrangements, the company works in collaboration with the
foreign firm in order to exploit the foreign markets.

3. Licensing Arrangements
The company, under the system, establishes licensing arrangements with the foreign
term whereby foreign enterprises are granted the right to use the exporting company’s
know- how, viz., patents, processes or trademarks according to the terms of agreement
with or without financial investment.

4. Consultancy Services
Offering consultancy services are also covered in international marketing scope. The
exporting company offers consultancy services by undertaking turnkey projects in
foreign countries. For this purpose, the exporting company sends its consultants and
experts in foreign countries who guide and direct the manufacturing activities on the
spot.

5. Technical and Managerial Know-How

The scope of international marketing also includes the technical and managerial know-
how provided by the exporting company to the importing company. The technicians and
managerial personnel of the exporting company guide and train the technicians and
managers of the importing company.

Characteristics of International Marketing

1. Different Legal System
Every Country has its own legal system. Some of the countries follow English Common
Law while others follow the civil law. Some of the European countries are having their
own legal system. This difference in the legal system among different countries
increases the difficulties of businessmen.

It is not sure for the businessmen that which legal system will be applicable to their
business transactions. There must be uniform legal system. However some of the
agencies are trying to make it uniform for all countries. The United Nations Commission
on International Trade Law is also supporting the opinion of uniformity and is doing, its
efforts to bring uniformity in International Trade Law.

2. Market Characteristics
The Market Characteristics of every Country is different due to the environmental
factors, demand patterns, Government Controls etc. In some countries like India and
USA the market characteristics are found different from state to state. It is because of all
above factors responsible for the market characteristics.

3. Monetary System
The monetary system of each country is decided by the government of that country and
the exchange value of country’s currency is being determined by the forces of supply and
demand.
4. Procedure and Documentation
Every country has its own procedure of documentation requirements for the purpose of
experts. Every business house has to comply with these rules and regulation for the
purposes of export and imports.

Significance of International Marketing

The term International marketing refers to exchanges across national boundaries for the
satisfaction of human needs and wants. International Marketing affects consumers in
many ways, though its importance is neither well understood nor appreciated. The
significance of international marketing may be explicitly in order to dispel such nations.
1. Survival
Most of the countries in the world are lacking of market size, resources and
opportunities. Therefore it is their compulsion to trade with other countries for their
survival. Since the European Countries are small in size therefore without overseas
markets their firms would not have sufficient economies of scale to be competitive with
U.S. based firms. It is pertinent to mention here that international competition may not
be a matter of choice when the survival is at stake.
Will Mitchell, J. Myles Shaver and Yeung Bernard conducted a study on “Performance
following changes in International Presence in Domestic and Transition Industries. In a
study of five pharma-sector industries, he found that international expansion is
necessary when overseas firms enter a domestic market. He revealed that the firms
having substantial market share and international experience expanded their business
activities successfully. And all those firms disappeared that retrenched after an
international expansion.”
2. Growth of International Market
Despite having numerous problems like economic and marketing problems, the
developing nations are considered be an excellent market to do business. The vast
potential of international markets can never be ignored. According to one survey total
world market is four time longer in comparison to U.S. Market.
A slow growth of U.S. population and changing life style viewed the growth of other
markets with a critical eye. It is evident that Russian smokers show no concern about
the health risks. And International giants Philip Moris Co, R.J. Reynolds, Tobacco
International SA and British-American Tobacco Co. have entered the market very
aggressively.
3. Sales and Profits
It is clear that there is a large potential to sell the products in the international market.
The International Market constitutes a large amount of share of the total business of
many firms. Further it is evident that many large U.S. based companies have performed
very well in the overseas market. IBM and Compaq are the best examples in this regard.
Both of them have maximized their sales in abroad in comparison to their domestic
market. In case of coca-cola it is important to mention here that 80 percent of the total
operating profit is contributed by the international sales account of the company. Thus
market is on saturation level, where as there is still a great potential for its future growth
in other countries. Thus it can be concluded that international market provides huge
potential to increase sales value and profits of the firms.
4. Benefit from Diversification
The investors can be benefited from global diversification. It is evident that the demand
of certain products is affected by cyclical factors like recession and seasonal factors like
climatic change. The sale of such products fluctuate adversely due to all these variables.
It is the only solution for such kind of risks, to diversify a company’s risk and to consider
foreign market as only solution to overcome with variable demand.
Such markets can provide outlets for excess production capacity and can easily counter
such fluctuations. Seasonal factors, for instance, may affect consumption level of soft
drinks. And keeping in mind such limitation, the soft drink industries are spreading
their marketing activities throughout the global market. It has been observed that global
selling has enabled the company to carry on with production throughout the year and
help the companies to stabilize their business.
5. Inflation and Price Modernization
The benefits of International trade are readily self-evident. Exports are always
considered beneficial to a country. On the other hand imports can also be highly
beneficial to a country. Because there is not any incentive for domestic firms to
moderate these prices. The lack of alternatives in imported products may compel
consumers to pay more for the products to local firms, resulting in inflation and excess
profits for local firms.
It is evident that in Europe, when the prices of orange Juice were jumped up, their
customers switched over to other alternative drinks. Finally it took ten years for citrus
industry to win back these consumers. The U.S. orange growers finally compromised to
live with import as they found that alternative juice is able to keep consumers by
minimizing the price increases.
6. International Marketing and Standard of Living
International marketing helps the countries and their citizens to increase their standard
of living. On the other hand without trade, there may be product shortage and which
may force people to pay more or less. International trade make easy for industries to get
specialization and gain access to raw materials.
And at the same time it foster competition and efficiency. In overall it leads to the
conclusion that international trade is helpful to provide their citizen higher standard of
living.

Factors affecting International Marketing

Many small and medium entrepreneurs wrongly think that an international marketing
plan has to be carried out only by big-sized companies. This conclusion is based on
wrong
and simplistic ideas that relegate the small-sized company plan. Every enterprise that
would like to internationalize must have its own plan of external business.

To design an adequate strategy, a number of steps relevant to any company will have to
be followed, no matter its size.
Among them, there are:
i. Search for information to take decisions.
ii. Ordering of a series of stages (assignation of priorities and deadlines) to follow, in
order to get access to external markets.
iii. Company internal resources (human, monetary, etc.) assessment for international
penetration.
iv. Quantification of objectives and supervision of their observance.
v. Putting into practice of the different policies so as to accomplish the set goals.
vi. Strategy different steps adjustment throughout the implementation of the plan.
Step # 1. Strategy Design:
Strategy design stage includes a series of sub-stages:
a. Acquisition of Information about International Markets:
However, some aspects on the topic are going to duly discuss the subject in full.
This stage comprises a series of steps to follow:
i. Fixing of objectives about what the international market information wanted is.
ii. Information inquiry instruments design and definition of the research acting field.
iii. Determination of the different traditional and alternative sources of information
(especially for informal market research).
iv. Acquisition of data elements (historical or current information and trends).
v. Analysis, comparison, register, accumulation and interrelation of the information
obtained.
vi. Drawing of conclusions of the information obtained and analyzed.

Major Decisions in International Marketing

1. Looking at the Global Marketing Environment:
A company looking abroad must start by understanding the
international trade system.
(a) Economic Environment:
Two economic factors reflect the country’s attractiveness as a market:
(i) The country’s industrial structure
(ii) Its income distribution.
Types of Industrial Structures
(i) Subsistence Economies
a. Agricultural economies consume most of what they produce and barter the rest for
simple goods and services.
b. Offer few market opportunities
(ii) Raw Material Exporting Economies
These economies are rich in one or more natural resources but poor in other ways.
(iii) Industrializing Economies
a. Manufacturing accounts for 10-20% of the economy.
b. Needs more raw material imports but less of foreign goods.
c. Gives rise to new rich and middle class who need more imported goods.
(iv) Industrial Economies
Major exporters of manufactured goods and invest funds.
Income Distribution
Countries with subsistence economies may have little surplus income, hence reduced
buying capability. Industrial economies have much more surplus funds to spend.
(b) Political / Legal Environment:
Political / Legal factors to be considered in deciding whether
to do business in a given country include:
(i) Attitude towards international buying – Some nations are receptive
others are hostile.
(ii) Government bureaucracy:
The extent to which the host government runs an efficient system for
helping foreign company.
(iii) Political stability – Changing governments may mean change in
policies.
(iv) Monetary regulations – Sellers want to take their profits in a
currency of value to them.
(c) Cultural Environment:
(i) Each country has its own folkways, norms and taboos.
(ii) The seller must examine the ways consumers in different countries
think about and use certain products before planning a marketing
program.
(iii) Business norms and behaviour also vary from country to country.
2. Deciding Whether to go Abroad:
Problems in Global Marketing:
(a) Learning new laws
(b) Learning new language
(c) Dealing with volatile currencies.
(d) Facing political and legal uncertainties.
(e) Redesigning their products to suit different customer needs and
expectations.
Factors that Attract Companies to Go International:
(a) Counterattack on global firms in their home market to counter
their attack in our market.
(b) High profit opportunities are available in some countries.
(c) To get a larger customer base to achieve economies of scale.
(d) To reduce its dependency on one market
(e) If company’s customers are going abroad and require international
servicing.
Risks in going abroad:
(a) Failure to understand the preferences of foreign customers.
(b) Failure to offer a competitively attractive product.
(c) Failure to understand the foreign country’s business culture or
know how to deal effectively with foreign nationals.
(d) The company might underestimate foreign regulations and incur
unexpected costs.
(e) Lack of managers with international experience
(f) The foreign country might change its laws etc. or there may be a
political change etc.
Challenges in International Marketing:
(a) Huge foreign indebtness (May lead to unstability of political
environment and may lead to nationalisation or limits on profit).
(b) Unstable Government.
(c) Foreign exchange problems.
(d) Foreign Government entry requirements and bureaucracy.
(e) Tariffs and other trade barriers.
(f) Corruption.
(g) Technological pirating.
(h) High cost of production and communication adaptation.
3. Deciding which Market to Enter:
Decisions that must be taken are:
(a) What proportion of foreign to total sales will it seek?
(b) Whether to market in a few countries or many countries.
(c) How fast to expand.
(d) Types of countries to enter.
Generally speaking it makes sense to operate in fewer countries with a
deeper commitment and penetration in each.
Companies should enter fewer countries when:
(i) Market entry and market control costs are high
(ii) Product and communication adaptation costs are high.
(iii) Population and income size and growth are high in the initial
countries chosen.
(iv) Dominant foreign firms can establish high barriers to entry.
4. Deciding How to Enter the Market:
Modes of Entry into Foreign Markets:
(a) Indirect export
(b) Direct export
(c) Licensing
(d) Joint ventures
(e) Direct investment
(f) Contract manufacturing
(g) Management contracting
(h) Joint ownerships
(a) Indirect Export:
(i) Occasional exporting is a passive level of involvement in which the
company exports from time to time either on its own initiative or as a
response to unsolicited orders from abroad.
(ii) Active exporting takes place when the company makes a
commitment to expand its exports to a particular market.
(iii) Indirect exporting i.e. they work through independent
intermediaries to export their product.
(b) Direct Export:
Companies handle their own export.
A company can carry on direct exporting in several ways:
(i) Domestic based export department or division.
(ii) Overseas sales branch or subsidiary.
(iii) Travelling export sales representatives.
(iv) Foreign based distributors or agents – They have exclusive rights
to represent the company in that country or only limited rights.
(c) Licensing:
Licensing is a method of entering a foreign market in which the
company enters into an agreement with a licensee in the foreign
market offering the right to use a marketing process, trademark,
patent, trade secret, or other item of value for a fee or royalty.
(d) Joint Venture:
Entering foreign markets by joining with foreign companies to
produce or market a product or service.
Joint venture differs from exporting in that the company joins with a
host country partner to sell or market abroad.
(e) Direct Investment:
Entering a foreign market by developing foreign based assembly or
manufacturing facilities.
(f) Contract Manufacturing:
A joint venture in which a company enters into contracts with
manufacturers in a foreign market to produce the product.
(g) Management Contracting:
A joint venture in which the domestic firm supplies the market knows
how to a foreign company that supplies the capital. The domestic firm
exports management services rather than products.
(h) Joint Ownership:
A joint venture in which a company joins investors in a foreign market
to create a local business in which the company shares joint ownership
and control.
5. Deciding on the Global Marketing Programme:
Companies that operate in one or more foreign markets must decide
how much, if at all, to adapt their marketing mixes to local conditions.
At one extreme are global companies that use:
(a) Standardised Marketing Mix:
An international marketing strategy for using basically the same
product, advertising, distribution channel and other elements of the
marketing mix in all the international markets.