International Marketing PPT - II

International Marketing
Unit - II
Dr. Ravindra
Associate Professor
Department of Commerce
Indira Gandhi University, Meerpur,
Rewari

International Marketing Research and
Information System
Introduction
Business managers need timely, useful, relevant and reliable
information about different components of marketing
environment viz. competitors, suppliers, customers,
government policies, technological innovations, political
environment, social and cultural environment, global
environment, etc. In international business, information is
needed not only about the domestic economy but also about
all the nations where the company is doing its business or is
planning to do its business. Timely, relevant and reliable
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Dr. Ravindra, IGU, Meerpur

International Marketing Research and
Information System
information must be available to the decision makers of
any international business unit. With the help of
marketing research, international marketer can get useful
relevant and reliable information about different
components of marketing mix. Marketers can understand
the changing trends of market; liking, disliking, taste,
preferences, etc. of their potential customers. The
marketing research also helps the marketer in
understanding strengths, and weaknesses of competitors.
The marketer can identify available opportunities and
hidden threats existing in the marketing environment.
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Marketing Research and Information
System
Meaning of Marketing Research
Marketing research is a systematic method of collecting,
recording, analyzing and interpreting the data to solve
marketing problems. It also helps the marketer in taking
important decisions like launching of new products in the
market, taking entry in new foreign market, dropping a
product from its existing marketing mix, selecting new
distribution channels, formulating pricing strategies for
different foreign market etc. Marketing research starts with
some marketing problems. The main aim of marketing
research is to solve these marketing problems in a scientific

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manner. Some important definitions of marketing research
are given below;
1. According to William J. Stanton, “Marketing research
is the development, interpretation and communication of
decision-oriented information to be used in the strategic
marketing process.”
2. According to Philip Kotler - “Marketing research is a
systematic problem analysis, model building and fact
finding for the purpose of improved decision-making and
control in the marketing of goods and services".

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3. According to Paul Green and Donald Tull - "Marketing
research is the systematic and objective search for, and
analysis of, information relevant to the identification and
solution of any problem in the field of marketing".
4. According to David Luck, Donald Taylor, and Hugh
Wales - "Marketing Research is the application of scientific
methods in the solution of marketing problems".
Scope of Marketing Research
Marketing research includes problem identification and
problem solving in the areas of consumer research, market
research, market research, product research, pricing research

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promotion research and distribution research, etc. After
identifying marketing problem, necessary data is collected
through primary and secondary sources. After collecting data,
it is analyzed and interpreted to solve marketing problems.
The main areas of marketing research are as follows:
1. Consumer Research: Under consumer research, information
is collected about various aspects of consumer behaviour viz.
their likings, preferences, disliking, buying pattern,
perception, buying motives, income level, education level,
frequency of purchase, quantity purchased, complaints and

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suggestions about existing products, their expectations from
our product, their level of satisfaction from our product, etc.
2. Market Research: Under market research, sales potential of
different geographic market segment is estimated to identify
weak and strong market territories. It helps in designing sales
territories, determining sales quota for different territories,
sales forecasting , etc.
3. Product Research: Product research is related with gathering
information about various features of product; like product
design, shape, colour, packaging, labeling etc. With the help

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of product research, the marketer can identify the stage of
product life cycle through which product is passing. It, in
turn, helps in designing appropriate marketing strategies.
4. Pricing Research: This area of marketing research is
concerned with gathering information about customers’
response to pricing policy of marketer. It helps to know if
our product is over priced or under priced in comparison
to competitor’s product. It also helps in evaluating
policies related to discount, rebate, premium, etc.
5. Promotion Research: Promotion research refers to
gathering information about various promotional tools,

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viz., advertising, personal selling, sales promotion, etc. It
helps in measuring effectiveness of advertising programmes,
and in comparing alternative advertising media viz. television,
newspaper, magazines etc.
6. Distribution Research: It is concerned with distribution
channels, location of warehouses, inventory control,
transportation, handling of finished goods, redressal of
consumer complaints, etc. It also includes inbound and
outbound logistics, appointment of foreign selling agents,
distributors, C&F agents, etc.
7. Competition Research: Under competition research,
information is collected about level of competition in foreign

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markets, strengths and weaknesses of competitive products,
legislations regulating competition, etc. This information
helps the international marketer in product planning and
development, selecting suitable foreign markets and in
formulating counter strategies to face competition.
Meaning of Information
Information is a message received by collecting, organizing
and analyzing data that adds to the knowledge of the person
receiving it. Information can be gathered from study, news,
experience, surveys, etc. Information is different from data.
Data means collection of facts in a systematic manner that is

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capable for statistical analysis. The processed data which is
meaningful and can be used in decision making process is
called information. Information adds to the knowledge of the
person receiving it. Information should possess the attributes
of accuracy, relevance and timeliness. Information should be
communicated in such a way that it is easy to understand and
is interpreted correctly by receiver Through effective
communication receiver can be made to understand the
message in the same sense in which sender sent it to the
receiver. Right information with the right user at the right
time is a valuable asset. Nowadays information is also termed

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as ‘soft infrastructure, and is an important to the decision
makers as physical infrastructure.
Information Requirements for International Marketing
International business managers need variety of information
for successful managing business in international market.
These managers need reliable, timely and relevant information
in following areas to take appropriate decisions.
1. Information About Market Potential: For conducting
international business and for selecting suitable market,
information about market potential in various nations is
needed. Market potential here is refers to level of possible
demand in the market. For estimating market potential,

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Information about GDP, per capita income, economic growth
rate, population size, purchasing power, etc. is requires.
2. Information About Competitive: Global business units need
information about level of competition in foreign market,
strengths and weaknesses of competitors, their strategies and
their market share. Sometime to get information about
competitors’ strategies, the global business units have to
indulge in spying also. This information is needed to design
counter strategies to face competition.
3. Information About Government Rules and Policies:
Global business units need information about traffic rates,

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quantitative restrictions on import like limits of import quota,
ceiling on imports, ceiling on FDI, tax concessions and
subsidies on FDI, attitude of host nation government towards
entry of foreign companies, etc. All this information is needed
for country evaluation, and for deciding mode of entry in
foreign market.
4. Information About Marketing Mix: The global business unit
needs information about various elements of marketing mix,
i.e., product, price, place, promotion to frame appropriate
business strategies. It is clear from following discussion:

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(i) Information About Product: The global company has to
take decision regarding customization or standardization of
product. Under customization, the global company modifies
its product according to local national requirements, while
under standardization, almost the same product is sold in
various national market.
(ii) Information About Price: Global companies may fix
different prices for the same product in different national
markets. Price in nation is fixed considering the price of
competitive products, cost of production, shipping cost,
tariff, insurance charges, paying capacity of customers of
host nation, government regulation regarding prices,
economic conditions prevailing in the host nation like phase

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of trade cycle, standard of living of masses, inflation rate etc.
(iii) Information About Distribution: The global company has
to take decision regarding direct export or indirect export;
direct marketing or indirect marketing. For taking this
decision, the information about wholesalers, retailers,
stockiest, dealers, export management company, export
brokers, commission charged by them, the service offered by
them etc.
(iv) Information About Promotion: For taking decision
regarding mode of promotion, selection media, brand
ambassador, for designing advertising message, for selecting
advertising agency, etc. various information are needed.

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5. Information about Customers: Global business units
need information about liking, disliking, tastes,
preferences, purchasing power, buying behavior, etc of
the customers in foreign markets. This information helps
the global business unit in product planning and
development.
6. Information about Global Logistics: Global business
units need information about logistics in different nations;
like information about suppliers, mode of transport,
shipping cost, warehouses, etc. This information helps the
global business unit to take decision regarding country
selection.

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7. Information about Macro Business Environment in the
Host Nation: The global business unit also analyses macro
business environment in the various nations before country
selection so as to minimize the risk in international business.
Information about the following components of macro
business environment is gathered and analyzed;
(i) Economic environment.
(ii) Political environment.
(iii) Physical environment.
(iv) Technological environment.

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(iv) Technological environment.
(v) Demographic environment.
(vi) Socio-Cultural environment.
Characteristics
The marketing information system is presently used by all
kinds of organizations to attain a competitive edge and
success in their business.
Let us now understand its multiple features to grab a clear
understanding of the concept:

Characteristics of Marketing Information
System
1. Computer-Based System: In the marketing information
system, all the information is gathered, analyzed and
communicated through a computer device, and the useful
marketing information is stored in microfilms.
2. Quick, Selective and Accurate Information: The
organization can maintain relevant marketing database
through marketing information system which can be
immediately and accurately accessed anytime.
3. Easy Accessibility: The information maintained with the
help of the marketing information system can be easily
viewed and utilized through a computer system.

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4. Inter-related Components: In marketing decisions and
communication, all the four components are inter-linked, i.e.,
the information provided by one element is useful for the
functioning of the other aspects.
These interconnected components include internal report,
marketing research, marketing intelligence and marketing
decision support systems.
5. Future-Oriented: The marketing information system initiates
strategy formulation and planning for future marketing
operations.
6. Supports Decision Making: Since this system provides an
accurate marketing database, it can be certainly used for
instantaneous decision making, by the marketing managers.

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7. Consistent Information: Marketing information system
enables the management and decision-makers to assess
relevant, updated and valuable marketing information.
8. Applicable at All Levels of Management: Every manager
uses the marketing information system to decide marketing
strategies, plans, policies and procedures prepared at all
managerial levels.
Types of Marketing Decisions
The marketing information system is all about making a
correct decision by the marketing personnel at the right time
to serve the organizational objectives.
Following are the three major marketing decisions taken with
the help of the marketing information system:

1. Strategic Decisions: The higher-level managers make
such decisions since these are related to the organizational
objectives, structure and policies which are crucial and
affects the whole organization e.g. decisions concerning
global marketing and market acquisition.
2. Control Decisions: These are the fundamental managerial
decisions which are taken as corrective actions (by
middle-level managers) in case of any deviation. This
preceded by proper evaluation and monitoring of the
implementation of the strategic plans so formed by the
higher-level managers.

3. Operational Decisions: These decisions deal with the day
to day activities performed for the accomplishment of
specific tasks (such as proper utilization of resources),
essential for adequate implementation of the plans formed
by top and middle-level managers e.g. directing the efforts
of the sales team towards the successful application of the
marketing strategy so decided.
Process of Marketing Information System
To know how a marketing information system operates,
please go through its sequential process, given below:

Process of Marketing Information
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Marketing Information System Process
Establishing Suitable Marketing Matrices
Collect Relevant Data From Internal and
External Sources
Plot Data on Graphs to Visualize the Changing
Trends
Communicate the Information to Relevant
Department
Decide Best Possible Course of Action

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Since every piece of information involves
some opportunity cost as well as a real cost. It is essential
to wisely select the subject or area requiring the
application of a marketing information system and
deciding a suitable metrics, accordingly.
Next comes the collection of required data as per the
selected metrics from various internal sources (books of
accounts, a sales record, sales reports and analytics) and
external sources (customer surveys, economic or financial
metrics, social media insights and competitor results).

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Then, the gathered data needs to be organized and plotted
systematically on a graph to facilitate comparative
analysis, future prediction and interpretation.
The fourth step is to communicate the graphical
information to the various departments for a better
interpretation and analysis of the available data and the
determination of multiple alternatives (decisions) as per
organizational goals.
The last step is to decide the best possible course of action
of the marketing metrics and applying it to the business to
enhance the marketing results.

Essential Conditions for Entry into
Foreign Market
Essential Condition for Entry into Foreign Market
Factors which are effecting the entry into foreign can be
divided into two parts i.e. (A) External factors, and (B)
Internal factors.
(A) External Factors
(i) Market Size: Market size of the market is one of the
key factors an international marketer has to keep in
mind when selecting an entry mode. Countries with a
large market size justify the modes of entry with
long-term commitment requiring higher level of
investment, such as wholly owned subsidiaries or
equity participation.

Foreign Market
(ii) Market Growth: Most of the large, established markets,
such as the US, Europe, and Japan, has more or less reached a
point of saturation for consumer goods such as automobiles,
consumer electronics. Therefore, the growth of markets in
these countries is showing a declining trend. Therefore, from
the perspective of long-term growth, firms invest more
resources in markets with high growth potential.
(iii) Government Regulations: The selection of a market entry
mode is to a great extent affected by the legislative framework
of the overseas market. The governments of most of the Gulf
countries have made it mandatory for foreign firms to have a
local partner. For example, the UAE is a lucrative market for
Indian firms but most firms operate there with a local partner.

Foreign Market
(iv) Level of Competition: Presence of competitors and
their level of involvement in an overseas market is another
crucial factor in deciding on an entry mode so as to
effectively respond to competitive market forces. This is
one of the major reasons behind auto companies setting up
their operations in India and other emerging markets so as
to effectively respond to global competition.
(v) Physical Infrastructure: The level of development of
physical infrastructure such as roads, railways,
telecommunications, financial institutions, and marketing
channels is a pre-condition for a company to commit more

Foreign Market
resources to an overseas market. The level of
infrastructure development (both physical and
institutional) has been responsible for major investments
in Singapore, Dubai, and Hong Kong. As a result, these
places have developed as international marketing hubs in
the Asian region.
(vi) Level of Risk: From the point of view of entry mode
selection, a firm should evaluate the following risks:
(a) Political Risk: Political instability and turmoil dissuades
firms from committing more resources to a market.

Foreign Market
(b) Economic Risk: Economic risk may arise due to volatility of
exchange rates of the target market’s currency, upheavals in
balance of payments situations that may affect the cost of
other inputs for production, and marketing activities in foreign
markets. International companies find it difficult to manage
their operations in markets wherein the inflation rate is
extremely high.
(c) Operational Risk: In case the marketing system in an
overseas country is similar to that of the firm’s home country,
the firm has a better understanding of operational problems in
the foreign market in question.
(vii) Production and Shipping Costs: Markets with substantial

Foreign Market
cost of shipping as in the case of low-value high-volume
goods may increase the logistics cost.
(viii) Lower Cost of Production: It may also be one of the key
factors in firms deciding to establish manufacturing
operations in foreign countries.
(B) Internal Factors:
(i) Company Objectives: Companies operating in domestic
markets with limited aspirations generally enter foreign
markets as a result of a reactive approach to international
marketing opportunities. In such cases, companies receive
unsolicited orders from acquaintances, firms, and relatives
based abroad, and they attempt to fulfill these export orders.

Foreign Market
(ii) Availability of Company Resources: Venturing into
international markets needs substantial commitment of
financial and human resources and therefore choice of an
entry mode depends upon the financial strength of a firm. It
may be observed that Indian firms with good financial
strength have entered international markets by way of wholly
owned subsidiaries or equity participation.
(iii) Level of Commitment: In view of the market potential, the
willingness of the company to commit resources in a
particular market also determines the entry mode choice.
Companies need to evaluate various investment alternatives

Foreign Market
for allocating scarce resources. However, the commitment
of resources in a particular market also depends upon the
way the company is willing to perceive and respond to
competitive forces.
(iv) International Experience: A company well exposed to
the dynamics of the international marketing environment
would be at ease when making a decision regarding
entering into international markets with a highly intensive
mode of entry such as Joint ventures and wholly owned
subsidiaries.

Foreign Market
(v) Flexibility: Companies should also keep in mind exit
barriers when entering international markets. A market
which presently appears attractive may not necessarily
continue to be so, say over the next 10 years. It could be
due to changes in the political and legal structure, changes
in the customer preferences, emergence of new market
segments, or changes in the competitive intensity of the
market.
Country Evaluation and Selection
Introduction: The global market area is very wide.
Global business unit has to take decision that in which

Foreign Market
country it should take entry for selling the products and in
which country it should locate its production base to serve
different markets. Due to limited resources, trade barriers,
restriction on foreign direct investment, political risk, law
and order situation, etc, it is not possible for the global
business unit to operate in markets of all nations. If in any
country tariff and non-tariff barriers are very strict or it
has imposed restrictions on inflow of foreign direct
investment or the markets of that nation are risky due to
political or other reasons, then entry into such country is
very difficult and is not profitable.

When a nation has banned the inflow of foreign direct
investment, then entry in that nation through FDI mode is
impossible. Moreover, the limited resources (financial,
human, core competence) of a company may not permit it
to operate in a large number of nations. With limited
resources, a business unit cannot exploit all opportunities.
The big multinational enterprises, which are operating in
more than 150 nations of the world, have not achieved this
massive size overnight; they have increased their size
gradually over a long period of time. Hence, it is essential
to evaluate various country markets and prepare a rank list

of these countries. In the earlier phase of entry into foreign
market, that country will be selected whose rank is highest in
the rank list, then for further entry, second best rank is
selected and so on. Thus, business unit selects the foreign
markets from the rank list from highest rank to the lowest
ranks.
Steps in Country Evaluation and Selection
1. Defining international business objectives.
2. Selecting factors/parameters for evaluation.
3. Preliminary screening.
4. Detail evaluation of selected market.
5. Final selection

Tools/Factors/ Parameters Used in Country Selection and
Evaluation
1. Trade Analysis and Analogy Methods: Trade analysis and
country analogy methods are widely used for country
evaluation by estimating their market size. In simple terms,
the market size of a country may be determined by subtracting
the exports of a product from the sum-total of its production
and imports.
Market size = Production + Imports – Exports.
One can arrive at market size by using data based on ITC(HS)
code classifications up to eight digits for specific product
categories. Published data on exports and imports can be
obtained through international sources, such as the WTO,
International Trade Centre, and the UNCTAD.

National governments comply trade statistics through
customs and central banks, for instance, in India, through
DGCI&S and Reserve Bank of India (RBI).
Production statistics are generally available through
government organizations for broad product categories,
such as agricultural commodities, textiles, steel, cement,
minerals, etc. More product-specific statistics are
compiled by commodity organizations and trade
associations.
For new product categories, with little consumption and
production in the past, various types of analogy methods
are employed. In the analogy method, a country at similar

stage of economic development and comparable consumer
behaviour is selected whose market size is known.
Besides, a surrogate measure is also identified, which has
similar demand to the product for the international market.
Alternatively, the analogy method for different time
periods, which may be compared with similar demand
patterns in two different countries, may also be used.
2. Opportunity-Risk Analysis: Carrying out a cross-
country analysis of opportunities and risks provides a
useful tool to compare and evaluate various investment
locations based on a company’s objectives and business

environment. The internationalizing firm may choose
variables both for opportunities (such as market size, growth,
future potential, tax regime, costs, etc.) and risks (political,
economic, legal, operational, etc.).
Values and weights may be assigned to each of these variables
depending upon their perceived significance by the firm.
Thus, it provides an opportunity to a company to evaluate
each country on the weighted indicators.
On the basis of business opportunities and risks, ranking of
various countries may be made for investment. Countries with
low-risks and high-returns are often preferred investment
destinations. In addition, such grids may also be used for
future projections.

Although, such grids (in the next slide) serve as useful
tools for cross-country comparison of opportunity versus
risk, it hardly provides any insight into relationships
among the investment destinations.
Countries for investment can also be plotted in form of a
matrix, as shown in Fig. 1 at slide no. 46 to indicate
opportunities and risks. Besides, the countries can be
placed for a pre-defined future time, both for opportunities
and risks. In addition to inter-country evaluation, the
country placements and its benchmarking with the global
average opportunities and risks may also be carried out.

Variables Weight Country
A B C D
Opportunities
Market Size
Growth
Competitive Intensity
Operation cost
Marketing efficiency
Tax rate
Total
Risk
Political
Commercial
Economic
Operational
Total

High
Opportunities
Low
High Low
Risk
Figure: Opportunity-risk Matrix for Country Evaluation
Products-Country Matrix Strategy: With an objective to examine
market diversification and commodity diversification, the product
Selective
(2)
Most Preferred
(1)
Least Preferred
(4)
Selective
(3)

-country matrix strategy is employed. Under this
approach, previous trade statistics are analysed to identify
the major markets and major products, based on which a
suitable marketing strategy is developed.
The matrix based on a predominantly supply side analysis
reveals comparative advantages. In 1995, the Government
of India carried out the analysis of trade data of the mid-
nineties to prepare such a matrix. The analysis revealed
the restricted commodity/country basket for India’s
exports. It was observed that 15 countries and 15
commodities accounted for around 75-80 per cent of

India’s exports. An attempt was made to involve trade
and industry to set up trade facilitators for achieving
increased exports in the 15 products and 15 markets.
However, the exercise of the trade facilitation did not get
enough support and response from various stakeholders.
The focus on the 15 x 15 matrix, based on past
performance data was a useful exercise as it helped to
focus on the importance of a few commodities and a few
destinations in India’s export performance.
There has been a market diversification for the top
products though there has also been a product
consolidation for the top markets.

The analysis also reveals that the 15 X 15 matrix is
dynamic and mature as it has undergone changes over the
years and it requires modification of marketing strategy on
a continuous basis.
3. Market Focus Strategies: In view of market potential of
a region, market focus strategies can be formulated. Under
this technique, the market potential, generally on a
regional basis is determined and major product groups that
need to be focused are identified. Subsequently, strategies
for increasing exports to the identified markets can be
formulated.

India’s major markets have been identified on the basis of
pre-defined criteria, such as country’s share in imports
and its growth rate, GDP and its growth rate, and trade
deficits which facilitate segmentation and targeting of
markets. India has formulated such market focus strategies
for Latin America, Africa, and CIS countries.
Considering the potential of the Latin American region, an
integrated programme ‘Focus LAC was launched in
November 1997 with an objective to focus at the Latin
American region, with added emphasis on the nine major
trading partners of the region.

The strategy emphasized identification of areas of bilateral
trade and investments so as to promote commercial
interaction. This region, comprising 43 countries, accounted
for about 5 per cent of the world trade. But India is not a
significant trading partner of this region. Under the
programme, nine major product groups for enhancing India’s
exports to the Latin American region were identified.
These included:
i. Textiles including ready-made garments, carpets, and
handicrafts
ii. Engineering products and computer software
iii. Chemical products including drugs/pharmaceuticals.

On similar lines, Focus Africa was launched on 1 April
2002, which initially covered seven countries in the first
phase of the programme to include Nigeria, South Africa,
Mauritius, Kenya, Tanzania, and Ghana.
Subsequently, it was extended to 11 other countries of the
region, i.e., Angola, Botswana, Ivory Coast, Madagascar,
Mozambique, Senegal, Seychelles, Uganda, Zambia,
Namibia, and Zimbabwe along with the six countries of
North Africa—Egypt, Libya, Tunisia Sudan, Morocco,
and Algeria.

Focus CIS was launched on 1 April 2003, which include
focused export promotion to 12 CIS (commonwealth of
independent states) countries, i.e., Russian Federation,
Ukraine, Moldova, Georgia, Armenia, Azerbaijan,
Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan,
Turkmenistan, and Tajikistan—the Baltic states of Latvia,
Lithuania, and Estonia.
The programme was based on an integrated strategy to
focus on major product groups, technology and services
sectors for enhancing India’s exports and bilateral trade
and co-operation with countries of the CIS region.

The strategy envisaged at making integrated efforts to
promote exports by the Government of India and various
related agencies, such as India Trade Promotion Organisation
(ITPO), Export Promotion Councils (EPCs), Apex Chambers
of Commerce and Industry, Indian missions abroad, and
institutions such as Export Import Bank and Export Credit and
Guarantee Corporation (ECGC).
Such integrated and focused approaches are conceptually
sound but their success depends upon effectiveness of
implementation of the programmes. On 1 April 2006, the
Focus Market Scheme was launched in order to enhance the
competitiveness in the select markets. The scheme notifies 83
countries form Latin America, Africa, and CIS.

Growth-Share Matrix: The technique offers a useful tool
to evaluate countries for different product categories
based on their market share and growth rate. Products are
classified under four categories on the lines of BCG
matrix based on a model developed by Boston Consulting
Group for classification of strategic business units (SB
Us) of an organization, as shown in Fig. in the next slid.
High-growth high-share [stars] products: Such
products offer high-growth potential but require lot of
resources to maintain the share in high-growth markets.

High
Growth Rate
Low
High Low
Market Share
Figure: Growth-share (BCG) Matrix
Low-growth high-share [cash cows) products: Products
under this category bring higher profits, although have a
slow market growth rate.
Stars
?
Question
marks
Cash Cows Dogs

High-growth low-share [question marks) products: These
are the products under high risk category with an uncertain
future, sometimes called problem children. A highly
competitive strategic business decision is required to invest
resources to bring it to the category of stars by achieving a
higher market share.
Low-growth Low-share (dogs) products: These products
have low growth and low market share, therefore generally do
not call for investing much resources.
For each of the product groups under the growth share matrix,
differentiated strategies need to be formulated and adopted.
Similar matrix can also be prepared country-wise for
formulating country-specific business strategies.

4. Country Attractiveness-Company Strength Matrix: An
analysis may be carried out for country evaluation and
strategy development based on business attractiveness of
countries and the competitive strength of the company.
Various factors, such as market size, market growth,
customers’ buying power, average trade margins,
seasonality and fluctuations in the market, marketing
barriers, competitive structures, government regulations,
economic and political stability, infrastructure, and
psychic distance may be taken into account to assess the
country attractiveness.

The competitive strength of a firm is often determined by
its market share, familiarity and knowledge about the
country, price, product-fit to the market, demands, image,
contribution margin, technology position, product quality,
financial resources, access to distribution channels, and
their quality.
An analysis can be carried out in the form of a matrix,
assigning weight to each of these factors. Based on this
analysis, a matrix may be drawn as in Fig. at next slide.
The countries depicted in the matrix may be segmented as

High
Medium
Country
Attractiveness
Low
Strong Medium Weak
Company’s Business Strength
(I) Primary Market: 1, 2, 4. (ii) Secondary Market: 5, 6, 7. and
(iii) Tertiary Market: 3, 8, 9
Invest/
Grow (1)
(2) Selective
Strategy (3)
(4) Selective
Strategy
(5)
(6)
Selective
Strategy
(7)
(8) Heaviest/di
vest
/Combine
/License(9)

Primary Market: These countries offer the highest
marketing opportunities and call for a high level of
business commitments. The firms often strive to establish
permanent presence in these countries.
Secondary markets: In these countries, the perceived
political and economic risks are too high to make long-
term irrevocable business commitments. A firm has to
explore and identify the perceived risk factors or the
firm’s limitations in these countries and adopt
individualized strategies, such as joint ventures so as to
take care of the limitations of operating business.

Tertiary markets: These are countries with high perceived
risks; therefore, allocation of firm’s resources is minimal.
Generally a firm does not have any long-term commitment in
such countries and opportunistic business strategies such as
licensing are often followed.
Based on the above analysis, a firm should focus its country
selection and expansion strategies in countries at the top left
of the matrix where the country attractiveness and the
competitive strengths of the company are very high. On the
other hand, the firm should focus on harvesting/divesting its
resources from countries where the country attractiveness and
company strength both are very low.

However, a firm may use licensing as a mode of business
operation with little resource commitment but continue to
receive royalties. Countries at the extreme right top of the
matrix signify higher country attractiveness but lower
company strength.
A firm should identify its competitive weaknesses in these
countries and strive to gain the competitive strength. It
may also enter into joint venture with other firms, which
most of the time are local and have complementarities to
gain competitive strength.

In countries where a firm has medium competitive strength
and country attractiveness needs to carefully study the market
condition and adopt appropriate strategy. Ford tractors used
the country attractiveness-company strength matrix and
placed India under the extreme right top of the matrix wherein
the country attractiveness was very high but the competitive
strength of the company was low.
Decisions to expand business across national boundaries
require much higher level of commitment of a company’s
resources as any business failure may have serious
repercussions. By way of effective evaluation and selection of
countries, the internationalizing firm avoids wastage of time
and resources and it can focus its efforts on a few fruitful
locations.

Product and Insurance Decisions
Introduction
Product is an important element of marketing mix. It is the
centre of all marketing activities. All marketing activities like
pricing, distribution, sales promotion, advertising, personal
selling, etc. are planned on the basis of nature, quality and
other features of the product. The life cycle of business unit
depends upon the product. Any wrong decision in product
planning and development can lead to failure of business. The
product planning and development is a complex task in
international marketing due to heterogeneous marketing
environment in different nations. Now global companies make
customized products to match the product features with

customers’ expectations, local requirements, culture, etc.
Meaning of Product
Product is the starting point in marketing. No marketing
activity can be undertaken in the absence of product. Product
includes physical product and services. It includes both
tangible and intangible attributes. Product is bundle of utilities
consisting of various product features and accompanying
services. It includes not only physical product but also
includes its brand, package, label, after sales services, etc.
Customer buys the product to increase the satisfaction level.
Product satisfies not just physiological need but also
psychological and social needs like prestige, status etc.

The product may be tangible, intangible, durable, non-durable,
consumer, industrial, necessity, comfort, luxury, agricultural
product or even idea. So product is anything which is bought
and sold in the market. The product has the ability to satisfy
consumers. This satisfaction may be physical or
psychological. At the same time, the product has capacity to
satisfy business need, i.e., it is capable of generating profits
for the business.
International marketers offer different versions of product to
cater the needs of heterogeneous segments of the market.
Sometimes they enter the foreign market with different brand
names, different packages designs, different terms of after
sales services or different guarantee/warranty terms etc. The

same product may be launched in different foreign markets to
satisfy different types of needs. Some definitions of product
are given below:
(i) According to Philip Kotler, “A product is a bundle of
physical services and symbolic particulars expected to yield
satisfaction or benefits to the buyer.”
(ii) According to William J. Stanton, “A product is a complex
of tangible and intangible attributes including packaging,
colour, price, manufacturer’s and retailer’s services, which
the buyer may accept as offering satisfaction of wants or
needs.”
(iii) According to Rustom S. Davar, “A product may be
regarded from the marketing view point as a bundle of
benefits which are being offered to consumer.’

From the above definition it is clear that product is a bundle of
benefits which are being offered by the marketer to
consumers. It includes both tangible product and services like
banking, transportation, warehousing, communication,
insurance, etc. The following decisions were related to the
product.
1. Product Decisions
A product is a physical good, service, idea, person or place
that is capable of offering tangible and intangible attributes
that individuals or organizations regard as so necessary,
worthwhile, or satisfying that they’re prepared to exchange
money, patronage or some other unit of value in order to
acquire it. Product decision represents product chrematistics
and different stages of life cycle.

Product decision should be as per the expectations of customer
and as per their culture views. India is a more cultural market,
where a anti culture product will effects all of the goodwill of
the company. So, we should care about the ethical issues of
India while taking product decision.
Important product decisions in international marketing
management are:
A. Market segment decision.
B. Product mix decisions.
C. Product specifications.
D. Positioning and communication decisions.

A. Market Segment Decision: The first product decision to
be made is the market segment decision because all other
decisions product mix decision, product specifications,
and positioning and communications decisions depend
upon the target market.
B. Product Mix Decision: Product mix decision pertains to
the type of products and product variants to be offered to
the target market.
C. Product Specifications: This involves specification of
the details of each product items in the product mix. This
includes factors like styling, shape, size and other
attributes and factors like packaging and labeling.

D. Positioning and Communications Decisions: Positioning is
the image projected for the product. For example, burger may
be positioned as veg. burger, non veg. burger, cream burger or
egg burger. Communication refers to the promotional message
designed for the product. Obviously, both positioning and
marketing communication are very much interrelated. For the
same product, sometimes the positioning and communication
strategies differ between markets. For example, non veg.
burger is a low priced gain in the New Zealand (its home
market); but when the company wanted to introduce it in the
India it found that there was no room in the minds of the
consumers for another low priced gain. So in the India the non
veg. burger was positioned as a high priced gain became very
successful.

A product is defined as anything that can be offered to a
market for attention, acquisition, use or consumption that
might satisfy a want or need includes physical objects,
services, person, places organizations and ideas.
2. Pricing Decisions
Pricing is the concept of determining what a organization will
receive in exchange for its products/service. Pricing factors
are manufacturing cost, market place, competition, market
condition, and quality of product in the presented market.
Pricing is also a key variable in microeconomic price
allocation theory. Pricing is a fundamental aspect of financial
modeling and is one of the four P’s of the marketing mix. The
other three aspects are product, promotion, and place. Price is
the only revenue generating element amongst the four Ps, the
rest being cost centers.

Pricing is the manual or automatic process of applying
prices to purchase and sales orders, based on factors such
as: a fixed amount, quantity break, promotion or sales
campaign, specific vendor quote, price prevailing on
entry, shipment or invoice date, combination of multiple
orders or lines, and many others. Automated systems
require more setup and maintenance but may prevent
pricing errors. The needs of the consumer can be
converted into demand only if the consumer has the
willingness and capacity to buy the product. Thus pricing
is very important in marketing.

Pricing managers have the perception that the process they
use in setting domestic prices can be applied to international
price setting. What works here has got to work there was how
one pricing manager stated his feeling about international
price setting. This ethnocentric approach can limit a firm’s
opportunity to grow and be profitable in international markets.
Using the most popular method of cost-plus price setting in
foreign markets is too simplistic. Currency fluctuations,
national and regional market regulations, cultural differences,
global economic trends, and political differences all impact on
how prices can be set in international markets. Each of them
must be taken into consideration before a price is placed on a
good/service.

International Factors to Consider While there are many factors
that universally affect all pricing strategies; four are of
particular concern to the international pricing manager. The
first of these is governments interfere. It poses one of the
greatest risks in international pricing determination, even if,
there is only a threat of intervention. Government intervention
can take on many forms, such as, monetary and price controls,
anti-trust legislation, non-tariff trade barriers and financial
reporting requirements. Countries with hyperinflation
typically impose price controls. The implication for
international pricing professionals operating in such markets
is that they need to develop strategies that allow them to
quickly increase selling prices in response to the competition.
Other possible pricing strategies might also include transfer
pricing.

Pricing decision is the second most important decision in
Indian food market. Our targeted customer expect a
reasonable price all of our product, as they can easily
afford to buy and it can’t effect the budget of customers
and as well as for the company.
As there are a lot of existing food centers in Indian
market. So we should go for competitive pricing strategies
for the simple cheap product and as well as we should
keep some products in expensive class for high/rich
segment customers.

3. Place (Distribution) Decision
A channel is an institution through which goods and services
are marketed. Channels give place and time utilities to
consumers. In order to provide these and other services,
channels charge a margin. The longer the channel the more
margins are added. Channels are an integrative part of the
marketer’s activities and as such are very important. They also
give a very vital information flow to the exporter. The degree
of control one has over a channel depends on the channel type
which is employed. While for developing countries(India), as
stated earlier, channels are almost given, this is not always the
case, and as exporting becomes more and more necessary, it
will not always be the case. In deciding on channel design the
following have to be considered carefully.

• Market needs and preferences.
• The cost of channel service provision.
• Incentives for channel members and methods of payment.
• The size of the end market to be served.
• Product characteristics required, complexity of product, price,
perish ability, packaging.
• Middlemen characteristics – whether they will push products
or be passive.
• Market and channel concentration and organization.
• Appropriate contractual agreements.
• Degree of control.

Indian market is very large and high growth market. As India
is a developing country. So, chances of growth are more than
a other developed/competitive country. One major positive
point for the company is the in high growth market there are
lots of options/channels available for franchises. It comes with
high growth chances in Indian developing market.
For launching Burger Fuel in India we should go with
franchisees. Initially we should go for big cities like New
Delhi, Chandigarh, Mumbai, Banglore and after successful
launching we would go for other nearby cities.
4. Promotion Decision
Promotion/advertising is the major part of our food industry,

in which our targeted customers are always affected by the
advertising effectives. A high level of advertising always
effect and motivate our targeted customers to convince them
to buy our product.
Promotional Tools
Numerous tools can be used to influence consumer purchases:
Advertising-in or on newspapers, radio, television, billboards,
busses, taxis, or the Internet.
Price promotions-products are being made available
temporarily as at a lower price, or some premium is being
offered for free.
Sponsorships.

Point-of-purchase-the manufacturer pays for extra display
space in the store or puts a coupon right by the product.
Other method of getting the consumer’s attention-all the
Gap stores in France may benefit from the prominence of
the new store located on the Champs-Ely sees.
As per the market we can use different channels of
promotion like Television Media, News papers,
Promotion offers, references. As we have done survey on
our selected test area, we should use high level of
Television Media promotion and reference promotion
offers like free discount coupons extra.

5. Integration and Link
Integration is the concept of connecting and holding all
the activities together. In burger fuel, all the activities of
marketing should be liaison and work with each other.
Coordination and Control:-
Coordination- Coordination is the act of organizing,
making different people or things work together for a goal
or effect to fulfill desired goals in an organization.
Coordination is a managerial function in which different
activities of the business are properly adjusted and
interlinked. Coordination play a big role in burger fuel
with its international presence in the globe.

Integration vertically involves the combination of two or
more separate marketing or production components under
common ownership or management. It can involve
investments “forward” or “backward” in existing activities
or investments in interlinked activities.
Integration horizontally means the linking of marketing or
production separable at the same level in the system, for
example, a group of retailers. Integration can bring a
number of economies to food marketing systems:-
Production/logistical economies: integration can bring
economies of bulk, transport and inventories.

Transaction cost economies: integration brings cost
economies because the firm may become the sole supplier of
goods and services to itself; these include bargaining costs,
information system streamlining and centralized decision
making.
Risk bearing advantages: vertical integration can overcome
risk and uncertainty, i.e. by internalizing flows the
organization can eliminate the risk of variability in supplies,
outlets, and qualities and so on. More direct control over
assets may enable the firm to invest in processing and
marketing facilities which further enable the development of
economies of scale. Typical examples include nuclear estates
and out grower schemes.

Market imperfections: these can be “absorbed” often by
vertically integrated organizations. Taxes, prices and
exchange controls and other regulations may be “absorb”.
b. Controlling
Control is about keeping things on track as per plan
against objectives, removing and adding elements,
reapportioning spend and resource as needed and
informing plans for the following year. Control means
keeping an eye on men (resource) money (budget) and
minutes (time). The expected and the unexpected can all
have a major impact.

There is no planning without control. Marketing control is the
process of monitoring the proposed plans as they proceed and
adjusting where necessary. If an objective states where you
want to be and the plan sets out a road map to your
destination, then control tells you if you are on the right route
or if you have arrived at your destination.
Control involves measurement, evaluation, and monitoring.
Resources are scarce and costly so it is important to control
marketing plans. Control involves setting standards. The
marketing manager will than compare actual progress against
the standards. Corrective action (if any) is then taken. If
corrective action is taken, an investigation will also need to be
undertaken to establish precisely why the difference occurred.

Factors to be Considered in Designing Products for
Foreign Market
Following are the main factors which need to be
considered while designing products for foreign markets.
1. Geographic and Climatic Conditions: These include
factors such as topography, humidity, temperature, rainfall
etc. The product may need modification as per the
climatic condition.
2. Economic Conditions: These include level of economic
development, per capita income, standard of living,
interest rate, consumption level, saving level etc.

(iii) Government Regulation: These include tariff rate, non-
tariff restrictions, FDI policy, EXIM policy, safety norms,
packaging norms, environmental norms, etc.
(iv) Social and Cultural Factors: These include social customs,
value system, language, religion, literacy level, etc.
(v) Consumer Behaviour: These include buying motives, tastes,
likings, preferences, buying pattern, etc.
(vi) Other Factors: These include miscellaneous factors like
availability of power, raw material, labour, availability of
technical skills, labour cost, measurement system, electrical
standards, technical standards, etc.

International Product Life Cycle
Introduction and Meaning
Product passes through various stages in its life cycle.
Like a human being, all product have certain length of
life, during which they pass through different phases.
Some products have shorter life, while some other
products have long life. When a new product is introduced
in the market, it grows, attains maturity and from the point
of saturation in the market, it inters its declining stage and
finally it is out of market. Generally, product passes
through introduction stage, growth stage, maturity stage
and decline stage during it life cycle. In international
marketing, it is possible that the same product of same

international business unit is passing through different
stages in different countries. In developed countries,
where the product is innovated, the product may be
passing through maturity stage or decline stage, while at
the same time, in underdeveloped countries, the product
may be passing through maturity stage or decline stage,
while at the same time, in underdeveloped countries, the
product may be passing through introduction stage or
growth stage. When a product is innovated in a country,
then international marketer initially tries to establish it in
its home nation only. When the product enters its growth

or maturity stage, then international marketer plans to
extend this product in foreign markets. So now in the
foreign markets, the product is in the introduction stage.
In this way, at the same time, the same product is passing
through different stages in different countries. So even if
the product enters its decline stage in the home nation, it
may be running good business in the other nations. It will
facilitate high level of sales and profits to international
marketer.
The length of product life cycle depends upon various
factors viz., nature of product, entry of competitors,
protection of product through patents, promotional efforts,

government regulations, market acceptance, efficiency of
managerial staff, etc. Some product pass through
introduction stage and enter in growth stage in a very
short period of time and start generating good profits;
while some product takes long time in the introduction
stage which is a risky stage, as profit and sales are less in
this stage. The marketing manager has to devise
marketing strategies considering the stage of product life
cycle. The pricing strategy, distribution strategy and
promotional strategies have to be modified depending
upon the stage of product life cycle. Some definition of
product life cycle are given below:

1. According to William J. Stanton, “The product life cycle
concept is the explanation of the product form its birth to
death as a product exists in different stages and in different
competitive environment.”
2. According to Philip Kotler, “The product life cycle is an
attempt to recognize the distinct stages in the sales history of
the product – sales history passes through four stages. These
stages are known as introduction, growth, maturity and
decline.”
3. According to Arch Patton, “Life cycle of a product is akin to
human life cycle from several angles. Like a man the product
also takes birth, rapid growth, attains the maturity and then
enters the declining stage.”

Stages of Product Life Cycle
1. Introduction Stage: In this stage, the product is launched in
the market. The sales and profits are very low, but
promotional expenses are very high. The marketer has to
spend huge amount on promotion expenses as consumers have
little knowledge about the new product. The distribution
network is not expended much because the product is just
introduced in the market. If the product is innovative then
there is little competition, so the marketer may charge higher
price for the product. But if the product is non-innovative then
it has to compete with well established existing products, so
the marketer has to fix lower price for its product in the
introduction stage.

2. Growth Stage: By the growth stage, consumers are already
taking to the product and increasingly buying it. The product
concept is proven and is becoming more popular - and sales
are increasing.
Other companies become aware of the product and its space in
the market, which is beginning to draw attention and
increasingly pull in revenue. If competition for the product is
especially high, the company may still heavily invest in
advertising and promotion of the product to beat out
competitors. As a result of the product growing, the market
itself tends to expand. The product in the growth stage is
typically weaked to improve functions and features.

As the market expands, more competition often drives prices
down to make the specific products competitive. However,
sales are usually increasing in volume and generating revenue.
Marketing in this stage is aimed at increasing the product's
market share.
3. Maturity Stage: When a product reaches maturity, its sales
tend to slow or even stop - signaling a largely saturated
market. At this point, sales can even start to drop. Pricing at
this stage can tend to get competitive, signaling margin
shrinking as prices begin falling due to the weight of outside
pressures like competition or lower demand. Marketing at this
point is targeted at fending off competition, and companies
will often develop new or altered products to reach different
market segments.

Given the highly saturated market, it is typically in the
maturity stage of a product that less successful
competitors are pushed out of competition - often called
the "shake-out point."
In this stage, saturation is reached and sales volume is
maxed out. Companies often begin innovating to maintain
or increase their market share, changing or developing
their product to meet with new demographics or
developing technologies. The maturity stage may last a
long time or a short time depending on the product. For
some brands, the maturity stage is very drawn out, like
Coca-Cola.

4. Decline Stage: Although companies will generally attempt to
keep the product alive in the maturity stage as long as
possible, decline for every product is inevitable.
In the decline stage, product sales drop significantly and
consumer behavior changes as there is less demand for the
product. The company's product loses more and more market
share, and competition tends to cause sales to deteriorate.
Marketing in the decline stage is often minimal or targeted at
already loyal customers, and prices are reduced.
Eventually, the product will be retired out of the market
unless it is able to redesign itself to remain relevant or in-
demand. For example, products like typewriters, telegrams
and muskets are deep in their decline stages (and in fact are
almost or completely retired from the market).

Product Life Cycle Theory in International Marketing
The Product Life Cycle Theory is an economic theory that
was developed by Raymond Vernon in response to the failure
of the Heckscher-Ohlin model to explain the observed pattern
of international trade. The theory suggests that early in a
product's life-cycle all the parts and labor associated with that
product come from the area where it was invented. After the
product becomes adopted and used in the world markets,
production gradually moves away from the point of origin. In
some situations, the product becomes an item that is imported
by its original country of invention. A commonly used
example of this is the invention, growth and production of
the personal computer with respect to the United States.

The model applies to labor-saving and capital-using products that (at
least at first) cater to high-income groups. In the new product stage,
the product is produced and consumed in the US; no export trade
occurs. In the maturing product stage, mass-production techniques
are developed and foreign demand (in developed countries) expands;
the US now exports the product to other developed countries. In the
standardized product stage, production moves to developing
countries, which then export the product to developed countries.
The model demonstrates dynamic comparative advantage. The
country that has the comparative advantage in the production of the
product changes from the innovating (developed) country to the
developing countries. This model is developed in 1960 and largely
accepted by US and other developed countries.

Raymond Vernon divided products into three categories
based on their stage in the product life cycle and how they
behave in the international trade market:
• New Product
• Maturing Product
• Standardized Product
There are five stages in a product's life cycle in respect to the
Product Life Cycle Theory:
• Introduction
• Growth
• Maturity
• Saturation
• Abandonment

The location of production depends on the stage of the
cycle.
According to International Product Life Cycle theory there
are five phases which describe how a product matures and
declines as a result of internationalization:
• Local Innovation
• Overseas Innovation
• Maturity
• World Wide Imitation
• Reversal

1. First Stage - Introduction: This is where the new product is
introduced to the market, the customers are unaware about the
product. To create demand, producers promote the new
product to stimulate sales. At this stage, profits are low but
starts increasing and there are few competitors. As more units
of the product sell, it enters the next stage automatically.
For example, a new product invented in the United States for
local consumers is first produced in the United States because
that is where the demand is, and producers want to stay close
to the market to detect consumer response. Characteristics of
the product and the production process are in a state of change
during this stage as firms familiarize themselves with the
product and the market. No international trade takes place.

2. Second Stage – Growth Stage: In this stage the inventing
nation starts searching foreign market for its innovative
products. The inventing nation adopts trade route and start
exporting its products to other nations particularly developed
nations, as tastes, likings, preferences, etc. of consumers in
developed nations are almost similar and people of developed
nations prefer innovative products and are less price sensitive.
After successfully launching the product in home market and
then in other developed nations, now the investing nation
launches the product worldwide in the second phase of this
stage. In this stage, only trade route is adopted and innovating
firm has monopoly in both home and foreign markets.

3. Third Stage – Maturity Stage: In the maturity stage of the
Product life cycle, the product is widely known and many
consumers own it. In the maturity phase of the product life
cycle, demand levels off and sales volume increases at a
slower rate. There are several competitors by this stage and
the original supplier may reduce prices to maintain market
share and support sales. Profit margins decrease, but the
business remains attractive because volume is high and costs,
such as for development and promotion, are also lower. In
addition, foreign demand for the product grows, but it is
associated particularly with other developed countries, since
the product is catering to high-income demands. For instance,
in the case of the newly invented product, this rise in foreign
demand (assisted by economies of scale) leads to a trade

pattern whereby the United States exports the product to
other high-income countries. Other developments also
occur in the maturing product stage. Once the American
firm is selling to other high-income countries, it may
begin to assess the possibilities of producing abroad in
addition to producing in the United States, With a plant in
France, for example, not only France but other European
countries can be supplied from the French facility rather
than from the U.S. plant. Thus, an initial export surge by
the United States is followed by a fall in U.S. exports and
a likely fall in U.S. production of the goods.

4. Fourth Stage – Decline Stage: It is a stage in which there is
neither increase nor decrease in the volume of sale. Through
modification in the attribute of the product is needed to attract
new consumers. Competitors product at this stage would have
started gaining its market share.
5. Fifth Stage – Reverse Import Stage: In this stage, the
reverse flow of the product starts, i.e. innovating country
starts importing the product from foreign nations (with low
labour cost) as goods from foreign locations become cheaper
in comparison to cost of production in home nations. The
imitating country starts selling the product in the home market
of innovating country as well. Thus benefits of international
trade shift from innovating country to low labour cost nations.

As per product life cycle model, the initial comparative
advantage of trade is with the developed nations having
new technology, skilled labour and better research and
development facilities. Later, when the product becomes
standardized, the comparative advantages of international
trade shifts to less advanced countries having relatively
cheap labour. In recent years, the time lag of technology
adaptation between innovating nation and imitating nation
is reducing i.e. now developing nations imitate the new
technology innovated by advanced countries in shorter
time. This shorter time span is favoring low labour cost
nations like Korea, China, India, etc. As per this theory

developed nations should continue designing new products to
gain advantage from international trade. Otherwise the
comparative advantage of trade will shift from these
developed nations to low labour cost nations.
Exceptions to Product Life Cycle Theory
In following cases, the results of product life cycle theory may
not hold true.
1. Product Which Have Rapid Innovation: There are certain
innovative products whose technology is fast changing. The
life cycle of such products is very short. For example, product
like telecommunication products, electronic product, laptops,

computers, i-pods, etc are fast changing. Their life cycle is so
short that by the time developing nations copy the innovative
product, the improved product based on further improved
technology comes in the market, so the first product becomes
obsolete.
2. Luxury Products: Luxury products are not price sensitive.
People purchase luxury products to enhance their status in the
society. Such consumers attach high status symbol to these
products if these products are manufactured in developed
country. On the other hand, if these products are manufactured
in developing nations, these lose their high level image. So,
the conclusion of PLC theory that in the later stages, the
location of production operations will shift from developed

nation to developing nations does not apply to luxury
products.
3. Product Based on Complex Technology: Certain
innovative products are based on complex technology.
The developing nations may not have enough caliber to
imitate these products, or the developed nations may not
like to give license of these products to developing
nations. So the conclusion of PLC theory that production
operations will shift from developed nations to developing
nations does not apply to products based on complex
technology.

4. Product Requiring Specialized Labour: Certain
innovative products require specialized labour which may
be available in advanced countries only. The developing
nation may not have specialized labour to undertaken
production operations of such innovative products. So in
this case, production operations will not shift from
developed nations to developing nations.
Factors Affecting Product Life Cycle in International
Market
The length of life cycle of a product depends upon
various factors. The main factors affecting product life
cycle in international market are discussed below:

1. Rate of Technical Changes: Life-cycle of a product
depends upon the rate of technical changes taking place in
the country. If technical changes take place in the country
at a very high rate, the life-cycle of the products in that
country will be very limited because new and improved
products take place of the old products. On the other hand,
if the rate of technical changes in a country is not so high,
the life-cycle of the products in that country may be
longer. For example, rate of technical changes in India is
lower when compared with that of the other developed
countries. As a result of it, the life-cycle of products in our
country is higher than that of the developed countries.

2. Rate of Market Acceptance: The length of life-cycle of
products in a country depends upon the rate of market
acceptance in the country also. If the customer of a country
accepts a new product very fast, the life-cycle of products in
such country will be very limited because the customers, who
have accepted a product so fast, can accept another product on
next day and the product may stand out of the market. On the
other hand, if the customers of a country accept a product
gradually, the life-cycle of products in such country may be
quite long. For example, the rate of market acceptance in our
country is very low and therefore, the life-cycle of most of the
products in our country is quite long.

3. Ease of Competitive Entry: The success or failure of a
product in the market depends to a large extent upon the
situation of competition in the market. If the competitors can
enter into a market very easily, the life-cycle of the product
will be very short because the competitors can make the
products out. On the contrary, if the competitors cannot enter
into a market so easily, the life-cycle of products in such
market can be fairly long.
4. Risk Bearing Capacity: The enterprises having more risk
bearing capacity can keep their products standing in the
market for a long period because they can face all the
challenges of market effectively. On the other hand, the
enterprises having less risk bearing capacity are unable in
facing the challenges of the market, life-cycle of their
products is curtailed to short.

5. Economic and Managerial Forces: Economic and
managerial forces of an enterprise also determine the
success of the enterprise in the market to a great extent. If
an enterprise enjoys sound economic and managerial
forces, the life-cycle of the product of such enterprise can
be longer than that of the products of an enterprise
suffering from weak economic and managerial forces.
6. Protection by Patent: If the patent of a product is getting
registered, the life-cycle of the product can be fairly long,
and if the patent of a product is not getting registered, the
life-cycle of the product is cut short.

7. Government Policy: Nowadays government also frames
various rules and regulations for product packaging, pricing,
ingredient etc. so as to protect the consumer interest. If
government imposes ban on any product due to its unhealthy
ingredient, defective packaging etc or imposes heavy tax/duty
on the product, it tends to make the life cycle of product
shorter. Similarly, if government reduces import duty on the
import of competing foreign goods then the product life cycle
of domestic goods will shorten. On the other hand, if
government provide incentives in the form of subsidy,
tax/duty exemption, then it has positive effect on the sale of
product and hence its product life cycle becomes longer.

8. Personnel Strategy: The life cycle of product also
depends upon ability, caliber and efficiency of various
personnel engaged in production, distribution, research
and development and promotion of the product. If
research and development staff modifies the product and
adds new features to it; production department
manufactures good quality product, distributors/dealers
put in best efforts for extensive market coverage and
promotion staff designs good promotional programmes,
then the product life cycle will be longer.

Utility of Study of Product Life Cycle
Study of various stages of life cycle of any product helps the
international marketer in devising appropriate marketing
strategies. These strategies can be with regard to various
elements of marketing mix, sales planning, profit estimation,
etc. The utility of study of product life cycle is discussed
below.
1. It Works as a Forecasting Tool: This is the first importance
of product life cycle and it means is an important tool for
sales forecasting because with the study of product life cycle
management becomes aware of a problem that a product faces
at different stages.

This tool also helps to determine the future work and goals of
a necessary product company and also helps to study the
market conditions regarding their sales potential. It can be
very helpful for your future business expectations.
2. It Works as a Planning Tool: This is the
second important and it means is an important tool used for
planning a particular object because it provides necessary data
to plan marketing strategy and policy for compilation.
It also helps to adopt the competitor’s policies and programs
for making a suitable marketing strategy. This tool is very
important for making the data reports of product life cycle
management.

3. It Works as a Control Tool: This is the third importance
of product life cycle and it means it helps in controlling
because the marketing manager can make the necessary
arrangement to make a product available to the market
and repair for plans to control losses.
In this tool, a marketing manager plays an efficient role in
calculating the control work. This tool also helps to decide
the plan’s strategy and this tool is also designed to analyze
the plan so that it can detect whether the work or project is
going well or wrong.
4. It Provides for Marketing Programs: This is the fourth

importance and it means the various plans, policies,
procedures, and strategies are followed in the different stages
of the product life cycle. Thus management can prepare
marketing programs accordingly to achieve success.
Marketing programmes are also very important for the
development of product situation.
Marketing Programmes are designed by the marketing
manager for the achievement of marketing objectives.
Marketing Programmes includes various things they can build
the proper report for market analysis and those things are:
collect data, create surveys, competitor analysis, sales
forecasting, find the ideal customers, and so on.

5. It Provides an Estimate for Profits: This is the
fifth importance of product life cycle and it means the rate
of profit increases or decreases vary with the turnover
ratio of an organization. At the introductory stage, profits
are negligible after which they go and began to fall
gradually and then become nil.
All this can be stimulated through the study of product
Life Cycle. If profit will decrease, that means the business
is at a declining stage and vice versa.
6. It Helps in the Development of New Products: This is
the sixth importance and it means, as we know, the life of

a product is always limited. Thus management tries to
improve its existing products or develop a new. It can be done
by the events that take place in the market, promotional plans
in the market, and also knowing their pricing policy to prepare
for the development of new products if required.
The Life Cycle of a product begins with its entry into the
market and passes through the stages of market development,
maturity, and end.
7. Helps to Identify Strong and Weak Markets: Study of
product life cycle in different foreign markets helps the
international marketer in identifying strong and weak markets.

It is possible that the product is passing through different
stages of its life cycle in different nation. It may be
passing through declining stage in one country and growth
stage in another country. The international marketer can
reduce its marketing efforts in the country where the
product has entered in the decline stage and can intensify
its marketing efforts in the country where the product has
entered in the growth stage.
Counterfeiting and IPR Issues
Counterfeiting and piracy is a global problem of enormous
scale, impacting virtually every industry sector around the

world. India is no exception, suffering significant economic
and health and safety consequences as a result of widespread
counterfeiting, piracy and smuggling in the country. Small
businesses, knowingly or unknowingly buy counterfeit
technology or equipment, and suffer unanticipated costs in
breakage, business downtime, and unenforceable warranties.
Foreign investors are reluctant to invest when the return on
investment of a new product is made more uncertain by
unenforced intellectual property rights. Of even greater
concern, individual consumers risk health and safety as they
are duped into buying faulty automobile parts or unsafe
medicines. Governments themselves have been victims of

counterfeiters as fake repair components find their way into
military aircraft and equipment.
In India, the Government has initiated steps to address
counterfeiting, piracy and smuggling. Two major efforts stand
out. First, the legal framework is fairly well developed in
India. Second, the government has taken steps to protect
consumers’ health and safety from dangerous counterfeits
through significant education efforts. Despite these actions, a
study by FICCI shows that counterfeit, piracy and smuggling
rates remain high. For example, across seven industry sectors
reviewed in the FICCI report, unauthorized or
counterfeit/smuggled goods sales caused average sales losses
to rights holders of 21.7% in 2012.

There are multiple reasons why counterfeiting and smuggling
continues to increase in India. Conflicting government
priorities, lack of adequate resources to deal with a multitude
of critical issue, a lack of political will to deal with the
problem and even a sense among some that counterfeiting and
smuggling Is a “victimless crime.”
In a study conducted by BASCAP in partnership with FICCI
CASCADE, including direct interviews with industry
representatives in India, all segments of industry called for
greater enforcement of trademark and copyright laws and
regulations. Enforcement was consistently cited as the key
element missing in developing a stronger national intellectual
property strategy for India.

There is a clear consensus that the key action needed to
stop the trade in counterfeits, pirated and smuggled goods
is stronger enforcement of the existing laws and
regulations.
FICCI CASCADE and BASCAP have prepared this report to
raise awareness of the serious consequences of the increase in
counterfeiting, piracy and smuggling in India, and the need
for more Government attention to the issues, at the Central,
Regional and State levels. This paper briefly reviews the
economic and consumer consequences of trademark and
copyright infringement; provides specific sector evidence of
the scope of the problem in India; and finally, based on
interviews with Indian rights holders and multinationals,
provides specific recommendations to improve enforcement
of IP protection laws and regulations in India.

FICCI CASCADE and BASCAP stand ready to work with
the Government, NGOs and industry to initiate the critical
discussions needed to address the concerns highlighted
here, and to implement the report’s recommendations.
“The future prosperity of India in the new knowledge
economy will increasingly depend on its ability to
generate new ideas, processes and solutions. The process
of innovation shall convert knowledge into social good
and economic wealth. In a globally competitive world,
India has to unleash its innovation potential to increase
capacity, productivity, efficiency and inclusive growth.
”...Indian President Pranab Mukherjee

India’s prominence in the global economy has been growing steadily
over the past two decades. The movement of hundreds of millions of
workers into global labour markets has had a tremendous impact not
only on wage growth and interest rates but also on innovation and
related investment. While emerging markets will continue to expand,
they will not accelerate at the same rate; these slowing growth rates
are evident in India. As President Mukherjee’s comment
demonstrates, India’s ability to continue to grow and develop its
economy will depend in large measure on its ability to promote
innovation.
Creativity and innovation are proven drivers for economic growth
and competitiveness. Research has shown that economic growth is
closely related to how well the economy encourages, stimulates and
fosters creativity and innovation.

A critical factor in maximizing the value of this creativity
and innovation is a clear legal and regulatory system that
recognizes the importance of the underlying intellectual
property and establishes and protects the property rights of
the creators, inventors and innovators.
The effectiveness of a country’s intellectual property
rights (IPR) regime is, therefore, a critical element for
unlocking a nation’s full innovative capacity and
associated economic growth and employment potential.
An effective IPR regime releases the potential of inventors
and creators, and empowers them to transform ideas into

high-quality products and services that create jobs and
stimulate economic growth. The protection of these
intellectual assets is increasingly important in enabling
countries to reach their economic development goals.
Consequently, India’s goals for innovation and economic
development will be closely tied to its ability to intensify
its focus and prioritization on the protection of the
intellectual property created by innovators and inventors.
IP benefits the economy – calculating tax and
employment losses due to piracy, counterfeits and
smuggled good

Strengthening IPR is increasingly being recognized as a
significant contributor to a country’s economic
development, technology transfer, and increased rates of
innovation. IPR helps attract foreign direct investment
(FDI) and promotes Research and Development (R&D)
and technology transfer in developing countries. IPR is
also an important component of many industries, ensuring
growth in value-added jobs and foreign trade. A wide
range of economic studies, from NGOs, government, and
industry, have confirmed that sectors that rely on IPR
protection are substantial contributors to the economy.

Conversely, counterfeiting, piracy and smuggling rob the
innovators in an economy of their intellectual property rights,
and this creates significant harm, not only to the innovators,
but to consumers and the economy in general. These costs of
counterfeiting, piracy and smuggling are real and they are
huge. Since counterfeiting operates outside the law,
estimating the exact level of this activity and evaluating its
harmful consequences is considerably challenging. For
obvious reasons, illegal businesses do not report information
on their activities to government authorities, and therefore any
measures of the scale of illegal sales or profit generated by
these businesses must be estimated by indirect methods.

However, in a study commissioned by the FICCI Committee Against
Smuggling and Counterfeiting Activities Destroying the Economy
(CASCADE), researchers identified seven key sectors which have
been most vulnerable to counterfeiting in the country. According to
the study, the seven sectors most vulnerable to smuggling and
counterfeiting are automotive parts, alcohol, computer hardware,
personal goods, packaged foods, mobile phones and tobacco
products. The research investigated the impact of the economic losses
to the Indian economy as a result of counterfeit, piracy and
smuggling activity in these sectors, including loss of jobs and tax
revenue. The loss of revenue to the government has a direct impact
on welfare spending such as health care, education and public
transport. Police and other enforcement infrastructure are also hit by
this resource crunch, which exacerbates the problem of insufficient
enforcement relative to pirate, counterfeit and smuggling operations.

The estimated loss to exchequer due to counterfeiting
was Rs. 52380 crors ( Rs. 3504 due to direct tax loss, Rs.
22686 due to indirect tax loss and Rs. 26190 loss to
exchequer) .
Additionally, the market for fakes has adverse effects on
the labour market by shrinking profitability of legitimate
businesses and increasing lay-offs. Moreover, workers
employed through piracy and counterfeits live with poor
working conditions and lack of benefits.
There are three main negative effects of counterfeiting and
smuggling on employment in the official market.

• Reduction in employment as a direct result of fall in sales and
profits.
• Reduction in employment due to decrease in demand for
services.
• Fall of induced demand due to reduction in expenditure by
employees directly employed by the sector.
1. IP Attracts Foreign Direct Investment (FDI)
Research shows that a country attracts more FDI when
investors have a reasonable level of certainty of a return on
investment. In an environment where potential investors find
high levels of piracy, counterfeiting, and theft of intellectual
property, they have no incentive to invest when other markets

offer stronger protection of their IP assets. Widespread
counterfeiting and piracy, and a lack of enforcement to stop it,
therefore, increase the risk of investments in India.
This assessment is clearly documented by an Organization for
Economic Cooperation and Development (OECD) study on
Intellectual Property Rights in Developing Countries, which
found that a 1% increase in a country’s trademark protection
correlates to a 3.8% increase in FDI. A 1% improvement in
patent and copyright protection increases FDI by 2.8% and
6.8%, respectively.10 Of note, India ranks last in FDI among
the BRIC countries (Brazil, Russia, India and China) and
South Africa that are competing for investment and growth.11
With slowing growth rates, India can little afford to ignore the
opportunity that improved intellectual property investment
could provide

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International Marketing PPT - II