International Marketing Concept

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Slide 1:
International Marketing Concept

Slide 2:
Globalization Globalization is defined as a process of economic integration of the entire world
through the removal of barriers to free trade and capital mobility as well as through the
diffusion of knowledge and information It is a historical process of moving at different speeds
in different countries and in different sectors One of the results is that firms, whose output was
previously significantly more limited by the size of their domestic market, now have the
chance to reap greater advantages from economies of scale by ‘being global’

Slide 3:
The revolution in information and communication technology (ICT) in the last 10-15 years has
also made communication much cheaper and faster The transaction costs of transferring ideas
and information have decreased enormously and the arrival of the Internet has accelerated
this trend This implies that countries with advanced technologies are best placed to innovate
further Moreover, unlike in the past when inventions and innovations were considered
breakthroughs, today they are a regular occurrence This implies that the transformation
process is continuous and has far-reaching consequences both for the overall organization of
firms and for policy making

Slide 4:
Global firms rely on technological innovation to enhance their capabilities In this sense,
technology is both driven by and is a driver of globalization and makes it possible to speak of
the new ‘technologically-driven character’ of the global economy.

Slide 5:
Globalization Index Ireland is the most global country followed by Singapore, Switzerland,
Netherlands, and Finland For arriving at a globalization index, the following key components of
global integration have been assessed • Economic Integration: Trade, portfolio, foreign direct
investment , and investment income • Personal Integration: Telephone, travel, remittances,
and personal transfers • Technology Integration: Internet users, Internet hosts, and secure
Internet services

Slide 6:
• Political Integration: International organizations, UN peacekeeping, treaties, and government
transfers. India ranks as the 61 st global integrated country out of the 62 countries.

Slide 7:
Globalization of Production The firms evaluate various locations worldwide for manufacturing
activities so as to take advantage of local resources and optimize their manufacturing
competitiveness The firms from the USA, the EU, and Japan manufacture at overseas locations
more than three times of their exports output produced in their home country The intra-firm
export-import transactions constitute about one-third of their international trade Toyota, one of
the world’s leading automakers, has a total of 51 overseas manufacturing companies
Slide 8:
in 26 countries and markets, and markets cars worldwide through its overseas network
consisting of more than 160 importers/distributors and numerous dealers.

Slide 9:
Globalization of Markets Marketing gurus in the last two decades have extensively argued over
the benefits of globalization of markets over customized marketing strategies Prof. Theodore
Levitt in his path-breaking paper ‘Globalization of Markets’ strongly argued in favour of the
emergence of global markets at a previously unimagined magnitude Technology as the most
powerful force has driven the world towards converging commonality Technological strides in
telecommunication, transport, and travel have created a new consumer segment in the
isolated places of the world

Slide 10:
Prof. Kenichi Ohmae also advocates the concept of a borderless world and need for universal
products for global markets Standardized products are increasingly finding markets across the
globe The products from global brands such as General Electric, Kodak, Colgate, Sony,
Benetton are few of the several brands preferred and bought by the consumers around the
world Such globalization of the world market has increased the scope for marketing activities
internationally and has also increased the competitive intensity of the global brands in the
market.

Slide 11:
The Concept of International Marketing In the mid-fifties, the orientation of markets shifted
from selling to marketing Earlier, under the selling concept, the focus was on selling products
through aggressive selling and sales promotion programmes leading to sales maximization,
which in turn was expected to maximize a firm’s profit earnings On the other hand, under the
marketing concept, the target market is the starting point and the focus is on customers’
needs The profit maximization under the marketing concept is achieved through customer
satisfaction by way of integrated marketing efforts

Slide 12:
Prof. Theodore Levitt explains this distinction by stating that selling focuses on the needs of
the sellers while marketing focuses on the needs of the buyers Selling is preoccupied with the
seller’s need to convert his product into cash; marketing involves the idea of satisfying the
needs of the customers by means of the product and the whole cluster of things associated
with creating, delivering, and finally consuming it The marketing guru Phillip Kotler defines
marketing as ‘the human activity directed at satisfying needs and wants through exchange
processes’ Achieving customer satisfaction is given the utmost importance in the marketing
concept as getting a new

Slide 13:
customer costs much more (estimated to be five times) than retaining an existing one It is
likely to cost 16 times as much to bring the new customer to the same level of profitability as
the lost customer Emphasizing exchange processes, the American Marketing Association
defines marketing as the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational goals With manifold increase in competitive intensity in the
present marketing era, the focus is shifting fast to market orientation Under the traditional
concept, a respective

Slide 14:
finds a stated need and fulfils it A step further is the anticipative marketer who looks ahead at
the customer’s needs in the near future However, a creative marketer discovers and produces
solutions that a customer did not ask for but would enthusiastically respond to The
development of products like walkman, VCRs, CDs, ATMs, and cellular phones are a few of the
illustrations of creative marketing The fundamental principles of marketing, especially related
to its technical aspects in domestic and international markets, remain more or less the same

Slide 15:
However, the differences in marketing environment make international marketing a distinct
discipline In simple terms, international marketing is defined as the marketing activities carried
out across national boundaries Every firm has to operate in a given set of environmental
factors over which it has little control Although the fundamentals of marketing remain the
same and have universal applicability, the flexibility of marketing decisions is limited by a
variety of uncontrollable factors, such as social, economic, political, legal, and technological
environment

Slide 16:
These environmental factors are known as uncontrollable elements on which a marketer hardly
has any influence, but the marketing challenge is to adapt the controllable elements of
marketing mix, i.e. product, price, distribution, and promotion, so as to ensure marketing
success Cateora defines international marketing as the performance of business activities
designed to plan, price, promote, and direct the flow of company’s goods and services to
consumers or users in more than one nation for a profit International marketing takes place
when marketing/trade is carried out ‘across the border’ or between ‘more than one nation’

Slide 17:
Global marketing is the process of focusing the resources and objectives of an organization on
global marketing opportunities and needs International marketing is all about identifying and
satisfying global customers’ needs better than the competitors, both domestic and
international, and coordinating marketing activities within the constraints of the global
environment.

Slide 18:
International marketing would involve: ( i ) identifying needs and wants of customers in
international markets, (ii) taking marketing mix decisions related to products, pricing,
distribution, and communication keeping in view the diverse consumer and market behavior
across different countries on one hand and firms’ goals towards globalization on the other
hand, (iii) penetrating into international markets using various modes of entry, and (iv) taking
decision on view of dynamic international market environment.

Slide 19:
Terms in International Marketing The traders should develop a thorough understanding of the
nuances of commonly used terms in international marketing which are sometimes used
interchangeably Some of these terms are as follows: • Domestic Marketing: marketing
practices within the domestic markets • Foreign Marketing: Methods and practices used in the
home market and also applied in overseas markets with little adaptation For instance, an
Indian firm using domestic marketing methods for the European market is known as foreign
marketing.

Slide 20:
• Comparative Marketing: Comparative study of two or more marketing systems to find out the
differences and similarities • International Trade: A macroeconomic term used at national level
with a focus on flow of goods, services, and capital across national borders It also involves
analysis of commercial and monetary conditions and their effect on transfer of resources and
balance of payment As international trade views international markets at the national level
from a macroeconomic perspective, little attention is given to the company-level marketing
methods and strategies.

Slide 21:
• International Business: A much wider term encompassing all commercial transactions that
take place between two countries These transactions, including sales, investment, and
transportation, may be initiated by government or private companies with an objective to
make profit or not. • International Marketing: It focuses on the firm-level marketing practices
across the border including market identification and targeting, entry mode selection,
marketing mix, and strategic decisions to compete in the international markets. • Global/World
Marketing: Global marketing treats the whole world as a single market and standardizes the
marketing mix of the companies as far as feasible

Slide 22:
A global company does not differentiate between the home country and a foreign country and
considers itself as a corporate citizen of the world The differences in transnational,
multinational, world, and global marketing are subtle in nature and have little effect on their
strategic implementation.

Slide 23:
Evolutionary Process of Global Marketing Domestic marketing Market Focus : Domestic
Orientation : Ethnocentric Marketing Mix : Focus on domestic Decision customers The
marketing mix decisions are invariably based on the needs and wants of the domestic
customers These decisions are taken so as to respond competitively and effectively to the
domestic environmental factors

Slide 24:
Ethnocentrism is defined as the predisposition of a firm to be predominantly concerned with its
viability and legitimacy only in its home country Neglect of competition from low-cost Japanese
manufacturers of consumer electronics by the US manufacturers in the 1960s and 1970s as a
result of their ethnocentric approach was the major reason behind their inability to cope with
forced competition in the US market.

Slide 25:
Export Marketing Market Focus : Overseas (Targeting and entering foreign markets)
Orientation : Ethnocentric Marketing Mix : Focused mainly on Decision domestic customers,
Overseas marketing- generally an extension of domestic marketing, Decisions made at head-
quarters The stage models suggest that generally a firm focused on domestic markets begins
to export

Slide 26:
unintentionally by receiving unsolicited orders from overseas markets The firm tries to fulfill
such orders reluctantly with little strategic orientation Thus, the initial entry of a firm in
international markets may be characterized as a consequence of responding to unsolicited
export enquiries However, the positive experience in fulfilling such overseas market
requirements serves as a stimulus to look for repeat orders.

Slide 27:
International marketing Marketing focus : Differentiation in country markets by way of
developing or acquiring new brands Orientation : Polycentric Marketing Mix : Developing local
products Decision depending upon country needs decision by individual subsidiaries Over a
period of time, the exporting company starts catering to the specific needs of a few overseas
markets and establishes noticeable share in the market

Slide 28:
Polycentric orientation refers to the predisposition of a firm to the existence of significant
cultural variations across the markets It recognizes the differences among markets and the
need to respond to the market forces with market-specific strategies The polycentric strategy
has a strong orientation towards the target markets The products are manufactured in the
home country with separate product adaptation for different markets However, the marketing
decisions, such as decisions about product development, branding, distribution, pricing, and
promotion, are taken independently by the marketing department in each country.

Slide 29:
Multinational Marketing Marketing focus : Consolidation of operations on regional basis gains
from economic of scale Orientation : Regiocentric Marketing Mix : Product standardization
Decision within regions but not across them on regional basis Once a company establishes its
manufacturing and marketing operations in multiple markets, it begins to consolidate its
operations on regional basis so as to take advantage of economies of scale in manufacturing
and marketing mix decisions

Slide 30:
Various markets are divided into regional sub- segments on the basis of their similarity to
respond to marketing mix decisions It is known as multinational marketing, where marketing
mix decisions are standardized within the region but not across the region Marketing mix
decisions are based on regional basis which brings economies of scale.

Slide 31:
Global Marketing Marketing focus : Consolidating firm’s operations on global basis Orientation :
Geocentric Marketing Mix : Globalization of marketing Decision mix decisions with local
variations joint decisions making across firm’s global operations The extreme view of global
marketing refers to the use of a single marketing method across the international markets with
little adaptation Global marketing hardly means complete standardization of the marketing
mix decisions, but it

Slide 32:
increasingly means a strategic approach to have a global perspective to have economies of
scale The objective is to find out some commonality in the customers’ needs and strive for a
uniform marketing strategy as far as feasible in various country markets.

Slide 33:
Global Marketing: What it is and What it is Not Although the marketing discipline is universal,
markets and customers are quite differentiated This means that marketing practice must vary
from country to country Each person is unique, and each country is unique This reality of
differences means that we cannot always directly apply experience from one country to
another If the customers, competitors, channels of distribution, and available media are
different, it may be necessary to change our marketing plan

Slide 34:
Companies who don’t appreciate this fact will soon learn about it if they transfer irrelevant
experience from one country or region to another Nestle, for example, sought to transfer its
great success with a four- flavour coffee line from Europe to the United States Its U.S.
competitors were delighted: The transfer led to a decline of 1% in US market share An
important task in global marketing is learning to recognize the extent to which marketing plans
and programs can be extended worldwide, as well as the extent to which they must be
adapted Much of the controversy about global marketing dates to Professor Theodore Levitt’s
1983 seminal

Slide 35:
article in the Harvard Business Review, “The globalization of Markets” Professor argued that
the marketers were confronted with a “homogeneous global village” Levitt advised
organizations to develop standardized high quality world products and market them around
the globe using standardized advertising, pricing, and distribution Some well-publicized failures
by Parker Pen and other companies seeking to follow Levitt’s advice brought his proposals into
question Indeed, it was global marketing that made Coke a worldwide success However, that
success was not based on a total standardization of marketing mix elements

Slide 36:
In his book, The Borderless World, Kenichi Ohmae explains that Coke’s success in Japan could
be achieved only by spending a great deal of time and money becoming an insider That is, the
company built a complete local infrastructure with its sales force and vending machine
operations Coke’s success in Japan, according to Ohmae , was a function of its ability to
achieve “global localization,’ the ability to be as much of an insider as a local company but still
reap the benefits that result from world-scale operations What does the phrase global
localization really mean?

Slide 37:
In a nutshell, it means a successful global marketer must have the ability to “think globally and
act locally” As we will see many times in this book, “global” marketing may include a
combination of standard (e.g. the actual product itself) and nonstandard (e.g. distribution or
packaging) approaches A “global product” may be “the same’ product everywhere and yet
“different” Global marketing requires marketers to behave in a way that is global and local at
the same time by responding to similarities and differences in world markets As the Coca-Cola
Company has demonstrated,
Slide 38:
the ability to think globally and act locally can be a source of competitive advantage By
adapting sales promotion, distribution, and customer service efforts to local needs, Coke
established such strong brand preference that the company claims a 78% shares of the soft-
drink market in Japan At first, Coca-Cola managers did not understand the Japanese
distribution system However, with considerable investment of time and money, they
succeeded in establishing a sales force that was as effective in Japan as it was in the United
States To complement Coke sales, the Japanese unit has created products such as Georgia-
brand canned

Slide 39:
and Lactia, a lactic, noncarbonated soft drink that promotes healthy digestion and quick
refreshment expressly for the Japanese market.

Slide 40:
Towards GLocal Marketing • As achieving greater market share and improved profitability is
more critical to a firm rather than achieving economies of scale, the global marketing firm
finds it difficult to overlook the local expectations and finer marketing nuances • Besides, the
growing level of expectations of the target market necessitates the global firms to give more
attention to the customers in view of their local requirements • thus, the term GLOCAL refers
to global marketing with a local focus

Slide 41:
• This is turn increases the marketing complexity for a firm, but helps it to fulfill the customer
expectations more competitively and secure greater market share.

Slide 42:
Marketing Complexity International Marketing Multinational Marketing Global Marketing
GLOCAL (Global Marketing With Local Focus) Exporting Domestic Process of
Internationalization Time

Slide 43:
Reasons for Entering International Markets Why should a firm enter international markets? a)
Growth b) Profitability c) Risk Spread d) Achieving Economics on Scale e) Access to Imported
Inputs f) Uniqueness of Products or Service g) Marketing opportunities due to Life Cycles h)
Spreading R&D Costs