MARKETING MANAGEMENT AND INTERNATIONAL TRADE

Lesson 26. SALIENT FEATURES OF INTERNATIONAL MARKETING

Module 8. International marketing

Lesson 26

SALIENT FEATURES OF INTERNATIONAL MARKETING

26.1 Definition of International Marketing

International marketing is defined as the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objective.

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. International marketing is all about identifying and satisfying global customers needs better than the competitors, both domestic and international and co-ordinating marketing activities within the constraints of global environment.

Thus, international marketing would involve

a) Identifying needs and wants of customers in international markets.

b) Taking marketing mix decisions related to product, pricing, distribution and communication, considering diverse consumers and market behaviour across different nations of the world on one hand and firms goals towards globalization on the other hand.

c) Entering into international markets through moves.

d) Taking marketing decisions considering dynamic international environment.

26.2 General Reasons for Entering International Market

1. Growth on saturation of domestic market: In order to find out other marketing opportunities elsewhere, firms enter international market.

2. To earn more profit: There exists difference in price for a product in different markets. Due to stiff competition in local market, firms profit gets reduced. In such situation exporters benefits owing to more profit margin in foreign/international market in price. Differences in price and enhanced profits in the international market are chief reasons for exporting.

3. Decreasing the risk: If a firm is restricting its marketing activities to home country only then it is prone to economic upheavals. International markets decreases dependence on domestic home market and reduces risk associated with market failure.

4. Availing imported inputs: Government provides incentive schemes that leads to duty exemption or remission on import of inputs for export production such as advance licensing, duty drawbacks, duty exemption, export promotion, capital goods scheme etc. such provisions helps the firm in obtaining imported items and technical know how to improve their current operations and become more competitive.

5. Product characteristics: Each product passes through product lifecycle stages. When a product enters in to decline stage in a particular market, a firm may decide to introduce it in new international market. At the same time some unique products e.g. Ayurvedic medicines may be appropriate for specific international markets.

26.2.1 Advantages of international marketing

26.2.1.1 Sustenance of business

A country does not have all the resources required for its citizens. All countries do not have a sufficient domestic market size. Thus in order to survive, it is necessary that firms expand their activities beyond their home country.

26.2.1.2 Expansion of business

International marketing provides opportunities for expansion and growth of the business. Many of the developing countries are highly populated. They represent huge market which provides growth opportunities for many firms.

26.2.1.3 Continuity of business

There are many seasonal products. Their sale is fluctuating according to season. Throughout the world, there is no uniformity of season. This helps the firms to continuously sell their products e.g. a multinational soft drink company of western world may face decrease in sale in winter season. But at the same time it is possible to have sale in Asian countries.

26.2.2 Stages of internationalization

26.2.2.1 Domestic sale

The firms in the beginning rely on domestic sale. They do not pay attention to changes in international marketing environment. This approach is referred to as ethnocentric concept; predisposition of a firm is predominantly concerned with viability and legitimacy only in its home country. This makes them vulnerable to charges forced upon them by foreign companies.

26.2.2.2 Export marketing

Here a firm catering to only domestic market receives demand of their products from foreign markets. The firm fulfills this demand and then later on tries to get repeat orders. At this stage due to lack of experience, the firm takes the help of intermediary (trading firm) and carry on the business which is generally referred to as indirect export. With due course of time as the firm gets the necessary experience of international marketing, it enters into direct export eliminating intermediary. At this stage it still retains the ethnocentric orientation.

26.2.2.3 International marketing

With passage of time, firm adopts polycentric orientation. Polycentric orientation is defined as predisposition of a firm to the existence of significant cultural differences among different markets. The firm adopting polycentric orientation visualizes these differences across the market and responds to it with appropriate market specific strategies. Under international marketing, a stage of multi domestic marketing is reached wherein all foreign subsidiaries operating in different countries adopt totally different independent strategies without direct appropriate control from mother country/head quarters. Here it is difficult to achieve economics of sale and hence multi domestic orientation is preferred only when higher diversity is there among different markets which call for separate independent marketing strategy.

26.2.2.4 Multinational marketing

When a firm tries to consolidate its activities on regional basis to gain advantage of economies of scale in manufacturing and marketing, its policy is referred to as multinational marketing. Here marketing mix decisions are standardized within the region but not across the region.

26.2.2.5 Global marketing

The firm operating in multinational markets may adopt the policy of single marketing methods across the international markets with limited changes. Such a move gives cost efficiencies by eliminating duplication of marketing efforts among the national and regional subsidiaries. Here there will be improved linkages among national marketing infrastructures leading to the development of a global marketing infrastructure which gives rise to global customers that gives opportunity for easy dissemination of products, brands and other ideas across subsidiaries.

26.2.2.6 Glocal marketing

Obtaining greater market share leading to profit is more critical for a firm than achieving economies of scale. Thus, global marketing firm cannot underestimate the local expectations and finer marketing nuances. It is required to give more attention to local customers. This gives rise to global marketing which indicates policy of global marketing with local focus. Although it increases marketing complexity for the firm but at the same time the firm is able to fulfill customer expectations more competitively and achieve higher market share.

The marketing complexity with each stage of international marketing is depicted in Fig. 26.1

Fig. 26.1 Marketing comlexity

Table 26.1 Marketing orientation during stages of internationalization

Activity	Domestic Marketing	Export Marketing	International Marketing	Multinational marketing	Global Marketing
Marketing focus	Domestic	Overseas (targeting and entering foreign markets)	Differentiation in country markets by way of developing or acquiring new brands	Consolidation of operations on regional basis. Gain from economies of scale	Consolidating firms operations on global basis.
Orientation	Ethnocentric	Ethnocentric	Polycentric	Regiocentric	Geocentric
Marketing mix decision	Focused on domestic customers	1. Focused mainly on domestic customers. 2. Overseas marketing; generally an extension of domestic marketing. 3. Decisions made at head quarter.	1. Developing local products depending upon country needs. 2. Decisions by individual subsidiaries.	1. Product standardization within region but not across them.	Globalization of marketing mix decision with local variations. Joint decision making across firms global operations.