CHAPTER 1

What is International Marketing???

Marketing carried out by Companies across National Borderlines. According to AMA (American Marketing Association International Marketing is the Multinational Process of planning and executing the Conception, Pricing, Promotion, and Distribution of IDEAS, GOODS and SERVICES to create exchanges that satisfy Individuals and Organizational Objectives.

What is Market Fragmentation and Consolidation?

Market Fragmentation refers to the Same Security traded in multiple exchanges, so the order flow for security is Fragmented into number of exchange. Market Consolidation refers to the status where all trade for the same security is done in a single exchange.

Why Market Fragmentation and Consolidation are Important in International Marketing???

Companies in international markets operate in an environment of opportunities and treats in which it is necessary to develop appropriate international marketing strategies configured to compete with other firms while providing value to customers. However companies respond by developing new products or by adapting existing products to the needs of customers in domestic and international markets. Causes of Market Fragmentation and Consolidation??? Low market entry cost and high exit cost No experience curve effects A typical cost structures Governmental interference in the market Difference in consumer tastes, languages, cultures, and technical standards Retailers are still nationally Focused New information technologies

Highly culture-bound items such as food, clothing, and medicine are more likely to be sold in fragmented markets, whereas consumer electronics and music, especially music aimed at the youth market, will probably continue to serve a standardized consolidated market. International markets may be consolidated when:

Successful international firms introduce low-cost standardized products covering most market needs this replace many specialized products; large marketing expenditures force less well-funded competitors to leave the market this is a common strategy in packaged consumer goods markets; Companies pursue policies of acquiring competitors and rationalising production capacity a strategy often followed by alcoholic beverage and electrical products companies.

International Brand Marketing Environment The international marketing environment is a complex constellation of demands and constraints that the company faces as it attempts to compete and grow.

There are a number of steps that need to be taken before you decide to enter international markets. The first step involves an analysis of the international marketing environment through a PEST analysis and many other elements.
COMPETITORS FIRM IN INTERNATIONAL MARKETS POLITICAL ECONOMY

CUSTOMERS

Cultures and Values

TECHONOLGY

MARKETS RESOURCES

Some factors that make up a PEST analysis: Political factors

The political stability of the nation. Is it a democracy, communist, or dictatorial regime? Monetary regulations. Will the seller be paid in a currency that they value or will payments only be accepted in the host nation currency?

Economical Factors

Consumer wealth and expenditure within the country. National interests and inflation rate. Are quotas imposed on your product? Is there import tariffs imposed? Does the government offer subsidies to national players that make it difficult for you to compete?

Social Factors

Language. Will language be a barrier to communication for you? Does your host nation speak your national language? What is the meaning of your brand name in your host countrys language? Customs: what customs do you have to be aware of within the country? This is important. You need to make sure you do not offend while communicating your message. Social factors: What are the role of women and family within society? Religion: How does religion affect behaviour? Values: what are the values and attitudes of individuals within the market?

Technological

The technological infrastructure of the market. Do all homes have access to energy (electricity) Is there an Internet infrastructure. Does this infrastructure support broadband or dial up? Will your systems easily integrate with your host countries?

What are the Trends towards Global Markets?? Globalization, or the trend towards global markets, means different things to different people. The aspects of globalization that directly affect international firms include: New information and communication technologies enable the firm to go global. Communication technology Information which is becoming a key resource in the international firm. Growth of non-profit businesses in international markets. Call for more ethical and social responsibility among international firms. Emergence of a global culture based on music, clothing, and entertainment, Influence of global branding for products and services.

What are the Causes of Globalization?

CAPTER 2

What is a Strategy?

A strategy is a plan of action designed to achieve a specific goal. As there is always an element of uncertainty about the future, strategy is more about a set of options than a fixed plan.

A Strategic Market: Strategic Market is the smallest area within which it is possible to be a viable competitor. The strategic market is determined by the interaction of demand factors with the supply factors.

What is International Marketing Strategy? Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. Each of the three options are considered within the context of two aspects of the competitive environment: The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus.

1. Cost Leadership The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained; labour is recruited and trained to deliver the lowest possible costs of production. 'Cost advantage' is the focus. Costs are shaved off every element of the value chain. Products tend to be 'no frills.' However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting the benefits of a bigger margin than competitors. Some organizations, such as Toyota, are very good not only at producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy.

2. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The

benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service. The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve.

3. Focus or Niche strategy The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost leadership or a wide scope differentiation strategy, a niche strategy could be more suitable. Here an organization focuses effort and resources on a narrow, defined segment of a market. Competitive advantage is generated specifically for the niche. A niche strategy is often used by smaller firms. A company could use either a cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. There are potentially problems with the niche approach. Small, specialist niches could disappear in the long term. Cost focus is unachievable with an industry depending upon economies of scale e.g. telecommunications.

How to develop competitive advantage? Refer book

Strategic differentiation in the International Firm Providing new customer benefits and focusing on customer value in selected international markets. Important sources of differentiation include: Knowledge of the market Product Mix Customer Mix Relations with Suppliers R&D and Technology Manufacturing and logistics Organizational Culture

Dynamics of the International Firm Refer book

CHAPTER 3 Characteristics of the International Firm: 1. Separation of producer from buyer. 2. Payment In foreign Currency 3.Application of intentional laws 4. Large number of middlemen. 5. Competition 6. Greater Risk. 7. Comparative Cost 8. Territorial Specialization 9.Reciprocal assistant 10. Domination and control of the govt. 11. Use of various documents

Factors influencing the internationalization of the firm are: Companies internationalize because of many factors that include profit motives, costs minimization, diversification of the markets, search for new opportunities, saturated domestic market etc.

The internationalization process of a firm involves many processes that are interlinked and the firm that wants to internationalize should always take these factors into considerations. The factors include the knowledge on the market, the availability of resources, the strategies to be used and the market environment.
Size of firm Goals & objectives Technology Internationalization of the firm

Location

Products & Services

Refer book pg.17

Management of the international firm Depends on level of key success factors: Cognitive stylesAttitudes towards company growthAspirations, commitment and expectations of managersCommitment to internationalizationManagerial expectations and internationalization-

Stages of Internationalization Domestic company: Most international companies have their origin as domestic companies. The orientation of a domestic company essentially is ethnocentric. A purely domestic company operates domestically because it never considers the alternative of going international. The growing stage-one company, when it reaches growth limits in its primary market, diversifies into new markets, products technologies instead of focusing on penetrating international markets. However, if factors like domestic market constraints, foreign market prospects, increasing competition etc. make the company reorient its strategies to tap foreign market potential, it would be moving to the next stage in the evolution. A domestic company may extend its products to foreign markets by exporting, licensing and franchising. The company, however, is primarily domestic and the orientation essentially is ethnocentric. In many instances, at the beginning exporting is indirect. The Company may develop a more serious attitude towards foreign business and move to the next stage of development, i.e., international company. International company: International company is normally the second stage in the development of a company towards the transitional corporation. The orientation of the company is basically ethnocentric and the marketing strategy is extension, i.e., the marketing mix developed a for the home market is extended into the foreign markets. International companies normally rely on the international business. Multinational company: When the orientation shifts from ethnocentric to polycentric, the international company becomes multinational. In other words, a company decides to respond to market differences, it evolves into a stage three multinational that pursues a multidomestic strategy. The focus of the stage three company is multinational that pursues a multinational or, in strategic terms, multi-domestic. The marketing strategy of the multidimensional company is adaptation.

In multinational companies each foreign subsidiary is managed as if it were an independent city state. The subsidiaries are part of an area structure in which each country is part of a regional organization that reports to world headquarters. The global company will have either a global marketing strategy or a global sourcing strategy but not both. It will either focus on global markets and source from the home or a single country to supply these markets, or it will focus on the domestic market and source from the world to supply its domestic channel. However, according to the interpretation of some others all strategies product development, production marketing etc- will be global in respect of the global corporation. The transitional corporation is much more than a company with sales, investments, and operations in many countries. This company, which is increasingly dominating markets and industries around the world, is an integrated world enterprise that links global resources with global markets at a profit.

CHAPTER 4 International Market Selection Process Marketing decision Go international or remain domestic Marketing intelligence Assessment of global market and firm's potential share in it, in view of local and international competition, Compared to domestic opportunities. A ranking of world markets according to market potential, local competition and the political situation. Size of international trade barriers, transport costs, local competition, government requirements and Political stability. For each market, buyer behaviour, competitive practice, distribution channels, media, company experience

Which markets to enter

How to enter target markets,

How to market in target markets

1. 2.

3.

Market Definition Market Segmentation a. Measurability b. Accessibility c. Profitability d. Action ability Determining the Markets

Segmenting International Market: International markets can also be segmented on the following criteria 1. 2. 3. 4. 5. Geographic Location Economic location Political and legal factor Cultural factor Inter market segmentation

Generic Markets (Large Segments) A generic market is comprised of groups of customers who have a general need, but have many offerings to choose from to meet that need. For

example: transportation is a generic market that can be met by many offerings: car, bus, train, subway, taxi, etc. There are 3 Generic Market Segmentation: Undifferentiated Sending the same Promoting the city as a promotional message historic destination by to everyone placing ads in widely read newspapers Concentrated Designing a promotional message that communicates the benefits desired by a single specific segment Designing more than one promotional message, with each communicating different benefits Promoting the city as historic by targeting elderly members of historical societies by placing ads in their newsletters Also targeting families by communicating a promotional message about the importance of children learning history

Differentiated

Refer book... pg.23

What is Market Segmentation? It is the process of dividing a potential markets into distinct subsets of consumers and selecting one or more segments as a market target to be reached with a distinct marketing mix. Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs as well as common applications for the relevant goods and services. There are various types of market segmentation: Refer book

Steps in market segmentation 1. Identify the target market The first and foremost step is to identify the target market. The marketers must be very clear about who all should be included in a common segment. Make sure the

individuals have something in common. A male and a female cant be included in one segment as they have different needs and expectations. Burberry stocks separate merchandise for both men and women. The management is very clear on the target market and has separate strategies for product promotion amongst both the segments. A Garnier mens deodorant would obviously not sell if the company uses a female model to create awareness. Segmentation helps the organizations decide on the marketing strategies and promotional schemes. Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Lower Income Group - Maruti 800, Alto Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara Suzuki Grand Vitara would obviously have no takers amongst the lower income group. The target market for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata watch. 2. Identify expectations of Target Audience Once the target market is decided, it is essential to find out the needs of the target audience. The product must meet the expectations of the individuals. The marketer must interact with the target audience to know more about their interests and demands. Kelloggs K special was launched specifically for the individuals who wanted to cut down on their calorie intake. Marketing professionals or individuals exposed to sun rays for a long duration need something which would protect their skin from the harmful effects of sun rays. Keeping this in mind, many organizations came with the concept of sunscreen lotions and creams with a sun protection factor especially for men.

3. Create Subgroups The organizations should ensure their target market is well defined. Create subgroups within groups for effective results. Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness. Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing. 4. Review the needs of the target audience

It is essential for the marketer to review the needs and preferences of individuals belonging to each segment and sub-segment. The consumers of a particular segment must respond to similar fluctuations in the market and similar marketing strategies. 5. Name your market Segment

Give an appropriate name to each segment. It makes implementation of strategies easier.A kids section can have various segments namely new born, infants, and toddlers and so on. 6. Marketing Strategies

Devise relevant strategies to promote brands amongst each segment. Remember you cant afford to have same strategies for all the segments. Make sure there is a connect between the product and the target audience. Advertisements promoting female toiletries cant afford to have a male model, else the purpose gets nullified. A model promoting a sunscreen lotion has to be shown roaming or working in sun for the desired impact. 7. Review the behaviour

Review the behaviour of the target audience frequently. It is not necessary individuals would have the same requirement (demand) all through the year. Demands vary, perceptions change and interests differ. A detailed study of the target audience is essential. 8. Size of the Target Market

It is essential to know the target market size. Collect necessary data for the same. It helps in sales planning and forecasting.

Refer book for factor affect demand pg.24 Chapter 5 What is culture?

Culture is the way that we do things around here. Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture). It is widely accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artefacts.

Role of culture in International Marketing Culture plays a vital role while implementing the marketing strategies on international level. To understand this one can take example of health and fitness industry which attracts people from all age groups in the western nations like USA, UK, and Canada etc. However, in South Asian countries there are very few people even in the rich families who are willing to spend money on health and fitness. The main reason behind this is that there is cultural perception that having high fitness level is something which is required for those who are professionals and it has little role to play in day to day life of a common man. This is the example of sociocultural influence over a particular industry. Because of this psychological attitude towards fitness, organizations and individuals hailing from fitness industry have redesigned their marketing strategy by promoting themselves as alternative to general health service providers who mainly belong to Allopath system. The most successful among the lot of alternative health service providers are the organizations related to Yoga followed by Reiki. Such is the marketing promotion strategy that despite of lack of genuine experts many individuals and organizations have become successful business entity. Refer book pg. 30

Chapter 7 The International Market Entry Evaluation Process The International Marketing Entry Evaluation Process is a five stage process, and its purpose is to gauge which international market or markets offer the best opportunities for our products or services to succeed. The five steps are Country Identification, Preliminary Screening, In-Depth Screening, Final Selection and Direct Experience.

Step One - Country Identification The World is your oyster. You can choose any country to go into. So you conduct country identification - which means that you undertake a general overview of potential new markets. There might be a simple match - for example two countries might share a similar heritage e.g. the United Kingdom and Australia, a similar language e.g. the United States and Australia, or even a similar culture, political ideology or religion e.g. China and Cuba. Often selection at this stage is more straightforward. For example a country is nearby e.g. Canada and the United States. Alternatively your export market is in the same trading zone e.g. the European Union. Again at this point it is very early days and potential export markets could be included or discarded for any number of reasons

Step Two - Preliminary Screening At this second stage one takes a more serious look at those countries remaining after undergoing preliminary screening. Now you begin to score, weight and rank nations based upon macro-economic factors such as currency stability, exchange rates, level of domestic consumption and so on. Now you have the basis to start calculating the nature of market entry costs. Some countries such as China require that some fraction of the

company entering the market is owned domestically - this would need to be taken into account. There are some nations that are experiencing political instability and any company entering such a market would need to be rewarded for the risk that they would take. At this point the marketing manager could decide upon a shorter list of countries that he or she would wish to enter. Now in-depth screening can begin.

Step Three - In-Depth Screening The countries that make it to stage three would all be considered feasible for market entry. So it is vital that detailed information on the target market is obtained so that marketing decision-making can be accurate. No one can deal with not only microeconomic factors but also local conditions such as marketing research in relation to the marketing mix i.e. what prices can be charged in the nation? - How does one distribute a product or service such as ours in the nation? How should we communicate with are target segments in the nation? How does our product or service need to be adapted for the nation? All of this will information will for the basis of segmentation, targeting and positioning. One could also take into account the value of the nation's market, any tariffs or quotas in operation, and similar opportunities or threats to new entrants. Step Four - Final Selection Now a final shortlist of potential nations is decided upon. Managers would reflect upon strategic goals and look for a match in the nations at hand. The company could look at close competitors or similar domestic companies that have already entered the market to get firmer costs in relation to market entry. Managers could also look at other nations that it has entered to see if there are any similarities, or learning that can be used to assist with decision-making in this instance. A final scoring, ranking and weighting can be undertaken based upon more focused criteria. After this exercise the marketing manager should probably try to visit the final handful of nations remaining on the short, shortlist. Step Five - Direct Experience Personal experience is important. Marketing manager or their representatives should travel to a particular nation to experience firsthand the nation's culture and business practices. On a first impressions basis at least one can ascertain in what ways the nation is similar or dissimilar to your own domestic market or the others in which your company already trades. Now you will need to be careful in respect of self-referencing. Remember that your experience to date is based upon your life mainly in your own nation and your expectations will be based upon what your already know. Try to be flexible and experimental in new nations, and don't be judgemental - it's about what's best for your company - happy hunting.

Chapter 8 Product Life cycle in International Marketing

The life cycle begins when a developed country, having a new product to satisfy consumer needs, wants to exploit its technological breakthrough by selling abroad. Other advanced nations soon start up their own production facilities, and before long LDCs do the same. Efficiency/ comparative advantage shifts from developed countries to developing nations. Finally, advanced nations, no longer cost-effective, import products from their former customers. The moral of this process could be that an advanced nation becomes a victim of its own creation.