International Marketing

1. International Marketing

2. Introduction International marketing is defined as the performance of business activities designed to plan, price, promote, and direct the flow of a company´s goods and services to consumer or users in more than one nation for a profit.

3. Definition The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large in more than one country.

4. International marketing consists of the activity, institutions, and processes across national borders that create, communicate, deliver, and exchange offerings that have value for stakeholders and society. Forms of international marketing include export–import trade, licensing, joint ventures, wholly owned subsidiaries, turnkey operations, and management contracts. Marketing serves as a key agent of societal change and as a key instrument for the development of societal responsive business strategy.

5. Scope of International Marketing Exports and Imports: International trade can be a good beginning to venture into international marketing. By developing international markets for domestically produced goods and services a company can reduce the risk of operating internationally, gain adequate experience and then go on to set up manufacturing and marketing facilities abroad. Contractual Agreements: Patent licensing, turn key operations, co – production, technical and managerial know – how and licensing agreements are all a part of international marketing. Licensing includes a number of contractual agreements whereby intangible assets such as patents, trade secrets, know – how, trade marks and brand names are made available to foreign firms in return for a fee. Joint Ventures: A form of collaborative association for a considerable period is known as joint venture. A joint venture comes into existence when a foreign investor acquires interest in a local company and vice versa or when overseas and local firms jointly form a new firm. In countries where fully owned firms are not allowed to operate, joint venture is the alternative.

6. Cont… Wholly owned manufacturing:  A company with long term interest in a foreign market may establish fully owned manufacturing facilities. Factors like trade barriers, cost differences, government policies etc. encourage the setting up of production facilities in foreign markets. Manufacturing abroad provides the firm with total control over quality and production. Contract manufacturing: When a firm enters into a contract with other firm in foreign country to manufacture assembles the products and retains product marketing with itself, it is known as contract manufacturing. Contract manufacturing has important advantages such as low risk, low cost and easy exit. Management contracting: Under a management contract the supplier brings a package of skills that will provide an integrated service to the client without incurring the risk and benefit of ownership.

7. Cont… Third country location: When there is no commercial transactions between two countries due to various reasons, firm which wants to enter into the market of another nation, will have to operate from a third country base. For instance, Taiwan’s entry into china through bases in Hong Kong. Mergers and Acquisitions: Mergers and Acquisitions provide access to markets, distribution network, new technology and patent rights. It also reduces the level of competition for firms which either merge or acquires. Strategic alliances:  A firm is able to improve the long term competitive advantage by forming a strategic alliance with its competitors. The objective of a strategic alliance is to leverage critical capabilities, increase the flow of innovation and increase flexibility in responding to market and technological changes. Strategic alliance differs according to purpose and structure.

8. The International Marketing Task Foreign Environment (Uncontrollables) 7 1. Competition 7. Structure of Distribution Domestic environment (Uncontrollables) Environmental uncontrollables country market A (Controllables) 1. Competition Price Product 2. Technology Target Market 5. Political- Legal Environmental uncontrollables country market B 6. Geography and Infrastructure 2 .Technology Promotion Place 4. Culture Environmental uncontrollables country market C 3. Economy 5. Political- Legal 3. Economy 4. Culture

9. Why Firms go International Proactive Stimuli • Profit advantage • Unique products • Technological advantages • Exclusive information • Economies of scale • Market size Reactive Stimuli • Competitive pressures • Overproduction • Stable or declining domestic sales • Excess capacity • Saturated domestic markets • Proximity to customers and ports

10. Reasons for marketing abroad s • Economies of scale and scope • Existence of lucrative markets in foreign countries • Saturated markets in the home country • High R&D costs • International opportunities • Less competition • New trade agreements • …

11. Differences between domestic and international marketing

12. Differences between domestic and international marketing (continued)

13. Differences between domestic and international marketing (continued)

14. Opportunities and Challengesin International Marketing • To handle newly emerging forces and dangers of unforeseen influences from abroad, firms need to: • Be prepared and develop active responses. • Envision new strategies. • Develop new plans. • Change the way of doing business.

15. Cont… • The growth of global business activities offers increased opportunities. • Knowledge transfer around the globe helps an international firm to build and strengthen its competitive position. • International opportunities require an awareness of global developments, an understanding of their meaning, and a development of capabilities to adjust to change.

16. Benefits of International Marketing Coca Cola in India

17. Disney International

18. The Nestlé Way • Nestlé sells more than 8,500 products produced in 489 factories in 193 countries • Nestlé is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water • The “Nestlé way” to dominate markets is summarized in four points: • think and plan long term • decentralize • stick to what you know • adapt to local tastes

19. Benefits of Global Marketing • Economies of scale • Unifying product development, purchasing, and supply activities across countries • Transfer of experience and know-how across countries through improved coordination and integration of marketing activities • Stability of revenues and operations

20. 4 P’sOF INTERNATIONALMARKETING MIX Product adaptation and development for international marketing Packaging and labelling Translation of technical literature Quality management Licensing and contract manufacturing Choice of pricing strategy Competitor analysis Determination of discount structures Credit management Choice of delivery terms Costing and budgeting Product Price Place Promotion International advertising, public relations and sales promotion International direct marketing Control of salespeople Translation of sales literature Exhibiting Market research International distribution Control of agents Export documentation Cargo insurance Establishment of joint ventures and subsidiaries