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SEMESTER- Semester 3
SUBJECT CODE & NAME- IB0011 International Marketing


Email Id:
Contact no- 9706665251/9706665232/

Q1. Discuss the scope of international marketing. How is international marketing more complex than domestic
(Scope-4 marks, difference-6 marks) 10 marks
Scope of International Marketing
The foundation for a successful international marketing programme is a sound understanding of the marketing discipline.
Marketing is the process of focusing the resources and objectives of an organisation on environmental needs and
opportunities. The first and the most fundamental fact about marketing is that it is a universal discipline. The marketing
discipline is equally applicable from China to India, United States to Japan and Australia to Zanzibar. Marketing is a set
of concepts, tools, theories, practices and procedures and experience.
Although the marketing discipline is universal, markets and customers are quite differentiative. This means that
marketing practices 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.
The scope of international marketing is to have a borderless world like the multinational companies Coca Cola, Pepsi,
McDonald, Gillette and so on. Their products and body marketing mix elements are both international and local in
nature. A central issue in international marketing is how to tailor the international marketing concept to fit a particular
product or business.
International Marketing vs. Domestic Marketing

The striking difference between international and domestic marketing lies in the environment in which the two take
place. The important points of differences between international and domestic marketing are:
1. Sovereign Political Entities: Each country is a sovereign political entity and, therefore, they for importing and
exporting the goods and services in order to safeguard their national interest impose several restrictions. The traders in
international marketing have to observe such restrictions. These restrictions may fall in any of the following categories.
i) Tariffs and customs duties on import and export of goods and services in order to make them costly in the importing
country and not to ban their entry into the country completely. In the post war period, through the efforts of General
Agreement on Tariffs and Trade (GATT) there has been a significant reduction in tariff globally and on regional basis due
to the emergence of regional economic groupings.
ii) Quantitative restrictions are also imposed with an intention to restrict trade in some specific commodities. The major
objective behind the restriction is the protection of home industries from the competition of the foreign commodities.
2. Different Legal Systems: Different countries operate different legal systems and they all differ from each other. In
most of the countries follow English Common Law as modified from time to time. Japan and Latin American countries
are important exceptions to this rule. The existence of different legal systems makes the task of businessmen more
difficult as they are not sure as to which particular system will apply to their transactions. This difficulty does not arise in
the domestic trade, as laws are the same for the whole country.
3. Different Monetary Systems: Each country has its own monetary system and the exchange rates for each countrys
currency are fixed under the rules framed by the International Monetary Fund and, therefore, they are more or less fixed.
However, in recent years the exchange rates are fluctuating and are being determined by demand and supply forces.
Some countries operate multiple rates; i.e. different rates are applicable to different transactions.
4. Lower Mobility Factors of Production: Mobility of different factors of production is less as between nations than in
the country, itself. However, with the advent of air transport, the mobility of labour has increased manifold. Similarly, the
development of international banking has increased the mobility of capital and labour. In spite of these developments, the
mobility of labour and capital is not as much as it is within the country itself.
5. Differences in Market Characteristics: Market characteristics in each segment are different, i.e. demand pattern,
channels of distribution, methods of promotion etc. are quite different from market to market. If we take each country a
separate market, we can assume different market characteristics there.
6. Differences in Procedure and Documentation: The centuries old laws and customs of trade in each country demand
different procedures and documentary requirements for the import and export of the goods and services.
Q2. What are trade barriers? Compare tariff and non-tariff barriers.
(Meaning-4 marks, Difference between tariff and non-tariff barriers-6 marks) 10 marks
Trade Barriers
Trade barriers are any of a number of government-placed restrictions on trade between nations. The most common sorts
of trade barriers are things like subsidies, tariffs, quotas, duties, and embargos.

Trade barriers may be: (i) Tariff barriers and (ii) Non-tariff or protective barriers.
Tariff barriers
Tariffs have been one of the classical methods of regulating international trade. Tariffs may be referred to as taxes levied
on the imports.
Kinds of tariffs: Tariffs may be classified according to (i) the purpose of taxes, and (ii) how they are levied.
1. As far as the purpose of taxes is concerned, tariffs may be classified into two categories:
(a) Revenue tariffs are basically intended to raise the Government revenue without intending to protect any industry of
the country. It is levied at a fairly low rate and does not obstruct the free flow of imports.
(b) Protective tariffs, on the other hand, aim at protecting the domestic industries and are generally levied at a very high
rate and, therefore, obstruct the free flow of imports. Its main purpose is not to increase revenue but to provide a
safeguard to the domestic industries against foreign competitions in the local market.
2. On the basis of method how tariffs are computed: Tariffs may be put into two categories:
(a) Specific duties or tariffs are imposed on the basis of per unit of any identifiable characteristics of merchandise
(b) Ad valorem tariffs are based on the value of imports and are charged in the form of a specific percentage of the value
of goods.
3. Other tariffs: In order to protect the domestic industries, against competition, some other tariffs also imposed among
them are important:
(a) Anti-dumping duties: The Government of the importing country imposes customs duty on some goods at a very high
rate to counteract this unfair competition. This duty is known as
anti-dumping duties. Such duties are charged in addition to the normal customs duty on the products.
(b) Counteracting duties: These are similar to the anti-dumping duties, and are charged on goods imported from
countries where the manufacturer exporter is paid, directly or indirectly, a subsidy as an incentive for export.
Non-tariff barriers
Non-tariff barriers are a form of restrictive trade where barriers to trade are set up and take a form other than a tariff.
Some of these non-tariff measures are:
1. Quantity restrictions, quotas and licensing procedures: Under quantity restrictions, the maximum quantity of
different commodities, which would be allowed to be imported over a period of time from various countries, is fixed in
advance. Quotas are very often combined with licensing system to regulate the flow of imports over the quota period as
also to allocate them between various importers and supplying countries. Under this system a licence of a permit is to be
obtained from the Government to import the goods specifying the quantity and the country from which to import, before
concluding the contract with the supplier.
2. Foreign exchange restrictions: Under this system, the importer must be sure that adequate foreign exchange would be
made available to him for the imports of goods by obtaining a clearance from the exchange control authorities of the
country before concluding the contract with the supplier
3. Technical and administrative regulations: Another measure to regulate the imports is the imposition of certain
standards of technical production, technical specifications etc. to which an importing commodity must conform. Such

types of technical restrictions are impressed in case of pharmaceutical products, etc. Besides technical restrictions,
administrative restrictions such as adherence to certain documentary procedure are adopted to regulate imports.
4. Consular formalities: A number of countries demand that shipping documents must accompany the consular
documents such as certificate of origin, certified invoices, import certificates etc. Sometimes, it is also
Q3. How is international marketing research carried out? Discuss in brief.
(Discuss the various steps in the process) 10 marks
Approach to Marketing Research
There are three main headings which have been identified to carry out step by step market research. These are covered
under (i) screen potential of markets (ii) assess targeted markets and (iii) draw conclusions.
Screen potential markets
Step 1: Obtain export statistics that indicate product exports to various countries. Export Statistics Profile (ESP) from the
Department of Commerce can assist. If ESPs are not available for a certain product, the firm should consult the Customs
Statistical Service, Foreign Trade Report, Export Information Data Reports or Annual Worldwide Industry Reviews.
Step 2: Identify five to ten large and fast growing markets for the firms product. Examine all these for the past three to
five years.
Step 3: Identify some smaller but fast emerging markets that may provide ground floor opportunities.
If the market is just beginning to open up, there may be fewer competitors than established markets.
Step 4: Target three to five of the most statistically promising markets for further assessment.
Assess targeted markets
Step 1: Examine trends for company products as well as trends regarding related products that could influence demand.
Step 2: Ascertain the sources of competition including the extent of industrys production and the major foreign
countries the firm is competing against, in each targeted market.
Step 3: Analyse factors affecting marketing and use of the product in each market, such as end user sector, channels of
distribution, cultural idiosyncrasies and business practices.
Step 4: Identify any foreign barriers (tariff or non-tariff) for the product being imported into the country.
Step 5: Identify any government incentives to promote export of the product or services.
Draw conclusions
After analysing the data, the company may conclude that marketing resources could be better used if applied to a few
countries. In general, company efforts should be directed at fewer than ten markets if the firm is new to exporting; one or
two countries may be enough to start with. The companys internal resources should help to determine its level of effort.
Q4. List the factors that affect the pricing strategy of an international firm? Explain the different pricing
strategies the firms can adopt.
(Listing Factors-3 marks, Pricing strategies-7 marks) 10 marks


International Pricing Strategies

Pricing strategy is an important part of fixing the international price. The price has to be competitive and based on the
quality of a product. Different pricing strategies are adopted in different foreign countries because of certain
environmental factors like political, economic, socio-cultural, legal and so on. Let us learn some more about international
pricing, discussed in following subsections.
Factors affecting pricing
There are three main factors which affect the export price strategy to be adopted by the exporter in the foreign markets
viz. the characteristics of the product and the nature of its demand, the philosophy of its management and the market
characteristics. The pricing strategy is a short-term tool to make fit the prices in the changing competitive situations in
the short run with its pricing policy decisions.
Characteristics of the product and the nature of its demand: It is a major factor in fixing the price of the product at a
particular time. In other words, improvement in quality of the product and product adaptation according to the changing
competitive conditions in the foreign market should be taken as a continuous process. Elasticity of demand is another
factor, which influences the price.
The philosophy of the management: As we know that the main objective of management of every concern is to
maximize profits, this is an adverse relationship between the price and the demand. The management can earn more
profit at increased revenue by reducing the price if the demand is more elastic. On the other hand, if the objective of the
management is to export a committed value of merchandise, the price may be even lower than the marginal cost.
Price strategies
The export price quotations may not be the same for all markets. Prices may differ from market to market due to various
reasons viz. political influence, buying capacity, financial and import facilities, total market turnover and other pricing
and non-pricing factors etc. in order to make the local price of the product competitive.
Thus, different strategies may be used in different markets. In some markets prices may be higher in some others they
may be cost price or in many others, they may be less than the cost price. Normally, the following pricing strategies are
used in the export market:
1. Market Penetration Strategy: Under this strategy, exporters offer a very low introductory price to speed up their sales
and, therefore, widening the market base. It aims at capturing the products in the market especially if the quality of the
product is proved with its wide acceptance.
2. Probe Pricing Strategy: Fixing low price for its product may have an adverse effect on the image of the firm and of
the product. It may raise doubts in the minds of the buyers about the quality of the product if it is lower than the price of
competitors or if it is reduced subsequently. When no information is available on the extent of the competition or the
likely preferences of the buyers, sufficiently higher prices may be quoted on the first few offers. No business is really
expected to grow except feed back information. Hence, the prices may be adjusted accordingly.

3. Follow the Leader Pricing Strategy: In a competitive world market or where adequate market information is not
available, it may be useful to follow the leader in the market comparing its product with that of the leader the exporter
may then fix the price of its product. In such cases the price of the product is lower than the leader s product. However,
this price has no rational or scientific base for fixing the price.
4. Skimming Pricing Strategy: Under this strategy, a very high introductory price is fixed to skim the cream of the
demand at the very outset. This policy is generally introduced when there is no competition in the market. Such prices
continue to be high till competitors enter the foreign market. As soon as competitors enter the market, the exporter
reduces the price.

Q5. Write short notes on:

a)International commercial terms(Incoterms)
(meaning, importance and listing of incoterms) 5 marks
Answer. International commercial terms or Incoterms are a series of sales terms that are used by businesses throughout
the world. Incoterms are used to make international trade easier. They are used to divide transaction costs and
responsibilities between buyer and seller. Incoterms were introduced in 1936 and they have been updated six times to
reflect the developments in international trade. The latest revisions are sometimes referred to as Incoterms 2000. There
are thirteen Incoterms that are used by businesses and are used in four different areas.
INCOTERMS are UNCITRAL recognized as global standards for interpretation of terms in foreign trade that provides
internationally accepted rules specifying standards and definitions of performance for most common trading terms.
INCOTERMS rules specify:

Establishment of seller and buyer

Point in journey where risk transfers from seller to buyer

Obligation of each party (buyer and seller)

In international trade, INCOTERMS identifies physical point in supply chain where damage or risk of loss shifts from
the exporter to importer. In addition, its through INCOTERMS that location in supply chain is determined where
responsibility of transport and custom related cost shifts from the exporter to importer.
There is no organization which is better placed than international Chamber of Commerce (ICC)-An organization which
establishes and maintains ENCOTERMS rules to assist traders in correct application of rules for their application in both
global and domestic trade So, by agreeing on INCOTERMS rules and incorporating the same into the trade contracts,

buyer and seller can easily achieve a precise understanding of what each party should do and the responsibilities that lies
in event of damage, loss and related mishaps. The recent INCOTERMS rules are set standards on trading terms and
conditions designed to help traders when goods are sold and transported. The new terms were developed for
INCOTERMS delimitation of rights and obligations of involved parties in international trade.
The first change brought in by INCOTERMS 2010 is the reduction of terms from 13 to 11 in INCOTERMS 2010/2011,
which clearly define obligations of the trading parties, and reduces the risks of legal implications.
b) Commercial invoice
(meaning and role of invoice) 5 marks
Commercial invoice
This is the basic document in an export transaction. All other documents are prepared with the help of information
contained in such invoice. It contains the information as description of goods, price charged, quantity of commodities,
various costs charged, terms of shipment, number of packages contained in the merchandise and marks/codes. The date
of invoice, names and address of buyers and sellers, name of shipping vessel and the port of destination should also be
indicated in the Bill.
The role of commercial invoice
The role of the performance of the commercial invoice as follows:
1. Check the seller's performance meets the contract. Invoice is a comprehensive description of a transaction shows the
price as the center of the main content of the contract. The content of invoices and contract terms will be checked one by
one, can understand the situation delivery by the seller.

2. Bookkeeping and accounting basis for both buyers and sellers. Invoices for the sale of goods seller, the buyer
settlement documents, the seller operating profit and loss accounts, master billing account economic efficiency and the
fundamental basis for both buyers and sellers.

3. Customs, tax calculated on the basis. Set forth in the invoice value and description of the goods is the Customs shall
order to approve the tax basis, but also exporting border inspection clearance, import clearance quickly pick up one of
the certificates.
4. In no bill settlement business, invoices instead of bills of exchange as a payment basis. In addition, the invoice can

also serve as the customs statistics, the value of proof of insurance claims, supplementary to determine the main
documents and other details of the transaction.

Q6. Explain the difference between the role of World Bank and International Monetary Fund.
(Functions/role of world Bank-5 marks, Functions/role of IMF-5 marks)10 marks
The IMF works with the IBRD (World Bank) to address the problems of the most heavily indebted poor countries (most
in Sub-Saharan Africa) through their Initiative for the Heavily Indebted Poor Countries (HIPCs). It is designed to ensure
that HIPCs with a sound track record of economic adjustment receive debt relief sufficient to help them attain a
sustainable debt situation over the medium term. The HIPC Initiative was enhanced in late 1999 to provide deeper and
more rapid debt relief to a larger number of countries.
World Bank IBRD
Origin: Conceived at the UN Monetary and Financial Conference at Bretton Woods (New Hampshire, USA) in July
1944, the IBRD, frequently called the World Bank, began operations in June 1946, its purpose being to provide funds,
policy guidance and technical assistance to facilitate economic development in its poorer member countries. The Group
comprises 4 other organizations.
Activities: The bank obtains its funds from the following sources: capital paid in by member countries; sales of its own
securities; sales of parts of its loans; repayments; and net earnings. A resolution of the Board of Governors of 27 April
1988 provides that the paid in portion of the shares authorised to be subscribed under it will be 3%.
The Strategic Compact: Unanimously approved by the Executive Board in March 1997, the Strategic Compact set out a
plan for fundamental reform to make the Bank more effective in delivering its regional programme and in achieving its
basic mission of reducing poverty. Decentralizing the Banks relationships with borrower countries is central to the
reforms. The effectiveness of devolved country management and the banks promotion of good governance and anticorruption measures to developing countries are likely to be key policies of the new strategy.

The International Monetary Fund was established on 27 December 1945 as an independent international organisation and
began financial operations on 1st March 1947; its relationship with the UN is defined in an agreement of mutual
cooperation, which came into force on 15 November 1947. The first amendment to the IMF s articles creating the
Special Drawing Right (SDR) took effect on 28th July 1969. The second amendment took effect on 1st April 1978. The
third amendment came into force on 11 November 1992; it allows for the suspension of voting and related rights of a
member, which persists in its failure to settle its outstanding obligations to the IMF.

Aims: To promote international monetary cooperation, the expansion of international trade and exchange rate stability; to
assist in the removal of exchange restrictions and the establishment of a multilateral system of payments; and to alleviate
any serious disequilibrium in members international balance of payments by making the financial resources of the IMF
available to them, usually subject to economic policy conditions to ensure the revolving nature of IMF resources.
Activities: Each member of the IMF undertakes a broad obligation to collaborate with the IMF and other members to
ensure orderly exchange arrangements and to promote a system of stable exchange rates. In addition, members are
subject to certain obligations relating to domestic and external policies that can affect the balance of payments and the
exchange rates. The IMF makes its resources available, under proper safeguards, to its members to meet short-term or
medium-term payment difficulties. The first allocation of SDRs was made on 1 January 1970 with 5 SDR allocations
since then. SDRs totaled SDR 21,400m in March 1998.
Capital Resources: In April 1997 the Interim Committee of the Funds Board of Governors endorsed the concept of an
amendment that would make the promotion of capital account liberalisation one of the Fund s purposes and would give
the Fund the appropriate jurisdiction over capital movements. The capital resources of the IMF comprise SDRs and
currencies that the members pay under quotas calculated for them when they join the IMF. A members quota is largely
determined by its economic position relative to other members; it is also linked to their drawing rights on the IMF under
both regular and special facilities, their voting power, and their share of SDR allocations.


Email Id:
Contact no- 9706665251/9706665232/