Chapter 14 International Marketing

1
International Business
Rakesh Mohan Joshi
Professor & Chairperson, IIFT New Delhi
Copyright @ Oxford University Press Inter Chapter 14: International

national Business R. M. Joshi Marketing
Chapter 14
INTERNATIONAL
MARKETING

Learning Objectives
 To explain the concept and framework of

international marketing
 To discuss market identification,
segmentation, and targeting
 To elucidate international marketing mix
decisions
 To examine the framework for
international product-promotion strategy
Growing Significance of International
Marketing
As a strategic response to globalization of
markets, business enterprises need to adopt
a proactive approach and learn to transform
emerging marketing threats and challenges
into viable business opportunities. Therefore,
developing a thorough understanding of
international marketing has become
inevitable not only for operating in
international markets but also a pre-condition
for success even for operating domestically.

International Marketing
Marketing carried out across national

boundaries.

Framework for International
Marketing

Setting Marketing Objectives
Once a firm decides to enter international
markets, it needs to set objectives, as to
what it aspires to achieve, both in the
short- as well as the long-term.

Market Identification, Segmentation, and
Targeting
A firm has to identity countries, which
offer relatively higher opportunities to
market its products. The approaches used
may be either:
 Reactive approach or
 Pro-active approach
Market Size
A cross-country comparison of market size
and its growth rate are the key indicators
that determine market potential for
targeting the market.
Market Size = (production)

+ (Value of imports of goods and
services)
– (value of exports of goods and
services).

Entry Mode Decisions
Entry mode: The institutional mechanism

so as to make the company’s products and
services available in international markets.
The entry mode may vary from simple

indirect exports through a merchant
intermediary to owning overseas operations.
International Marketing Mix Decisions
Marketing mix: The set of marketing tools a

firm uses to pursue its marketing objectives in a
target market. These may be classified into the
four Ps of marketing:
 product
 price
 place and
 promotion.
Product Decisions
Product: Anything that can be offered to
a market to satisfy a want or need.
Products that are marketed include
physical goods, services, experiences,
events, persons, places, properties,
organizations,
information, and ideas.
Perceptions and expectations about the

products differ to a varied extent across
countries which makes decision-making
about products much more complex for
international markets.
Product Standardization vs. Adaptation
A firm operating in international markets
has to make a crucial decision whether to
sell a uniform product across countries or
customize products in view of individual
market requirements.
Although no readymade solution can be
prescribed for the decision to standardize
or adapt the product in international
markets, firms are required to carry out a
careful cost-benefit analysis before arriving
at a decision.
Product Standardization
Product standardization: Marketing a product in
the overseas markets with little change except
for some cosmetic changes such as modifying
packaging and labelling.

Major Factors Favouring Product Standardization
 High level of technology-intensity
 Formidable adaptation costs
 Convergence of customer needs worldwide
 Country of origin impact

Product Adaptation
Making changes in the product in response
to the needs of the target market.
Adaptation of a product may vary from

major modifications in the product itself to
minor alterations in its packaging, logo, or
brand name.

Mandatory Factors Influencing Product Adaptation
 Government regulations
 Standards for electric current
 Operating systems
 Measurement systems
 Packaging and labelling regulations

Voluntary Factors Influencing Product Adaptation
 Consumer demographics
 Culture
 Conditions of use
 Price

Trade-off Strategy between
Product Standardization and Adaptation
A firm operating in international markets has
to carefully carry out the cost-benefit analysis
of the decision to market the standardized
product across countries or customize it,
depending upon the market requirements.

New Product Launch for International
Markets

‘Waterfall’ Approach
Under the ‘waterfall approach’ a product
trickles down in the international markets in
a cascade manner and are launched
sequentially.

‘Sprinkler’ Approach
Under this approach, the product is

simultaneously launched in various
countries.

Branding Decisions in International
Markets
Brand: A name, term, sign, symbol or design, or a
combination of these, intended to identify the goods or
services of one seller or group of sellers and to
differentiate them from those of competitors.
A global brand should have a minimum level of

geographical spread and turnover in various markets
worldwide.

Top 10 Global Brands

International Pricing Decisions
Price: The sum of values exchanged from
the customer for the product or service.
Price is generally referred to the in terms of
amount of money but it may also include
other tangible and intangible items of utility.

Pricing Approaches for International Markets
 Cost-based pricing
 Full cost pricing
 Marginal cost pricing
 Market-based pricing

Factors Influencing Pricing Decisions
 Cost
 Competition
 Purchasing power
 Buyers’ behaviour
 Foreign exchange fluctuations

International Distribution Channels
Set of interdependent organizations networked
together to make the product or services
available to the end consumer in international
markets.
Types of International Distribution
Channels
Indirect
Agents
Merchant Intermediary
Direct
Agents
Merchant Intermediary
 e- channels

International Retailing
The retailer buys the goods from
wholesalers or distributors and sells it to
the ultimate customers in the
international market. The retailers serve
the important function of carrying
inventories, displaying products at sales
outlets, providing points for purchase
promotions, and extending credit. The
retailing system varies widely among
various countries.
Communication Decisions for
International Markets
Communication is crucial to a firm’s success
in international markets. While marketing
across countries, a firm has to communicate
to the customers and the channel
intermediaries located in overseas markets
that considerably differ in terms of the
characteristics of their marketing
environments.
Tools for International Marketing
Communication

Advertising
Any paid form of non-personal
communication by an identified sponsor. It
can be for a product, service, an idea, or
organization.
Advertising: Standardization vs. Adaptation
An international marketing firm may either
use a standardized advertising strategy or
customize it, depending upon the needs of the
target markets.

Advertising Standardization
Using the same advertising strategy across
countries. Reasons for advertising
standardization:
 Increasing homogenous consumer preferences and
lifestyles
 Increasing similar consumer behaviour among city
dwellers
 Rapid rise in international travel
 International reach of media
 Contributes to a uniform corporate image
 Economies of scale
Advertising Adaptation
Modifications in the advertisement’s message, copy,
or content.
Reasons for advertising adaptation:
 Difference in cultural values among countries
 Difficulties in language translation
 Variations in level of education of the target
groups
 Media availability
 Social attitudes towards advertising
 Regulatory framework of the target market

Direct Marketing
Selling products and services to customers,
without using any market intermediary. It
deals with customers on a one-to-one basis
directly, unlike conventional mass marketing.

Types of Direct Marketing
 Direct mailing
 Door-to-door marketing
 Multi-level marketing

Personal Selling
It involves a firm’s representatives

personally meeting with customers.
Personal selling is widely used for selling
plants and machinery, heavy equipment, or
high-value products to institutional buyers.
As languages, customs, and the business
culture differ across international markets,
personal selling becomes more complex.

International Trade Fairs and Exhibitions
Trade fairs are organized gatherings wherein
the buyers and sellers come into contact and
establish communication These are the
oldest and most effective tools to explore
marketing opportunities..

Sales Promotion
Various tools are used as short-term
incentives in order to induce a purchase
decision. It includes both trade promotion
and consumer promotion.

Public Relations
It aims at building a corporate image and
influencing media and other target groups to
garner favourable publicity.

Factors Influencing International
Communication Decisions

Culture
 Language
 Level of education
 Media infrastructure
 Government regulations

Framework for International
Product-Promotion Strategies

Straight Adaptation
In cases, when the need satisfied and the
conditions of product use is the same, the
product as well as the marketing
communication is extended across markets.

Product Extension–Promotion
Adaptation
When the condition of product use remains
the same whereas the needs satisfied or the
product function is different, the product is
extended as such but the promotion
strategy is adapted.
Product Adaptation–Promotion
Extension
In markets where the condition of product
use is different but the product performs the
same function or satisfies the same needs,
the strategy of product adaptation–
promotion extension is employed.

Dual Adaptation
In countries where the functions of the
product and need satisfied are different and
the conditions for the product use is also
different, a firm has to customize both the
product and the promotional strategies.

Developing New Product
In markets where the product function and

need satisfied remain the same, but the
conditions of product use differ and also the
consumers do not necessarily possess the
ability to pay for the product, it requires
product invention and developing new
marketing communication.

Reviewing Performance and
Consolidating International Marketing
Operations
Once a business enterprise implements
international marketing decisions, it needs
to periodically review the performance to
assess whether the desired marketing
objectives are met.
The reasons for the performance gaps need
to be identified and remedial actions
initiated which include modification in
various components of marketing mix.

Chapter 14 International Marketing

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Chapter 14 International Marketing

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1

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

 To explain the concept and framework of

Copyright @ Oxford University Press Inter Chapter 14: International

Marketing carried out across national

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Once a firm decides to enter international

markets, it needs to set objectives, as to

what it aspires to achieve, both in the

short- as well as the long-term.

offer relatively higher opportunities to

market its products. The approaches used

Market Size = (production)

Copyright @ Oxford University Press Inter Chapter 14: International

Entry mode: The institutional mechanism

The entry mode may vary from simple

Marketing mix: The set of marketing tools a

target market. These may be classified into the

Perceptions and expectations about the

Product standardization: Marketing a product in

the overseas markets with little change except

for some cosmetic changes such as modifying

packaging and labelling.

Copyright @ Oxford University Press Inter Chapter 14: International

 High level of technology-intensity

 Formidable adaptation costs

 Convergence of customer needs worldwide

 Country of origin impact

Copyright @ Oxford University Press Inter Chapter 14: International

Adaptation of a product may vary from

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

A firm operating in international markets has

to carefully carry out the cost-benefit analysis

of the decision to market the standardized

product across countries or customize it,

depending upon the market requirements.

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Under this approach, the product is

Copyright @ Oxford University Press Inter Chapter 14: International

A global brand should have a minimum level of

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Price: The sum of values exchanged from

the customer for the product or service.

Price is generally referred to the in terms of

amount of money but it may also include

other tangible and intangible items of utility.

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Set of interdependent organizations networked

together to make the product or services

available to the end consumer in international

Copyright @ Oxford University Press Inter Chapter 14: International

Copyright @ Oxford University Press Inter Chapter 14: International

Any paid form of non-personal

communication by an identified sponsor. It