International Marketing

Amity Business School
INTERNATIONAL MARKETING
MANAGEMENT
MBA CLASS OF 2012.
MOHAMMED KAREEM
HYDERABAD.
INTRODUCTION
Contd..
Contd..
Continued… Amity Business School
IMPORTANT Books
Global Marketing Management by

Warren. J. Keegan
Other Important References:

• Global Marketing Management-Kotabe Makadi
• International Marketing Management- Varshney
and Bhattacharya.
• The Worldly Philosophers- Robert. H. Heilbrowner
• History of Economic Thought- Eric Roll
• Economic Theory- Eric Roll
Syllabus - MODULE-1
• Need, Scope, Tasks, Domestic vs.

International Marketing, International
Trade Theories, Importance of
International Marketing, The EPRG
Concept of Management Orientation.
MODULE-2
• International Marketing Environment– Economic
Environment- World Economy, stages of market and
economic development, income and purchasing power
parity, Economic risk analysis, Balance of Payments
concept, Trade patterns, international trade alliances–
GATT and WTO, World Bank, IMF– Regional Economic
Groups– EU, NAFTA, SAFTA, G8, OPEC etc. Social and
Cultural Environment- Culture, analytical approaches to
cultural factors, cultural impact on industrial and
consumer products. Political, Legal and regulatory
environment– political risk, international law, licensing
and trade services, dispute settlement and litigation,
Embargoes and Sanctions
MODULE-3 Amity Business School
• International Entry and Expansion Strategies–

Decision criteria for entry, International market
entry strategies– Exporting, sourcing, licencing,
joint-ventures, ownership and control, ownership
investment, Merger’s and Acquisitions,
Investment in developing countries, Market
expansion strategies, Stages of development
models– Domestic, International, multinational,
global, transnational.
• Analyzing, segmenting, targeting and

positioning, international marketing
opportunities – regional market
characteristics, marketing in less
developed economies. Perspective on
international consumer behavior,
international market segmentation,
targeting and positioning.
• Developing product for international

market – Products, local, national,
international and global. The international
product and life-cycle, product positioning,
product design consideration, Geographic
expansion, global branding, and different
positioning, of the same brand I different
countries, new product development and
testing in national market. Dumping, Role
of services in global economy.
Module- 6 Amity Business School
Promotion and pricing strategy for International

market – Channel development and innovation,
role of international advertising and branding,
PR, Trade fairs, personal selling, sales
promotion, Exhibitions, Sponsorship promotions,
internet marketing. Global pricing– objectives
and methods, pricing policies. Export payment
methods– L/C, Advance, DA/DP, FIBC, Counter
trade, transfer price.
India’s international policy and impact on

economy--- Government measures and
export incentives, EXIM policy, ECGC
services, Role of Indian banks and
financial institutions, FDI, FEMA, Foreign
exchange market and rate, services export
from India.
Module - 8 Amity Business School
Emerging Trends– Integrating the concepts

with other functions of management.
Definition of Globalization
• Globalization means integrating the economy of the country

with the world economy. Under this process- goods,
services, capital, labor and resources move freely from one
nation to another, further implying one single market in a
global village.
Further, the thrust of globalization has been to increase
the domestic and external competition through extensive
application of market mechanism and facilitating forging of
dynamic relationships with the foreign investors and
suppliers of technology.
Contd..
• Role of globalization and its effect in the business
environment.
DEFINITION OF INTERNATIONAL BUSINESS
• International business is the activity of engaging in

business operations across national boundaries/borders.
• International business is the field of study that concerns
itself with the development, strategy and management of
multinational enterprises in the global context of complex
and dynamic business environments.
Actually the complete gamut of the whole context
and interest in international business lies in multinational
enterprises, culture and communications-as also the
special skills that are required to operate in global business
environment.
DEFINITION OF MULTINATIONAL
ENTERPRISES
• A corporation that has production operations in more
than one country, (e.g.:- Toyota having manufacturing
facility in India as also other parts of the world.) for
various reasons such as- securing supplies of raw
materials, utilizing cheap labor sources, servicing
local markets and bypassing protectionist barriers.
• Important critical comment on multinationals and its
gravity in the light of marketing products in the
‘Third World’ market.
DEFINITION OF FOREIGN INVESTMENT

FOREIGN DIRECT INVESTMENT(FDI)

DOMESTIC MARKET
• Part of a nation’s internal market
representing the mechanism for issuing
and trading securities of entities domiciled
within that nations.
Continued.. Amity Business School
• Brief Historical Background of International

Business/Trade relations-
-- International business and trade has been there from
times immemorial,
-- Man is a social animal– wants different kinds of goods/
commodities- required for the standard of living.
-- The country is not self-sufficient in developing all the
products/ commodities etc.
-- Hence dependent on other country-
-- Thus international business and trade exists-
International trade is between nations, business is
between companies.
Fundamental Questions that companies

tackle:
-- What market presence should be
achieved in own country/ continent.
-- Globally presence – yes/ no
-- Knowledge of Competitors.
-- What strategies to be adopted?
-- What resources to deploy?
• Factors that reinforces to take interest

in International Marketing in Modern
Times
-- Income growth of the consumers
-- Lower trade barriers
-- Desire for new products, around the world
-- Search for new markets/new avenues/new
segments
-- Demand for new styled goods/ services–

innovative goods.
-- Integration of telecommunication
facilities/communication
-- Faster means of travel, transport,
technology.
-- Move towards reduction of international
marketing barriers.
Definition of Global Industry:

A global industry is an industry, where the
strategic positions of competitors in major
geographic or national markets are
fundamentally affected by their overall
global positions.
Definition of Global Firm:

A global firm is one that is operating in more than
one country- captures research and
development, production, logistical, marketing
and financial advantages in its costs and
reputation that are not available to purely
domestic competitors.
-- They rely on technological innovation.
-- Enhance their capabilities through technology.
Need/Factors for International Marketing:
1. Business Factors
2. Competitive Factors
BUSINESS FACTORS:
-- Profitability
-- Achieving Economies of Scale
-- Growth Factors
-- Marketing due to life-cycle
-- Uniqueness of Product / Services
-- Access to imported inputs
-- Spreading R and D cost
In Continuance:
Competitive Factors/ Other Factors:
-- The company’s domestic market might be attacked by
global firm’s offering better products or at lower prices.
-- Counterattack by the domestic firm in the competitors
home market.
-- Company discovering, some markets presenting higher
profit opportunities than the domestic market.
-- Company wanting larger customer base in order to
achieve economies of scale.
In Continuance:
-- Company wanting to reduce dependence
on anyone market.
-- Reducing risk
Major decisions in International Marketing:

The Major decisions are encircled as a step by
step calibrated process:
1. Deciding whether to go abroad?
2. Deciding which market to enter?
3. Deciding how to enter?
4. Deciding on the marketing program?
5. Deciding on the marketing organization?
Major Concerns while Entering Foreign

Market:
1. Unstable Government, if any.
2. Foreign Exchange problems.
3. Foreign government entry requirements/
entry barriers.
4. Trade / Tariff barriers.
5. Corruption in the respective country
government, if any.
6. Technological pirating.
(Explanation: A company locating its plant abroad
worries about foreign managers learning how to
make its product and breaking away to compete
openly or clandestinely- for example in the
diverse area such as machinery, electronics,
chemicals, pharmaceuticals etc.)
7. High cost of product manufacturing and
communication adaptation.
Environmental Differences when marketing

overseas:
1.Language
2. Tastes and Fashions
3. Religion
4. Physical Environment (temperature/ humidity
etc)
5. Power sources
6. Security arrangements
7. Family structure and size
In Continuance:
8. Times at which business is done
9. What is polite and impolite
10. Social priorities
11. Literacy levels
12. Communication infrastructure
13. Distribution facilities
14. Methods of transaction
In Continuance:
15. Political differences
16. Legal differences
17. Regulatory differences
18. Different technical standards (may be
operating in the country)
19. Different taxation policy
20. Economic complications/situations – at a
particular time
What to study finally – when company’s

going abroad:
1. Study each foreign market carefully
2. Study about the economic laws of
targeted countries
3. Know about the politics of that country
4. Know about the culture
5. Adapt that country’s products and
communication to foreign tastes
Domestic VS International Marketing
-- Definition of Domestic Marketing

-- Definition of International Marketing
NB: Basic tenets of marketing concepts is applied
whether it is domestic or international marketing.
It revolves around the controllable and
uncontrollable factors that governs the
pragmatic marketing scenario.
Continued….
In Continuance:
Uncontrollable Factors:
1. Macro Environment- Uncontrollable Factors are:
-- Economic
-- Political
-- Logistics (controllable to a certain extent only, especially in the
domestic market )
-- Competition
-- Legal Affairs
-- Socio-cultural
-- Geography
In Continuance:
Micro Environment-the Controllable Factors:
-- Product
-- Price (subject to certain limitations, taking
competitors offer prices into consideration)
-- Place
-- Promotion
Management’s Orientation Amity Business School
Management’s orientation towards

international marketing- EPRG
Concept:
E---- Ethnocentric
P---- Polycentric
R---- Regiocentric
G--- Geocentric
Importance of Global Marketing and the EPRG

Concept:
The importance of global marketing can be gauged
from the fact that:
-- Maximum growth potential opportunities to be

tapped.
-- Companies should go global/ motivation
required to go global.
Management’s orientation- the EPRG

concept revolves around the grand fact
that any company’s response to global
market opportunities depend greatly on
the management’s assumptions and
beliefs, as to how it views the new market
opportunity, how it plans to enter the
foreign market, how it views the culture,
preferences of consumers in a foreign
market etc…..
In Continuance:
The Ethnocentric Orientation:
-- It is a belief which considers- one’s own country/ culture,
products as superior
-- It views similarities in all markets/ foreign country market.
-- Product’s/ services/ management practices/ methods that
is being offered/ followed in one’s own country/
successful in one’s own country will be acceptable in
other world markets, anywhere.
-- Adaptation of the product is not required.
-- Shades of egoism encircled herewith
In Continuation:
Criticism of Ethnocentrism
-- Ethnocentric oriented companies ignore foreign market
and therefore loose great opportunities.
-- the product of the ethnocentric oriented company might
be of a very high quality, and might be accepted in other
world markets- (this is accepted in the first instance,
subject to certain limitation), but will the marketing
methods/ practices that is being followed in the home
country does not need any adaptation in any form? For
example if a- Benz Car or a Lincoln or a Ferrari or a
BMW is to be marketed in a ‘Third World’ country. A
critical examination is required.
In Continuation:
The Polycentric Orientation:
-- Opposite of Ethnocentrism .
-- It views each country as unique.
-- Each subsidiary is to develop its own
unique business.
-- Each subsidiary to develop its own
marketing strategies to succeed in its own
right.
In Continuation:
The Regiocentric Orientation:
-- Management views regions as unique.
-- Management seeks to develop an integrated
regional strategy, to market product/services- in
the particular identified region.
-- Regions are considered to be one- i.e.
consumers having one taste, choices,
preferences, one regional identity etc.
-- NAFTA, EU, SAARC etc are examples.
In Continuation:
The Geocentric Orientation:
-- The Company views the entire world as a
potential market.
-- Company strives to develop integrated world
market strategies.
-- It views similarities and differences in markets
and countries.
-- It seeks to create a global strategy- responsive
to local needs and wants.
Definition of Global Localization:

The concept of global localization refers to
the explicit fact that – a successful global
marketer should have the ability to think
‘globally’ and act ‘locally’.
Drivers for Global Integration (in the light of

Globalization)
-- Technology
-- Culture
-- Market Needs
-- Cost
-- Free Markets
-- Economic Integration
-- Management’s vision
-- Strategic Intent
-- Global Strategy and Action
International Trade Amity Business School
“Of all sorts of luggage man is the most

difficult to be transported”. – Adam Smith
In Continuation:
International trade defined:
Simply explained international trade refers to trade
between countries/nations/state’s. It is always
compared with inter-regional trade- meaning
trade between different regions within the same
country.
NB: Here little attention is given to the
company level marketing methods and
strategies
International trade contd.. Amity Business School
In continuation:
The Fundamental basis of International Trade:
It lies on the fact that different countries of the
world are endowed by nature with different
elements of productive powers. Factor
endowments are unevenly distributed among the
countries of the world. For example- West
Bengal in India for the production of Jute, Arab
countries for oil resources etc.
In continuation:
Is International Trade Inevitable?
International trade is inevitable when there

are marked differences in the countries
regarding materials, natural resources,
natural vegetation, climate, soil etc.
In Continuation:
Other Factors affecting International Trade:
1. Stage of economic development
2. Accumulation of capital by a nation
3. Foreign investments by a nation
4. Technological progress
5. Trade
6. Finance regulations
7. Political affiliations- etc.
International Trade Theories Amity Business School
The Theories are:

A. Theory of ‘Mercantilism
B. Theory of Absolute advantage (of Adam Smith)
C. Theory of Comparative advantage/
comparative cost (of David Ricardo)
D. Modern theory of international trade or Factor
Endowment theory
E. Theory of International Product life-cycle
F. Theory of Competitive Advantage
A. Theory of Mercantilism:
-- An economic doctrine that flourished in the 17th and 18th centuries.

-- It sought to maximize national wealth- in the form of nation’s bullion
reserves - especially in gold.
-- To this end tariff’s were applied to imports in the hope of creating a
‘balance of trade’ surplus, and adding to bullion reserves.
-- Exports were viewed favorably so long as they brought in gold for the
country.
GIST: Nations should accumulate financial wealth in the form of gold by

encouraging exports and discouraging imports.
B. Theory of Absolute Advantage:

-- Forwarded by the great classical
economist, Adam Smith.
-- Repudiated the mercantile notions of
international trade.
-- Advocated the theory of Free Trade.
-- Advocated that the real wealth of a nation
is measured by the level of improvement
in the quality of living of a nation’s people.
Gist of the Absolute advantage theory:
If one country has an absolute advantage over

another in one line of production and the
other country has an absolute advantage
over the first country in another line of
production, then both countries would gain
by trading.
NB: A country’s advantage can be:-
A. Natural Advantage
B. Acquired Advantage
C. Theory of Comparative Advantage

-- Forwarded by David Ricardo./
-- Extension of the theory of Absolute advantage
-- Also known as the theory of comparative cost.
-- The theory forwards that- a country tends to
specialize in the production of those
commodities in which it possesses a
comparative advantage by virtue of its climate,
natural resources, skill of its people, capital
equipment etc.
Gist of the comparative advantage theory
Any two countries can very well gain by

trading even if one of the countries is
having an absolute advantage in both
the goods over another, provided the
extent of absolute advantage is
different in the two commodities in
question.
D. Modern theory of International Trade

-- Also called Factor Endowment Theory or factor
proportions theory.
-- Forwarded by Heckscher and Bertil Ohlin.
-- The immediate cause of International trade is
the difference in commodity prices, which in turn
is due to the differences in factor prices.
-- Thus goods are purchased from outside
because it is cheaper to buy them outside.
Gist of the Modern theory of International

trade:
A nation will export that commodity
whose production requires intensive
use of the nation’s abundant and cheap
factors, and import the commodity
whose production requires intensive
use of the nation’s scarce and
expensive factors.
E. Theory of International Product Life Cycle

-- Revolves around the concept of international
marketing of product/services
-- Two paradigms on which the theory is based:--
A. Shifting of market in the light of the size of the
market
B. Reaching the economies of scale by location
of production facilities.
F. Theory of Competitive Advantage:

-- Forwarded by ‘Michael Porter’
-- Concentrates on a firm’s home country
environment as the main source of
competencies and innovations.
-- Forwarded the famous ‘Diamond Model’
The Diamond Model

Attributes of the Diamond model revolves around:
A. Factor / Input conditions
B. Demand Conditions
C. Firm’s supporting industries
D. Firm’s Strategy, structure and rivalry
E. Chance i.e. occurrences that are beyond the
control of firm
F. Government- its policies regarding trade etc.
Module --2 Amity Business School
The World Economy – An Overview

- Brief Historical background of the World Economy
a. World Economic scenario has undergone a drastic
change, if we look it critically from the economic
paradigm’s point of view.
b. The development of economies of the different regions/
countries of the world, has a strategic effect from the
angle of international business scenario.
c. Finally we reach the year– 1945 (End of the second
World War)
Year – 1945 and after (till late 1991)

--Signaled the end of ‘The Second World War’.
-- The World divided into bi-polar world.
-- Start of the Cold War, meaning silent war
-- Cold war was but a silent war among the two
economic systems – Capitalism and Socialism,
led by USA and erstwhile USSR.
-- Fall of Socialism by 1991
-- Mixed Economic System
Changes found in the World Economy

-- Emergence of global markets
-- New opportunities for the marketer’s
-- Global Competitors in the market place
-- Heavy Competitive environment
-- New players in the product line
-- Integration of the world economy
-- Globalization effects in the macro environment
of business.
-- Increased volume of capital movements
The World Economy– The Macro Dimensions of the

Environment
-- Economic Environment
-- Social Environment
-- Cultural Environment
-- Political Environment
-- Legal Environment
-- Technological Environment
NB:Most important of all, is the Economic Environment
from a global marketer’s point of view. The
Economic environment has the shades of
opportunity. And opportunity is business. Business
is for profit, and profit is successful marketing.
-- Relationship between productivity and

employment
-- The greatest economic change is the end of the
Cold War
NB: The success of the capitalist market

system has caused the overthrow of
communism as an economic and political
system, and the role of ‘Mixed Economic’
system has a role to play in the current
business scenario/ trade relations.
The Economic Systems

The economic systems criteria has been
divided into three forces:
A. The Capitalist market allocation
economic system.
B. Socialist pattern of command
allocation economic system
C. Mixed economic system.
Brief Explanations of the economic systems:
The Capitalist Economic system:

--The capitalist economic system, believed in the fundamental fact of
free market allocation system, where the role of the state in a
market economy is to promote competition and ensure consumer
protection.
-- It is the capitalist who will decide – What to produce? How to
produce? and For whom to produce?
NB:-- Basically the whole concept of ‘Capitalism’ is designed around
the concept of ‘Laissez Faire’- meaning ‘Leave us alone’
Capitalism continued:
--Under capitalism, all farms, factories and other
means of production are the property of private
individuals and firms. They are free to use them,
with a view to making profit or not to use them, if
it so suits them.
-- Desire for profit is the main motive behind the
capitalist economy system.
-- In a capitalist economy everyone is free to take
up any line of production he likes and is free to
enter into any contract with other fellow citizens
for his profit.
Socialism Defined:
Based on the command allocation system or the
so called Central Plan allocation system,
socialism is an alternative to capitalism. In a
nutshell, it implies social ownership of means of
production. Here the major instruments of
production is under the state control, so that the
economy is run for social benefit rather than
private profit.
Continued-----
Under Socialism as an economic system it is

the State that decides:
-- Which products are required
-- Which products are not required
-- How to make these required products
Mixed Economic System:

It is neither pure capitalism nor pure socialism, but a
mixture of the previous two economic systems.
-- The characteristics of both capitalism and socialism is
found in this economic system.
-- It is operated both by private enterprise as well as public
enterprise.
-- The private enterprise is not permitted to function freely
and uncontrolled through price mechanism’s– the
government intervens to regulate and control private
enterprise in several ways.
How Mixed Economy?

-- Control and regulation of the government over
the private enterprise through its monetary and
fiscal policies.
-- The government institutes:
a. Price Control
b. Licensing System
c. Import control
d. Exchange control
e. Control over capital issues.
Stages of Economic Development/

Market development:
In brief, the importance of the stages of
economic and subsequent market
development, rests on the fact that it
provides a useful basis for global market
segmentation and target marketing. It is a
first hand knowledge for a global marketer
towards meeting the desired goals.
FOUR STAGES of Economic/Market

Development:
-- Stage 1. Low Income Countries
-- Stage 2. Lower Middle Income Countries
or Lesser Developed Countries.
-- Stage 3. Upper – Middle Income
Countries or the Industrializing
Countries.
-- Stage 4. High Income Countries.
Characteristics of LOW- INCOME countries :

1. Political instability
2. Heavy reliance on foreign aids
3. High birth rates
4. Limited industrialization
5. High population growth
6. Low literacy levels
7. Very limited markets for products
NB: Importance of chief characteristics from
purchasing power point of view, as also the
probable growth in the market place.
The BEM Concept :

BEM refers to “big emerging markets”- an
international marketing concept forwarded by
Jeffrey E. Carten, in his famous treatise- ‘The
Big Ten’. BEM’s are those markets that are
growing at a faster rate than the world average
market growth, from the current stage where it is
at present. And here the marketers sees a
wonderful opportunity for growth in their
profitability and related issues. The BEM’S are
well positioned to move towards the next stage
of development – economic as well as market.
Income and purchasing power parity
-- The chief role of the income from

consumerism/ consumer buying behavior.
-- Explanation of the concept
Balance of Payments :
-- Balance of Payment or BOP, is a
comprehensive record of economic
transactions of the residents of a country
with the rest of the world during a given
period of time.
-- The system generally adopted for
recording transactions is the ‘Double
Entry Book- Keeping System’
Importance of BOP:
Every nation carrying out economic
transactions with foreign countries prepare
its BOP accounts periodically :
-- To know/taking stock of its assets and
liabilities.
-- To know its receipts from and payment
obligations to the rest of the world.
Main Purpose of BOP:

The main purpose of BOP is to present an
account of all receipts and payments on
account of goods exported, services
rendered, and capital received by
residents of a country – and goods
imported, services received and capitals
transferred by the residents of the country.
Division of BOP :-- Into two categories:
A. CURRENT ACCOUNT
B. CAPITAL ACCOUNT
CURRENT ACCOUNT : (what is recorded)

- Imports
- Exports
- Expenses on travel
- Transportation
- Insurance
- Investment income
NB: All these are related to current
transactions
CAPITAL ACCOUNT: (What is recorded)
- Borrowing and lending of capital

- Repayment of capital
- Sale and purchase of securities and other
assets to and from foreigners – individuals and
governments
NB: Export of commodities to foreign countries
adds to the foreign receipts, while imports
adds to the payments, that a resident have to
make to the foreigners.
IF, EXPORT > IMPORT it is favorable

balance of trade
IF, IMPORT> EXPORT it is unfavorable

balance of trade.
Balance of Trade : The difference between
the value of commodity exports and
imports is known as the Balance of Trade.
TRADE PATTERNS :
• Merchandise trade. i.e. trade in
commodities- a visible trade
• Services trade, i.e. intangible items for
example human resources skills etc, is
an invisible trade.
DEGREE OF ECONOMIC COOPERATION: (Four

degrees)
a. FTA,(Free Trade Association) meaning to remove all
internal barriers to trade among the member nations
b. Customs Union, meaning establishing a common
external barriers.
c. Common Market, meaning eliminating the barriers to
the flow of factors of production such as labor and
capital within the market.
d. Economic Union, meaning fulfilling the all the chief
characteristics of an economic union.
Chief Characteristics of an
ECONOMIC UNION
1. Unified central bank.
2. Common policies on agriculture.
3. Social services and welfare.
4. Transport services requirement.
5. Regional development.
6. Taxation policy.
7. Single currency
8. Construction and building infrastructure.
9. Political unity requirements.
Importance of Stages of Economic Development :

-- For a global marketer or a multinational company, when
interested to enter a new foreign market, the stage in
which that targeted region/country is matters most- in
designing a marketing plan and strategy.
-- The stage of economic development of a particular
country is directly related to the stage of market
development in that country.
-- The reference is towards the Income and the
purchasing power parity, context – revolving round the
international marketing opportunities.
International Trade Alliances :

-- GATT and WTO
-- IBRD (The World Bank) and IMF
-- EU (The European Union)
-- NAFTA
-- SAFTA
-- G8
-- G10 and GAB i.e. General Agreement to
Borrow
-- OPEC
The Autonomous and Accommodating items

in Balance of Payment :
--The autonomous items include all visible or
invisible items such as exports, imports,
remittances, reparations etc which enter
the balance of payments regardless of its
position or with motives quite other than to
put balance of payments into positive
balance. …..Continued…. next slide.
They are in both current and capital accounts.

NB:-- Accommodating items are meant to offset
balance of payments deficit or surplus. They
include movement of monetary gold from the
central bank or sale of foreign currency or
increase in foreign liabilities to meet import bill or
taking foreign loan to finance deficit etc.
Continued…………..
-- Accommodating movements may be

made by private or public authorities and
may be automatic, unplanned or
unforeseen. However, they take place only
when other items in the Balance of
Payments are such as to leave a gap to
be filled.
SDR and Its Importance Amity Business School
SDR Defined :--

--Special Drawing Right’s or SDR’s were created
as a new and additional form of international
reserves/liquidity in 1970, under the
International Monetary Fund.
-- Countries receive SDR’s as per their share in
reserve assets, and have an automatic right to
draw them from the IMF- over and above other
drawing facilities.
Continued…..
-- A deficit country uses SDR’s for settling

deficit by exchanging SDR’s for whatever
currency it requires.
-- Other countries accept SDR’s as gold or
convertible currencies. Its value is based
on the values of a ‘Standard Basket’ of five
major currencies.
SDR Continued.. Amity Business School
Basket Value of SDR—

A group of five currencies namely – US
Dollar, Deutsche Mark, Japanese Yen,
French Franc and Pound Sterling-
included proportionally on the basis of
Country’s size of exports of goods and
services during the previous five years. It
is used by IMF to determine the vale of
SDR’s.
GATT- General Agreement on Tariff’s and Trade

-- A trade treaty that operated from 1948 until
1995, when it was replaced by World Trade
Organization (WTO).
-- GATT was technically an agreement, rather than
an organization, among various countries called
contracting parties.
-- Secretariat at Geneva.------- Continued…
Objectives of GATT:
A. Establishing Standards for the non-
discriminatory commercial policies of the
contracting parties.
B. Settling trade disputes and encouraging
mutual consultation between nations.
C. Discouraging non-tariff barriers and sponsoring
tariff reductions.
D. Meeting the above through a series of
multilateral negotiations and rounds.
THE WTO Amity Business School
-- Set up in 1995, following the conclusion of

the long-running URUGUAY round of trade
negotiations and talk.
-- A body of organizing framework for the
smooth application of free trade rules
among the interested member nations.
--
Primary functions of WTO:--

A. Administering WTO agreements.
B. Act as a forum for trade negotiations.
C. Handling trade disputes between member
nations.
D. Monitoring the national trade policies of its
members.
E. Providing technical assistance and training for
developing member countries.
F. To act in coordination with other international
organizations.
Of Particular Importance-- WTO

--- As far as the dispute settlement process
of WTO is concerned , countries may
complain to the WTO about the behavior
of another member, and a disputes panel
will then adjudicate. A country that does
not abide by the findings of the panel can
be subject to countermeasures.
IMPORTANT
It should never be forgotten that
companies/firms/corporations/business
enterprises are not allowed to make complaints
to the WTO. They must persuade a government
to do so, for it falls under the world trade laws of
WTO, to be accepted by one and all, and the
international economic protocol so desires, to be
respected in toto. NB: WTO is also charged
with advancing the agenda of free-trade with
new trade rounds.
IBRD-International Bank for reconstruction and

Development
-- A specialized agency of the United Nations,
known as the World Bank, with headquarters in
Washington DC, its function is to finance
development in member countries by making
loans to governments or under government
guarantee.
-- Set up in 1944 under Bretton Woods agreement
to facilitate reconstruction after world war II.
-- All members of World Bank should belong to the
IMF.
IMF- The International Monetary Fund

-- Established in 1945, to promote international
monetary harmony, monitor exchange rates and
monetary policies and to provide credit for
countries experiencing problems in terms of
deficits in their ‘balance of payments’.
-- The members of IMF have a quota, known as
the SDR or the special drawing rights.
-- IMF is funded through quotas paid by members.
GAB and G-10

Refers to ‘General Agreement to Borrow’ . Members of GAB are:
1. Belgium
2. Canada
3. France
4. Germany
5. Italy
6. Japan
7. The Netherlands
8. Sweden
9. Switzerland
10. The United Kingdom and the US
SAARC Amity Business School
SAARC: --
-- South Asian Association for Regional
Cooperation. The first South Asian summit
held in Dhaka, Bangladesh in December 1985,
culminated in the formation of the South Asian
Association for Regional Co-operation.
-- Members of SAARC are: India, Bangladesh,
Pakistan,Sri Lanka, Bhutan, Nepal and
Maldives.
-- The charter of SAARC provides for annual

meetings of the Heads of State and of
Governments, and a six monthly meeting of a
Council, of Ministers, which is the organizations
highest policy making body.
-- A permanent secretariat of the state has been
set up at Kathmandu in Nepal.
-- The chairmanship of the organization remains
with the country which had hosted the last
summit and is transferred to the new host at the
time of the next summit.
The EEC Amity Business School
EEC or the European Economic Community :

--Created under separate treaties signed on March
25, 1957– it became effective from January 1,
1958.
-- EEC is currently a bloc of 15 west European
industrial nations, which through a network of
agreements are seeking to pool their
economies, while retaining their separate
national identities. …. Continued….
-- The ultimate goal is a complete customs

union, with free flow of goods, service and
labor- among all members.
-- Members of EEC currently are-
Belgium, France, Germany, Italy,
Luxembourg, Netherlands, Denmark,
Ireland, United Kingdom, Greece, Portugal
-- Headquarters of EEC is located in
Brussels, Belgium.
ASEAN Amity Business School
ASEAN Association of South East Asian Nations :

The ASEAN was formed on August 8, 1967 by
Indonesia, Thailand, the Philippines, Malaysia
and Singapore- to promote active collaboration
and mutual assistance in matters of common
interest in the economic, social, cultural,
technical, scientific and development fields.
-- Currently under ASEAN, there are 10 members.
OPEC Amity Business School
OPEC Organization of Petroleum Exporting

Countries :
--OPEC was formed on November14, 1960,
to control production and pricing of crude
oil. It has been successful in determining
world oil prices and in advancing
member’s interest in trade and
development dealings with industrialized
oil consuming nations. …. Continued..
-- Membership of OPEC is open to any country

having a substantial net exports of crude
petroleum, which has fundamentally similar
interests to those of member countries.
-- Members are– Algeria, Indonesia, Iran, Kuwait,
Libya, Nigeria, Iraq, Qatar, Saudi Arabia, United
Arab Emirates (UAE), Venezuela.
-- Headquarters located at Vienna, Austria.
OAPEC Amity Business School
OAPEC- Organization of Arab Petroleum

Exporting Countries
-- The OAPEC was established in 1968, to
safeguard the interests of its members and
encourage co-operation in economic activity
within the petroleum industry. Its members are
--- Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya,
Qatar, Saudi Arabia, Syria and the UAE.
-- Headquarters at Kuwait.
Group of Eight/G-8 Amity Business School
G-8- Group of Eight originally consisted of the

seven wealthiest nations of the world- The USA,
UK, Japan, Germany, France, Italy and Canada.
However with the admission of Russia at G-7
summit at (DENVER – June 21, 1997) the group
was renamed as G-8 in May, 1998.
-- The heads of governments of G-8 countries
meet annually at different venues to discuss
economic matters and world problems.
NAFTA Amity Business School
NAFTA- North American Free Trade Agreement :

-- A trade agreement between US, Canada and
Mexico. The objectives of NAFTA is to promote
economic growth and expand trade and
investment among member nations.
-- To meet economic challenges in the decades to
come.
-- Gradual elimination of trade barriers.
-- Protection of the Intellectual Property Rights.
Social and Cultural Environment:

--Culture has a major influence, in international
marketing/ global business environment.
-- In global marketing scenario the concept of
consumer buying behavior has a definite role to
play.
-- Society and culture affects the consumers
decision making process
-- Trend conscious consumers, dictates global
marketing of products and services.
Examples of affects of culture in global marketing:

(The American Culture)
-- Eating breakfast or sand-witch while moving in a
train.
-- Drinking coffee in public places etc.
NB: Marketing industrial or consumer goods in
targeted foreign markets is looked from the
angle of the stage of economic development -
the targeted county is in.
Reference is here to Stage 1 to Stage 4, where
the targeted market falls.
MODULE - 3 Amity Business School
International Entry and Expansion

Strategies
Decision Criteria for entry :
-- Major decisions in International Marketing

-- Decision criteria for international business
Major Decisions in International

Marketing
1. Deciding whether to go abroad or not?
2. Deciding which market to enter?
3. Deciding how to enter the market?
4. Deciding on the marketing program.
5. Deciding on the marketing organization.
Decision Criteria for International

Business
This rests on the following specific
questions:
-- Importance of the international macro
environment. The importance and scope.
-- Advantages and Disadvantages that have
to gained/lost, opportunities to be tapped.
The Decision criteria’s are as follows :

1. Political Risk
2. Market Access
3. Factor Cost and Conditions
4. Shipping Consideration
5. Country Infrastructure
6. Foreign Exchange
7. Creating a Product Market Profile (The Nine W’s)
8. Market Selection Criteria
The NINE W’s of creating a Product Market Profile :

1. Who buys our Product?
2. Who does not buy our product?
3. What need or function does our product serve?
4. What problem does our product solve?
5. What are customer’s currently buying to satisfy the
need/problem?
6. What price are they paying?
7. When is our product purchased?
8. Where is our product purchased?
9. Why is our product purchased?
Strategies for Entering foreign market:
-- It refers to the different routes that is

undertaken to enter a foreign market
OR
-- The Modes of Entry
OR
-- Stages of Foreign Market entry
Different routes to enter a foreign market are the

following:
1. EXPORTING – A. Indirect Exporting
-- B. Direct Exporting
2. FOREIGN PRODUCTION
-- A. Licensing
-- B. Contract
Manufacturing/Management
Contract
-- C. Local Assembly/Investment
Indirect Exporting is one when a third

party arranges the documentation,
shipping and selling of an organization’s
goods abroad.
-- Refers to the lowest level of commitment
to international marketing
(The third party refers to independent
middlemen – of four types )
Indirect Export through four routes:

1. Domestic-based export merchant– here the
middlemen buys the manufacturers products
and sells them abroad on its own account.
2. Domestic-based export agent– here the
agent seeks and negotiates foreign purchases
for a commission. Agents can be in the form of
individuals or a group of people involved or
trading companies
3. Co-operative Organization– exporting

on behalf of several producers and is
partly under administrative controls.
4. Export Management Company–
manages export for its client for a fee.
Advantages of Indirect Export :

1. Involves less investment
2. No spending on export department
3. No foreign/overseas sales force required
4. No foreign contacts required
5. Less risk
6. First hand knowledge of the foreign market,
through the middlemen
7. Fewer mistake by the seller.
Direct Export:
As foreign sales grow, an organization often

begins to make a limited commitment,
frequently documenting itself/ deciding to
handle their own exports.
Methods of Direct Export :

1. Domestic based export department.
2. Setting up an overseas sales branch
office/depot/subsidiary.
3. Appointing and utilizing the service of
export sales representatives.
4. Foreign brand distributors or agent
Foreign Production:
A. Licensing represents a simple way for a
manufacturer to become involved in international
marketing. Here the licensor licenses a foreign
company to use a manufacturing process,
trademark, patent, trade secret, or other item of
value for a fee or royalty.The licensor gains entry
into the foreign market at little risk; the licensee
gains production expertise or a well-known
product or name without having to start from
scratch.
B. Management Contract -- A company

can enter a particular foreign market
through the management contract route.
Here a company can sell a management
contract to a party to manage a foreign
business such as hotel, hospital etc for a
fee. It is a low-risk method of getting into a
foreign market, since it yields income from
the beginning.
C. Contract Manufacturing : An entry method,

where the firm engages local manufacturers to
produce the product.
Contract manufacturing’s disadvantage is that
there is less control over the manufacturing
process. Finally it offers the company a chance
to start faster, with less risk, and with the
opportunity to form a partnership or buy out the
local manufacturer later.
D. Joint Ventures: Joint ventures are a part of foreign

investment. It represents an extensive form of
participation and commitment towards international
marketing. Here foreign investors may join with local
investors to create a joint venture in which they share
ownership and control. Forming a joint venture might be
necessary or desirable for economic or political reasons.
The foreign firm might lack the financial, physical, or
managerial resources to undertake the venture alone or
the particular foreign government might require joint
ownership as a condition for entry.
E. Direct Investment --(Ownership and Control

/Manufacturing Facilities)
The foreign investment is another route through ownership
or through a manufacturing facilities presence.The
foreign company can buy part or full interest in a local
company or build its own facilities. As a company gains
experience in export, and if the foreign market appears
large enough, foreign production facilities offer distinct
advantages- by securing cost economies, gaining a
better image in the host country, developing deeper
relationship with the government, customers, local
suppliers etc.
Foreign investments are undertaken in the light of long
term strategic goals and ambitions of the company.
Investment in Developing Countries:
--Rapidly growing economies, Expanding purchasing power

and Expanding markets etc of the developing countries,
provides opportunities for the foreign companies to enter
a new market. It is linked with the basic tenets of the
need of international marketing and the opportunities
that any developing country offers.
-- Foreign investments in the developing country can be
through joint ventures, through equity stakes in another
company, mergers and acquisitions etc.
Market Expansion Strategies
1. Targeting few segments in few countries.

2. Country concentration and segment
diversification.
3. Country Diversification and market
segmentation concentration.
4. Country and segment diversification.
Stages of Development Models

It refers to the stages in the evolution of the
global corporation from a domestic player
to international player to multinational
player to a global player to transnational
player.
Developing product for International

Market
BASIC CONCEPTS
Product Defined :
-- A product is often considered in a
marketing sense that can be offered to a
market for attention, acquisition, use or
consumption – that may satisfy a want or
need. Continued……
Continued … Amity Business School
-- A product is something tangible that can be

described in terms of physical attributes, such as
shape of the product, dimensions of the given
product, important components in making of the
product, form color and so on.
-- A product is also intangible, which cannot be
touched and felt, only experienced of its
benefits, for example- engineering services,
restaurant services, hotel services etc.
Marketing of Products
Products that are marketed include:
-- Physical Goods such as automobiles, books
etc.
-- Services such as engineering services,
marketing services.
-- Persons such as Amitabh Bacchan, Aishwarya
Rai, Sachin Tendulkar etc.
-- Places such as Delhi, Agra, Jodhpur etc.
-- Organizations such as AIIMS, Escort Heart
Research Institute, NGO’s etc.
The best way to define a product is to

describe it as a bundle of UTILITIES or
SATISFACTION
A PRODUCT OFFER GIVES

-- Status Symbol- in the case with highly
niche product category
-- Benefits– whether it is any generic
product or any niche product
FIVE LEVELS OF A PRODUCT
1. Core Benefits– The fundamental benefit or

service that the consumer is actually buying.
2. Generic Product– The basic version of the
product. For example a ‘car’, a solution for
easy transportation. A car can be of many
designs and models, and from different
manufacturers and of different brand names.
3.Expected Product– what the buyers expect

from a product offer, in terms of a set of
attributes and conditions.
4. Augmented Products– Expectation of
additional services and benefits by the
consumer, that distinguishes a company’s offer
from the competitors product.
5. Potential Product– meaning all the changes
and transformations that the product may
undergo in future. It is nothing but a possible
evolution of the product. It is distinguishing the
market offer.
-- Focus is the Product offer.

-- Product is the most crucial element of the
marketing program.
-- A company’s product defines its business.
-- Pricing, quality, promotion, communication
and distribution policies has importance in
product offering.
-- Firm’s competitors and customers are
determined by the products it offers.
--Research and Development
Important: Whenever, we as a consumer

buy any product, to satisfy our need or
want, we are actually looking for a
solution. We thus end up buying a solution
and return with a brand. Brand is always
associated with any product offering –
tangible and intangible. This is a generic
fundamental fact enshrined with any
particular product being marketed or
sold in any part of the world.
Brand Defined:
A particular product, or a line of products,
offered for sale by a single producer or
manufacturer and made easily
distinguishable from other similar products
by a unique identifying name and or a
symbol or term.
Brand Image :
The perception of a product formed in the
mind of the consumer which is the result of
the symbols and meanings associated
with a particular brand. Advertising is often
employed to create brand image: e.g.
automobile advertising on television
commonly sells a lifestyle rather than a
mode of transportation.
Brand Marketing :
A strategy in which each of a firm’s product’s

is marketed independently, generally
under the direction of a brand manager.
Brand Name :
That part of a brand consisting of the actual

letters or words; i.e. that part which can
actually be vocalized, which comprises the
name of the product or service as distinct
from other identifying signs, symbols, and
designs incorporated into the overall
design.
Brand Position :
A products niche in the marketplace. The

term ‘position’ refers to the products
relationship to competing brands and is
generally measured in terms of how the
consumer perceives the various attributes
attached with the brand.
Brand Positioning / Positioning :

Efforts aimed at establishing a product or service
in a particular niche or segment of the market
place.
Brand positioning is also referred to as market
positioning- where the strategy usually includes
those promotional strategies which differentiate
the product from competitors and which vividly
establish the products image in the minds of the
potential customers. Also known as Positioning,
product positioning or target positioning.
Products – Local, National, International

and Global
The concept of products, when taken from an

international marketing perspective rests on the
fact that any product, whether it is a national
product of one country for use in the same
country– can it be marketed into another foreign
market? Can it be modified into as per the
requirements of the now target country or for….
Continued….
any other world market? These enigmatic

questions revolves around the EPRG concept of
global marketing management, as also the
stage of economic development / market
development the particular targeted country is
in, at the particular period of time.
-- Should the company focus on the production of
products for each particular market ?
LOCAL PRODUCTS :
-- Products available in the portion of the national

market
--Sometimes hailed under the category of regional
products
-- These products may be new products that the
company is introducing.
-- Local products are products exclusively distributed
in a particular region.
National products
-- Product that is offered in a single national
market
-- Product specially developed for a
particular country.
-- Products that are not sold outside the
home country.
International Products :
-- Offered in multinational and regional markets.
-- A multiregional product can become an
international product.
[The Gist is that initially a product can be a great
player in a regional market, and having the
quality to become an international player, it can
come out of the regional market, and can also
be a player and thus marketed into other
targeted world markets- through the route of
acquisition or joint venture or any other specific
route.]
Global Products and Global Brands

-- The global products are offered in global
markets and in every part of the world – and in
every economic development stage country.
-- Some products are specially designed to target
all the world market.
-- Some products specially made for a particular
national market, can also be marketed in other
country market.
Important:
The concept of Global Products revolves
around the concept of Global Brands.
Please Note:
A product is not a brand. Any Global brand
like the generic concept of brand has a
general perception and image.
Examples of Global Brand:

VOLVO
MERCEDES BENZ
AUDI
BMW
VOLKSWAGEN
TOYOTA
HONDA
MARLBORO
COKE
A Global brand has :

-- SIMILAR IMAGE
-- SIMILAR POSITIONING
-- GUIDED BY THE SAME STRATEGIC
PRINCIPLES
-- MARKETING MIX MAY VARY FROM
COUNTRY TO COUNTRY
Only Difference between a global product

and global brand is that --- it does not
carry the same name and image from
country to country.
-- A great global product can be sold in the
home country by a different name and the
similar product can be sold in other world
market by a different name.
Should a global product be turned into a

global brand?
For this:
-- Name should be standardized
-- Image should be standardized
Please Note: The definition of standardized

product follows in the slides concerning
‘IPLC’ segment, later
International Product Life cycle

IPLC Theory
The international product life cycle

theory (IPLC) describes the ‘diffusion
process of an innovation’ across
national boundaries.
The Whole game of IPLC, has the following

characteristics:
--The International product 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 less
developed countries do the same.
Continued from last slide…

-- Efficiency/comparative advantage, thus
shifts from developed countries to
developing nations.
-- Finally, advanced nations, no longer

cost effective, import products from
their former customers.
The understanding
The entire result of the great game of the
stages encircled with its particular
characteristics- is governed by the fact that
in the end the initiating country and the
advanced nations become a victim of its own
creation.
NB: The IPLC is examined from the marketing
perspective, and marketing implications for both
innovators and initiators are taken from the
paradoxical angle of marketing only.
Stages of IPLC
The stages of international product life cycle
begins from Stage 0 to Stage 4.
STAGE 0 --- Local Innovation
STAGE 1 --- Overseas Innovation
STAGE 2 --- Maturity
STAGE 3 --- Worldwide Imitation
STAGE 4 --- Reversal
The generic diagram concerning the IPLC may be

referred.
NB: The curves in the IPLC shows curves for the

same innovation: one for the initiating country,
one for other advanced nations, and one for the
Less developed countries.
-- For each curve, net export results when the
curve is above the horizontal line, and when the
curve is under the horizontal line, net import
results from that country.
Why USA as a initiating country?

As far as the curves related to the international
product life cycle is concerned, it has been
universally accepted that a developed nation
having all the technical knowhow, expertise etc
that is required to develop a product--- after
identifying the need and demands of a particular
product a company in a particular country,
initiates that product in its home market initially.
This is the beginning of the diffusion of the
innovation process concerning the international
product life-cycle. Continued……………
Why USA…….?
Since many of the products found in the world’s
markets were originally created in the USA,
before being introduced and refined in other
countries and in most instances, regardless of
whether a product is intended for later export or
not, an innovation is initially designed with an
eye to capture the US market, the largest
consumer nation in the world.
Stages of International Product Life

Cycle (IPLC) and their Characteristics
Stage 0 – Local Innovation
-- Represents a life cycle stage when any initiating

country takes the first leap in manufacturing the
product for the first time in the world, thereby
beginning the story of the familiar life-cycle
stage, in operation within its original market.
-- Innovations are most likely to occur in a highly
developed countries because consumers in
such countries are affluent and have relatively
unlimited wants.
Stage 0 …………….
-- At this stage firms in advanced nations
have both the technical know-how as
well as abundant capital to develop
new products.
Stage 1 : Overseas Innovation

As soon as the new product is developed and
initiated by the initiating country following
syndromes will happen:
-- Original market will get well cultivated.
-- there will be demand for the all new offering.
-- Local demands of the product will be adequately
supplied.
-- Many prospective consumers/user of the product
will come to learn about the utilities and
satisfaction to be derived from the product.
Important:
It is at this stage only that, the innovating
firm will look to overseas market in order
to expand its sales and profit.
-- Stage 1 is also called as the
‘Pioneering Stage’ or ‘International
introduction’ stage.
In the Stage 1, the technological gap is first

noticed in other Advanced nations due to
their similar needs and high income levels.
(Concept of the Stages of Economic
Development runs here)
Competition in Stage 1
--Competition at this stage usually comes from
US firms, since firms in other countries may
not have much knowledge about the
innovation.
-- Production costs tend to decrease at this
stage for the competitive firms, because by
this time the innovating firm will normally
have improved the production process.
-- Aggressive overseas sales also help decline

the production costs.
-- The scenario gives the intangible feeling of
the ‘Economies of Scale’.
-- the price of the product at this stage is high,
since because of the technological
breakthrough, costs need to be recovered, in
addition to the recovering of the price
incurred in marketing efforts.
The final word for Stage 1 is that– there

will be more exports from the USA, and
increase in imports by other developed
nations.
Stage 2 – Maturity
-- Growing demand in advanced nations,
will lead firms to conceptualize the
product, and learn to make it in their
home country.
-- Local production will start in advanced
nations
Stage 2 …… continued..
-- Competition grows more at this stage.
-- More players in the market place.
-- Innovating firm’s sales see the light of the start
of suffering, at the cost of advanced nations
products, but still the export level remains
stable.
-- The LDC’s now enter the imitation field.
-- Introduction of the product in LDC’s helps offset
any reduction in export sales to advanced
nations.
Stage 3 – World Wide imitation

-- This stage is generally considered as the
beginning of heavy competition among the
advanced nations firms.
-- This is the stage where copy cats work, in the
form of re-engineering, me-too products, made
in different forms and styles, having the same
USP’s, differentiation is tried at every angle of
the product make……
-- Tough times for the initiating nation.

-- Loss of market share for the initiating
firm- to products from other advanced
nations and LDC’s.
-- No more new demand anywhere for the
initiating country to cultivate.
-- Effect on the economies of scale for
the initiating nation.
-- Now the production cost for the

initiating nation rises, on account of the
new players using the comparative
advantage philosophy.
-- Firms in other advanced nations use
their lower prices, coupled with product
differentiation techniques in place.
-- Worldwide imitation is faster at this
stage.
-- The initiating country’s export declines very

fastly and rapidly reaching nil.
The Final word for Stage 3--- At this stage US

production or the initiating nation production still
remaining, is basically cornered from the world
market- and is left for the local consumption
only. Once an initiating country, now only a small
player in its national market – facing competition
from products from other advanced nations. A
great paradox of the business macro
environmental scenario.
A great paradox of the business macro

environmental scenario. The greatest
Example for stage 3:
Among the 30 different companies selling cars

in the U.S.A., with several more on the rise,
of these only two players – General Motors
and Ford are US firms. The rest are from
Western Europe, Japan, South Korea, and
others/
Stage 4– Reversal
-- In this stage two functional characteristics
makes appearance
A. Product Standardization
B. Comparative Disadvantage
-- The innovating country’s comparative

advantage becomes country’s disadvantage.
-- The product is no longer capital –intensive or
technology – intensive.
-- The above becomes a comparative
advantage for LDC’s, for they possess those
advantage – looking from all point of scale in
the development of international business,
married to the ‘Economies of Scale’.
The final word for Stage 4:

The Less Developed countries are the
last IMITATORS. They establish
sufficient productive facilities to satisfy
their own domestic needs as well as to
produce for the biggest market in the
world, USA. And also targeting other
advanced nations market. Finally
targeting world market.
STANDARDIZED PRODUCT Defined
A product developed for one national

market and then exported with no
change to international markets.
The Moral of the Whole Game of

International Product Life Cycle
The initiating nation becomes a victim of

its own creation
PRODUCT POSITIONING
Positioning defined
A marketing strategy that will position a

company’s products and services against
those of its competitors in the mind of the
consumers.
Achieving Positioning Success
To achieve positioning success, three generic

competitive strategies are employed which a
particular company can follow.
The three winning strategies are:
1. Cost Leadership-- the company tries to
achieve lowest costs of production and
distribution.
2. Differentiation--- making use of specific

marketing mixes.
3. Focus--- paying attention to a few market
segments.
Differentiation defined- Differentiation is
the act of designing a set of meaningful
differences to distinguish the company’s
offer from competitor’s offer.
Criteria for different positioning

1. Important- Product delivers a highly
valued benefit to a sufficient number of
buyers.
2. Distinctive: The difference is either isn’t
offered by others or is offered in more
distinctive way by the company.
3. Superior: The difference is superior in
other ways to obtain the same benefit.
4. Communicable: The difference is

communicable and visible to buyers.
5. Pre-emptive: The difference cannot be
easily copied by competitors.
6. Affordable: The buyer can afford to pay
the price for the difference.
7. Profitable : The product is profitable for
the company.
International Market positioning

The above criteria for differential
positioning is summed up in the context of
international marketing management also.
Thus the general strategies for product
positioning in international marketing /
global business are:
Continued….
1. ATTRIBUTE OR BENEFIT
2. QUALITY / PRICE
3. USE / USER
4. HIGH-TECH POSITIONING
5. HIGH-TOUCH POSITIONING
NB: 1,2 and 3 are considered to be general
product positioning tenets, whereas 4
and 5 are two special positioning that is
considered for international product.
Attributes in the form of

a. Features
b. Performance
c. Durability
d. Reliability
e. Reparability
f. Style
g. Design.
Importance of high-tech positioning

High tech positioning can be applied under
two categories of product offers.
1. Technical Products such as
Computers, Chemical, Technical
Financial products requiring special; care
and expertise while selling, etc.
2. Special Interest Products such as
bicycles, Adidas Shoes etc.
High-Touch Positioning
Here more emphasis is given on IMAGE.
Examples:
A. Products solving a common problem, such
as thirst problem solved by a cola drink, coffee
drink, etc. a birthday cake, a birthday card etc.
This category actually uses ‘products important’
from day to day particular important moments /
special moments of life.
B. Global Village Products – i.e. those products

that enhance the consumers all over the world.
Examples can be: Levis Jeans or other Jeans
brands, Marlboro , Mc Donald, Ferrari, Harley-
Davidson etc.
NB: Global Village products are mostly those
products that has a cosmopolitan touch, in
its essence, and the users have mostly
cosmopolitan nature/culture outlook.
C. Products with a universal theme- those

product category that have a universal
acceptance such as:
--- Photographic Cameras- Yashika,

Canon, Sony, Panasonic
--- Electronic Gadgets etc – Casio
Calculating instruments, defence related
electronic gadgets,
Product Design Considerations:

Product design is a key factor in determining
success in global marketing.
Questions that arise concerning product
design decisions:
1. Should there be an adaptation of the
product for various national markets?
2. Should a company offer a single
design for the global market?
Important factors to be considered in product

design:
1. PREFERENCES and TASTES / CHOICES.
2. COST – (talking about the economies of
scale)
3. LAWS and REGULATIONS – (i.e. compliance
with laws and regulations in different countries,
where the product is to be made)
4. COMPATABILITY – (i.e. understanding the
products compatibility with the environment)
Geographic Expansion in International

Marketing
(THE STARTEGIES)
Introduction
Companies can pursue three generic basic global
strategies to penetrate foreign markets:
1. STRAIGHT EXTENSION i.e. adapting the same
product or communication policy used in their home
market.
2. ADAPTATION STRATEGY i.e. adapting as per the
market situation. This enables the firm to cater to the
needs and wants of its foreign customers.
3. INVENTION STRATEGY i.e. products are designed from
scratch for the global market place.
Please Note--- The three basic strategies above are further

clubbed into five distinguished strategic options:
A. Strategy 1– Product and Communication Extension-
Dual Extension.
B. Strategy 2 – Product Extension and Communications
Adaptation.
C. Strategy 3– Product Adaptation- Communication
Extension.
D. Strategy 4 – Product Adaptation and Communication
Adaptation (Dual Adaptation)
E. Strategy 5 – Product Invention
Strategy 1. Product and Communication

Extension – Chief Characteristics
A. Marketing a standardized product using
a uniform communications strategy- i.e.
companies pursuing this strategy sell
exactly the same product with the same
advertising and promotional appeals as
used in the home country.
Continued……
B. Best strategy for the new entrants in the global arena.

C. Best strategy for the small companies with limited / few
resources.
D. Dual Extension also works when company targets a
‘global segment’ with similar needs.
Important: Generally speaking, a standardized product
policy coupled with a uniform communication strategy
offers substantial savings coming from economies of
scale.
NB: This strategy is basically product driven rather than
market driven.
Strategy 2- Product Extension and

Communications adaptation
Chief Characteristics: Due to differences in the
cultural or competitive environment:
A. Same product is often used to offer benefits or
functions, that dramatically differ from those in
the home market.
B. Gaps between the foreign and home market
drive companies to market the same product
using customized advertising campaigns.
D. Customized advertising campaigns is

adopted for this strategy for different
country market.
E. This strategy entails ‘the economies of
scale’ on the manufacturing side.
F. Potential savings of the firm is spent on
advertising front.
Strategy 3 – Product Adaptation- Communications

Extension
Chief Characteristics:
A. Firms adapt their product, but market it using a
standardized communications strategy.
B. Local market circumstances favour the case
of product adaptation.
C. Company’s expansion strategy is also the
reason for strategy 3. Continued………..
Strategy 4- Product adaptation and

communications adaptation (Dual
Adaptation)
Important: Demand for a dual adaptation
strategy. Why?
Because of:
1. Difference in cultural environment
2. Differences in physical environments
Strategy 5– Product Invention

Product invention means creating something
new. It can take two forms:
1. Backward Invention, reintroducing
earlier product offers that are well
adapted to a foreign country’s need.
2. Forward Invention, creating new
products to meet a need in another
country.
Standardization versus Customization

A recurrent theme in global marketing is
whether companies should aim for a
standardized product offer or customized
or country tailored product strategy.
• Standardization means:
--- Offering a uniform product on a regional
or world wide basis.
--- Minor alternations are usually made to
meet local regulations or market
conditions
-- A standardized / uniform product
capitalizes on the common platform
requirements across countries.
Customization means
Under customization process management
focuses on cross-border differences in the
needs and wants of the firms target
customers. Under customization,
appropriate changes are made to match
local market conditions.
New Product Development

Definition of New Product–
Any product offer that consumers regard as an addition to
their available choice can be regarded as a ‘new
product’. A new product can be:
-- an original invention.
-- a modification of an existing item.
-- the firm’s own version of a product already supplied by a
competitor or
-- merely a change in how an item is packaged and
presented.
Process of product development

The process begins with the ‘Idea Generation’
--- In considering the feasibility of an idea it is
necessary to define the concept of the
intended new item such as :
a. What it will do?
b. The benefits it will provide to customers
c. Its market position.
d. How will it differ from current or possible future
products offered by competing businesses.
International Test Marketing/Testing in

national market
Introduction: Prior to committing itself to
marketing a new consumer product on a
global scale, a company will usually select
a number of areas in different parts of the
world where it can test its entire marketing
program.
Factors calling for testing new product

1. Testing lowers the risk of subsequent
failures.
2. Establishes or refutes the validity of the
basic concept of the new product.
3. Provides a basis for forecasting future
sales.
Most important:
Each group of companies in which the
item is to be sold, the company needs
to identify towns, cities, or rural
locations that possess characteristics
as near as possible to the averages for
the region as a whole.
DUMPING Amity Business School
Dumping takes place when a firm or an industry

sells products in the world market at prices
below the cost of production.
REASONS
Generally a company dumps when it wants to
dominate a world market. After the lower prices
of the dumped goods have succeeded in driving
out all the competition, the dumping company
can exploit its position by raising the prices of its
product.
Important: Whatever the motivation for

dumping may be –
A. Disposal of surplus stock or
B. Penetration of markets etc.
Dumping is basically an unfair trading
practice under WTO regulations. Hence
the governments of affected countries
are allowed to impose special import
taxes on offending products.
Gray Market Amity Business School
Important characteristics
-- Gray market channels refer to the legal export / import
transactions involving genuine products into a country by
intermediaries other than the authorized distributors.
-- From the importers side it is known as ‘Parallel

Imports’.
-- Distributors, wholesalers and retailers in a foreign

market obtain the exporters product from other
business entity. Thus the exporters legitimate
distributors and dealers face competition from
others who sell the product at reduced prices in that
foreign market.
Conditions necessary for Gray Market:

Three Conditions are required:
1. Products must be available in other markets.
2. Trade barriers such as tariff, transportation
costs and legal restrictions must be low
enough for parallel importers to move the
products from one market to another.
3. Price differentials among various markets must
be great enough to provide the basic
motivation for gray markets.
Role of Services in global economy
SERVICE DEFINED– A service is an act or

performance that one party can offer to another
that is essentially intangible and does not result
in the ownership of anything. Its production may
or may not be tied to a physical products
Examples: Restaurant / Hotel services,
Engineering services, services required for
manufacturing a product etc.
Outsourcing of Service activities: It refers

to service procurement activities on a
global basis in the same way they procure
components and finished products.
-- Because the production and consumption
of some services do not need to take
place at the same location or at the same
time, global sourcing of services is a viable
strategy.
Outsourcing of service activities relates to:

-- Reducing costs and improving the corporate
focus, that is concentrating on the core activities
of the firm.
-- Reducing time to implement internal processes.
-- Sharing risk in an increasingly uncertain
business environment.
-- Improving customer service.
-- Improving access to expertise not available in-
house.
APPENDIX--a Amity Business School
Important Comment on ‘New’ Product

Inventing and bringing to the market a completely new
product can be enormously expensive, and the risk of
failure is high. For it has been seen that the majority of
new inventions with a commercial application are
financially unsuccessful. Hence there is a strong
incentive for firms to develop current product offerings,
introduce complimentary products, diversify product lines
and duplicate competitors best selling items rather than
invest in basic technical research leading to completely
new product concepts.
APPENDIX-- b Amity Business School
Standardization versus Customization

While the standardization has a product
driven orientation– lower your costs via
mass production- customization is inspired
by a market driven orientation- increase
customer satisfaction by adapting the
product to local needs.

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Amity Business School

MBA CLASS OF 2012.

Global Marketing Management by

Other Important References:

• Need, Scope, Tasks, Domestic vs.

• International Entry and Expansion Strategies–

• Analyzing, segmenting, targeting and

• Developing product for international

Promotion and pricing strategy for International

India’s international policy and impact on

Emerging Trends– Integrating the concepts

• Globalization means integrating the economy of the country

DEFINITION OF INTERNATIONAL BUSINESS

• International business is the activity of engaging in

DEFINITION OF FOREIGN INVESTMENT

FOREIGN DIRECT INVESTMENT(FDI)

• Brief Historical Background of International

Fundamental Questions that companies

• Factors that reinforces to take interest

-- Demand for new styled goods/ services–

Definition of Global Industry:

Definition of Global Firm:

Need/Factors for International Marketing:

Major decisions in International Marketing:

Major Concerns while Entering Foreign

Environmental Differences when marketing

What to study finally – when company’s

Domestic VS International Marketing

-- Definition of Domestic Marketing

1. Macro Environment- Uncontrollable Factors are:

Management’s orientation towards

Importance of Global Marketing and the EPRG

-- Maximum growth potential opportunities to be

Management’s orientation- the EPRG

Definition of Global Localization:

Drivers for Global Integration (in the light of

“Of all sorts of luggage man is the most

International trade is inevitable when there

The Theories are:

-- An economic doctrine that flourished in the 17th and 18th centuries.

GIST: Nations should accumulate financial wealth in the form of gold by

B. Theory of Absolute Advantage:

Gist of the Absolute advantage theory:

If one country has an absolute advantage over

C. Theory of Comparative Advantage

Gist of the comparative advantage theory

Any two countries can very well gain by

D. Modern theory of International Trade

Gist of the Modern theory of International

E. Theory of International Product Life Cycle

F. Theory of Competitive Advantage:

The Diamond Model

The World Economy – An Overview

Year – 1945 and after (till late 1991)

Changes found in the World Economy

The World Economy– The Macro Dimensions of the

-- Relationship between productivity and

NB: The success of the capitalist market

The Economic Systems

Brief Explanations of the economic systems:

The Capitalist Economic system:

Under Socialism as an economic system it is