International Marketing Session 1 Dr. Bikramjit Rishi

Session Learning Objectives To appreciate the factors underlying the globalisation of economies To appreciate the factors underlying the globalisation of economies To recognise impacts of globalisation on firms’ marketing activities To recognise impacts of globalisation on firms’ marketing activities To identify challenges for firms entering foreign markets To identify challenges for firms entering foreign markets To develop a basic understanding of international market development strategies To develop a basic understanding of international market development strategies

GLOBALISATION OF ECONOMIES Convergence of cultures and economies Convergence of cultures and economies Rapid pace of change Rapid pace of change Opportunities for exporters Opportunities for exporters Threats from overseas competition in firms’ domestic markets Threats from overseas competition in firms’ domestic markets

Globalization index e conomic integration: trade, portfolio, foreign direct investment, and investment income personal integration: telephone, travel, remittances, and personal transfers technology integration: internet users, internet hosts, and secure internet services political integration: international organization, UN peacekeeping, treaties, and government transfers

Globalization index (contd) Rank Country 12 Ireland 16 Singapore 8Switzerland 5 Netherlands 9Finland 7Canada 19United States 26 New Zealand 2Austria 11Denmark 82India

Competition Consumer Marketing Challenges in country Z Marketing Challenges in country Y Marketing Challenges in country X Place Promotion Price (Controllables) Product Legal Socio Cultural Competition Political Economic Infrastructure Domestic Environmental Challenges (Uncontrollables) Political Overseas Environmental Challenges (Uncontrollables) Legal Logistics Geography Political Economic Domestic marketing and international marketing decisions

Evolutionary process of global marketing Domestic marketing : Marketing Focus domestic Orientation ethnocentric (our culture is superior than other culture) Marketing Mix Decisions focussed on domestic customers

Evolutionary process (contd) Export marketing: Marketing Focus overseas (targeting and entering foreign markets) Orientation ethnocentric Marketing Mix Decisions focussed mainly on domestic customers overseas marketing-generally an extension of domestic marketing decisions made at headquarters

Marketing Focus differentiation in country markets foreign markets) Orientation Polycentric (Particular Market Oriented) Marketing Mix Decisions developing local products depending upon country needs. Decisions by individual subsidiaries International Marketing: Evolutionary process (contd)

Multinational marketing: Marketing Focus consolidation of operations on regional basis gains from economies of scale gains from economies of scale Orientation regiocentric (Region specific) Marketing Mix Decisions product standardization within regions but not across the region

Evolutionary process (contd) Global Marketing: Marketing Focus consolidating firm’s operations on global basis OrientationGeocentric (considers whole world a single market) Marketing Mix Decisions globalization of marketing mix decisions and joint decision making across firm’s global operations

MACRO-ECONOMIC REASONS FOR GLOBALISATION Exploitation of comparative cost advantages Exploitation of comparative cost advantages Removal of tariff barriers Removal of tariff barriers Increasing incomes means more imported “luxuries” Increasing incomes means more imported “luxuries” Homogenisation of market segments Homogenisation of market segments

FIRMS’ MOTIVATIONS TO ENTER INTERNATIONAL TRADE Extend product life cycle in new markets Extend product life cycle in new markets Domestic market may be saturated Domestic market may be saturated Develop economies of scale Develop economies of scale Stretching a strong brand to new markets Stretching a strong brand to new markets Spread risks in numerous markets Spread risks in numerous markets Customers may demand global coverage Customers may demand global coverage

ANALYSING FOREIGN MARKET OPPORTUNITIES Begin with a general environmental assessment Begin with a general environmental assessment –Political/ legal environment –Economic environment –Social/ demographic environment –Technological environment Many idiosyncratic factors - e.g. language barriers, pleasant location to live

DETAILED MARKET ANALYSIS Begin with secondary research at home Begin with secondary research at home May employ a local research agency May employ a local research agency Primary research helps to clarify important issues of buyer behaviour etc Primary research helps to clarify important issues of buyer behaviour etc Problem of interpreting primary research Problem of interpreting primary research Analysis needs to balance cost, risk and speed Analysis needs to balance cost, risk and speed

ADAPTING PRODUCT AND PROMOTION Main options: Maintain a uniform product and promotion world-wide Maintain a uniform product and promotion world-wide Retain a uniform service formulation, but adapt promotion. Retain a uniform service formulation, but adapt promotion. Adapt the Product Offer Only. Adapt the Product Offer Only. Adapt both product and promotion. Adapt both product and promotion. Develop new products. Develop new products.

WOULD YOU EXPORT THIS PRODUCT TO THE Other markets? New product development must increasingly have an eye to possible future export markets. New product development must increasingly have an eye to possible future export markets.

PRICING IN OVERSEAS MARKETS Should reflect: Should reflect: –Position of brand in the market –Consumers’ willingness/ ability to pay –Strength of competition –Local production costs –Local taxes –Whether fixed price lists are customary

GLOBAL PRICING How practical is a single uniform price across all of a company’s markets? How practical is a single uniform price across all of a company’s markets?

ADAPTING DISTRIBUTION Should reflect: Should reflect: –differences in consumer behaviour. –different social norms. –legislation which may prevent use of distribution channels commonly used in the home market.

PEOPLE ISSUES Should a company locals? Should a company locals? What are the training needs? What are the training needs?