International Marketing Prof. Shrikant Diwan
Introduction to International Marketing Chapter 1 Introduction to International Marketing
Globalization Globalization of production Globalization of markets Own Production Facilities Contracting Outsourcing Globalization of markets Developed Countries Developing Countries WTO
Trends in International Trade Year Value of Merchandise Exports (in Billions USD) 1950 55 1960 113 1970 280 1980 1,846 1990 3,311 2000 6,350 2010 10,120 Source: IMF and WTO, World Trade Report, 2010
YOY growth - International Trade
Top 5 Exporters Source: WTO Year: 2011 Value (Billion USD) European Union 2,131 China 1,898 USA 1,481 Japan 823 Republic of Korea 555 Source: WTO Year: 2011 India ranks 13h in the world with exports of 297 Billion USD in Merchandise export but ranks fourth in the world (148) just behind EU (789), USA (578), China (182) in exports of commercial service.
Top 5 Importers Source: WTO Year: 2011 Exporter Value (Billion USD) European Union 2,344 USA 2,265 China 1,743 Japan 854 Republic of Korea 524 Source: WTO Year: 2011 India ranks 8th in the world with imports of 451 Billion USD of Merchandising and 5th in the world as importer of commercial services (130 Billion USD)
Reasons for entering international markets Growth Profitability Achieving economies of scale Risk spread Access to imported inputs Uniqueness of product or services Marketing opportunities due to life cycle Spreading R&D cost
Special Problems in International Marketing Political and Legal difference Cultural Difference Economic Difference Difference in currency Unit Language Difference Marketing Infrastructure difference Trade Restrictions High cost of distance Differences in Trade practices
EPRG Fraework Ethnocentric orientation (Home Country) The EPRG framework identifies four types of attitudes or orientation towards internationalisation that are associated with successive stages in evolution of International operations Ethnocentric orientation (Home Country) Polycentric orientation (Host Country) Regiocentric orientation (Regional Orientation) Geocentric orientation (World Orientation)
Evolutionary process of global marketing Domestic marketing : Marketing Focus domestic Orientation ethnocentric Marketing Mix Decisions focussed on domestic customers Decisions made at headquarters International Business is just an extension for selling excess capacity
Evolutionary process (contd) Export marketing: Marketing Focus Host Country Orientation Polycentric Marketing Mix Decisions Separate decision for each country Decisions made at subsidiaries International Business is independent of the Home country business
Evolutionary process (contd) Multinational marketing: Marketing Focus consolidation of operations on regional basis gains from economies of scale Orientation regiocentric Marketing Mix Decisions product standardization within regions but not across the region International Business is centred at regions and regions are independent of each other
Evolutionary process (contd) Multinational marketing: Marketing Focus consolidation of operations on global basis gains from economies of scale Orientation Geocentric Marketing Mix Decisions product standardization across world International Business is in integration across the world
Market Entry Strategy C O R N I T S R K L Indirect exporting Licensing Franchising Contract manufacturing Strategic alliance Joint venture Wholly owned subsidiary
International Markerting Decision International mkt decision ( Objectives Resources, Potential , Environmental Factors) Market Selection Entry & Operating Decicion Marketing Mix Decision ( 4 P’s)
SCOPE OF INDIAN PRODUCTS ABROAD SouthEast Asian Countries Product Modification Vocation of Certain Industries /Segments Current suppliers to foreign firms turning to selling to their own products Jems n Jewellry, Leather,Texttiles, Seafood Phramcy Products(off patent product) Sell value added product (leather, Spices) .
Participants in International Marketing 1) MULTINATIONAL IN INDIA 2)Other Large Firms 3)SME’s 4) PSU 5) Trading Companies 6) Individuals
Future Of International Marketing No More International Global Supply Chain Management Information Surge & Consumer Choice World Growth Multipolar World Pervasiveness of Free Market
Multinationals in India Very Little Investment in India before 1970’s Foreign Exchange Regulation Act(1973) Myth- Cos investing in low priority sectors n high profit sectors Discriminate Policies against Exporting Highly Protected market, Unrealistic Exchange Rates NEW POLICY
IMPORTANCE OF CULTURE IN INTERNATIONAL MARKETING
LEVELS OF CULTURE National Culture Business Culture Occupational Culture Organizational Culture ELEMENTS OF CULTURE Belief Language Attitude Customs & Manners Aesthtics Religion Education Supernatural Belief
Implication for International Business Spread Cross-Cultural Litercay Multiculture Culture & Competitive Advantage Compatibility between Strategy & Culture Managing Diversity