D Efin Itio N - Differences B/W Domestic and IB - Evolution - Nature - Reasons/Benefits - Stages Of: - Approachesofib - Driversofglobalisation

IN TR O D U C TIO N TO
IN TER N ATIO N A L
M A R K ETIN G
- D EFIN ITIO N
- D IFFER EN C ES B /W D O M ES TIC A N D
IB
- EV O LU TIO N
- N ATU R E
- R EA S O N S / B EN EFITS
- S TA G ES O F :
IN TER N ATIO N A LIS ATIO N /
G LO B A LIS ATIO N
W hat is International
Marketing
M Domestic
arketing?
Carried out within a defined national or
geographic boundary
Relatively free to plan, implement and control
marketing plans within a known marketing
environment
International Marketing
Begins to explore markets outside national
boundaries of domestic market
Direct and indirect exporting to neighbouring
countries
The need to manage uncontrollable
international environmental elements
Emphasis on central production and planning
W hat is G lobalM arketing?

The notion that the world has no centre, but a
borderless global marketplace

Marketing operations that seeks to lever its
assets across political and cultural boundaries
Maximising opportunities and exploiting
marketing similarities and differences in search
for global competitive advantage
Seek to add stakeholders values by:
organising world-wide efforts
researching of domestic and foreign markets
pursuing international partnerships
Sourcing of raw materials and support
services
R easons / O bjectives of
International M arketing
1. Achieve Higher Rate of Profits
2. Expand the production Capacities
beyond the demand of the home

country
3. Severe competition in the home
country
4. Limited Home Market due to
small population size or low
purchasing power
5. Increase Market Share
4
R easons / O bjectives of
International M arketing
6. Nearness to Raw Materials
7. Availability of Quality Human
resources at low cost

8. Liberalization and Globalization
9. Political Instability
Factors A f e
fcting IM
D rivers of IM
There has been a significant shift
and inclination towards IM after

1990s. The factors that have
contributed towards IM are:
1. Establishment of WTO
2. Regional Integration
3. Declining Trade Barriers
4. Declining Investment Barriers
5. Growth in FDI
6. Strides in Technology
6
Factors A f e
fcting IM
D rivers of IM
1.Establishment of WTO :
Post discussion by the member
countries of GATT, WTO was

established in Jan 1995 in
order to facilitate
implementation,
administration, operation of
the multilateral trade
agreements.
7
Factors A f e
fcting IM
D rivers of IM
2. Regional Integration:
1. EU, NAFTA, ASEAN were formed. This
increased the size of market, demand

and employment.
EU: 25 member countries by 2005.
. Adopted common currency Euro
. Political boundaries erased for business
activities
. Goods/ services/ people and capital can
move freely
. No Import tariffs, tariffs replaced by
community tariff system
8
Factors A f e
fcting IM
D rivers of IM
3. Declining Trade Barriers
Tariffs and quota reduced to encourage

free flow of goods post World War II.
USA reduced tariffs from 44% in 1913 to
3.9% in 2000
Japan reduced tariffs from 30% to 3.9%.
4.Declining Investment Barriers

Investment barriers imposed to protect
domestic industries were reduced.

Treaties were signed to promote and
protect investment among countries.
Bilateral treaties increased from 181 in
9
1980 to 2081 in 2006.
Factors A f e
fcting IM
D rivers of IM
5. Growth in FDI:
FDI is investment made by a company
in a new manufacturing / marketing

facilities in a foreign country.
USA followed by UK was the largest
provider and recipient of FDI.
6. Strides in Technology
Phenomenal change in Telecom and IT
Witnessed as
Internet and World Wide Web
Online Globalisation
Microprocessors and telecom
Transportation technology
10
Factors A f e
fcting IM
Changes and Challenges

Adopting New Rules of Global
Engagement
Adopting to new Global Economic
Architecture
Matching the Needs of New Global
Consumers
Managing Strategic Relationships
Achieving Global Competitiveness
CSR and Ethics
The N ew Rules of
G lobalEngagem ent
A move away from the one-size-fits-
all US-style capitalism towards a

more localised, equitable economic
development
The new challenge for global
businesses
Ability to adapt to changing market
opportunities
Emphasis on partnerships that will
The N ew G lobal
Econom ic Architecture
Emergence of new economic
powerhouses the BRICS countries

Asia to become the production hub
and the West the service hub
By 2050, Asia will have the worlds
most populated consumer markets
with growing, young and highly
educated populations
M atching the N eeds of

N ew G lobalConsum ers
Consumers born in the 1990s
and 2000s grew up in

digitally enhanced
environments. They do not
respond to conventional
marketing stimulus as
previous generations
Emergence of
global
consumers
Convergence in global
consumption patterns
Diversity and subcultures
The N ew Breed ofConsum ers
Expectation of more customized
products and services to cater to

their individual needs
The Im portance of
M anaging Relationships
Customer acquisition can cost up
to 5 times more than retention

The Pareto 80/20 rule
The need to forge long-term and
profitable relationships with
customers as well as other
stakeholders
Achieving
G lobalCom petitiveness
The challenge is to overcome:
Shortening product life cycle
Demand for high quality at low
prices
The green issue
Changing rules of competition
Demanding customers
Know ledge as a Source of

G lobalCom petitive Advantage
People and information (the
knowledge base) are the most

valuable assets in a service
economy
The concept of knowledge
management makes sense
How do we do it? Any step-by-step
manual?
The accountant asks: do we value it
as cost or asset?
M arketing U sing
N ew Technologies
The Internet and Communication
Technologies (ICTs) revolution

The nature of interaction between
organization and customers have
changed
Increasing interactivity and
transparency
Fragmentation of media
Corporate SocialResponsibility and

Ethics
Growing interest and scrutiny in
how organizations discharge moral

and social responsibilities
Requires constant monitoring and
adaptation that involve:
Regular risk assessments, marketing
entry and withdrawal strategies,

expatriation of funds etc.
A potential source of competitive
21
G lobalM arketing Environm ent

It can be defined as
Those variables, largely out of the
organizations control but which it must

account for, within which it conducts its
business globally
Considerable variations between
countries in the laws governing

business conduct
There is no global standard practice
Fig.2.1 Reasons for accounting for

internationalenvironm entalfactors
Fig.2.3 G lobalM arketing Environm ent
The PoliticalEnvironm ent

Includes any national or international political factors
which may affect an organizations decision making,

planning, implementation, and control mechanisms
Marketers have to work within the political framework
of the host country
Important question what role does the target
markets government play in the economy? Its level
of participation in economic development?
Three Types of Political Risks:
Ownership risk
Operating risk
Transfer risk
What are the International Relations of the target
markets government? Does it belong to a trading

bloc or free trade area?
The LegalEnvironm ent

Key Aspects of International Legal
Environment:
Local domestic laws can limit what
can be exported/imported
International laws patents,
trademarks, copyrights and tariff
reduction etc.
If involved in disputes with
international trading partners, the

organization will need to
understand the law systems
Case vs. code laws the former takes a
The Econom ic Environm ent

Market potential can be gauged by
assessing population size, growth, density,

distribution, age distribution, disposable
income and its distribution
An Economic Environmental Analysis can
involve asking:
How big is the population and at what rate is it
growing?
Where is the population located and how
dense is it?
What is the population age and distribution?
What is its disposable income and distribution?
Fig.2.4 W orld Bank Classifi

cation of
Econom ies
(Based on G D P Per Capita)
D iff
erent Form s ofInternationalM arket
Agreem ent
Type of
Agreement
Example
Free Trade Area
NAFTA, EEA & COMESA
Custom Union
MERCUSOR
Common Market
CACM
Economic Union
EU
Political Union
USA, Canada
Bilateral or Multilateral
Trade
Zimbabwe and China in Construction
Sectoral Free Trade
Multi-fibre Agreement
Economic Cooperation
Asia Pacific Economic Cooperation

(APEC)
Trade Preference
Agreement
Southern African Development

Conference (SADC)
Fig 2.5 G lobaleconom ic

facilitators
The Socio-Econom ic
Envi
ronm
ent
Global
socio-cultural environment is manifested
in a number of ways
Social class and income have significant impact
on purchases of consumer goods and services
Spain and Portugal are highest consumers of fish in
the EU; Scandinavians consumed most bread and

cereals
Switzerland is the largest consumer of coffee in the
world; Greece the smallest
French the largest consumer of mineral water
Germans the largest consumer of beer
The impact of the ageing global population

The increasing global trends of urbanisation
Approaches to the Study ofCulture

Maslow (1970): Hierarchy of Needs
Lee (1966): Self Reference Criteria
Halls (1977): High and Low
Context Cultures
Hofstede (2001, 1997): The four
dimensions of power distance,
individualism and masculinity and
uncertainty avoidance
Hampden-Turner and Trompenaars
(1998)
The TechnologicalEnvironm ent

Two principal drivers to global development:
Speed of communication due to Internet
Reduction in cost of technology
Advent of E-Commerce, E-Marketing and E
Data Exchange
Growth of Internet Organisations and
Consumers
Rise of Global Media and the Global
Communication Industry
The breakthrough in nanotechnology
Technology can be sustainable or disruptive
The Com petitive Environm ent
Competition is intensifying internationally

and locally due to trade liberalization and
privatization
Assessing competitors involve (Kotler,
2003):
Identifying the organizations competitors
Determining competitors objectives
Identifying competitors strategies
Assessing competitors strengths and
weaknesses
5. Estimating competitors reactions
6. Selecting competitors to attack and avoid
1.
2.
3.
4.
The Currency Environm ent

World currency environment is
worth billions annually e.g.

derivatives market is estimated at
US$88 billion per annum
The global financial market is
interconnected, volatile and subject
to extreme fluctuations
Foreign exchange fluctuations are
very unpredictable and can have
far-reaching effects on a company's
global operations
Pressure G roups
Increased corporate
transparency publication
of ethical and green
statements
Companies now devise
strategy to manage their
relationships with pressure
group
Consumers and pressure
groups such as Greenpeace
and Friends of the Earth
want to see companies
switch to cleaner and
renewable energy sources

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IN TR O D U C TIO N TO

Carried out within a defined national or

W hat is G lobalM arketing?

borderless global marketplace

beyond the demand of the home

resources at low cost

and inclination towards IM after

countries of GATT, WTO was

increased the size of market, demand

3. Declining Trade Barriers

Tariffs and quota reduced to encourage

4.Declining Investment Barriers

domestic industries were reduced.

in a new manufacturing / marketing

Changes and Challenges

all US-style capitalism towards a

powerhouses the BRICS countries

M atching the N eeds of

and 2000s grew up in

The N ew Breed ofConsum ers

Expectation of more customized

products and services to cater to

to 5 times more than retention

Know ledge as a Source of

knowledge base) are the most

Technologies (ICTs) revolution

Corporate SocialResponsibility and

how organizations discharge moral

entry and withdrawal strategies,

A potential source of competitive

G lobalM arketing Environm ent

organizations control but which it must

Considerable variations between

countries in the laws governing

Fig.2.1 Reasons for accounting for

Fig.2.3 G lobalM arketing Environm ent

The PoliticalEnvironm ent

which may affect an organizations decision making,

What are the International Relations of the target

markets government? Does it belong to a trading

The LegalEnvironm ent

If involved in disputes with

international trading partners, the

The Econom ic Environm ent

assessing population size, growth, density,

Fig.2.4 W orld Bank Classifi

Free Trade Area

NAFTA, EEA & COMESA

Zimbabwe and China in Construction

Sectoral Free Trade

Asia Pacific Economic Cooperation

Southern African Development

Fig 2.5 G lobaleconom ic

the EU; Scandinavians consumed most bread and

The impact of the ageing global population

Approaches to the Study ofCulture

The TechnologicalEnvironm ent

Advent of E-Commerce, E-Marketing and E