International Marketing PPTs - I

International Marketing
Unit - I
Dr. Ravindra
Associate Professor
Department of Commerce
Indira Gandhi University,
Meerpur, Rewari
6/17/2021 Dr. Ravindra, IGU, Meerpur 1

Introduction
International marketing, though it has certain distinct
characteristics, is similar to domestic marketing in terms of
certain technical attributes. Marketing can be concerned as an
internal part of two processes, viz. technical and social.
International marketing and Domestic marketing are identical,
so far as technical process is concerned. It includes non
human factors such as product, price, cost, brands, etc. The
basic principles regarding these variables are of universal
applicability. But the social aspects of marketing are unique in
any given stratum, because it involves human elements,
namely, the behavior pattern of customers and the given

characteristics of a society, such as consumers attitude,
values etc. It is obvious that marketing, to extent it is
visualized as a social process, will be different from
domestic marketing.
Definition
1. According to Philip Kotler, “Marketing is the analysis,
planning, implementation and control of programmes
designed to bring about desired exchanges with target
audiences for the purpose of mutual or personal gain. It
relies heavily on the adoption and co-ordination of
product, price, promotion and place for achieving
effective response.”

2. According American Marketing Association: “Marketing is
the performance of business activities that direct the flow of
goods and services from producer to consumer or user.”
3. According to Richard Buskrik: “Marketing is an integrated
system of action that creates value in goods through creation
of form, place, time and ownership utilities.”
Extension of marketing activities across the glob is known as
global marketing. When a business unit carries on its
marketing activities in more than one nation, then it is
including in international marketing. Now a days due to on-
going globalization process, tariff and non-tariff barriers are

eliminating. Further due to faster means of transportation and
communication, distance barrier have reduced. Many brands
like Coca-Cola, Pepsi, Loreal, Samsung, Nokia, Dell, Rolex
watches, Apple Computer, McDonald, Levis jeans, LG, Sony,
Vodafone, etc. are popular worldwide. The marketers of these
brands view whole world as their market. It is international
marketing only that has enabled these companies to grow to a
very huge size. The popular definitions of international
marketing are given here;
1. According to Harold Barson, “International marketing is the
process of establishing multinational physical distribution
channels and undertaking various activities for selling the
products and services in different nations.”

2. According to Van Terpestra, “ International marketing is
the process of planning, designing, executing marketing
strategies to achieve marketing objectives in the markets of
other countries.”
3. According to Hess and Cateora, “To make available
company’s products and services to more than one country’s
customer for use is known as international marketing.”
4. According to Backman and T.N. Davidson, “The
performance of all activities necessary for ascertaining the
needs and wants of markets, planning product availability,
effecting transfers of ownership of products, providing for
their physical distribution and facilitating the entire
marketing process in more than one country is known as
international marketing.”

It may be made clear that international marketing is just not
simple extension of domestic marketing mix to various
nations. It is much more than that due to heterogeneous
marketing environment in different nations. The marketing
strategies are to be customized to local need, culture,
economic conditions, geographical conditions, government
legislations, etc. of different nations. For example, McDonald
has customized its menu among different nations as per local
food habits. The name of dishes are determined according to
local language of that nation, the distribution and promotion
programmes are designed according to local customs.

Nature of International Marketing
After studying the meaning and definitions of the international
marketing now turn to understand the nature of international
marketing.
1. Complex: It is very complex in nature as the global company has to
analyze marketing environment of various nations.
2. Controllable and Uncontrollable Variables: International,
marketing has both controllable and non-controllable variables.
Controllable variables are components of marketing mix, i.e. 4Ps
(Product, Price, Place and Promotion). These are components of
international marketing environment. While component of external
marketing environment, viz. competition, government policy,
technology, political environment, etc. of both domestic and

foreign nations constitute non-controllable variables.
3. Wide Scope: Its scope is very wide. The global company can
sell its products and services in many nations, like Coca-Cola
is selling its products in more than 150 nations.
4. More Risky: It involves more risk due to uncertainties
associated with country risk and political risk of different
nations.
5. Requires Services of Experts: It requires services of experts
like export agents, shippers, packaging companies,
technocrats, etc.
6. More Competition: The level of competition in international
marketing is more in comparison to domestic marketing. The

international marketers face competition from other global
companies, domestic marketers of home nation and domestic
marketers of host nation. So global companies face both
domestic competition and foreign competition.
Characteristics of International Marketing
After understanding the nature of the international marketing ,
the followings are the characteristics of global marketing;
1. Different Legal System: Every country has its own legal
system. Some of the countries follow English Common law
while others follow the civil law. Some of the European
countries are having their own legal system. This difference in

in the legal system among different countries increases the
difficulties of businessmen. It is not sure for the businessmen
that which legal system will be applicable to their business
transactions. There must be uniform legal system. However
some of the agencies are trying to make it uniform for all
countries. The United Nations Commission on International
Trade Law is also supporting the opinion of uniformity and is
doing its efforts to bring uniformity in International trade
Law.
2. Market Characteristics: The market characteristics of every
country is different due to the environmental factors, demand
patterns, Govt. control etc. In some countries like India and

USA the market characteristics are found different from
state to state. It is because of all above factors responsible
for the market characteristics.
3. Monetary System: The monitory system of each country
is decided by the government of that country and the
exchange value of country’s currency is being determined
by the forces of supply and demand.
4. Procedure and Documentation: Every country has its
own procedure of documentation requirements for the
purpose of exports. Every business house has to comply
with these rules and regulation for the purposes of export
and imports.

Benefits/Importance of International Marketing
• Benefits to Manufacturer
(i) Increase in Market Area: International marketing has
helped the companies to expand their market area. Now the
whole world constitute their market like; Philips, Nestle,
Nokia, Sony etc. are selling their product worldwide
although their home country market is very small.
(ii) Increase in Sales and Profits: Global companies have huge
level of sales and profits due to large market size. The
companies can sell their surplus production in foreign
market. The sale of many MNCs is even more than GDP of
many nations.
(iii) Diversification of Risk: With global marketing, companies
can diversify company risk, political risk, natural risk,

economic risk, etc. because the global company is not
dependent on market of single nation.
(iv) Economies of Large Scale: Global companies
manufacture their products on a very large scale. Due to
modern techniques of production, division of labour and
specialization, cost of production is low and the quality is
better. Thus, global companies can avail economies of
large scale.
(v) Global Image: MNCs sell their products and services
throughout the world. It improves their corporate image
and brand image. Due to global brand equity, these
companies can easily launch new products, capture new

markets, can even charge high price due to their deep
brand loyalty. Due to their good global image, MNCs can
easily face competition with domestic manufacturers of
host nation.
• Benefits to Economy
(i) Control Over Inflation: Global companies increase the
supply of products in host nations. If in any nation,
domestic prices are rising then it can import goods
through international markets and thereby check the rising
prices in the economy by increasing the supply of these
goods.

(ii) Increase in Employment: Many persons are getting direct
and indirect employment in international marketing. Many
persons are engaged in physical distribution, advertising,
personal selling, transportation, warehousing, etc. Further,
international marketing results in increase in demand and
hence increase in production. Persons engaged in extra
production activities also get employment indirectly due to
global marketing.
(iii) Increase in Exports: International marketing increases
exports and thus helps to earn precious foreign exchange. It
helps to solve the problem of negative balance of payments.

(iv) Increase in Standard of Living: Global marketing makes
available the goods being manufactured in other nations. The
person living in least developed nations and developing
nations can use these modern goods and thereby increase their
standard of living. Global marketing increase choice for
consumers, promotes healthy competition which helps to
reduce prices and improve quality of goods. So customers get
better quality products at lower prices.
(v) Rapid Economic Growth: International marketing promotes
economic activities in the economy of parent nation. It results
in increase in national income and thereby promotes economic

growth in the economy.
(vi) Optimum Utilization of Global Natural Resources: A
nation may have some natural resources in abundance which
are more than its domestic requirements, while some other
nation may be deficient in the same natural resources. Due to
international marketing, one nations can use the natural
resources available in the other nations.
(vii) Strengthens International Ties: International marketing
brings participating nation closer to each other. It results in
increased interaction among people of different nation. It
promotes international cooperation and helps to strengthen
international ties. It, in turn improves international relations.

• Benefits to Consumers
(i) Wider Choice: International marketing increases
availability of verities of foreign goods. The consumer
can used goods being produced in various nations. It
widens consumer’s choice. It also helps to increase
standard of living of masses by providing new and
improved products.
(ii) Better Quality Goods: International marketing
promotes competition between domestic business units
and foreign business units. Increased competition
promotes market efficiency. The business units provides
best quality goods to attract customers and to face

competition effectively.
(iii) Goods Available at Low Price: International marketing
enables production on a mass scale. As a result, economies of
large scale can be availed viz. reduction in per unit production
cost, distribution cost, etc. It helps to make the goods
available at low price. Further international marketing
promotes competition which, in turn, results in low prices.
Challenges in International Marketing
After studying the benefits of international marketing it is
appropriate for the marketers that, to understand the
challenges of global marketing.

1. Difference in Consumers’ Tastes and Preferences: Due to
different culture, climatic conditions, food habits, literacy
level, Level of economic development, etc., the consumers
in different nations have different expectations of the
product. It becomes very difficult for global manufacturer to
design customized product for these heterogeneous groups.
2. Uncertainties in Government Policy: If the government of
importing nation or exporting nation is unstable, then there
may be uncertainty regarding tariff rates, import regulations
like import license, quota, permit, export regulations, etc. So
the importing/exporting firm cannot make long –term plans

regarding international marketing. Government may
impose ban on import or export of certain goods.
Similarly, packing norms may also be changed. The
relation between home nation and host nation may turn
hostile leading to stoppage of trade between these two
nations.
3. Bureaucratic Hurdles: International marketing involves
excessive documentation. The bureaucrats create
unnecessary hurdles in getting the documents cleared. The
excessive formalities for custom clearance add to the
complexities of international marketing.

4. Foreign Exchange Fluctuations: Exchange rates of two
nations never remain static. The value of a particular
currency in terms of another currency keeps on
appreciating or depreciating. It creates environment of
uncertainties for both exporter and importer.
5. Opposition by Domestic Manufacturers: The
manufacturer of importing nation always oppose the entry
of global companies in the domestic territory. Many a
time, social protests and demonstrations are made against
foreign goods. It tarnishes the image of foreign goods.

6. Technological Piracy: In some nations, Patent Act is not
strictly implemented leading to piracy of foreign technology
and duplicate foreign goods. So, the global companies hesitate
to enter into such nations.
7. Dumping: Many a time, global manufacturers dump their
surplus production blow their cost in foreign nations with a
view to damage domestic industry of host nation. It has
negative effect on domestic units. It also tarnishes the image
of foreign company.
8. Corruption: In some nations, global companies have to pay
huge amount as bribe to the ministers to get entry in foreign
nations.

9. Difference in Consumers’ Response to Marketing Mix
Elements: Consumers of different nations differ in their
attitude, opinion, ideology towards different elements of
marketing mix, etc. In some nations consumers are very price
sensitive. Consumers of different nations give different
weights to various product features. For example, in France
and Italy, consumers prefer stylish products. Consumers of
USA are cynical towards advertising, while Japanese
consumers view advertising positively. Indian consumers are
very price sensitive. So, due to different responses to
marketing mix, the global manufacturers find it very difficult
to design appropriate marketing mix.

10. Difference in Marketing Infrastructure: Basic
marketing infrastructure may differ from country to
country which makes the implementation of the same
marketing strategy difficult in different nations. For
example, channels of distribution, retail practices, media
availability and media costs all vary significantly among
various nations. Foreign companies have struggled for
years to get entry into Japan’s rigid distribution system
that has restricted the penetration of foreign goods in
Japan.

Organizational Structure of International
Marketing
Introduction
There is no right way to tackle global markets. When
deciding upon a structure that best matches your
international needs, the objective should be to create the
most efficient system based on the needs of your
company, your shareholders, and your products and
services. Ultimately, the structure must be strong enough
to achieve corporate goals and flexible enough to
withstand market pressures.

Marketing
Definition
By definition, international marketing is the performance
of business activities that direct a flow of goods and
services to consumers or users in more than one nation for
a profit. Depending upon your source, there are four or
five basic marketing structures that can support these
activities and several operational factors that can impact
your decision of which structure will work best for your
organization.

Marketing
Operational Underpinnings
While the exact descriptions vary somewhat, marketing structures
should be developed based upon the operational arrangement of a
company. Begin by identifying with which operational
arrangement you are dealing. The company may be a multinational
organization with primarily overseas operation and a portfolio of
independent, often country-specific, product brands or it may be
arranged as an international company in name, but function
primarily as a domestic operation with overseas sales operations
viewed as profit appendages. A third operational arrangement is
more global, consisting of overseas manufacturing and a sales
pipeline delivery to a unified global market. A fourth operational

Marketing
structure is the most complex: an organized, integrated
network in which overseas operations may manufacture
product components in one country, assemble in another,
distribute globally, but manage product sales people, or
information among geographically-dispersed, but
interdependent units.
Basic Decision: Centralize v/s Decentralize
Once the underlying operation has been identified,
consider how it functions. The first basic marketing
structure decision that must be made is whether marketing

Marketing
will be conducted from a centralized location where
decisions are made at headquarters (HQ) and simply
executed in the field, or if decision-making will be
decentralized; made independently in the regions or
countries where the manufacturing, distribution and sales
are occurring. Centralized marketing requires strong
communications and solid organizational processes to be
successful; otherwise, the lack of communication of
company policies and goals will slow marketing to a
crawl. It also demands a more uniform approach to every-

Marketing
-thing from messaging to pricing and promotional
activities. Decentralized marketing allows for localized, or
at least country-specific, decision-making and message
modification based on cultural attributes like affluence or
literacy. While it facilitates rapid decision-making, it can
also lead to a fragmented brand.
Marketing Structure: Aligned Around Products
Marketing structures aligned around products are focused
on the delivery of the products for specific customer
groups. These dedicated cross-functional teams tend to

Marketing
include product-expert vertical teams, such as a cross-
functional group including product management,
manufacturing facilities, call centers, direct sales teams,
and customer service groups, all focusing on a specific
product or group of products and a global customer base.
This marketing structure is aligned around product
expertise and is focused on providing the best product to
meet the needs of the most customers. While there is
usually a company headquarters and management staff,
the group is often multi-national with offices dispersed
around the globe.

Marketing
Marketing Structure: Aligned Around Geographic
Areas
In other international marketing structures, teams are
organized around geographic areas of the world: North
Africa, the Caribbean/South America, Asia, North
America, etc. They may all deliver the same group of
products, but the team adjusts the product attributes,
positioning, pricing and messaging based upon the
geographic area of the globe they serve. Marketing
expertise is not in the products, but knowledge of the
audience to which the products are to be offered.

Marketing
These teams may be cross-functional groups, and may or
may not be overseen directly from the company's
headquarters. Typically, they revolve around a
geographic, regional office.
Marketing Structure: Aligned Around Processes and
Activities
Another marketing organizational structure is one closely
aligned to distribution channels or the company's physical,
in-country manufacturing capability. With this structure,

Marketing
marketing is designed to focus on key accounts and global
direct sales, or big ticket, multi-million dollar sales with
long lead times. This is common in manufacturing and
technology industries. Another marketing structure more
common in wholesale/retail sales revolves around
seasonal product lines. This includes short lead-time
distribution and activities with set market schedules,
showrooms, and both major and minor accounts. The
global fashion industry is an example of this structure.

Marketing
EPRG Framework
A study of the EPRG framework stands to study
Ethnocentricity, Poly-centricity, Regiocentricity and Geo-
centricity. It is observed in the study of EPRG framework
that firms exhibiting an ethnocentric orientation
emphasize the home market and export to psychologically
close markets. In addition these firms believe that
marketing adaptation is not necessary. In controls to it
Polycentric, Regiocentric firms export to psychologically
distant markets. Adaptation increases as

Marketing
psychological distance between home and host markets
increases.
Further it may be said that globalization is not a one
dimensional concept. The future researches are required to
be carried out to determine the relevant dimensions and
variables as well as their weights in formulating
internationalization index.

WTO and International Marketing
Introduction
World trade is defined as an agreement between two or
more nations that may operate their business in different
parts of the world. This business is done by importing and
exporting goods and services. In short, buying and selling of
products and services irrespective of national boundaries.
Given below are five elements that make international
trades possible
• The agreement over sale of items.
• The agreement over carriage of items.
• The agreement over insurance of the items.

• The consent from the exports and imports authorities to
fulfill legal formalities.
• The mode of payment as agreed by the buyer and the
seller.
It is not possible for any country to fulfill all its needs by
itself. International market is a channel through which
nations source the products and services they lack or do
not have in sufficient quantities. Apart from this,
international politics play a pivotal role in achieving,
promoting or maintaining peace between international
trading partners or nations.

World Trade Organization
The WTO regulates international trade, formulates tariffs
globally, and also resolves conflicts among member
countries.
The major functions of WTO are as follows;
• To facilitate the implementation, administration and
operation and further the objectives of this Agreement and
of the Multilateral Trade Agreements, and also provide
the frame work for the implementation, administration and
operation of the Multilateral Trade Agreements.

• To provide the forum for negotiations among its members
concerning their multilateral trade relations in matters
dealt with under the Agreement.
• To administer the Understanding on Rules and Procedures
Governing the Settlement of Disputes.
• To administer Trade Policy Review Mechanism.
• To cooperate, as appropriate, with the International
Monetary Fund (IMF) and with the International Bank for
Reconstruction and Development (IBRD) and its affiliated
agencies with an aim to achieve greater coherence in
global economic policy making.

The WTO helps maintain peaceful trans-boundary trades and
also resolves the conflicts among the participating countries.
It is not possible to imagine international trade in the absence
of WTO. All the participating nations are bound to abide by
the protocols set by WTO.
Transition from Domestic Marketing to International
Marketing
International Marketing is different from domestic marketing
in many ways. The risks and complexities associated with
International marketing are higher in comparison to domestic
marketing. Therefore, the decision to enter in the foreign

market should be based on economic factors. It is
pertinent to mention here that while entering to foreign
market other controllable and uncontrollable factors must
be studied properly. The temperamental decisions is
considered to be totally unsuitable for the purpose of
international marketing. The complete involvement and
sound determination is the key factor to success in export
marketing and it is based on the basic economic
necessities of the corporate firm.
A. Factors Influencing to go for Export Marketing
What made a firm to go for export business? This is a
question, which always give its answer that whether a

present non-exporter will become an exporter. And if so, what
factors forced him to go for export business. Why he has
opted export and when is the suitable time for him to go
export marketing? The factors which influence a non-
exporting firm to go in for export marketing can be classified
as under:
1. Characteristics of Corporate Firm: If the firm predict no
future market potential for its product in the domestic market,
it motivate the firm to go for the alternative. The
characteristics of the firm are studied to evaluate its strengths,
weaknesses, opportunities and threats. It includes the analysis
of (a) Product characteristics (b) Analysis of the financial
health, (c) Analysis of the growth potential of existing market

and (d) Potential of export market.
2. Recognition of Export Market Conditions: It includes (a)
Export potential (b) Market opportunities and (c) Government
assistance to promote export oriented activities in the country.
Under this management recognizes all these export market
condition and motivates the firms to go in export marketing
for their product.
3. Management Expectations: It is clear that the decision to go
in for export market is always taken by keeping in mind the
huge potential of business in the International market.
Therefore, the management’s expectation about the positive

impacts of exports on the firm’s business always increase. It
includes (a) Increase in the sales volume of the firm, (b)
Increase in the level of profits (c) Optimum utilization of the
level of capacity and (d) Achievement of the growth
objectives of the firms.
B. Motivation to Export Marketing
The following are some basic economic factors which
motivate a company to adopt export marketing.
1. Sales Volume: In export marketing there is huge potential to
increase sales volume. The export orders are always huge in
export business in comparison to domestic market. Therefore,

there are advantages of bulk selling, which motivate the firms
to go in for export marketing.
2. Higher Profit: The sales volume in export business is always
higher. Therefore, the volume of profit earned in export
market is always higher. There is also a progressive
improvement. In the unit value realization of certain product
meant for export.
3. Saturation of Demand in Domestic Market: The demand for
certain products in the domestic market either decline over a
period of time or reaches at its saturation level. It results into
under utilization of the installed capacity of the business
firms. This recession of the demand in domestic market serves

as a stimulus to export ventures. The export market offers
a huge potential and market to sell the product in
international market.
4. Helpful in Reducing Business Risks: International
marketing helps in reducing business risks. There may be
steep fluctuation in the business. It may be due to certain
factors which may affect the overall business activities.
When a firm is selling its product in number of markets,
there may be fluctuation in sales volume in some markets.
Some time there may be downward fluctuation in the sales

of domestic market. It may create a huge business risks.
The international marketing, through its diversified export
business may help in reducing business risks in the overall
activities of a company.
5. Legal Restrictions: The government may impose certain
legal restrictions to expand the limits of certain business
activities up to certain extent for the fulfillment of certain
social obligations. But such restrictions may not be
imposed on export business or to such firms who are
utilizing their excess capacity for the purpose of export
only. In such a situation, a firm may contemplate export

operations, because it offers a way to achieve corporate
growth. Such restrictions encourage the investors to go in
for export market.
6. Social Responsibility of the Business: Some
industrialists feel a sense of responsibility to contribute
towards national economy by increasing their export
operations. Sometime they also try to build up their image
by exporting at the time of advance situation. This sense
of social responsibility encourage them to increase their
export activities.

7. Increase in the Production Level: To increase the production
capacity is very necessary for ultimate survival of a business.
It is possible only with the help of export marketing as the
avenues in the domestic markets are limited. In today era of
liberalization, privatization and globalization, a lot of
technological changes are taking place. Bigger companies are
spending a lot of money on research and development. It is
necessity of the business to increase its level of production, as
to meet out the increase costs of research and development. It
requires additional market to sell its product in the market.
The limitation of domestic market and requirements of a

business encourages the firm to go in for export business.
8. Technological Changes: It is evident that export marketing
operations are helpful in (a) generating new idea, (b)
increasing the existing product line (c) improvements in the
quality of a product (d) reducing the cost of production (e) to
make product at a competitive price to generate new ideas are
possible when a firm is dealing in the international market. It
is also helpful to equip the company with latest technological
changes.
9. Product Life Cycle: The stages of product life cycle are
different in domestic as well as international market. A
product in the domestic market may be at decline stage, while

in case of international marketing it may be at its
introduction or growth stage. The product life cycle also
motivate a firm to go for the export market.
International Marketing Environment
Meaning
International Marketing environment refers to the
controllable and uncontrollable forces that influence upon
the marketing decision making of a firm globally.
International Marketing environment is comprised of
those components which shape policies, programmes and

strategies of an international marketer. An international
firm must resort to systematic study of international
marketing environment to collect the inputs of marketing
decision making.
To serve the international markets effectively, a firm is in
need of understanding international marketing
environment properly. The needs, preferences and
expectations of buyers in different overseas markets are
not necessarily similar. The environmental differences
influence the international marketing decisions of a firm.

Such strategic decisions as whether a company should
enter a given foreign market or not, what market entry
strategy should it employ, what strategy it should adopt in
respect of product, promotion, pricing and distribution,
etc. are based on two sets of factors, viz., the company
related factors and the foreign market related factors. The
decision as to whether to go international or not is based,
in addition to the above two, on yet another set of factors,
viz., the domestic marketing environment.
The company related factors refer to such factors as the
company objectives, resources, and international
orientation. The domestic marketing environment consist

of factors like growth prospects including the competition,
government policies etc. The foreign market related
factors which are relevant to the international business
strategy formulation or which affect the international
business are often described as the international business
environment.
What makes a business strategy which is successful in one
market a failure in another market is often the differences
in the business environment. In other words, the
differences in the business environment may call for
changes in the business strategies, i.e., there should be

adaptation of the business strategy to suit the environment
of the market. In short, it is the differences in the
marketing environment which may make the international
business strategy different from the domestic one.
Definitions
1. According to Cherunilam, “International marketing
environment is composed of economic environment,
political environment, legal environment, socio-cultural
environment, technological environment and other factors
which affect international trade and finance.”

2. According to Armstrong, “International marketing
environment refers to all internal and external forces that
affect marketing policies, decisions and operations of a
business unit.”
3. According to Cravens, “International marketing
environment is that which is external to the marketing
management function, largely uncontrollable, potentially
relevant to marketing decision making and changing and/or
constraining in nature.”
4. According to Philip Kotler, “Marketing environment refers
to external forces that affect a firm’s ability to develop and
maintain successful transactions and relationships with target
customers.”

Environment
1. Complex in Nature: International marketing environment
is very complex in nature. It includes economic, political,
socio-cultural, legal, physical, technological environment.
In case of international marketing, the business unit has to
analyze these environmental components of many nations.
The nature of these components significantly varies
among different nation. So the study of international
marketing environment is complex.

2. Dynamic: The components of marketing environment at the
global level are not static. These factors keep on charging
from time to time. Because of these fast changing
components, the international marketing environment is
dynamic. So the business unit operating at international level
has to analyze it on a regular basis and has to adjust its
marketing plans and strategies accordingly.
3. Affects Different Business Units Differently: It is not
necessary that any particular change in marketing
environment will effect all types of business in a similar
manner. One business may welcome a change in marketing

environment, while some other business may feel adverse
effect of the same change. Therefore, marketing environment
may affect different business units in different manner.
4. Short-term and Long-term Impact: Every change in
marketing environment has both short-term and long-term
impact on business. The changed environment affects the
profitability, productivity and development of business in both
short term and long term.
5. Unlimited Effect of External Environment Factors:
External factors of international marketing environment are
uncontrollable. These factors have very deep effect on
business. Sometimes the effect of these factors is so deep that

it may take the business to closure, like decision of
government to ban wine, whisky will compel wine shops to
wind-up their business.
6. Uncertain: International marketing environment is more
uncertain in comparison to domestic marketing environment.
There may be sudden changes in any component of
international marketing environment at any point of time.
Even developed nations like US, European nations, Japan
have experienced recession. The global business units
marketing their products to such rich nations were in sudden
shock due to this recession. The global business units were
not expecting economic recession in these nations which
badly affected their sales and profits.

7. Interdependent Components: Various components of
international marketing environment are interdependent and
hence affect each other. For example, economic environment
affects social environment and is also affected by it. Similarly,
socio-cultural environment affects demographic environment
and is also affected by it.
8. Includes Both Internal and External Environment: Internal
marketing environment includes both internal and external
environment of domestic economy as well as economies of
other countries where the business unit operates. Business unit

has control on internal environment because it is related to
factor within the organization. External environment is
outside the organization and is beyond the control of business
unit. The international business unit has to change its
marketing plans, strategies and policies in accordance with
changes in components of external marketing environment.
9. Affected by International Trade Agreements: Multilateral
trade agreements among different countries regarding tariff
and non-tariff barriers affect the working of business units
engaged in international marketing. Reduction in tariff in a
nation will have favorable effect on the business units
exporting to such nation. Similarly, quantitative restrictions

on imports imposed by a nation will cause threat to the
business unit exporting to such nation. Major international
economic institution like WTO, IMF, World Bank,
UNCTAD also significantly affect international marketing
environment.
Components of International Marketing Environment
International marketing environment has two
types/components:
A. Internal Marketing Environment.
B. External Marketing Environment.

A. Internal Marketing Environment
Definition: Internal environment is a component of
the business environment, which is composed of various
elements present inside the organization, that can affect or
can be affected with, the choices, activities and decisions
of the organization.
It encompasses the climate, culture, machines/equipment,
work and work processes, members, management and
management practices.
In other words, the internal environment refers to the
culture, members, events and factors within an
organization that has the ability to influence the decision

of the organization, especially the behaviour of its human
resource. Here, members refer to all those people which
are directly or indirectly related to the organization such
as owner, shareholders, managing director, board of
directors, employees, and so forth.
The factors which are under the control of the
organization, but can influence business strategy and other
decisions are termed as internal factors. It includes:
1. Value System: Value system consists of all those
components that are a part of regulatory frameworks,

such as culture, climate, work processes, management
practices and norms of the organization. The employees
should perform the activities within the purview of this
framework.
2. Vision, Mission and Objectives: The company’s vision
describes its future position, mission defines the
company’s business and the reason for its existence and
objectives implies the ultimate aim of the company and
the ways to reach those ends.
3. Organizational Structure: The structure of the
organization determines the way in which activities are
directed in the organization so as to reach the ultimate
goal. These activities include the delegation of the task,

coordination, the composition of the board of directors, level of
professionalization, and supervision. It can be matrix structure,
functional structure, divisional structure, bureaucratic structure,
etc.
4. Corporate Culture: Corporate culture or otherwise called an
organizational culture refers to the values, beliefs and behaviour of
the organization that ascertains the way in which employees and
management communicate and manage the external affairs.
5. Human Resources: Human resource is the most valuable asset of
the organization, as the success or failure of an organization highly
depends on the human resources of the organization.

6. Physical Resources and Technological Capabilities:
Physical resources refers to the tangible assets of the
organization that play an important role in ascertaining the
competitive capability of the company. Further,
technological capabilities imply the technical know-how
of the organization.
Internal environmental factors have a direct impact on a
firm. Further, these factors can be altered as per the needs
and situation, so as to adapt accordingly in the dynamic
business environment.

B. External Marketing Environment
External environment refers to the factors outside the firm.
These factors are uncontrollable or we can say that these are
beyond the control of a company. The external environmental
factors such as the economic factors, socio-cultural factors,
government and legal factors, demographic factors,
geographical factors etc. are generally regarded as
uncontrollable factors.
The external environment may further be divided in two
parts:
a. Micro Environment and
b. Macro Environment.

a. Micro Environment
The micro environment is made from individuals and
organizations that are close to the company and directly
impact the customer experience. They can be defined as
the actors in the firm’s immediate environment which
directly influence the firm’s decisions and operations.
These include, suppliers, various market intermediaries
and service organizations, competitors, customers, and
publics. The micro environment is relatively controllable
since the actions of the business may influence such
stakeholders.

Wal-Mart’s micro environment would be very much
focused on immediate local issues. It would consider how
to recruit, retain and extend products and services to
customers. It would pay close attention to the actions and
reactions of direct competitors. Wal-Mart would build and
nurture close relationships with key suppliers. The
business would need to communicate and liaise with its
publics such as neighbors which are close to its stores, or
other road users. There will be other intermediaries as
well including advertising agencies and trade unions
amongst others.
1. Suppliers: Marketing managers must watch supply
availability and other trends dealing with suppliers to

ensure that product will be delivered to customers in the
time frame required in order to maintain a strong customer
relationship.
2. Marketing Intermediaries: Marketing intermediaries
refers to resellers, physical distribution firms, marketing
services agencies, and financial intermediaries. These are
the people that help the company promote, sell, and
distribute its products to final buyers. Resellers are those
that hold and sell the company’s product. They match the
distribution to the customers and include places such as
Wal-Mart, Target, and Best Buy.

Physical distribution firms are places such as warehouses that
store and transport the company’s product from its origin to
its destination. Marketing services agencies are companies
that offer services such as conducting marketing research,
advertising, and consulting. Financial intermediaries are
institutions such as banks, credit companies and insurance
companies.
3. Customers: Another aspect of microenvironment is the
customers. There are different types of customer markets
including consumer markets, business markets, government
markets, international markets, and reseller markets. The
consumer market is made up of individuals who buy goods
and services for their own personal use or use in their house -

- hold. Business markets include those that buy goods and
services for use in producing their own products to sell.
This is different from the reseller market which includes
businesses that purchase goods to resell as is for a profit.
These are the same companies mentioned as market
intermediaries. The government market consists of
government agencies that buy goods to produce public
services or transfer goods to others who need them.
International markets include buyers in other countries
and includes customers from the previous categories.

4. Competitors: Competitors are also a factor in the micro
environment and include companies with similar offerings
for goods and services. To remain competitive a company
must consider who their biggest competitors are while
considering its own size and position in the industry. The
company should develop a strategic advantage over their
competitors.
5. Publics: The final aspect of the microenvironment is
publics, which is any group that has an interest in or
impact on the organization's ability to meet its goals. For
example, financial public can hinder a company’s ability

to obtain funds affecting a level of credit a firm has. Media
public include newspapers and magazines that can publish
articles of interest regarding the company and editorials
that may influence customers’ opinions.
Government publics can affect the company by passing
legislation and laws that put restrictions on the company’s
actions. Citizen- action publics include environmental
groups and minority groups and can question the actions
of a company and put them in the public spotlight. Local
publics are neighborhood and community organizations
and will also question a company’s impact on the local
area and the level of responsibility of their actions.

The general public can greatly affect the company as any
change in their attitude, whether positive or negative, can
cause sales to go up or down because the general public is
often the company’s customer base and finally those who are
employed within the company and deal with the organization
and construction of the company’s product.
b. Macro Environment:
The macro environment is less controllable. The macro
environment consists of much larger all-encompassing
influences (which impact the micro environment) from the
broader global society. The macro environment includes;

culture, political issues, technology, the natural
environment, economic issues and demographic factors
amongst others.
A number of factors constitute the international
environment: social, cultural, political, legal, competitive,
economic, and technology. Each should be evaluated
before a company makes a decision to go international.
1. Social/Cultural Environment: The social/cultural
environment consists of the influence of religious, family,
educational, and social systems in the marketing system.

Marketers who intend to market their products overseas
may be very sensitive to foreign cultures. While the
differences between home country and those of foreign
nations may seem small, marketers who ignore these
differences risk failure in implementing marketing
programmes. Failure to consider cultural differences is
one of the primary reasons for marketing failures
overseas.
This task is not as easy as it sounds as various features of
a culture can create an illusion of similarity. Even a
common language does not guarantee similarity of
interpretation. For example, in the US customers purchase

“cans” of various grocery products, but the Britishers purchase
“tins”. A number of cultural differences can cause marketers
problems in attempting to market their products overseas.
These include:
(a) Language,
(b) Colour,
(c) Customs and taboos,
(d) Values,
(e) Aesthetics,
(f) Time,

(g) Business norms,
(h) Religion, and
(i) Social structures.
lets discuss all these factors;
(a) Language: The importance of language differences cannot
be over emphasised, as there are almost 3,000 languages in
the world. Language differences cause many problems for
marketers in designing advertising campaigns and product
labels. Language problems become even more serious once
the people of a country speak several languages. For example,
in Canada, labels must be in both English and French. In
India, there are over 200 different dialects, and a similar
situation exists in China.

(b) Colours: Colours also have different meanings in
different cultures. For example, in Egypt, the country’s
national colour of green is considered unacceptable for
packaging, because religious leaders once wore it. In
Japan, black and white are colours of mourning and
should not be used on a product’s package. Similarly,
purple is unacceptable in Hispanic nations because it is
associated with death.
(c) Values: An individual’s values arise from his/her moral
or religious beliefs and are learned through experiences.
For example, in America people place a very high value

on material well-being, and are much more likely to
purchase status symbols than people in India.
Similarly, in India, the Hindu religion forbids the
consumption of beef, and fast-food restaurants such as
McDonald’s and Burger King would encounter
tremendous difficulties without product modification.
Americans spend large amounts of money on soap,
deodorant, and mouthwash because of the value placed on
personal cleanliness. In Italy, salespeople call on women
only if their husbands are at home.

(d) Aesthetics: The term aesthetics is used to refer to the
concepts of beauty and good taste. The phrase, “Beauty is
in the eye of the beholder” is a very appropriate
description for the differences in aesthetics that exist
between cultures. For example, Americans believe that
suntans are attractive, youthful, and healthy. However, the
Japanese do not.
(e) Time: Americans seem to be fanatical about time when
compared to other cultures. Punctuality and deadlines are
routine business practices in the US. However,
salespeople who set definite appointments for sales calls

in the Middle East and Latin America will have a lot of time
on their hands, as business people from both of these cultures
are far less bound by time constraints. To many of these
cultures, setting a deadline such as “I have to know next
week” is considered pushy and rude.
(f) Business Norms: The norms of conducting business also
vary from one country to the next.
Here are several examples of foreign business behaviour
that differ from Indian business behaviour:
(1) In France, wholesalers do not like to promote products. They
are mainly interested in supplying retailers with the products
they need.
(2) In Russia, plans of any kind must be approved by a
seemingly endless string to committees. As a result business

negotiations may take years.
(3) In Japan, businesspeople have mastered the tactic of silence
in negotiations.
(g) Religious Beliefs: A person’s religious beliefs can affect
shopping patterns and products purchased in addition to
his/her values. In the United States and other Christian
nations, Christmas time is a major sales period. But for other
religions, religious holidays do not serve as popular times for
purchasing products. Women do not participate in household
buying decisions in countries in which religion serves as
opposition to women’s rights movements.
Every culture has a social structure, but some seem less widely

defined than others. That is, it is more difficult to move
upward in a social structure that is rigid. For example, in the
US, the two-wage earner family has led to the development of
a more affluent set of consumers. But in other cultures, it is
considered unacceptable for women to work outside the
home.
2. Political Environment: The political environment abroad is
quite different from that of India. Most nations desire to
become self-reliant and to raise their status in the eyes of the
rest of the world. This is the essence of nationalism. The
nationalistic spirit that exists in many nations has led them to
engage in practices that have been very damaging to other
countries’ marketing organizations.

For example, foreign governments can intervene in
marketing programmes in the following ways:
(1) Contracts for the supply and delivery of goods and
services
(2) The registration and enforcement of trademarks, brand
names, and labeling.
(3) Patents
(4) Marketing communications.
(5) Pricing
(6) Product safety, acceptability, and environmental issues.

(a) Political Stability: Business activity tends to grow and thrive
when a nation is politically stable. When a nation is politically
unstable, multinational firms can still conduct business
profitably. Their strategies will be affected however. Most
firms probably prefer to engage in the export business rather
than invest considerable sums of money in investments in
foreign subsidiaries. Inventories will be low and currency will
be converted rapidly. The result is that consumers in the
foreign nation pay high prices, get less satisfactory products,
and have fewer jobs.
(b) Monetary Circumstances: The exchange rate of a particular
nation’s currency represents the value of that currency in
relation to that of another country. Government set some

exchange rates independently of the forces of supply and
demand. The forces of supply and demand set others. If a
country’s exchange rate is low compared to other
countries, that country’s consumers must pay higher
prices on imported goods. While the concept of exchange
rates appears relatively simple, these rates fluctuate
widely and often, thus creating high risks for exporters
and importers.
(c) Trading Blocs and Agreements: A trade bloc is a type
of intergovernmental agreement, often part of a regional
intergovernmental organization, where regional barriers to

trade, (tariffs and non-tariff barriers) are reduced or
eliminated among the participating states. Regional trading
blocs represent a group of nations that join together and
formally agree to reduce trade barriers among themselves.
Trace blocs can be stand-alone agreements between several
states such as the North American Free Trade Agreement
(NAFTA) or part of a regional organization such as the
European Union (EU). Depending on the level of economic
integration, trade blocs can fall into different categories, such
as, preferential trading areas, free trade areas, customs unions,
common markets and economic and monetary unions.

Trade agreements regulate international trade between two or more
nations. An agreement may cover all imports and exports, certain
categories of goods, or a single category. The most important general
trade agreement is called, simply enough, the General Agreement on
Tariffs and Trade (GATT).
India views Regional Trading Arrangements (RTA’s) as ‘building
blocks’ towards the overall objective of trade liberalisation. Hence, it
is participating in a number of RTAs which include Free Trade
Agreements (FTAs); Preferential Trade Agreements (PTAs);
Comprehensive Economic Cooperation Agreements (CECAs); etc.
These agreements are entered into either bilaterally or in a regional
grouping. The United States is currently engaged in some 320 trade
agreements with various nations; However, several general trade
agreements have shaped trade policy on broad levels.

(d) Tariff and Non-Tariff Barriers: Most nations
encourage free trade by inviting firms to invest and to
conduct business there, while encouraging domestic firms
to engage in overseas business. These nations do not
usually try to strictly regulate imports or discriminate
against foreign-based firms. There are, however, some
governments that openly oppose free trade. For example,
many Communist nations desire self-sufficiency.
Therefore, they restrict trade with non-Communist
nations. But these restrictions vary with East-West
relations.

The most common form of restriction of trade is the tariff,
a tax placed on imported goods. Protective tariffs are
established in order to protect domestic manufacturers
against competitors by raising the prices of imported
goods. The other form of restriction is non-tariff.
Countries impose non-tariff barriers to restrict the import
of goods indirectly from certain countries. Non-tariff
barriers include quota system, restriction on foreign
exchange, state trading, etc.
(e) Expropriation: All multinational firms face the risk of
expropriation. That is, the foreign government takes
ownership of plants, sometimes without compensating the

owners. However, in many expropriations there has been
payment, and it is often equitable. Many of these facilities
end up as private rather than government organisations.
Because of the risk of expropriation, multinational firms
are at the mercy of foreign governments, which are
sometimes unstable, and which can change the laws they
enforce at any point in time to meet their needs.
3. Legal Environment: Businesses are affected by legal
environments of countries in many ways. Legal
environments are not just based on different laws and
regulations concerning businesses, these are also defined
by the factors like rule of law, assess to legal systems by

foreigners, litigations systems etc. Variations in legal
environments, rule of law, laws, and legal systems affect
foreign business firms in a number or areas.
Key areas of business that are affected by legal
environments are listed below:
(a) Laws concerning employment and labour affect
managing of workforce in international markets.
(b) Different laws in foreign countries regulate financing of
operations by foreigners. In some countries foreign firms
are restricted access to local deposits/funds.

(c) Various countries around the world have different laws
concerning marketing of products, especially food
products, pharmaceuticals, hazardous materials and
strategic products to a nation.
(d) Countries also control and regulate developing and
utilising of technologies through various laws and
regulations.
(e) Many countries also have different laws and regulations
that affect ownership of businesses by foreigners.
(f) Countries also regulate /restrict remittances to foreign
countries and repatriation of profits.

(g) Some countries regulate closing of operations and in some
countries businesses are not allowed to close shop especially
when they have sold products that have guarantees and
warranties from the foreign firms.
(h) Various countries around the world have implemented
different trade and investment regulations.
(i) Countries also have their own taxation requirements, systems
and laws.
(j) Countries also differ on the accounting reporting requirements
from various categories of firms.
(k) Countries around the world have also actively implemented
environmental regulations that affect businesses.

4. Technological Environment: Technological know-how
impacts all spheres of an international marketer’s
operations including production, information system,
marketing etc. The international marketers must
understand technological development and its impact on
its total operations. The marketing intelligence system
may help the international firm to know technological
orientations of other enterprises and to update its own
technologies to remain competitive. Research and
Development (R&D) has a vital role to play in increasing
technological ability of a firm.

New technologies create new markets and opportunities.
However, every new technology replaces an old
technology. Xerography hurt carbon-paper industry,
computer hurt typewriter industry, and examples are so
on. Any international marketer, when ignored or forgot
new technologies, their business has declined. Thus, the
marketer should watch the technological environment
closely. Companies that do not keep up with technological
changes, soon find their products outdated.
The United States leads the world in research and
development spending. Scientists today are researching a

wide range of promising new products and services ranging
from solar energy, electric car, and cancer cures. All these
researches give a marketer an opportunity to set his products
as per the current desired standard. The challenge in each case
is not only technical but also commercial that means
manufacture a product that can be afforded by mass crowd.
The level of technological development of a nation affects the
attractiveness of doing business there, as well as the type of
operations that are possible. Marketers in developed nations
cannot take many technological advances for granted. They
may not be available in lesser developed nations.

Consider some of the following technologically related
problems that firms may encounter in doing business
overseas:
(a) Foreign workers must be trained to operate unfamiliar
equipment.
(b) Poor transportation systems increase production and physical
distribution costs.
(c) Maintenance standards vary from one nation to the next.
(d) Poor communication facilities hinder advertising through the
mass media.
(e) Lack of data processing facilities makes the tasks of planning,
implementing, and controlling marketing strategy more
difficult.

5. Economic Environment: The international marketer tries to
understand economic environmental variables of the global
markets for identifying the right marketing opportunities for
the enterprise.
The economic environment is comprised of the following
economic variables:
(a) National Income
(b) Gross Domestic Product (GDP)
(c) Industrial Structure
(d) Currency floating (Open/fixed) issue
(e) Demand patterns
(f) Balance of Payment (BOP) status

(g) Economy base (Import/Export)
(h) Rate of Economic Growth
(i) Occupational Pattern
(j) State of Inflation
(k) Consumer Mobility.
The economic situation varies from country to country.
There are variations in the levels of income and living
standards, interpersonal distribution of income, economic
organisation, and occupational structure and so on. These
factors affect market conditions. The level of development

in a country and the nature of its economy will indicate
the type of products that may be marketed in it and the
marketing strategy that may be employed in it.
In high income countries there is a good market for a large
variety of consumer goods. But in low-income countries
where a large segment does not have sufficient income
even for their basic necessities, the situation is quite
different. A nation’s economic situation represents its
current and potential capacity to produce goods and
services. The key to understanding market opportunities
lies in the evaluation of the stage of a nation’s economic
growth.

A way of classifying the economic growth of countries
is to divide them into three groups:
(a) Industrialised,
(b) Developing, and
(c) Less-developed nations.
The industrialised nations are generally considered to be
the United States, Japan, Canada, Russia, Australia, and
most of Western Europe. The economies of these nations
are characterized by private enterprise and a consumer
orientation. They have high literacy, modern technology,
and higher per capita income. Developing nations are

are those that are making the transition from economies based
on agricultural and raw materials production to industrial
economies.
Many Latin American nations fit into this category and they
exhibit rising levels of education, technology, and per capita
incomes. Finally, there are many less developed nations in
today’s world. These nations have low standards of living,
literacy rates are low, and technology is very limited.
Usually, the most significant marketing opportunities exist
among the industrialized nations, as they have high levels of
income, one of the necessary ingredients for the formation of
markets. However, most industrialized nations also have stable
population bases, and market saturation for many products
already existing. The developing nations, on the other hand,

have growing population bases, and although they
currently import limited goods and services, the long-run
potential for growth in these nations exists.
Dependent societies seek products that satisfy basic needs-
food, clothing, housing, medical care, and education.
Marketers in such nations must be educators, emphasizing
information in their market programmes. As the degree of
economic development increases, so does the
sophistication of the marketing effort focused on the
countries.

6. Competitive Environment: To plan effectively international
marketing strategies, the international marketer should be well-
informed about the competitive situation in the international
markets.
By competitive environment we mean the following variables:
(a) Nature of competition.
(b) Players in the competition.
(c) Strategical weapons used by the participants.
(d) Competition regulations.
Entering an international market is similar to doing so in a
domestic market, in that a firm seeks to gain a differential
advantage by investing resources in the market. Often local firm

will adopt imitation strategies, sometimes successfully.
When they are successful, their own nation’s economy
receives a good boost. When they are not successful, the
multinational firm often buys them out.
Japanese marketers have developed an approach to
managing product costs that has given them a competitive
advantage over US competitors. A typical American
company will design a new product, and then calculate the
cost. If the estimated cost is too high, the product will be
taken back to the drawing board.

In Japan, a company typically starts with a target cost
based on the price that it estimates the market is most
willing to accept. Product designers and engineers are
then directed to meet the cost target. This approach also
encourages managers to worry less about product costs
and more about the role it should play in gaining market
share. Briefly, at Japanese companies like NEC, Nissan,
Sharp, and Toyota, a team charged with bringing a
product idea to market estimates the price at which the
product is most likely to appeal to the market.

Following are the ways an international marketer can handle
competition:
(i) Proper knowledge about the competitors
(ii) Knowledge of competitors’ objectives
(iii) Knowledge of competitors’ strategies
(iv) Knowledge of competitors’ reaction patterns
(v) Knowledge of competitors’ strengths and weakness.
International Marketing Environment – Importance
The various components of the international marketing environment
are the major determinants of marketing opportunities. As such, it is
the responsibility of an international firm to have clear grasp of
international marketing environment to formulate effective marketing
decisions regarding Marketing Mix variables.

The following points highlight the importance of
understanding international marketing environment:
1. International Marketing environment opportunities vary
among the nations. Some economies have enormous
potentials of growth while other has not. The knowledge
of economic environment helps an international marketer
to understand which market to select for reaping lasting
benefits.
2. Culture is a basic determinant of human behaviour. The
cultural norms and values may vary among the countries.
That’s why knowledge of cultural environment is utmost
important to the international marketer.

3. Political environment has a major influence on creating sound
investment climate. The law and order situations influence
business operations. International marketing operations can be
smoothly conducted in a country having political stability and
healthy political situation.
4. International marketing is affected by legal environment of a
foreign country in which a firm intends to operate.
International marketing transactions need compliance with
legal provisions. So international marketer should be familiar
with the legal environment of foreign countries where
marketing efforts will be made.
5. The state of competition prevailing in an international market
has great importance upon the strategic plan of the
international marketer.

6. Technological changes have also great importance because of
its direct impact on product obsolescence issue. Up-to-date
knowledge about the state of technological environment is
essential for the firms associated with international marketing.
Foreign Market Entry Strategies
Although investing in another market can be risky and require
a lot of capital, the rewards can be huge.
By selling your product or service in another country, you can
introduce your company to huge markets, increase your sales
and profits, gain brand recognition, reduce the risk of only
operating in one market (eg, due to economic or seasonal
downturns) and extend your product’s life cycle.

Which Country?
You may already have a country in mind, or you may simply
have the idea of exporting but no idea where to. Start by
making a list of countries you are interested in.
When you have a list, consider more carefully your product –
is it suitable for any of the countries on your list? The culture,
religion and law of each country are extremely important to
consider here. Some countries are very conservative in
comparison to the UK, so trying to export items such as
clothes or alcohol may be tricky. The majority of the
population in other countries may have certain dietary
requirements – for examples, Hindus do not eat beef. When
you have narrowed down your list, consider international
business laws in each country.

You may need to consult locals to research regional laws
and customs to ensure that you are able to take your
product or service into that country. You will also need to
undertake the usual market research, to ensure that people
in your target market will definitely want to buy your
product and service.
When to Enter?
If you know that your competitors are considering
entering the same market as you, there are two options:
aim to be ‘first to market’ or wait and see how successful
your competitors are and follow them into the market.

By aiming to be ‘first to market’, you will be taking several
risks. Firstly, regardless of how thorough your market
research is, you cannot guarantee that people will buy what
you are selling. Secondly, depending on your market entry
method, you may have to invest high capital or meet
resistance from potential local partners who are unsure that
the product will succeed.
By following your competitors should they succeed, you will
know that there is a market for your business and it is much
more likely that local companies will be willing to partner
with you. However, you run the risk that local customers will
have become loyal to your competitors’ brand and will not
want to buy from another company.

Scale of Entry
The obvious issue here is cost. Entering a market on a
large scale will require significant resources. Although
this is more likely to make an impression on a new market
as it will attract the attention of customers and local
businesses alike, it may be risky financially if your
company does not take off.
Entering on a smaller scale can offer business owners the
chance to learn about the new market and limit risks –
however, you are much less likely to gain significant
amounts of attention.

Market Entry Methods
When you know the scale of entry, you will need to work out
how to take your business abroad. This will require careful
consideration as your decision could significantly impact your
results. There are several market entry methods that can be
used.
1. Exporting: Exporting is the direct sale of goods and / or
services in another country. It is possibly the best-known
method of entering a foreign market, as well as the lowest
risk. It may also be cost-effective as you will not need to
invest in production facilities in your chosen country – all
goods are still produced in your home country then sent to
foreign countries for sale. However, rising transportation costs
are likely to increase the cost of exporting in the near future.

The majority of costs involved with exporting come from
marketing expenses. Usually, you will need the involvement
of four parties: your business, an importer, a transport
provider and the government of the country of which you
wish to export to.
2. Licensing: Licensing allows another company in your target
country to use your property. The property in question is
normally intangible – for example, trademarks, production
techniques or patents. The licensee will pay a fee in order to
be allowed the right to use the property.
Licensing requires very little investment and can provide a
high return on investment. The licensee will also take care of
any manufacturing and marketing costs in the foreign market.

3. Franchising: Franchising is somewhat similar to licensing in that
intellectual property rights are sold to a franchisee. However, the
rules for how the franchisee carries out business are usually very
strict – for example, any processes must be followed, or specific
components must be used in manufacturing.
4. Joint venture: A joint venture consists of two companies establishing
a jointly-owned business. One of the owners will be a local business
(local to the foreign market). The two companies would then provide
the new business with a management team and share control of the
joint venture.
There are several benefits to this type of venture. It allows you the
benefit of local knowledge of a foreign market and allows you to
share costs. However, there are some issues – there can be problems
with deciding who invests what and how to split profits.

5. Foreign Direct Investment: Foreign direct investment (FDI)
is when you directly invest in facilities in a foreign market. It
requires a lot of capital to cover costs such as premises,
technology and staff. FDI can be done either by establishing a
new venture or acquiring an existing company.
6. Wholly Owned Subsidiary: A wholly owned subsidiary
(WOS) is somewhat similar to foreign direct investment in
that money goes into a foreign company but instead of money
being invested into another company, with a WOS the foreign
business is bought outright. It is then up to the owners
whether it continues to run as before or they take more control
of the WOS.

7. Piggybacking: Piggybacking involves two non-competing
companies working together to cross-sell the other’s products
or services in their home country. Although it is a low-risk
method involving little capital, some companies may not be
comfortable with this method as it involves a high degree of
trust as well as allowing the partner company to take a large
degree of control over how your product is marketed abroad.
8. Trunkey Projects: We need to clarify it right away – this
market entry method won’t suit every business concept you
have. This strategy is suitable only for firms that are providing
such services as environmental consulting, architecture,
construction, and engineering. The essence of this method is
that everything is build from scratch and only then turns over

to the client ready to work.
We like the principle of “turnkey” work because after all you
only need to turn the key to start your business operations. We
are not afraid to claim that this strategy is not worse than
others. Turnkey projects most of the time come from
governments. These contracts are known as one of the best so
you have to compete with other foreign and domestic firms to
perceive such contracts.
9. Buying Out a Company: The name of this market entry
method speaks for itself. Actually, it may be the easiest way to
enter a new market but simultaneously the most costly one at
the same time. As we mentioned at the beginning of our

discussion certain methods approach certain businesses you
are eager to enter. This could be because the organization has
a considerable market share, you are a major competitor or
this is the only way for your company to join the industry due
to government regulations. That is why buying a new
company may be the most appropriate way to enter some
specific markets.
From our point of view, this strategy is a great chance to
establish yourself in a new arena. Here are some advantages:
• Your business already has a market share;
• Fewer problems with authorities as you are taken as a local
firm;
• Existing brand image and customer base.

Such a method as buying a new company doesn’t only have
pros but there are several cons:
• You are no longer a single organization, and your foreign
activities in that specific industry will be somewhat as distinct
from the rest of the picture of your brand.
• It’s very expensive, particularly if the company you want to
acquire is profitable.
10. Partnering: Different foreign markets may require
partnering. It’s rather a versatile term. On the one hand,
partnering may be that you are co-working in marketing,
manufacturing, etc., on the other hand, you and your partner
may invest in the same product on general terms.

Personally, we love partnering as it is the best way to get
adapted to the new market environment. Looking back,
some countries really require partnering and you won’t be
able to enter a new market without it. But anyway that is a
great strategy especially for the unknown for your
business markets to get used to business and social
culture, get more knowledge about the local market, and
get new contacts. But don’t forget to study in detail who
you will be dealing with. You need someone who will be
helping you to move on, not slow down.

Broad Structure of International
Marketing Plane
The International Marketing Plane
It should be apparent by now that companies and
organizations planning to compete effectively in world
markets need a clear and well-focused international marketing
plan that is based on a thorough understanding of the markets
in which the company is introducing its products. The
challenge, then, of international marketing is to ensure that
any international strategy has the discipline of thorough
research, and an understanding and accurate evaluation of
what is required to achieve the competitive advantage. As
such, the decision sequence in international marketing (see
Exhibit 15) is much larger than that of domestic markets. As
noted in the next “Integrated marketing”, it is also more
complicated.

Broad Structure of International Marketing
Plane
Corporate
Level
Business
Level
Functional
Level
Objective
Decision to go
International
Stakeholder’s
expectation
Situation Analysis
Market Objective
Selection of Target
Market
Marketing Strategies
Tactics/Implementati
on
Allocation of
Resources
Control/Correction
Data on potential
market
External
Environment
Level of
Commitment
Resources
Selection of
entry
Methods

Marketing Plane
The corporate level: We begin at the corporate level, where
firms decide whether to become involved in international
markets and determine the resources they are willing to
commit. Thus, this stage is primarily concerned with the
analysis of international markets. Decisions here will be
dependent on matching the results of that analysis with the
company’s objectives. These objectives, in turn, will be
determined by the many motivating factors we have discussed
in the earlier sections. The level of resources that the company
is willing to commit should be determined by the strategy that
is needed to achieve the objectives that have been set.

Marketing Plane
The Business Level: Business-level considerations begin
with the assessment of the stakeholders involved in the
business. It is important to clearly identify the different
stakeholder groups, understand their expectations, and
evaluate their power, because the stakeholders provide the
broad guidelines within which the firm operates. In the
case of international marketing, it is particularly important
to address the concerns of the stakeholders in the host
company.

Marketing Plane
The situation analysis concerns a thorough examination of the
factors that influence the businesses’ ability to successfully
market a product or service. The results lead to a realistic set
of objectives. Conducting a situation analysis in an
international setting is a bit more extensive. It not only
includes the normal assessment
of external environmental factors and resources
/capabilities, it also includes a determination of the level of
commitment exhibited by the business, as well as possible
methods of entry. These last two factors are interrelated in that
a company’s level of commitment to international markets
will directly influence whether they employ exporting, a joint
venture, or some other method of entry.

Marketing Plane
In turn, level of commitment and method of entry are
influenced by the evaluation of environmental factors as well
as resources and capabilities. The latter audits not only the
weaknesses of the company, but also the strengths of the
company, which are often taken for granted. This is
particularly important in international markets; for example,
customer brand loyalty may be much stronger in certain
markets than others, and products may be at the end of their
life in the domestic market but may be ideal for less
sophisticated markets. It is important, too, to evaluate the
capacity of the firm to be flexible, adaptable, and proactive, as
these are the attributes necessary, for success in a highly
competitive and rapidly changing world.

Marketing Plane
Undoubtedly, environmental factors have received the most
attention from marketers considering international markets.
The Functional Level: Having set the objectives for the
company, both at the corporate level and the business level,
the company can now develop a detailed program of
functional activities to achieve the objectives. Following the
integrated approach employed throughout this text, each of
the functional elements (e.g. finance, human resources,
research) must be considered jointly. The best international
marketing strategy is doomed to failure if human resources
can not find and train the appropriate employees, or research
cannot modify the product so that it is acceptable to
consumers in another country.

Marketing Plane
Ultimately, this coordination between business functions
is contingent on the market entry strategy employed as
well as the degree of standardization or customization
deemed. Having integrated at the function level, we next
consider integration of the marketing mix elements.
Product/Promotion: Keegan has highlighted the key
aspect of marketing strategy as a combination of
standardization or adaptation of product and promotion
elements of the mix and offers five alternative and more
specific approaches to product policy:

Marketing Plane
• One product, one message, worldwide. While a number of writers
have argued that this will be the strategy adopted for many products
in the future, in practice only a handful of products might claim to
have achieved this already.
• Product extension, promotion adaptation. While the product stays the
same this strategy allows for the adaptation of the promotional effort
either to target new customer segments or to appeal to the particular
tastes of individual countries.
• Product adaptation, promotion extension. This strategy is used if a
promotional campaign has achieved international appeal, but the
product needs to be adapted because of local needs.
• Dual adaptation. By adapting both products and promotion for each
market, the firm is adopting a totally differentiated approach.

Marketing Plane
• Product invention. Firms, usually from advanced nations, that
are supplying products to less well-developed countries adopt
product invention.
Another critical element that is closely aligned with the
product and promotion is the brand. Anthony O’Reilly,
Chairman of H J Heinz, believes that the communications
revolution and the convergence of cultures have now set the
stage for truly global marketing. The age of the global brand
is at hand. For example, Heinz was looking to expand its 9
Lives cat food brand and Morris the Cat logo into Moscow.
Although it is a stable and successful brand in the US, testing
and research done by Dimitri Epimov, a local marketing
manager in Moscow, led Heinz executive to make a marketing

Marketing Plane
change to ensure the product’s success in Russia. Namely, a
fatter-looking Morris was created for packaging. Another
discovery: while Americans tend to treat their kitties with
tuna, Russian cat lovers prefer to serve beef-flavored food.
As discussed earlier, product positioning is a key success
factor and reflects the customer’s perceptions of the product
or service. However, in countries at different stages of
economic development, the customer segments that are likely
to be able to purchase the product and the occasions on which
it is bought may be significantly different.

Marketing Plane
Pricing: Pricing products in foreign nations is complicated by
exchange rate fluctuations, tariffs, governmental intervention,
and shipping requirements. A common strategy involves a
marketer setting a lower price for their products in foreign
markets. This strategy is consistent with the low income levels
of many foreign countries, and the lower price helps to build
market share. Pricing strategies are also strongly influenced
by the nature and intensity of the competition in the various
markets.
For these reasons, it is important to recognize at the outset
that the development and implementation of pricing strategies
in international markets should follow the following stages:

Marketing Plane
1. Analyzing the factors that influence international pricing, such as the cost
structures, the value of the product, the market structure, competitor
pricing levels, and a variety of environmental constraints.
2. Confirming the impact the corporate strategies should have on pricing
policy.
3. Evaluating the various strategic pricing options and selecting the most
appropriate approach.
4. Implementing the strategy through the use of a variety of tactics and
procedures to set price.
5. Managing prices and financing international transactions.
Perhaps the most critical factor to be considered when developing a
pricing strategy in international markets, however, is how the customers
and competitors will respond. Nagle has suggested nine factors that
influence the sensitivity of customers to prices, and all have implications
for the international marketer. Price sensitivity reduces:

International Marketing PPTs - I

International Marketing PPTs - I

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