Chapter 1

International Marketing : An Introduction

Incase you missed 3 June was
National donut day

Dunkin Donuts China was serving up

a fresh batch of dry pork and
seaweed donuts.

With over 3,100 stores in 30

countries outside of the U.S., Dunkin
Donuts has evolved its menu to
satisfy the sweet tooth of its global
customers
EPRG FRAME WORK OF IM
CONCEPT

It is companies management orientation towards internationalization of

the firms operation
 EPRG FRAMEWORK
Ethnocentric
Polycentrism Regiocentrism Geocentrism
- Home
country - Host country - A regional - A world
orientation orientation orientation orientation

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EPRG FRAMEWORK
Ethnocentric
- Self
Reference
Criterion

8
• Overseas operations are viewed as secondary to
domestic operations
• Considered as a means to dispose of surplus
domestic production
• Plans for overseas market are developed in the
home office, utilizing policies and procedures
identical to those employed in the domestic
market
• Overseas marketing is looked after by home
country nationals
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• No systematic research is conducted overseas
• No major modifications are made to products sold
in overseas markets
• Prices are calculated on the same basis as in the
home market with the addition of overseas
distribution costs
• Promotion and distribution strategies are similar
to that employed in the home country
• Strong reliance on export agents
EPRG FRAMEWORK

Polycentrism
- Host
country
orientation

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• Subsidiaries are established in overseas market
• Each subsidiary operates independently with its own
marketing objectives and plans
• Marketing activities are organized on country by
country basis
• Marketing research is conducted independently in each
country
• Separate product lines are developed in each country
• Home country products are modified to meet local
needs.
 Polycentric continued
• Each subsidiary will have its own pricing and
promotion policy
• Sales personnel from those countries
• Traditional channels of distribution of those
countries

Eg. McDonalds – Veg

burgers in India

McDonald’s does not use multiple 4’s in

advertising prices in China; four sounds like the
word death.

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EPRG FRAMEWORK

Regiocentrism
- A regional
orientation

14
EPRG FRAMEWORK

Geocentrism
- A world
orientation
 Regiocentric and
Geocentric
• Region or entire world as potential market
• Firm develops policies and organizes activities
on a regional or worldwide basis
• Marketing personnel from the region or from
any country
• Standardized product lines for regional or
worldwide markets
• Regional or Global channels of distribution are
also developed
Eg for Regional centric D Mart or Walmart
 Importance of International
Marketing
1.Important to expand target market – Target market of a
marketing organisation will be limited if it just concentrate on
domestic market. When an organisation thinks globally, it looks
for overseas opportunities to increase its market share and
customer base.

2. Important to boost brand reputation – International

marketing may give boost to a brand’s reputation. Brand that
sold internationally is perceived to be better than the brand that
sold locally. People like to purchase products that are widely
available. Hence, international marketing is important to boost
brand reputation.
3. Important to connect business with the world – Expanding
business into an international market gives a business an advantage
to connect with new customers and new business partners.

Apple - the tech giant designs its iPhone in California; outsources its
manufacturing jobs to different countries like - Mongolia, China, Korea, and
Taiwan; and markets them across the world. Apple has not restricted its
business to a nation, rather expanded it to throughout the world. The
opportunities for networking internationally are limitless. The more "places"
a business is, the more connections it can make with the world.

4. Important to open door for future opportunities – International

marketing can also open door for future business opportunities.
International marketing not only increases market share and customer
base, it also helps the business to connect to new vendors,
a larger workforce and new technologies and ways of doing business.

For example – American organisations investing in Japan have found

programs like – Six Sigma and Theory Z which are helpful in shaping their
business strategies.
 Nature of International
Marketing
1. Broader market is available – Unlike domestic marketing the
market is not restricted to national population. Population of other
countries can also be targeted in international marketing.

2. Involves lots of uncontrollable variables – In domestic

marketing the marketers have to interact with only one set of
uncontrollable variables. In international marketing lots of
uncontrollable variables are involved or more if the marketing
organization deals in more countries.

3. Requires broader competence – Special management skills and

broader competence is required in international marketing/business.
4. Competition is intense – An international marketing
organization has to compete with both the domestic competitors
and the international competitors. Hence, the competition is
intense in international marketing.

5. Involve high risk and challenges – International marketing

is proof to various kinds of risk and challenge like – political risk,
cultural differences, changes in fashion and style of foreign
customers, sudden war, changes in government rules and
regulations, communication challenges due to language and
cultural barriers, etc,.
 Scope of International
Marketing
1. Export – It is a function of international business whereby goods
produced in one country are shipped to another country for further
sale or trade.

2. Import – Goods or services brought into one country from another for
use or sale.

3. Re-export – Import of semi-finished goods, further processing, and

export of finished goods.

4. Management of international operations

Operating marketing and sales facilities abroad,
Establishing production or assembly facilities in foreign countries, and
Monitoring the operations and practices of other MNCs and agencies
Why Go Global
 Challenges in International
Marketing
1. Tariff Barriers:
 Tariff barriers indicate taxes and duties imposed on imports.
Marketers of guest countries find it difficult to earn adequate
profits while selling products in the host countries.

 Sometimes, to prevent foreign products and/or promote

domestic products, strategically tariff policies are formulated
that restricts international marketing activities.

 Frequent change in tariff rates and variable tariff rates for

various categories of products create uncertainty for traders
to trade internationally. Antidumping duties levied on imports
and defensive strategies create difficulty for exporters.
2. Administrative Policies:
Bureaucratic rules or administrative procedures – both in guest countries and
host countries – make international (export and/or import) marketing harder.

Some countries have too lengthy formalities that exporters and importers
have to clear. Unjust dealings to get the formalities/ matters cleared create
many problems to some international players. International marketers have to
accustom with legal formalities of several courtiers where they wants to
operate.

3. Considerable Diversities:
Different countries have their own unique civilization and culture. They pose
special problems for international marketers. Global customers exhibit
considerable cultural and social diversities in term of needs, preferences,
habits, languages, expectations, buying capacities, buying and consumption
patterns, and so forth. Social and personal characteristics of customers of
different nationalities are real challenges to understand and incorporate.
Compared to local and domestic markets, it is more difficult to understand
behaviour of customers of other countries.
4. Political Instability or Environment:
Different political systems (democracy or dictatorship), different economics
systems (market economy, command economy, and mixed economy), and
political instability are some of real challenges that international markers have to
face. Political atmosphere in different courtiers offer opportunities or pose
challenges to international marketers.

5. Place Constraints (Diverse Geography):

Trade in foreign countries of far distance itself practically difficult. In case of
perishable products, it is a real challenge. Exporting and importing products via
sea route and making arrangements for effective selling involves more time as
well risks. Segmenting and selecting international markets require the marketers
to be more careful.

6. Variations in Exchange Rates:

Every nation has its currency that is to be exchanged with currencies of other
nations. Currencies are traded every day and rates are subject to change. Indian
Rupee, European Dollar, US Dollar, Japanese Yen, etc., are appreciated or
discounted at national and international markets against other currencies. In
case of extraordinary and unexpected moves (ups and downs) in
currency/exchange rates between two courtiers create serious settlement
problems.
7. Norms and Ethics Challenges:
Ethics refers to moral principles, standards, and norms of conduct governing
individual and firm’s behaviour. They are deeply reflected in formal laws and
regulations. In different parts of the world, different codes of conduct are
specified that every international business player has to observe. However,
globalization process has emphasized some common ethics worldwide.
Corruption is another issue relating to business ethics.

8. Terrorism and Racism:

Terrorism is a global issue, a worldwide problem. People of the world are
living under constant fear of terrorists attracts anywhere in the world. To
trade internationally is not economically risky, but there is the threat to life.
Racism also restricts international trade activities.
International Organization Written –
Assignment -
• WTO-world trade organisation

• IDA- international development association

• IFC-International finance co operation

• IBRD- the international bank for reconstruction and

development

• ICSID- the international center for settlement of investment

dispute

• IMF-International Monetary funds

• UNCTAD-united Nations conference on trade and

development

• UNIDO-the united nations industrial development organisation

THANK YOU