INTERNATIONAL MARKETING MANAGEMENT Module - 1

MODULE OBJECTIVES
Introduction Framework of IM Definition-scope and challenges Difference between IM & DM The dynamic environment of international trade Transition from domestic to international markets

INTRODUCTION
It refers to marketing carried out by companies overseas or across national borderlines. The performance of the business activities that direct the flow of a companys goods and services to consumers or users in more than one nation for a profit.

American Marketing Association (AMA)

The multinational process of
planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

INTERNATIONAL MARKETING
In simple words International Marketing is the application of marketing principles to across national boundaries.

However, there is a crossover between what is commonly expressed as international marketing and global marketing, which is a similar term.

Global marketing
It refers to marketing activities integrated across multiple country markets.

Alternative Market Entry Strategies

According to Frank Bradley & Micheal Gannon, any injudicious selection of the entry mode give rise to opportunity costs & in some cases foil subsequent endeavors in international market

Prof.Raghavendran Venugopal

Level of commitment
1. Domestic purchasing 9. Contract manufacture 2. Piggy back operations 10.Licensing 3. Export management 11.Strategic alliance companies 12.Joint venture 4. Trading companies 13.Assembly operations 5. Sales force 14.Company Acquisition 6. Distributors & agents 15.Wholly owned 7. Franchising subsidiary 8. Direct marketing
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Factors Affecting the selection of entry mode

External factors
Market size Market growth Government regulations Level of competition Physical infrastructure Level of risk
Political Economic Operational

Production & Shipping Costs Lower cost of Production

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 Internal factors
Company Objectives Availability of company resources Level of commitment International experience Flexibility

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Steps in Entering Foreign Market

Country Identification Preliminary Screening In depth Screening Final Selection Direct Experience

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Foreign Market Entry Strategies

Exporting Joint venture Acquisition Assembly operations Turnkey operations Wholly owned subsidiary Licensing Strategic alliances Franchising Management contracts Free Trade Zones Contract Manufacture
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Exporting
Traditional mode of entering the foreign market
The volume of foreign business is not large enough to justify production in foreign marketing Cost of production in the foreign market is high. Company may not have permanent interest in the foreign market and no guarantee of longer markets Licensing or contract manufacturing is not a better alternative.
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 Factors to be considered in exporting

Government policies Marketing factors Logical considerations Distribution Issues

Type of Exporting
Indirect Exporting Direct Exporting
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Advantages & Disadvantages of Indirect Exporting Advantages

Free from botheration No need for export firm A boon to new entrants Economy Market information Concentration on production Disadvantages Ignorant for export trading No scope for product development Availability of middle men Commission No obligation to manufacturer No permanency in business.
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Direct Exporting
Functions:
Direct supervision, including the development of export policy. Selling, advertising, sales promotion, training and services. Credit & terms of payment. Financing, exchange, invoicing and bill collections
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Adv & Dis adv

Advantage:
Better knowledge of customers demand Complete control Better returns on exports, goodwill Appreciation of market conditions Permanency Supply chain management Dedication of staff Large financial resources Managerial ability Increased distribution costs Risk Miscellaneous limitations
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Disadvantage:

Licensing
Licensing agreements are most common on the use of patents, trademarks, copyrights & unpatented technology. Advantage:
Offers a small business Relatively low investment Low financial risk Less cost MR Less investment in R&D Escapes from product failures
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Disadvantages
No control over production & marketing Licensor can be competitor Chances of misunderstanding between two parties Quality control may be difficult to achieve.

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Joint Venture
When company decides to shares its ownership of specially set up new company for manufacturing & marketing to explore opportunity. It is always based on 2 or more companies can contribute complimentary resources or expertise.

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Reasons for joint ventures

Cost savings Expanding customer base Access to technology Risk sharing Entry to emerging Economics & Technical markets. Global competition.

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Types of Joint Ventures

Between two firms in one industry. Between two firms across different industries Between an Indian firm and foreign company in India. Between an Indian firm and foreign company in foreign country. Between an Indian firm and foreign company in a third country.
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Adv & Dis Adv

Advantage:
Large capital flow. Joint risk burden Different skills set are available. Large projects are feasible and possible. More direct participation in local markets Exert greater control over the JV.

Disadvantage:
Potential of conflicts. Delay in decision making Life cycle of a JV hindered by many causes of collapse.
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Strategic Alliances
It is an agreement between two or more individuals or entities stating that the involved parties will act in a certain way to order to achieve a common goal. Strategic alliances usually make sense when the parties involved have complementary strengths. e.g. code share where airlines of a similar type sell each others tickets. There is no co-ownership.
Types

technology swaps R&D exchanges distribution relationships

Driving forces

insufficient resources High R&D costs Concentration of firms in mature markets Market access
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