Module 1-amity university International marketing notes bba sem 6DEFINITION OF INTERNATIONAL MARKETINGInternational Marketing can be defined as exchange of goods and services between differentnational markets involving buyers and sellers. According to the American MarketingAssociation, “International Marketing is the multi-national process of planning and executing theconception, prices, promotion and distribution of ideal goods and services to create exchangesthat satisfy the individual and organizational objectives.”CONCEPTS OF INTERNATIONAL MARKETINGI. Domestic Marketing: Domestic Marketing is concerned with marketing practices within themarketer’s home country.II. Foreign Marketing: It refers to domestic marketing within the foreign country.III. Comparative Marketing: when two or more marketing systems are studied, the subject ofstudy is known as comparative marketing. In such a study, both similarities and dis-similaritiesare identified. It involves an analytical comparison of marketing methods practiced in differentcountries.IV. International Marketing: It is concerned with the micro aspects of a market and takes thecompany as a unit of analysis. The purpose is to find out as to why and how a product succeedsor fails in a foreign country and how marketing efforts influence the results of internationalmarketing.V. International Trade: International Trade is concerned with flow of goods and services betweenthe countries. The purpose is to study how monetary and commercial conditions influencebalance of payments and resource transfer of countries involved. It provides a macro view of themarket, national and international.VI. Global Marketing: Global Marketing consider the world as a whole as the theatre ofoperation. The purpose of global marketing is to learn to recognize the extent to which marketingplans and programmes can be extended world wide and the extent to which they must beadopted.

Need for International Marketing:(1) International interdependence of countries and growing world population: Self-sufficiency inall respects is not attained by any country in the world. Due to geographical and other factors, nocountry can produce all its requirements. There is international interdependence due to whichevery country has to import certain goods and export goods, in order to pay for imports. Theawareness of mutual dependence favors the growth of international marketing.(2) No uniform geographic and climatic conditions: there is any uniformity of geographic andclimatic conditions in all countries. A country does not have the capacity to produce all thegoods required by it. Due to natural and other economic factors, a country can import the goods,which it is not in a position to produce.(3) No uniform production cost:International marketing is needed because the production cost inall countries is not the same. Every country can produce certain commodities with lowproduction cost because of some favourable factors. Exchange of goods on the basis ofcomparative cost is beneficial to all countries.(4) Increasing needs and better standard of living:International marketing is needed to fulfill theincreasing needs of consumers for production and improved products and for providing goodstandard of living to the people.(5) Need of developing closer economic and cultural cooperationInternational marketing isneeded for developing closer economic and cultural co-operation between different countries.Thus, the global resources can be used fully at the global level. International marketing isrequired for economic integration among the countries of the world.(6) Problem of surplus production and scarce production in some countries:Internationalmarketing is needed because ofsurplus production in some countries and scarce production insome other countries. Some countries have huge unutilized production capacity. Some countrieshave no capacity to fulfill even their domestic requirements. This problem can be solved by

international marketing which helps in exchange of goods according to the requirements ofdifferent countries.(7) Bridging gap between developed and developing nations: International marketing is neededto bridge the gap between developed and developing nations. International marketing helps inexchange of goods and services and helps in transfer of technical know-how and skills, therebyaccelerating the development of developing countries.(8) Economic growth of developing countries and peace in the world:International marketing isneeded for quick economic growth of developed and developing countries. It helps in transfer oftechnology and quick industrial development in developing countries. The developed countriesprovide help to developing countries. International marketing develops co-operation amongcountries and thereby world peace and prosperity.OBJECTIVES OF INTERNATIONAL MARKETING• To bring countries closer for trading purpose and to encourage large scale free trade amongthe countries of the world.• To bring integration of economies of different countries and there by to facilitate the processof globalization of trade.• To establish trade relations among the nations and thereby to maintain cordial relationsamong nations for maintaining world peace.• To facilitates and encourage social and cultural exchange among different countries of theworld.• To provide better life and welfare to people from different countries of the world. Inaddition, to provide assistance to countries facing natural calamities and other emergenciessituations.• To provide assistance to developing countries in their economic and industrial growth andthereby to remove gap between the developed and developing countries.• To ensure optimum utilization of resources (including surplus production) at global level.• To encourage world export trade and to provide benefits of the same to allparticipating countries.• To offer the benefits of comparative cost advantage to all countries participating in

international marketing.• To keep international trade free and fair to all countries by avoiding trade barriers.Difference between International and Domestic MarketingInternational Marketing Domestic Marketing1. Meaning It refers to those activities which resultsinto transfers of goods and servicesfrom one country to another.It refers to those activities whichresults into transfers of goods andservices inside the country itself.2. Barriers International trade is characteristics bytariff and non tariff barriers.Domestic marketing has no suchrestrictions.3. Currencies It involves exchange on the basis ofdifferent currencies.It involves exchange in the basis ofsame currencies.4.GovernmentInterferenceExchange takes place undergovernment rules and regulations.There is high degree of governmentinterference.Government in interference is zero orminimum only incase of essentialcommodities.5. Culture Trade should be done taking diverse Culture does not affect in domesticinto consideration. Even things likecolour combination can be affect thetrade.marketing.6.Mode of Payment Letter of credit is normally as mode ofpayment.Cash, Cheques, DD’s are the mostcommon.7.Mobility of Factorsof ProductionFactors of Production are relativelyimmobile as compared to domesticmarketing.Domestic Trade enjoys greatermobility in factors of production.8. Competition International Trade is subject to intense

competition.Competition is not as intense as it isin international marketing.9. Documentation International Marketing is subject tocomplex documentationDomestic trade does not involvemuch of documentation.10. Risk International Marketing is subject tohigh risk. Political, foreign exchangerisk, bad debt risk are few of them.Domestic Marketing is also subjectto risk but not as high asinternational marketing.SCOPE OF INTERNATIONAL MARKETINGInternational Marketing constitutes the following areas of business:-Exports and Imports: International trade can be a good beginning to venture intointernational marketing. By developing international markets for domestically producedgoods and services a company can reduce the risk of operating internationally, gainadequate experience and then go on to set up manufacturing and marketing facilitiesabroad.Contractual Agreements: Patent licensing, turn key operations, co – production, technicaland managerial know – how and licensing agreements are all a part of internationalmarketing. Licensing includes a number of contractual agreements whereby intangibleassets such as patents, trade secrets, know – how, trade marks and brand names are madeavailable to foreign firms in return for a fee.Joint Ventures: A form of collaborative association for a considerable period is known asjoint venture. A joint venture comes into existence when a foreign investor acquiresinterest in a local company and vice versa or when overseas and local firms jointly form anew firm. In countries where fully owned firms are not allowed to operate, joint ventureis the alternative.Wholly owned manufacturing: A company with long term interest in a foreign marketmay establish fully owned manufacturing facilities. Factors like trade barriers, cost

differences, government policies etc. encourage the setting up of production facilities inforeign markets. Manufacturing abroad provides the firm with total control over qualityand production.Contract manufacturing: When a firm enters into a contract with other firm in foreigncountry to manufacture assembles the products and retains product marketing with itself,it is known as contract manufacturing. Contract manufacturing has important advantagessuch as low risk, low cost and easy exit.Management contracting: Under a management contract the supplier brings a package ofskills that will provide an integrated service to the client without incurring the risk andbenefit of ownership.Third country location: When there is no commercial transactions between two countriesdue to various reasons, firm which wants to enter into the market of another nation, willhave to operate from a third country base. For instance, Taiwan’s entry into china throughbases in Hong Kong.Mergers and Acquisitions: Mergers and Acquisitions provide access to markets,distribution network, new technology and patent rights. It also reduces the level ofcompetition for firms which either merge or acquires.Strategic alliances: A firm is able to improve the long term competitive advantage byforming a strategic alliance with its competitors. The objective of a strategic alliance is toleverage critical capabilities, increase the flow of innovation and increase flexibility inresponding to market and technological changes. Strategic alliance differs according topurpose and structure. On the basis of purpose, strategic alliance can be classified asfollows:i. Technology developed alliances like research consortia, simultaneous engineering agreements,licensing or joint development agreements.ii. Marketing, sales and services alliances in which a company makes use of the marketinginfrastructure of another company in the foreign market for its products.

iii. Multiple activity alliance involves the combining of two or more types of alliances. Forinstance technology development and operations alliances are generally multi- country alliances.On the basis of structure, strategic alliance can be equity based or non equity based. Technologytransfer agreements, licensing agreements, marketing agreements are non equity based strategicalliances.Counter trade: Counter trade is a form of international trade in which export and importtransactions are directly interlinked i.e. import of goods are paid by export of goods. It istherefore a form of barter between countries. Counter trade strategy is generally used byUDCs to increase their exports. However, it is also used by MNCs to enter foreignmarkets. For instance, PepsiCo’s entry in the former USSR. There are different forms ofcounter trade such as barter, buy back, compensation deal and counter purchase. In caseof barter, goods of equal value are directly exchanged without the involvement ofmonetary exchange. Under a buy back agreement, the supplier of a plant, equipment ortechnology. Payments may be partly made in kind and partly in cash. In a compensationdeal the seller receives a part of the payment in cash and the rest in kind. In case of acounter purchase agreement the seller receives the full payment in cash but agrees tospend an equal amount of money in that country in a given period.Problems in International Marketing(1) Political and Legal Differences: The political and legal environment of foreign markets isdifferent. The complexity generally increases as the number of countries in which a companydoes business increases. The political and legal environment is not the same in all provinces ofmany home markets. For example, the political and legal environment is not exactly the same inall the states of India.(2) Cultural differences: Cultural differences pose one of the most difficult problems ininternational marketing. It is essential to understand cultural differences to formulate successful

marketing strategies. However, many domestic markets, are also not free from cultural diversity.(3) Currency unit differences: The currency unit differs from nation to nation. This maysometimes cause problems of currency convertibility, besides the problems of exchange ratefluctuations. There may be differences also in the monetary system and regulations.(4) Language differences: An international marketer often faces problems due to languagedifferences. Even when the same language is used in different countries, the same words or termsmay have different meanings. However, the language problem is not something peculiar tointernational marketing. For example, the multiple languages in India.(5) Marketing Infrastructure Differences: The availability and nature of marketing facilitiesavailable in different countries may differ widely. For example, an advertising medium veryeffective in one market may not be available, or may be underdeveloped, in another market.(6) High Costs of Distance: When the markets are far removed by distance, the transport costbecomes high and the time require