A study of global markets and

understanding pricing product

and brand building strategies in
global markets

Submitte
d by
Kushagra Bhatnagar

CERTIFICATE
(FROM FACULTY GUIDE)
This is to certify that Mr. Kushagra Bhatnagar Roll no. PGFA1432, a
student of Post-Graduate Diploma in Management in Jaipuria Institute
of management, Noida, has worked under my guidance and
supervision. This project report A study of global markets and
understanding pricing product and brand building strategies in global
markets has the requisite standard and to the best of our knowledge.

(Signature)

Name of the project guide: Mr. Himanshu Manglik

Date:

DECLARATION
(FROM STUDENT)
I, Kushagra Bhatnagar, hereby declare that that the project work entitled
A study of global markets and understanding pricing
product and brand building strategies in global markets
submitted towards partial fulfilment of requirements for the award of Post
Graduate Diploma in Management is my original work and the dissertation
has not formed the basis for award of any degree, associate ship,
fellowship or any similar title to the best of my knowledge.

Date:
Student)

(Signature of

Kushagra Bhatnagar
PGFA1432

Contents
Executive
summary ....................................................................................................................
................
Limitation of
project ........................................................................................................................
..........
Introduction to
project .................................................................................................................
1.
.....
Primary
objective .........................................................................................................
1.1.
................
1.2 Expected
outcome ....................................................................................................................
.........
Globalization ......................................................................................................
2.
..............................
Globalization
2. index ................................................................................................................
1
........
3. Domestic market and international marketing
decisions ................................................................
Domestic Marketing
...................................................................................................... .
1.1.1
Global Marketing
.......................................................................................................... .
1.1.2
Global Marketing Considerations
....................................................................................... .
1.2
1.
Domestic vs. International
3
marketing ..................................................................................... .
4. Reasons for entering in international
markets ................................................................................
5. Process of international
marketing ................................................................................................. .
6. Decision making process for international
markets ........................................................................
7.
Identification of international
1
markets ......................................................................................... .
7.
Segmentation of international
2
markets .........................................................................................
7.3 Tools for international market
analysis .........................................................................................
Trade statistics
............................................................................................................................... .
Tariffs and market requirements
............................................................................................... .
Foreign direct investment data
.................................................................................................. .
Voluntary standards
...................................................................................................................... .
Market analysis studies
................................................................................................................ .
Capacity building in market
analysis.........................................................................................

7
8
9
1
0
1
0
1
1
1
1
1
3
1
3
1
3
1
3
1
5
1
8
2
2
2
4
2
4
2
5
2
7
2
7
2
7
2
7
2
8
2
8
2
8

8. Entering international
markets ........................................................................................................... .
8.
Mode of international market
1
entry ....................................................................................... .
8.
Factors affecting the selection of entry
2
mode .........................................................................
External Factors:
.............................................................................................................................
.
2) Internal Factors:
.......................................................................................................................... .
8.
Choosing the right international market entry
3
mix .................................................................
Step One Country Identification
.................................................................................................. .
Step Two Preliminary Screening
.................................................................................................. .
Step Three In-Depth Screening
.................................................................................................... .
Step Four Final Selection
.............................................................................................................. .
Step Five Direct Experience
.......................................................................................................... .

2
8
2
8
3
1
3
1
3
4
3
5
3
5
3
6
3
7
3
7
3
8
4

9. Product strategy for international markets...............................................................

38

9.1

Standardization vs adaptation in international markets.................................

38

9.2

Factors influencing product adaptation in international markets.................

40

Target Market.........................................................................................................................

40

Packaging.................................................................................................................................
40

Changes in Economic Climate.................................................................................................

41

Actions of Competitors............................................................................................................

41

9.3

Product quality decisions for international markets.........................................

41

9.4

Packaging and labelling for international markets...........................................

47

9.5

Product launch for international markets...........................................................

49

9.6

Product promotion strategies for international markets.................................

50

Extension.................................................................................................................................
50

Adaptation...............................................................................................................................
50

Invention..................................................................................................................................
51

Pricing Considerations............................................................................................................

51

Brand building in international markets.................................................................

10
51

10.1 Types of brands.......................................................................................................

51

10.2 Brand image............................................................................................................

57

10.3 Brand equity............................................................................................................

58

10.4 Brand identity..........................................................................................................

60

10.5 Brand essence.........................................................................................................

61

When is it useful?....................................................................................................................

61

10.6 Brand positioning....................................................................................................

63

10.7 Brand revitalization................................................................................................

64

10.8 Strategies for building global brands.................................................................

65

10.9 International branding strategy...........................................................................

67

Pricing decision for international markets.............................................................

11
71

11.1 Pricing approaches for international markets..................................................

71

Skimming Strategies:.............................................................................................................

72

Penetration Pricing Strategies:................................................................................................

73

Differential Pricing Strategies:...............................................................................................

73

Geographic Pricing Strategies:...............................................................................................

74

Product Line Pricing Strategies:.............................................................................................

74

11.2 Factors influencing pricing decision in international markets......................

76

11.3 Terms of payment in international transactions dumping.............................

78

Cash-in-Advance.....................................................................................................................

78

Letters of Credit......................................................................................................................

79

Documentary Collections........................................................................................................

79

Open Account..........................................................................................................................

80

Consignment............................................................................................................................
80

11.4 Counter trade..........................................................................................................

81

11.5 Transfer pricing in international markets..........................................................

83

11.6 Grey marketing.......................................................................................................

85

References:...............................................................................................................................
86

Executive summary
Now a days companies believe in going global for various reasons such as expansion and earn
more revenue. They also want to have a global understanding of customers by going global.
But making products for global customer is a complete different process as product
manufacturing and marketing of the products deals with various behaviour of customer such as
culture, perception about the product. Various decisions are made on the international basis
such as deciding the price of the product, packaging of the product and that to at a cost
effective manner.
Various strategies are made for making product successful in the international markets. The
companies either have to standardise their product or they have to adapt in accordance with
customer need and requirement. To become successful in the global market companies, have to
take one of the either strategy.
The projects give us an understanding of global market and various marketing strategies that
are being used in the global market.
In the era of globalization ever company or business need to go global in order to increase their
business and reach. Marketing activity carried out by a firm for profit I more than one country
is referred to as international marketing. Since the firm has to carry out its marketing
operations in more than one nation, the task of marketing becomes much more complex
compared to domestic marketing. As in the case of domestic marketing, international marketing
involves identifying the needs and wants of customers, conceptualizing and developing
products, pricing, promotion and distribution of goods and services and coordinating the
marketing activities in international markets.

Limitation of project
Limited Time was one of the biggest constraints felt while working on the project, though to
reduce the effect of this on the project, certain books, articles, and research papers were read
online to gather information on the subject matter. The report was made informative using the
insights from newspaper articles, web, books, and research papers published. This project is an
attempt to make the research more intense and broad by citing some examples from the
companies and to measure the effect of these motivational factors on their performance.

1. Introduction to project
Through the fundamental of marketing are the same as those in domestic markets, in
international markets, variety of environmental factors combine to make the marketing
decision of a business organisation more challenging. Also known as uncontrollable elements
these are social, economic, political, legal and technological factors over which a marketer can
exercise little influence. The challenge in international marketing thus lies in managing the
controllable elements of the marketing mix product, price, distribution and promotion and
adapting to environmental uncontrollable to ensure marketing success.
During the last few decades the marketing environment across the world has witnessed
unprecedented changes which have metamorphosed the entire approach to marketing. Increase
in income levels in nearly all across the world, except in Sub-Saharan Africa, has accelerated
the growth of global markets. Reduction in tariffs and prohibition of explicit non-tariff
marketing barriers under the WTO framework has contributed to the opening up of
international markets. Economic integration of the entire world through the removal of trade
barriers, increase in capital mobility, and diffusion of knowledge and information have
significantly contributed to the process of globalization. Even countries with state driven
marketing systems such as CIS and China, are fast moving towards free markets.
Thus, in the merging marketing scenario, developing thorough understanding of international
marketing has become not only necessary for the firms operation g in the international markets but
also a pre-condition of success even for operating domestically. Recent development in the world
economy had led to the emergence of international marketing as one of the key areas of marketing.
The subject adopts a multi-disciplinary approach, borrowing from diverse disciplines such as
marketing, international trade, international economics, international business environment,
international supply changing and logistic and management and international finance. All this has
contributed to making it a strategically important field of study.
9

1.1.

Primary objective

To understand the need of entering in global markets

Understand Decision Making Process in international markets

To understand pricing and product development strategies in global market
To understand product promotion and brand building in international markets

1.2

Expected outcome

The project will give an understanding of international markets and various

strategies that are being
used in current global markets scenario

10

2. Globalization
Globalization is defined as a process of economic integration of the entire world
through the removal of barriers to free trade and capital mobility as well as
through the diffusion of knowledge and information. It is a historical process of
moving at different speeds in different countries and in different sectors. One of
the result is that firms, whose output was previously significantly more limited by
the size of their domestic markets, now have the chance to reap greater
advantage from economics of scale by being global. The revolution in information
and

communication

technology in

the

last

10-15 years has

also made

communication much cheaper and faster. The transaction cost of transferring

ideas and information have decreased enormously and the arrival of the Internet
has accelerated this trend. This implies that countries with advanced technologies
are best placed to innovate further. Moreover, unlike in the past when inventions
and innovations were considered breakthroughs, today they are a regular
occurrence. This implies that the transformation process is continuous and has farreaching consequences both for the overall organisation of firms and for policy
making. Global firms rely on technological innovation to enhance their capabilities.
In this sense technology is both driven by and is driver of globalization and makes
it possible to speak of the new technologically driven character of the global
economy.

2.1 Globalization index

A Globalization Index is a list of countries ranked according to Globalization criteria the global connectivity, integration and interdependence in the economic, social,
technological, cultural, political, and ecological spheres.
To arrivie at a globalization index, the following key components of global integration have
been assessed:

Economic integration: trade, portfolio, foreign direct investment and investment

income.
Personal integration: telephone, travel, remittances and personal transfers

Technology integration: internet users, internet host, and secure internet services

Political integration: international organisations, UN peacekeeping, treaties and

government

1
1

An explosive growth n internet usage, worlds largest remittances in absolute terms,

emergence of premier IT outsourcing destination, and active membership in international for a
have contributed Indias global integration. However, FDI outflows and inflows had been
merely 0.7% of the GDP comparing poorly with top ranking countries.

66.18

Panam
a

66.84
67.27

Icelan
d

67.96
68.08
68.4
69.02

Kuwait
Bahrai
n

69.34
69.5

Thilan
d

71.02
71.06
71.08
72.25
72.27
72.41
72.71
74.81
75.48
75.69
76.11
76.34

Chile
Romania
Lithuania
Malta
Bulgaria
United Arab
Eirates

76.71
78.29
78.86
79.05
79.08
79.35
79.43
79.51

Germany
Greece
poland
Australia
United
kingdom
Slovak
Republic
Luxembourg
Czech
Republic
hungary
switzerland
Denmark
Singapore
Belgium
Ireland

81.64
82.65
82.89
83.3
83.52
83.54
83.56
83.71
84.2
85.03
85.49
85.64
86.04
86.29
86.63
86.59
87.49
90.24
91
91.24
91.

3
0

10

20

30

40

50

60

70

80

90

100

12

3. Domestic market and international marketing

decisions
When it comes to promoting a product or service, one size doesn't fit all. Certain aspects of the
marketing plan may need to change depending on whether you are marketing domestically or
globally.
1.1.1

Domestic Marketing

Domestic marketing means selling within one's own country. Typically, this is the first area where
companies seek to market their goods or services. Because the market, customer needs, tastes,
geography, demographics, and distribution methods are likely familiar, it's often the easiest place
for companies to launch a product. The four P's of marketing - product, price, place and
promotion - are often easier for companies to determine within the domestic market.

1.1.2

Global Marketing

Global marketing means to offer one's goods or services worldwide. Most companies begin
marketing their goods or services within their country, and expand to the global market to
capture greater market share and open up new avenues for sales.
1.2 Global Marketing Considerations
Global marketing is more complex, and must take into consideration numerous factors,
including but not limited to:

Language and translation: While some countries share similar languages,

every country has nuances of language that must be considered before
marketing globally. English, for example, is a language spoken in the United
States, Canada, the United Kingdom, and other countries, yet certain words
mean certain things. Spanish is another language shared by millions worldwide,
yet the Spanish spoken in Mexico differs from the Spanish spoken in Spain. Be
sure to share marketing pieces with

13

native speakers in the countries you target, even if the language is the same as your
domestic market. You can avoid laughable mistakes and serious marketing by
having someone review marketing pieces.

Cultural considerations: As with language, cultures vary worldwide and

marketing pieces must reflect cultural nuances accordingly. Some cultural
differences are quite dramatic, while others are subtler. In the United States,
advertisements depicting scantily clad models sell everything from shaving
products to soft drinks. In more conservative cultures, such advertisements
would be offensive or even banned. Some cultures value abstract, clever
advertisements, while others prefer direct messages. In addition to checking
linguistic differences, it's wise to use a service that will also examine the cultural
context of your marketing campaigns to avoid gaffes. Spending money on such a
service may seem like an extravagance, but it will save money later by helping
you avoid costly advertising and marketing mistakes. Many translation
companies also offer cultural evaluations of marketing pieces.

Price and payment methods: Pricing products for a global marketplace can be
tricky. In addition to online sellers needing currency converters or payment
processing systems that accept multiple currencies, sellers must be aware of
pricing sensitivities by country, by product and by market. Before launching your
product into any global market, be sure to investigate the competition and
competitive pricing models. Make sure your intended customers can afford your
products. You may need to price them different depending on whether or not you
are selling domestically or globally.

Marketing methods and the media mix: Some marketing methods, such as
websites and print advertisements, are used in most countries. Other methods, like
direct mail, are new. Many countries with large rural populations, such as China and

14

India, may not have as robust a mail service as industrialized countries. Other
countries may rely more heavily on radio or television rather than printed messages
to share new and information. Be sure to know and understand the audience in the
countries you are targeting before investing in any media. As with all aspects of
marketing, knowing the audience for your products and services as well as you
know yourself is the key to success.

Distribution methods and shipping concerns: Worldwide shipping must take

into consideration costs, time delays, and country restrictions. Each country has
its own laws governing what goods may be imported. Companies must comply
with all importation laws, and must be willing to invest the time into learning
the various rules and regulations concerning exports and imports. If your
company is located in the United States and you are shipping globally, check
the U.S. Postal Service's website to learn about any restrictions. The site offers
guidance on restricted goods and services and other considerations.

1.3 Domestic

vs. International marketing

Domestic marketing refers to the practice of marketing within a firms home

country. Whereas International or foreign marketing is the practice of marketing
in a foreign country; the marketing is for the domestic operations of the firm in
that country.

Domestic marketing finds the "how" and "why" a product succeeds or fails
within the firms home country and how the marketing activity affects the
outcome. Whereas, foreign marketing deals with these questions and tries to
find answers according to the foreign market conditions and it provides a micro
view of the market at the firms level.

In domestic marketing a firm has insight of the marketing practices, culture,

customer preferences, climate and so on of its home country, while it is not
totally aware of the policies and the market conditions of the foreign country.

15

The stages that have led to achieve global marketing are:

Domestic marketing - Firms manufacture and sell products within the country.
Hence, there is no international phenomenon.

Export marketing - Firms start exporting products to other countries. This is a

very basic stage of global marketing. Here, the products are developed based on the
companys domestic market although the goods are exported to foreign countries.

International marketing - Now, Firms start to sell products to various countries

and the approach is polycentric, that is, making different products for different
countries.

Multinational marketing - In this stage, the number of countries in which the

firm is doing business gets bigger than that in the earlier stage. And hence, the
company identifies the regions to which the company can deliver same product
instead of producing different goods for different countries. For example, a firm
may decide to sell same products in India, Sri lanka and Pakistan, assuming that the
people living in this region have similar choice and at the same time offering
different product for American countries. This approach is termed regiocentric
approach.

Global marketing - Company operating in various countries opts for a common

single product in order to achieve cost efficiencies. This is achieved by analysing
the requirements and the choice of the customers in those countries. This approach
is called

Geocentric approach.

The practice of marketing at the international stage does not designate any country
as domestic or foreign. The firm is not considered as the corporate citizen of the
world as it has a home base.

The firm must not have a single marketing plan, because there are differences between
the target markets (that is domestic or international markets). There should never be a

16

rigid marketing campaign. A firm that is successful internationally first obtains success
locally.

Few approaches that you can consider for an international marketing are:

Advertise as a foreign product - By doing so, the product will be considered

as genuine and original in some countries.

Joint partnership with a local firm - finding a firm that has already
established credibility will benefit a lot. The product will be considered as a
local product by following this marketing approach.

Licensing - You can sell the rights of your product to a foreign firm. Here the
problem is that the firm may not maintain the quality standard and therefore
may hurt the image of the brand.

Culture is a major factor which influences marketing decisions and practices in

a foreign country. For example, in the middle-eastern countries the prior
approval of the governing authorities should be taken if a firm plan to advertise
a product related to womens apparel, as showcasing some aspects of women
clothing is considered immodest and immoral.

The differences between domestic marketing and international marketing are

listed below:

17

Characteristics

International
marketing

Domestic
marketing

Culture

Multi culture

Single
culture
and in some case
multi culture

Data accessibility

Very difficult

Easy

Data Reliability

Very low

High

Control

Difficult

Relatively easy

Consumer
Preferences

Vary
country
country

Product Mix

Adaptability
required

Business
Operation

More than
country

Currency
exposure

Required

from
to

Very in
extent

small

Standardization
required
one

Hoe country only

Required only if
there importing

4. Reasons for entering in international markets

Below are the few reasons for entering in international markets:
1.

Domestic Market Saturated

2.

Domestic Market Small

3.

Slow Growth of Domestic Market

4.

Suppliers follow their Customers Internationally

5.

Competitive Pressures

6.

Attractive Cost Structures Globally

7.

Growth Rate and Potential

8.

Compete Successfully in Domestic Market.

1
8

Traditionally many companies have stayed focused in their domestic

markets and have refrained from competing globally. They know their
domestic markets better and understand that they have to make
fundamental changes in the way they work to be able to compete globally.

But increasingly companies are choosing or are being forced to sell their
products in markets other than their domestic markets. It has become
imperative for most companies

to compete in foreign

markets.
i.

Domestic

markets

are

saturated

and

there is pressure
to raise sales and
profits. Most
companies have very ambitious sales and profit targets. If such figures have
to be realized, companies have to move out of their domestic markets.
ii. Domestic markets are small. Companies which have ambitions to
become big will have to look for bigger markets outside their
boundaries.
iii. Domestic markets are growing slowly. Most companies are no longer
content to grow incrementally. If such companies have to achieve high
growth rates, they have to obtain some of their sales from international
markets.
iv. In some industries like advertising, customers want their suppliers to

have international presence so that suppliers can contribute in most of

the markets
1
9

where the buyer is operating. For instance, a multinational will choose an

advertising agency which has a presence in all the markets where the
multinational is selling its product. The customer does not want the hassle of
hiring a separate advertising agency for each of its markets. This process
will be replicated in more industries.
A multinational company seeking materials and equipments would want its
supplier to supply to all its international manufacturing locations. The
supplier is forced to develop competencies and resources at many
international locations to be able to serve the international manufacturing
locations of its buyer.

v. Some companies will have to move out of their domestic markets when their
competitors have done so, if they want to maintain their market share. If the
competitor is allowed to pursue its international growth alone, the competitor is
likely to plough back some of the earnings from its international operations to
the domestic market, making it difficult for the companies which refrained
20

from pursuing international markets, to focus on the domestic market. In

other cases, a domestic player would start operations in the home country of
its global competitor, to divert the attention and resources of its competitor
towards operations at home to safeguard its home market.
vi. Developed markets have high cost structures and companies may
move their operations to regions and countries where costs of
production are lower. Once a company starts operating in a
geographical region, it becomes easier and profitable to market their
products in that area.
vii. Countries and regions are at different stages of development, and their
growth rates and potential are different. Companies do not like to
concentrate all their efforts in limited regions and want to spread out
their risk. Such companies will look for markets which are likely to
behave differently from their existing ones in terms of economic
parameters like growth rate, size, affluence of customers, stage of
market development, etc.
A company would not like all its markets to be under recession or inflation
simultaneously, and would not like all its markets to be in mature stage, or in
growth stage. Having different type of markets will make revenues and profits
more consistent. The investment requirements would also be more balanced.

viii.

Even if a company decides to concentrate on its domestic

market, it will not be allowed to pursue its goals unhindered.

Multinational companies will enter its market and make a dent in its
market share and profit. The company has no choice but to enter
foreign markets to maintain its market share and growth.
ix. Companies are realizing that it is no longer an option to stay put in ones
domestic market. The ability to compete successfully in domestic markets

will depend upon their ability to match the resources and competencies of
21

multinational companies, with whom they have to compete in their domestic

markets.
And once they decide to take on the multinational companies on their home
turf, they have to improve their resources and competencies to be able to
match those of the multinational companies. They will also learn about the
ways of operation of multinational companies. This experience will be helpful
when they have to protect their domestic markets against the multinational
companies.
The boundary between a companys domestic market and other markets is
getting blurred. Only a company which is internationally competitive can
protect its domestic market. No market is or will be protected from incursion
by multinational companies. A companys only choice is to go global, even if
its prime interest is to protect its domestic turf.

5. Process of international marketing

International Marketing Process comprises of following five steps: 1. Motivation for International Marketing For an organisation the
motivation for entering international market can be any or all of the
following:
Growth
Profitability
Economies of Scale, or
Risk Spread
2. Research and Analysis Market research is done to Analyse the
organizations strength and weakness, opportunities available in international
markets, and threats in international markets.

22

3. Decision to enter International Markets After identification of potential

opportunities in international market decisions are taken to enter
international market. Such decisions include identification of potential
buyers

in

international

markets,

demand

measurement

and

forecasting, market segmentation, market targeting and market

positioning.
4. International Marketing Mix At this step international marketing mix is
developed. Marketing mix identifies four key areas Product, Price,
Place, and Promotion for developing a well-coordinated marketing
strategy.
5. Consolidate Marketing efforts - Developing a good marketing program
is not enough a marketing organisation need to manage the
international marketing effort properly. Marketing organisations also
need proper analysis, planning, implementation and control of their
marketing efforts.

23

6. Decision making process for international markets

7.1 Identification of international markets
The following factors are typically taken into consideration when analysing potential markets to

determine which are the most attractive;

Market size and growth

Overall market potential, i.e. market size in dollar terms

Growth rate of the market in recent years

Trends and growth forecasts for the type of product

Import history for the type of product/service;

Identify competitors, domestic and international

Comparison of current prices in the market with your planned pricing structure

Evaluate quality of currently available products and points of difference with your product
Market Accessibility

Investigate import duties and tariff rates for the type of

product, note that high import duties and tariff costs can
adversely affect pricing and competitiveness in export
markets

Consider distribution channels, it is very important to

understand how you will distribute your products, which
could be through local distributors, agencies or
wholesalers etc.

Carefully evaluate advertising and promotion options,

effective export marketing promotion is critical in building awareness of your product / brand.

24

Economic Conditions

Determine the economic climate within the new marketplace, e.g. is it thriving, in decline
or growing steadily?

Examine the difference in currency value and exchange rate. It is critical to have a full
understanding of currency rates and monitor currency fluctuations to appropriately price
your products and anticipate any potentially adverse currency rate changes

Discuss with your bank or financial advisor options to purchase currency exchange risk
protection. This type of forward cover can protect you against adverse currency
movements.

Cultural, Legal and Political Factors

Undertake research to identify any potential cultural issues that could adversely affect
sales of your product. This could be for example translations of your product name or
slogan that could be culturally insensitive.

Consider the political stability of potential markets and to what level any instability could
affect the sales of your product

Observe whether the legal system is supportive of international trade, this can include
factors such as is there enforced protection of intellectual property rights

Check overseas registration and licensing procedures to identify any potential restrictions
or impediments to you getting your product into the market

7.2 Segmentation of international markets

Market segmentation is the process in marketing of dividing a market into distinct subsets that
behave in the same way or have similar needs. Because each segment is fairly homogenous in
their needs and attitudes they are likely to respond similarly to a given marketing strategy. That
s, they are likely to have similar feelings and ideas about a marketing mix comprised of a given
product or service, sold a given price, distributed in a certain way, and promoted in a certain

25

way. Broadly, markets can be divided according to a number of general criteria, such as
by industry or public versus private sector. Small segments are often niche markets or
speciality markets. However, all segments fall into either consumer or industrial markets
although it has similar objectives and it overlaps with consumer markets in many ways the
process of Industrial market segmentation is quite different.
The process of segmentation is distinct targeting and positioning. The overall intent is to identify

groups of similar customers and potential customers; to prioritise the

understand

groups to address; to
their behaviour; and

to respond with appropriate marketing strategies that satisfy the

different preferences of each chosen segment.
Improved segmentation can lead to significantly improved marketing effectiveness. With the ri
ght
segmentation,
the right lists can be purchased, advertising results can be improved and customer
satisfaction can be increased.
Basis for segmenting consumer markets:
Geographic
nations, regions, states, counties, cities, neighborhoods, climate, population density etc.
Demographic
age, gender, family size, family life cycle, income, occupation, education, religion, race,
nationality etc.
Psychographic
social class, lifestyle, personality etc.
Behavioral

2
6

Purchase

occasion,

benefits

sought, user status, user rate, loyalty status, readiness status, attitude
toward product etc.

7.3 Tools for international market analysis

Trade statistics
Understanding the structure and evolution of international markets is essential for both
firms and trade support institutions. Firms seeking opportunities to diversify products,
markets and suppliers, and trade support institutions setting priorities for trade
promotion, sectoral performance, partner countries and trade-development strategies
must have detailed statistical information on international trade flows to effectively
utilize resources.
Tariffs and market requirements
Improving transparency in the market-access conditions that countries face and
impose worldwide is important for developing countries exporters, trade support
institutions and policymakers. Market Access Map is an interactive analytical web
application developed by ITC to address this need. Users in developing countries and
territories can access the application for free, while users in developed countries and
territories can register for a limited free-trial period or subscribe for longer access.
Foreign direct investment data
Investment Map is a web-based tool that helps investment promotion agencies assess
which sectors in their countries have attracted foreign direct investment (FDI) and it
assists them in the process of prioritizing sectors for investment promotion. It also helps

2
7

those agencies identify competing countries and the most active investing countries in
specific sectors.
Voluntary standards
Trade for Sustainable Development (T4SD) is ITCs partnership-based programme
that provides comprehensive, verified and transparent information on voluntary
sustainability standards through Standards Map. The main objective of T4SD is to
strengthen the capacity of producers, exporters, policymakers, and private and public
buyers to participate in more sustainable production and trade.
Market analysis studies
ITC conducts customized market analysis studies to support trade support institutions
and policymakers with export potential assessment.
Capacity building in market analysis
ITC provides a range of face-to-face and web-based capacity building programmes in
market analysis and research that support companies, trade support institutions and
governments in developing countries. Training content is tailored to the particular
needs of the beneficiary.

8. Entering international markets

8.1

Mode of international market entry

The decision of how to enter a foreign market can have a significant impact on the results.
Expansion into foreign markets can be achieved via the following four mechanisms:

Exporting

Licensing
28

Joint Venture

Direct Investment

Exporting
Exporting is the marketing and direct sale of domestically-produced goods in another country.
Exporting is a traditional and well-established method of reaching foreign markets. Since
exporting does not require that the goods be produced in the target country, no investment in
foreign production facilities is required. Most of the costs associated with exporting take the
form of marketing expenses.
Exporting commonly requires coordination among four players:

Exporter

Importer

Transport provider

Government

Licensing
Licensing essentially permits a company in the target country to use the property of the licensor.
Such property usually is intangible, such as trademarks, patents, and production techniques. The
licensee pays a fee in exchange for the rights to use the intangible property and possibly for
technical assistance. Because little investment on the part of the licensor is required, licensing has
the potential to provide a very large ROI. However, because the licensee produces and markets the
product, potential returns from manufacturing and marketing activities may be lost.

29

Joint Venture
There are five common objectives in a joint venture: market entry, risk/reward sharing,
technology sharing and joint product development, and conforming to government regulations.
Other benefits include political connections and distribution channel access that may depend on
relationships.
Such alliances often are favorable when:
the partners' strategic goals converge while their competitive goals diverge;

the partners' size, market power, and resources are small compared to the industry
leaders; and

partners' are able to learn from one another while limiting access to their own
proprietary skills.

The key issues to consider in a joint venture are ownership, control, length of agreement,
pricing, technology transfer, local firm capabilities and resources, and government intentions.
Potential problems include:

conflict over asymmetric new investments

mistrust over proprietary knowledge

performance ambiguity - how to split the pie

lack of parent firm support

cultural clashes

if, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and compete:

30

Strategic imperative: the partners want to maximize the advantage gained for the joint
venture, but they also want to maximize their own competitive position.

The joint venture attempts to develop shared resources, but each firm wants to develop
and protect its own proprietary resources.

The joint venture is controlled through negotiations and coordination processes, while
each firm would like to have hierarchical control.

Foreign Direct Investment

Foreign direct investment (FDI) is the direct ownership of facilities in the target country. It
involves the transfer of resources including capital, technology, and personnel. Direct foreign
investment may be made through the acquisition of an existing entity or the establishment of a
new enterprise.

Direct ownership provides a high degree of control in the operations and the ability to better
know the consumers and competitive environment. However, it requires a high level of
resources and a high degree of commitment.

8.2 Factors affecting the selection of entry mode

External Factors:
Market Size:
Market size of the market is one of the key factors an international marketer has to keep in
mind when selecting an entry mode. Countries with a large market size justify the modes of
entry with long-term commitment requiring higher level of investment, such as wholly owned
subsidiaries or equity participation.

31

ii) Market Growth:

Most of the large, established markets, such as the US, Europe, and Japan, has more or less
reached a point of saturation for consumer goods such as automobiles, consumer electronics.
Therefore, the growth of markets in these countries is showing a declining trend. Therefore,
from the perspective of long-term growth, firms invest more resources in markets with high
growth potential.
iii) Government Regulations:
The selection of a market entry
mode is to a great extent affected
by the legislative framework of
the

overseas

market.

The

governments of most of the Gulf

countries have made it mandatory
for foreign firms to have a local
partner. For

example, the UAE is a lucrative market for Indian firms but most firms operate there with a
local partner.
iv) Level of Competition:
Presence of competitors and their level of involvement in an overseas market is another crucial
factor in deciding on an entry mode so as to effectively respond to competitive market forces.
This is one of the major reasons behind auto companies setting up their operations in India and
other emerging markets so as to effectively respond to global competition.

32

v) Physical Infrastructure:
The level of development of physical infrastructure such as roads, railways, telecommunications,
financial institutions, and marketing channels is a pre-condition for a company to commit more
resources to an overseas market. The level of infrastructure development (both physical and
institutional) has been responsible for major investments in Singapore, Dubai, and Hong Kong. As
a result, these places have developed as international marketing hubs in the Asian region.

vi) Level of Risk:

From the point of view of entry mode selection, a firm should evaluate the following risks:
a) Political Risk:
Political instability and turmoil dissuades firms from committing more resources to a market.
b) Economic Risk:
Economic risk may arise due to volatility of exchange rates of the target markets currency,
upheavals in balance of payments situations that may affect the cost of other inputs for
production, and marketing activities in foreign markets. International companies find it
difficult to manage their operations in markets wherein the inflation rate is extremely high.
c) Operational Risk:
In case the marketing system in an overseas country is similar to that of the firms home country,
the firm has a better understanding of operational problems in the foreign market in question.

vii) Production and Shipping Costs:

Markets with substantial cost of shipping as in the case of low-value high-volume goods may
increase the logistics cost.

33

viii) Lower Cost of Production:

It may also be one of the key factors in firms deciding to establish manufacturing operations in
foreign countries.
2) Internal Factors:
i) Company Objectives:
Companies operating in domestic markets with limited aspirations generally enter foreign
markets as a result of a reactive approach to international marketing opportunities. In such
cases, companies receive unsolicited orders from acquaintances, firms, and relatives based
abroad, and they attempt to fulfill these export orders.
ii) Availability of Company Resources:
Venturing into international markets needs substantial commitment of financial and human
resources and therefore choice of an entry mode depends upon the financial strength of a firm.
It may be observed that Indian firms with good financial strength have entered international
markets by way of wholly owned subsidiaries or equity participation.
iii) Level of Commitment:
In view of the market potential, the willingness of the company to commit resources in a
particular market also determines the entry mode choice. Companies need to evaluate various
investment alternatives for allocating scarce resources. However, the commitment of resources
in a particular market also depends upon the way the company is willing to perceive and
respond to competitive forces.

34

iv) International Experience:

A company well exposed to the dynamics of the international marketing environment would be
at ease when making a decision regarding entering into international markets with a highly
intensive mode of entry such as Joint ventures and wholly owned subsidiaries.
v) Flexibility:
Companies should also keep in mind exit barriers when entering international markets. A
market which presently appears attractive may not necessarily continue to be so, say over the
next 10 years. It could be due to changes in the political and legal structure, changes in the
customer preferences, emergence of new market segments, or changes in the competitive
intensity of the market.

8.3 Choosing the right international market entry mix

Step One Country Identification
The World is your oyster. You can choose any country to go into. So you conduct country
identification which means that you undertake a general overview of potential new markets.
There might be a simple match for example two countries might share a similar heritage e.g.
the United Kingdom and Australia, a similar language e.g. the United States and Australia, or
even a similar culture, political ideology or religion e.g. China and Cuba. Often selection at this
stage is more straightforward. For example, a country is nearby e.g. Canada and the United
States. Alternatively, your export market is in the same trading zone e.g. the European Union.
Again at this point it is very early days and potential export markets could be included or
discarded for any number of reasons.

3
5

Step Two Preliminary Screening

At this second stage one takes a more serious look at those countries remaining after undergoing
preliminary screening. Now you begin to score, weight and rank nations based upon macroeconomic factors such as currency stability, exchange rates, level of domestic consumption and so
on. Now you have the basis to start calculating the nature of market entry costs. Some countries
such as China require that some fraction of the company entering the market is owned domestically
this would need to be taken into account. There are some nations that are experiencing political
instability and any company entering such a market would need to be rewarded for the risk that
they would take. At this point the marketing manager could decide

3
6

upon a shorter list of countries that he or she would wish to enter. Now in-depth screening can
begin.
Step Three In-Depth Screening
The countries that make it to stage three would all be considered feasible for market entry. So it
is vital that detailed information on the target market is obtained so that marketing decisionmaking can be accurate. Now one can deal with not only micro-economic factors but also local
conditions such as marketing research in relation to the marketing mix i.e. what prices can be
charged in the nation? How does one distribute a product or service such as ours in the
nation? How should we communicate with are target segments in the nation? How does our
product or service need to be adapted for the nation? All of this will information will form the
basis of segmentation, targeting and positioning. One could also take into account the value of
the nations market, any tariffs or quotas in operation, and similar opportunities or threats to
new entrants.

Step Four Final Selection

Now a final shortlist of potential nations is decided upon. Managers would reflect upon
strategic goals and look for a match in the nations at hand. The company could look at close
competitors or similar domestic companies that have already entered the market to get firmer
costs in relation to market entry. Managers could also look at other nations that it has entered to
see if there are any similarities, or learning that can be used to assist with decision-making in
this instance. A final scoring, ranking and weighting can be undertaken based upon more
focused criteria. After this exercise the marketing manager should probably try to visit the final
handful of nations remaining on the short, shortlist.

37

Step Five Direct Experience

Personal experience is important. Marketing manager or their representatives should travel to a
particular nation to experience first-hand the nations culture and business practices. On a first
impressions basis at least one can ascertain in what ways the nation is similar or dissimilar to
your own domestic market or the others in which your company already trades. Now you will
need to be careful in respect of self-referencing. Remember that your experience to date is
based upon your life mainly in your own nation and your expectations will be based upon what
your already know. Try to be flexible and experimental in new nations, and dont be
judgemental its about whats best for your company happy hunting.

9. Product strategy for international markets

9.1
Basis

Standardization vs adaptation in international markets

of Adaptation

Standardisation

differences
1)

Application

Marketing Means

in It is

supported by Companies should apply

strong market variety the four basic marketing

especially by market
individualism

instruments (4P5) in the

and same way worldwide and

market uniqueness.

ignore national specialties

in individuals markets.

2)

Reason

Application

for Almost

every MNC

international

globally

should

think

and

apply

company takes into integration

access

account (in higher worldwide.

or

lower

level),
38

regional or

local

conditions

which

are typical

to the

differentiation.
3) Product Offered

Altering
feature

relevant Complete
of

the standardization

product

in would

significant ways for

each

and

designing a

product

every that is identical

in

individual

every relevant way for

geographical

geographical

market

in

market

the in which the product

product is sold.
4) Characteristics

involve

will be sold.

product

is A standard

differential

product

from does not need

competitors

have

product and further

characteristics of the

the

all

to
the

products other products buyer

produced

by requires.

particular company.
5) Approach

Adaptation

is

an Standardization

approach

of product

detailing

the approach

differentiation

that increasing

exists

of

is

the
for

between commonality

products

of

and product in the supply

services.

chain management.

6) Economics of

Unique

aspects in Commonality

in

Scale

product

result

in

different in

in products

quality higher

results

productivity

thus

increasing due

cost of

production demand, having

and

to

higher
an

lower impact on economies

39

economies

of of

scales

which

scale.
7) Need

lowers the total cost.

Satisfy a particular Satisfy

need of buyer.

the

heterogeneous
needs of the buyer.

8) End Result

Show
value to

sense

of Benefits buyer

by

the buyer lowering price.

but they have

to

pay more for such

product.

9.2
Factors influencing product adaptation in international
markets
Product adaptation is the process by which a company adjusts and improves upon a product to
make it more appealing to the target market. The owner might adapt her own product or
improve upon an existing product offered by another company. It's important for a business
owner to continuously evaluate her product line to determine whether adjustments are in order.
Target Market
Noticing changes in the moods, opinions and needs of your target market is a key factor in the
product adaptation process. Business owners use feedback from focus groups and online forums
to keep in touch with the needs of customers. A climate of ever-changing technology also
affects the opinions of consumers. If you see a trend developing, such as a demand for a new
feature for an existing software program, adapting the product to that consumer need might help
increase sales.
Packaging
Response to the packaging of the product is another important consideration when evaluating the
need for a product adaptation. Your decisions regarding packaging should depend on the cost, added
value and protection the package provides for the actual product inside as well as how
40

attractive it is to customers. While changing the packaging of the product could confuse some
longtime, dedicated users, a simple packaging change may help boost sales of the item in other
cases. If you get a lot of comments from customers to the effect of "This is a great product, but
I never would have picked it up if my friend hadn't referred it to me," you could have a
packaging issue. For example, a publisher might adapt a book by changing a plain and
uninteresting cover into a more colorful and descriptive cover with an eye-catching title.
Changes in Economic Climate
Changes in the economic climate due to matters that are out of your control affect product
adaptation. If problems in the economy cause an overall reduction in sales, consider using less
expensive materials or modifying the overall design of the product to make it more affordable
for consumers.
Actions of Competitors
It's also important for a business owner to keep a close eye on competing products when
evaluating his own offering. The actions and product offerings of competitors is a key factor
that leads to product adaptation. For instance, if a competing baby stroller company starts
offering a stroller with a built in GPS tracking device that customers love, you could be left
behind if you don't eventually adapt your own strollers with this feature.

9.3

Product quality decisions for international markets

The important product decisions needed to be taken in global marketing management are
as follows:
Identification of Products for International Market:
The firm has to carry out preliminary screening, that is, identification of markets and products by
conducting market research. A poorly conceived product often leads to marketing failures. It

41

was not a smooth sailing in the Indian market for a number of transnational food companies
after the initial short-lived euphoria among Indian consumers.

Kelloggs, Pizza Hut, McDonalds, and Dominos Pizza have all run into trouble in the
experienced the troubled waters in Indian market at one point of time or the other. The basic
mistakes that these firms made were:
i) Gross Overestimation of Spending Patterns of Indian Consumers:
Despite the ability to buy products, the customers in South Asia are very cautious and selective
when spending. They look for value for money in their purchase decisions far more than their
Western counterparts do.
ii) Gross Overestimation of the Strength of their Transnational Brands:
These MNCs estimated their brand image very high in the international markets and the
globalization of markets was considered to be a very potent factor for getting a large number of
customers for their products, as happened in African and other East Asian countries.
iii) Gross Underestimation of the Strength of Ethnic Indian Products:

4
2

As Indian food is traditionally prepared on a small scale, and mass manufacturing and
organised mass-marketing of Indian products was missing, it was wrongly believed that the
food products manufactured by the multinationals would change the traditional eating habits of
the Indian consumers. They failed to recognize the variety and strength of ethnic Indian foods.
India is not only the largest producer of milk in the world with an 80 million metric ton output,
that is, about 20 million tons ahead of the US but also home to hundreds of varieties of sweets.
Developing Products for International Markets:
Various approaches followed for developing products for international markets are as
follows:
i) Ethnocentric Approach:
This approach is based on the assumption that consumer needs and market conditions are more
or less homogeneous in international markets as a result of globalization. A firm markets its
products developed for the home market with little adaptation. Generally, an exporting firm in
the initial phases of internationalization relies too heavily on product expansion in international
markets.

This market extension approach of product development facilitates cost minimization in

various functional areas and a firm gains rapid entry into international markets. However, the
ethnocentric approach does not always lead to maximization of market share and profits in
international markets since the local competitors are in a relatively better position to satisfy
consumers needs.
ii) Polycentric Approach:
An international firm is aware of the fact that each country market is significantly different from
the other. It therefore adopts separate approaches for different markets. In a polycentric approach
products are developed separately for different markets to suit local marketing conditions.

iii) Regiocentric Approach:

Once an international firm establishes itself in various markets the world over, it attempts to
consolidate its gains and tries to ascertain product similarity within market clusters. Generally,
such market clusters are based on geographical and psychic proximity.
iv) Geocentric Approach:
Instead of extending the domestic products into international markets, a firm tries to identify
similarities in consumption patterns that can be targeted with a standard product around the
world. Psychographic segmentation is helpful in identifying consumer profiles beyond national
borders.

In a geocentric approach to product development, there is a high degree of centralization and

coordination of marketing and production activities resulting in higher economies of scale in
the various constituents of the marketing mix. However, it needs meticulous and consistent
researching of international markets.
Market Segment Decision:
The first product decision to be made is the market segment decision because all other
decisionsproduct mix decision, product specifications, and positioning and communications
decisionsdepend upon the target market.
Product Mix Decision:
Product mix decision pertains to the type of products and product variants to be offered to the
target market.
Product Specifications:
This involves specification of the details of each product item in the product mix. This includes
factors like:

i) Product Attributes:
Some of the key characteristics and features of a product are its quality, styling, and
performance. These characteristics are affected by consumer needs, conditions of product use,
and ability to buy. The factors that affect product attributes change from country to country.
ii) Packaging:
The main concerns in packaging a product are product protection and promotion. For example,
in a hot and humid climate product deteriorate rapidly. Special packaging is necessary to
minimize the deterioration of the product. An international marketer has to pay attention to this
aspect in designing the packaging material for the product.

In designing the packaging material for promotion, an international marketer has to consider
different aspects, such as colour, size, appearance, disposable income, and shopping habits.
When designing packaging for a low-income market, it must be ensured that packaging costs
less and the goods are packaged in smaller amounts and sizes. When the product is meant for a
high-income market the packaging must be in large amounts and must be durable, because,
high-income buyers, in general, go for shopping very infrequently.
iii) Labelling:
The primary role of labelling is to provide information. Often the host governments determine
the information requirements. The information the manufacturer may be asked to provide
includes description of weight, contents, ingredients, product dating, name of the manufacturer,
and unit price information. Language difference is a barrier for a firm operating in international
markets. When it is operating in overseas markets the labels have to be translated into local
languages. Alternatively, the firm can use internationally recognized symbols or multilingual
labels.

45

iv) Service Policies:

Services of physical products can be classified into pre-sale services and post-sale services.
Pre-sale services include delivery, technical advice, and postal services. Post-sale services
include repair services, maintenance, and operating advice. The level of service necessary
depends upon the complexity of the product.

The more complex the product the greater the demand for pre-and post-sales service. When an
international firm appoints foreign distributors and agents for providing service it has to train
them adequately to meet its after sales needs. The emphasis it lays on service support must be
proportionate to the value the customer attaches to the service support.
v) Warranties:
A warranty is a written guarantee of a manufacturers responsibility when a product fails to
perform. Through warranties a firm takes responsibility for repair and replacement of defective
products. Warranties must conform to local laws both in terms of product standards and a
manufacturers liability.

Local consumers in many countries view the products manufactured by a foreign firm as less
dependable. Providing a strong warranty can go a long way in assuring the local consumers
about the trustworthiness of the product. The international firm can in fact use the superior
warranty protection as a promotional tool.
Positioning and Communications Decisions:
Positioning is the image projected for the product. Communication refers to the promotional
message designed for the product. Obviously, both positioning and marketing communication
are very much interrelated. For the same product, sometimes the positioning and
communication strategies differ between markets.
46

Product Elimination:
Product Elimination is one of the most important product related decision. Too many product
introductions can risk overburdening the firms marketing system. There is a constant need for
a regular review of the range and for elimination decisions to be made where a product is either
in its decline stage or simply failing to generate sufficient profit.

The international perspective, however, means that decision-making is more difficult, since a
product may be manufactured principally in a plant in one country, be a cash cow in one market
and a dog in another. Careful analysis is therefore needed before the product elimination decision
is taken. The identification of overlaps in the product range or poor performance of specific
products may necessitate elimination of products if they are in the declining stage of the product
life cycle, have been duplicated or have been replaced by a newer product.

Product Diversification:
Diversification means seeking unfamiliar products or unfamiliar markets, or both, for the
purpose of expansion. Diversification requires substantially different and unfamiliar
knowledge, thinking skills, and processes. Thus, diversification is at best a risky strategy, and a
company should choose this path only when current product/market orientation seems to
provide no further opportunities for growth.

9.4

Packaging and labelling for international markets

Packaging ensures the safety of the goods. Therefore, it is very important for every
exporter to follow the instructions with respect to packaging, labelling and marking as
given by the importer.

Depending on the method of transportation, packaging may differ. If the goods are
transported by air and are light, light kind of wooden crate packaging would be sufficient.
47

Conversely, if the goods are dispatched by sea and are in transit for a longer period of time
they require harder wooden crates in order to tolerate the rough handling. The products
dispatched by road/rail may require tough or lighter packaging depending on the kind of
good, distance to be travelled and the storage time.
Packaging - Labelling and Marking

The exporter should label the goods as per the instructions of the importer. Usually, ships
carry various batches of goods, which belong to different exporters. Therefore,
identification marks for the goods are very important. They indicate the identity of the
good and help in distinguishing one good from the other. It also helps in faster inspection
of the goods by the customs authority. Marks may include bill of lading number, port of
destination, name of the importer, case number etc. Exporter can select his own marking, if
overseas buyer gives no specific instructions. The exporter should make sure that the
instructions on the packing case are stated in the language of the importers country.
Finally the marks and the number of packages should match to those written in invoices,
insurance certificate, mates receipt etc.

The exporter has to follow the certain instructions as specified in the contract. In the
absence of any instructions the packaging should be as per the customary standards of the
particular country. In addition to the packing standards prescribed by the Bureau of Indian
standard, the exporter should make sure that

He chooses the kind of packing which costs him lesser freight. Finally, the packing should
be very durable to withstand the frequent loading and unloading in various stages. Strong
and long-lasting containers ensure that the product will be protected against heat, theft,
moisture etc.

48