INTERNATIONAL MARKETING ENVIRONMENT Unit - 2 , 3 & 4

Dr. S. Anthony Rahul Golden
M.Com., M.Phil., NET., Ph.D., MBA.,SET., NET., M.A., M.Sc. (Psy)., M.A.,  PGDBA., 

Asst. Professor of Commerce., Loyola College (Autonomous), Chennai - 34
Mobile No- 91+9176313545
https://yesrahul.blogspot.com/

https://orcid.org/0000-0001-8071-4801

https://vidwan.inflibnet.ac.in/profile/339311

https://www.researchgate.net/profile/Anthony-Golden-S 

https://scholar.google.com/citations?hl=en&user=faw7X-UAAAAJ
Anthony Rahul Golden, S. - Author details - Scopus Preview

Internal Environment and External Environment

1. Learning Objectives

After studying this lesson, students should be able to:

1. Explain the meaning of International Marketing.

2. Define and explain the Marketing Environment.

3. Distinguish between Internal and External Environment.

4. Explain controllable and uncontrollable factors.

5. Understand domestic and foreign uncontrollables.

6. Explain the International Marketing Task.

7. Identify the major elements of the international environment.

8. Explain the importance of environmental adaptation.

9. Describe the Micro and Macro Environment.

10. Explain the major internal environmental factors.

11. Explain suppliers, customers, competitors, intermediaries and publics.

12. Explain demographic, economic, natural, technological, political and cultural forces.

13. Understand how environmental changes create opportunities and threats.

14. Explain why international marketers need to be trend trackers and opportunity seekers.

2. Meaning of International Marketing

The uploaded material defines international marketing as the performance of business activities involving the flow of a company's goods and services to consumers in more than one nation for profit.

Simple Definition

International marketing is the process of planning and carrying out marketing activities in more than one country with the objective of satisfying customers and earning profit.

Example

Suppose an Indian company manufactures garments in Tamil Nadu and sells them in:

• India

• UAE

• USA

• UK

• Germany

The company is involved in international marketing because its marketing activities extend beyond one country.

---

3. Domestic Marketing vs International Marketing

A very important point in the material is that the basic concepts of marketing do not change when a company moves from domestic to international marketing.

The major difference is the environment in which marketing activities are implemented.

Domestic Marketing	International Marketing
Activities mainly take place within one country	Activities take place in more than one country
Relatively familiar environment	Foreign environments may be unfamiliar
One major national environment	Multiple national environments
Lower environmental uncertainty	Greater environmental uncertainty
Strategies may be comparatively standardized	Strategies may need greater adaptation

Important Principle

Marketing principles are universal, but marketing environments are not.

For example, the principle of satisfying customer needs applies everywhere.

But what customers need and how they behave may differ from country to country.

---

4. What is Marketing Environment?

Marketing does not operate in isolation.

A company operates within a surrounding environment consisting of numerous:

• People

• Organizations

• Institutions

• Forces

• Regulations

• Economic conditions

• Cultural conditions

• Technological developments

The material explains that the marketing environment consists of factors and forces outside marketing that affect management's ability to develop and maintain successful transactions with target customers.

Simple Definition

Marketing environment refers to all internal and external factors and forces that influence a company's marketing decisions and performance.

---

5. Why is Marketing Environment Important?

The environment influences almost every marketing decision.

For example:

Product

What product should be produced?

Price

How much can customers afford?

Promotion

What type of advertising will be acceptable?

Distribution

How should the product reach customers?

Market Selection

Which country or market should the company enter?

Therefore:

Marketing decisions cannot be made independently of the environment.

The material specifically notes that even marketing opportunities must be identified by carefully observing the environment, and the marketing mix must be decided within the context of that environment.

---

6. International Marketing Environment

International marketing operates within a complex and changing environment.

The major forces include:

• Demographic forces

• Economic forces

• Political forces

• Cultural forces

• Technological forces

• Competitive forces

• Legal forces

• Natural forces

• Geographic and infrastructure factors

• Distribution structure

These forces may create:

Opportunities

or

Threats

for the organization.

The material emphasizes that international marketers face greater complexity because each country can have different legal systems, cultures, socio-economic infrastructure and other environmental conditions.

---

7. International Marketing Environment – Basic Structure

A useful way to teach the concept is:

                 INTERNATIONAL MARKETING ENVIRONMENT
                              │
              ┌───────────────┴───────────────┐
              │                               │
          INTERNAL                         EXTERNAL
          ENVIRONMENT                       ENVIRONMENT
              │                               │
      Mostly controllable             ┌────────┴────────┐
                                      │                 │
                                   MICRO              MACRO
                                      │                 │
                          Suppliers, Customers,     Demographic
                          Competitors,              Economic
                          Intermediaries,           Natural
                          Publics                   Technological
                                                    Political
                                                    Cultural

The source itself summarizes the environment as internal + external, with external environment further divided into micro and macro environment.

---

8. Controllable and Uncontrollable Factors

Another important classification is:

A. Controllable Factors

These are factors that the company can largely control through managerial decisions.

Examples include:

• Product decisions

• Pricing

• Promotion

• Distribution

• Marketing strategy

The marketing manager can modify these according to changing conditions.

Example

If sales are falling, a company may:

• Reduce price

• Improve the product

• Increase advertising

• Change distribution channels

These are relatively controllable marketing decisions.

---

B. Uncontrollable Factors

These are environmental forces that are largely beyond the direct control of the company.

Examples:

• Government policies

• Economic conditions

• Culture

• Political changes

• Technology

• Demographic changes

• Natural conditions

The company cannot simply command these forces to change.

Instead, it must:

Understand → Monitor → Adapt → Respond

---

9. Domestic and Foreign Uncontrollables

This is particularly important in international marketing.

The international marketer faces two major levels of uncontrollable uncertainty:

1. Domestic Uncontrollables

These originate in the company's home country.

2. Foreign Uncontrollables

These originate in the foreign country where the company operates.

The material explains that the international marketer therefore faces at least two levels of uncontrollable uncertainty compared with the domestic marketer.

---

10. Domestic Uncontrollables

Domestic uncontrollables include home-country factors that can influence foreign business.

Important examples are:

• Political forces

• Legal structure

• Economic climate

• Foreign policy

• Currency conditions

Example

Suppose the Indian government changes its export policy.

An Indian company exporting to another country may immediately be affected.

Therefore:

Home-country policy → Export conditions → International marketing performance

---

11. Foreign Uncontrollables

Foreign uncontrollables are environmental forces in the foreign country.

They may include:

• Political conditions

• Legal requirements

• Economic conditions

• Cultural differences

• Technology

• Competition

• Infrastructure

• Geography

The greater the number of countries in which a company operates, the greater the variety of uncontrollable environmental factors it may have to manage.

Example

A marketing strategy successful in India may not work in Japan because:

• Consumer expectations may differ.

• Culture may differ.

• Regulations may differ.

• Distribution systems may differ.

• Competition may differ.

---

12. The International Marketing Task

The international marketer has a more complicated task than the domestic marketer.

Why?

Because there are several layers of environmental influence.

Three levels can be understood:

              FOREIGN ENVIRONMENT
          ┌──────────────────────────┐
          │ Political, Legal,        │
          │ Economic, Cultural etc.  │
          └──────────────────────────┘

              HOME ENVIRONMENT
          ┌──────────────────────────┐
          │ Domestic Political,      │
          │ Legal, Economic etc.     │
          └──────────────────────────┘

              MARKETING DECISIONS
          ┌──────────────────────────┐
          │ Product | Price |        │
          │ Promotion | Distribution│
          └──────────────────────────┘

The company's marketing decisions are influenced by both its home environment and the foreign environment.

---

13. Major Foreign Environmental Forces

The source identifies seven significant elements of the uncontrollable international environment:

1. Political/Legal Forces

2. Economic Forces

3. Competitive Forces

4. Level of Technology

5. Structure of Distribution

6. Geography and Infrastructure

7. Cultural Forces

These constitute major sources of uncertainty for international marketers.

---

14. Environmental Adaptation

This is one of the most important concepts in international marketing.

The source states that the key to successful international marketing is adaptation to environmental differences from one market to another.

What is Adaptation?

Adaptation means modifying the marketing programme according to environmental differences.

Example

A company may change:

• Product formulation

• Packaging

• Language

• Advertising

• Pricing

• Distribution

• Promotional message

depending on the foreign market.

---

15. Why is Cultural Adaptation Especially Important?

The material describes cultural adjustment as one of the most challenging and important tasks facing international marketers.

A marketer may make a mistake by assuming:

“Customers everywhere think like our domestic customers.”

This is called an inappropriate frame of reference.

Example

A colour, symbol, word, image or advertising theme may have a positive meaning in one country but a completely different meaning elsewhere.

Therefore:

International marketers must understand the customer's cultural frame of reference.

---

16. What is Marketing Adaptation?

Adaptation can be understood as:

Environmental Difference

↓

Study the Difference

↓

Predict its Marketing Impact

↓

Modify Marketing Mix

↓

Serve the Customer Better

The source defines adaptation as a conscious effort to anticipate the influence of domestic and foreign uncontrollable factors on the marketing mix and adjust the mix to minimize their effects.

---

17. Adapting to Environmental Change

The marketing environment is dynamic, not static.

Changes may occur in:

• Technology

• Consumer tastes

• Consumer preferences

• Competition

• Population

• Attitudes

• Values

• Income

• Government policies

• Regulations

Therefore:

A successful marketing policy must be adaptable.

---

18. Forecasting Environmental Changes

Although no organization can predict the future perfectly, useful forecasts can be made.

Companies can forecast:

• Product demand

• Population

• Income

• Technology

• Demographic trends

These forecasts help companies formulate appropriate strategies.

Example

If market research indicates that consumers are increasingly demanding environmentally friendly products, the company can begin developing:

• Sustainable packaging

• Eco-friendly products

• Green marketing campaigns

before competitors do.

---

19. Outside-Inside Approach

Successful companies increasingly take an:

Outside-Inside View

This means the company begins by looking at what is happening outside the organization and then adjusts internal activities accordingly.

Outside

• Customers

• Competitors

• Technology

• Economy

• Government

• Culture

↓

Inside

• Strategy

• Product

• Employees

• Production

• Finance

• Marketing

Simple principle:

Don't ask only “What can we produce?” Ask “What does the changing market need?”

---

20. Internal Environment

The internal environment consists mainly of factors within the organization that influence its decisions and performance.

The material identifies several important internal factors.

---

20.1 Value System

The values of:

• Founders

• Owners

• Top management

influence:

• Business choice

• Mission

• Objectives

• Policies

• Practices

Example

If a company's founders strongly value sustainability, the company may emphasize:

• Green products

• Ethical sourcing

• Environmental responsibility

---

21. Mission and Objectives

The company's mission and objectives determine its:

• Business domain

• Priorities

• Direction

• Philosophy

• Policies

Example

If the mission is:

“To provide affordable healthcare products to all.”

The marketing strategy may emphasize:

• Affordability

• Wide distribution

• Accessibility

• Mass markets

---

22. Management Structure and Nature

The organizational structure and management style influence business decisions.

Important aspects include:

• Organizational structure

• Board composition

• Professionalization of management

• Decision-making system

Example

A highly centralized organization may take international decisions from headquarters.

A decentralized organization may give greater authority to regional or country managers.

---

23. Internal Power Relationships

Internal relationships influence whether decisions can be effectively implemented.

Important relationships include:

• Top management

• Employees

• Shareholders

• Board of Directors

Example

A new international marketing strategy may fail if top management supports it but employees do not cooperate with implementation.

---

24. Human Resources

Employees are an important internal strength or weakness.

Relevant characteristics include:

• Skill

• Quality

• Morale

• Commitment

• Attitude

• Adaptability

Example

An international company needs employees who can understand:

• Foreign cultures

• Languages

• International customers

• Global competition

• Technology

---

25. Company Image

Company image influences:

• Financing

• Joint ventures

• Alliances

• Marketing intermediaries

• Contracts

• New product launches

Example

A company with a strong reputation may find it easier to attract:

• Investors

• Distributors

• Strategic partners

• Customers

---

26. Other Internal Factors

The source also identifies:

• Production capacity

• Technology

• Production efficiency

• Research and Development

• Marketing organization

• Quality of marketing personnel

• Distribution network

• Financial policies

• Financial position

• Capital structure

These factors influence the firm's competitiveness and marketing efficiency.

---

27. External Environment

The source broadly divides external environment into:

A. Micro Environment

and

B. Macro Environment

---

28. External Micro Environment

Micro-environment consists of forces close to the company that affect its ability to serve customers.

The major forces are:

1. Suppliers

2. Customers

3. Competitors

4. Marketing intermediaries

5. Publics

---

29. Suppliers

Suppliers provide the resources required by the organization.

They may provide:

• Raw materials

• Components

• Equipment

• Services

• Other inputs

The company must consider:

• Quality

• Quantity

• Reliability

• Credit facilities

• Warranties

• Price

Why are suppliers important?

Supply shortages or delays can:

• Stop production

• Delay delivery

• Reduce sales

• Damage goodwill

Example

If an automobile manufacturer cannot obtain essential components, production may stop even though customer demand remains high.

---

30. Customers

The source identifies five types of customers:

1. Ultimate Consumers

Individuals and households purchasing for personal consumption.

Example: A family buying a refrigerator.

2. Industrial Consumers

Organizations purchasing goods/services to produce other goods or services.

Example: A factory purchasing machinery.

3. Resellers

Organizations purchasing products to resell for profit.

Examples:

• Wholesalers

• Retailers

• Distributors

4. Government Customers

Government departments and agencies purchasing goods and services for public purposes.

5. International Customers

Individuals or organizations from other countries purchasing products for:

• Consumption

• Production

• Resale

• Government purposes

---

31. Competitors

Competition is broader than simply companies selling the same product.

The source explains that firms may compete for the consumer's income even when their products are different.

Example

Suppose a consumer has ₹50,000 available.

A television company is not competing only with another television company.

The customer could spend the money on:

• Refrigerator

• Smartphone

• Two-wheeler

• Travel

• Investment

• Other services

Therefore, the company must understand the customer's total spending alternatives.

---

32. Types of Competition

The material refers to four types:

1. Desire Competition

2. Generic Competition

3. Form Competition

4. Brand Competition

Easy understanding

Desire Competition

Competition among different ways of satisfying a basic desire.

Generic Competition

Different product categories that can satisfy the same need.

Form Competition

Different forms of the same product.

Brand Competition

Different brands offering similar products.

---

33. Four Cs of Marketing Positioning

The material highlights four dimensions that companies should consider:

1. Customers

Who are the customers?

2. Channels

How will the product reach them?

3. Competitors

Who else is competing for the customer?

4. Company

What are our own strengths and characteristics?

Easy formula:

Customer + Channel + Competitor + Company = Stronger Positioning

---

34. Marketing Intermediaries

Marketing intermediaries are independent organizations that help the company:

• Promote

• Sell

• Distribute

products to final buyers.

Two major categories are:

A. Middlemen

• Wholesalers

• Retailers

• Agents

B. Facilitating Organizations

• Warehouses

• Transportation firms

• Marketing research agencies

• Advertising agencies

• Media firms

• Marketing consultants

• Banks

• Credit companies

• Insurance companies

---

35. Importance of Marketing Intermediaries

They create an important link:

Company → Intermediary → Customer

If the intermediary is inefficient, the company's marketing performance may suffer.

Example

A company may manufacture an excellent product, but if its distribution partner:

• Delivers late

• Damages products

• Has poor customer service

the company's reputation can suffer.

---

36. Publics

A public is any group that has an actual or potential interest in, or impact on, the company's ability to achieve its objectives.

The source identifies seven types.

---

36.1 Financial Publics

These influence the company's ability to obtain funds.

Examples:

• Banks

• Investment houses

• Shareholders

---

36.2 Media Publics

They carry:

• News

• Features

• Editorial opinions

Examples:

• Newspapers

• Magazines

• Radio

• Television

---

36.3 Government Publics

Government developments affect business.

Companies may need to consider:

• Product safety

• Advertising regulations

• Legal requirements

• Government policies

---

36.4 Citizen-Action Publics

These include:

• Consumer organizations

• Environmental groups

• Minority groups

• Other social-interest groups

They may question or influence company decisions.

---

36.5 Local Publics

Examples:

• Neighbourhood residents

• Community organizations

---

36.6 General Publics

The general public's attitude toward the company and its products influences its image and acceptance.

---

36.7 Internal Publics

These include:

• Workers

• Managers

• Executives

• Volunteers

• Board of Directors

Good internal communication can improve employee involvement and create positive attitudes toward the organization.

---

37. External Macro Environment

Macro environment consists of larger societal forces.

The source identifies:

1. Demographic

2. Economic

3. Natural

4. Technological

5. Political

6. Cultural forces

A useful memory device is:

D-E-N-T-P-C

Demographic
Economic
Natural
Technological
Political
Cultural

---

38. Demographic Environment

Meaning

Demography refers to the study of population characteristics such as:

• Size

• Density

• Location

• Age

• Gender

• Occupation

• Other population statistics

Why is it important?

Because:

People make up markets.

Changes in population characteristics change demand.

Example

If more households have both husband and wife working, demand may increase for:

• Fast food

• Home appliances

• Childcare/crèches

• Convenience services

---

39. Economic Environment

The economic environment determines people's:

Purchasing Power

and

Spending Behaviour

Important factors include:

• Income

• Income distribution

• Economic development

• Economic resources

• Inflation

• Productivity

• Unemployment

• Shortages

• Consumer spending

Example

During an economic slowdown:

Consumers may reduce spending on luxury products.

During economic expansion:

Demand for premium products may increase.

---

40. Natural Environment

The natural environment includes natural resources that:

• Serve as inputs to production

• Are affected by marketing activities

Major concerns include:

• Raw-material shortages

• Air pollution

• Water shortages

• Resource conservation

• Environmental protection

This has contributed to the growth of the:

Green Movement

Therefore, marketers increasingly need to consider environmental sustainability.

---

41. Technological Environment

Technology is one of the most powerful forces affecting marketing.

Technological change can be:

Opportunity

or

Threat

Opportunity

Technology can create:

• New products

• New services

• New production methods

• New distribution systems

• New communication methods

Threat

New technology can make existing products or business models obsolete.

Example

Digital technology has changed:

• Retailing

• Banking

• Advertising

• Communication

• Entertainment

• Education

Therefore:

Companies must monitor technological change continuously.

---

42. Political Environment

The political environment includes:

• Government

• Laws

• Government agencies

• Pressure groups

• Public policies

Political decisions can affect:

• Tariffs

• Taxes

• Trade

• Industry

• Advertising

• Product safety

• Competition

• Foreign investment

Example

If a government increases import duties, imported products may become more expensive.

---

43. Cultural Environment

Culture influences:

• Values

• Perceptions

• Preferences

• Behaviour

• Attitudes

• Consumption patterns

This is particularly important in international marketing because different countries can have very different cultural characteristics.

Example

A company's:

• Product name

• Advertisement

• Packaging

• Colour

• Symbol

• Message

• Selling approach

may need adaptation according to local culture.

---

44. Micro Environment vs Macro Environment

Micro Environment	Macro Environment
Closer to the company	Broader societal forces
Directly affects marketing operations	Generally affects indirectly
Suppliers	Demographic forces
Customers	Economic forces
Competitors	Natural forces
Intermediaries	Technological forces
Publics	Political forces
More immediate	More broad and extensive

The source specifically explains that macro forces are more uncontrollable and indirectly influence marketing decisions, while micro forces are closer to the company and form part of its marketing system.

---

45. Internal vs External Environment

Internal Environment	External Environment
Exists within the organization	Exists outside the organization
Largely controllable	Generally less controllable
Value system	Suppliers
Mission and objectives	Customers
Management structure	Competitors
Human resources	Intermediaries
Internal power relationships	Publics
Company image	Demographic, economic, political etc.
Production capacity	Technology and culture
Financial position	Natural environment

---

46. Opportunity and Threat Perspective

The marketing environment should not be viewed only as a problem.

Every environmental change can create:

Opportunity

or

Threat

Example

New technology

→ Opportunity for a digital business

→ Threat to an outdated traditional business

Economic growth

→ Opportunity for premium products

Economic recession

→ Threat to luxury-product companies

Environmental regulation

→ Threat to polluting industries

→ Opportunity for green-product companies

---

47. Reactive vs Proactive Environmental Management

The material gives an important strategic distinction.

Reactive Approach

The company:

Waits → Observes → Responds

It adapts only after environmental changes occur.

---

Proactive Approach

The company:

Monitors → Anticipates → Prepares → Influences

The material recommends that companies should, whenever possible, be proactive rather than reactive.

Example

A company notices that customers are increasingly interested in sustainable products.

Reactive company:

Waits until sales decline.

Proactive company:

Immediately invests in:

• Sustainable packaging

• Green products

• Environmental communication

and gains an early advantage.

---

48. Role of Marketing Managers

Modern marketing managers should be:

Trend Trackers

They continuously monitor changes in:

• Society

• Economy

• Technology

• Government

• Culture

• Competition

Opportunity Seekers

They identify new opportunities emerging from environmental changes.

The source specifically describes marketers as “trend trackers and opportunity seekers.”

---

49. How Should a Company Analyse the International Marketing Environment?

A useful teaching framework is:

Step 1 – Identify

What environmental factors are changing?

↓

Step 2 – Collect Information

Use:

• Marketing research

• Market intelligence

• Customer feedback

• Competitor analysis

↓

Step 3 – Analyse

Will the change create an:

Opportunity or Threat?

↓

Step 4 – Forecast

What may happen in the future?

↓

Step 5 – Develop Strategy

How should the company respond?

↓

Step 6 – Adapt Marketing Mix

Modify:

• Product

• Price

• Promotion

• Distribution

↓

Step 7 – Monitor

Continuously observe the environment.

This reflects the source's emphasis on monitoring, forecasting and adapting to environmental changes.

---

50. Comprehensive Concept Map

                    INTERNATIONAL MARKETING
                             │
                             ▼
               INTERNATIONAL ENVIRONMENT
                             │
             ┌───────────────┴───────────────┐
             ▼                               ▼
        INTERNAL                         EXTERNAL
        ENVIRONMENT                      ENVIRONMENT
             │                               │
             │                    ┌──────────┴──────────┐
             │                    ▼                     ▼
             │                  MICRO                 MACRO
             │                    │                     │
             │             Suppliers              Demographic
             │             Customers               Economic
             │             Competitors             Natural
             │             Intermediaries           Technological
             │             Publics                  Political
             │                                      Cultural
             │
      Value System
      Mission & Objectives
      Management Structure
      Internal Power
      Human Resources
      Company Image
      Production
      Technology
      R&D
      Finance
      Distribution

---

51. The International Marketer's Central Challenge

The entire lesson can be understood through one central question:

How can a company control what it can control and adapt to what it cannot control?

The company can control:

Product + Price + Promotion + Distribution

The company must adapt to:

Political + Economic + Cultural + Technological + Demographic + Natural + Legal + Competitive conditions

Therefore:

Marketing Success = Good Internal Capabilities + Environmental Understanding + Adaptation

---

52. Important Examination Questions

Short-answer questions

1. Define international marketing.

2. What is marketing environment?

3. What is internal environment?

4. What is external environment?

5. What is micro environment?

6. What is macro environment?

7. What are domestic uncontrollables?

8. What are foreign uncontrollables?

9. Define marketing intermediaries.

10. What is environmental adaptation?

11. What is demographic environment?

12. What is cultural environment?

13. What is technological environment?

14. Who are financial publics?

15. What is green movement?

Medium-answer questions

1. Explain the importance of international marketing environment.

2. Explain the difference between domestic and international marketing.

3. Explain controllable and uncontrollable factors.

4. Discuss domestic and foreign uncontrollables.

5. Explain the internal environment of a company.

6. Explain the micro environment.

7. Explain the different types of customers.

8. Explain the role of marketing intermediaries.

9. Explain the types of publics.

10. Explain the macro environment.

Essay questions

1. Explain the international marketing environment in detail.

2. Discuss the internal and external environmental factors affecting international marketing.

3. Explain the micro and macro environments of international marketing.

4. Discuss the major uncontrollable forces in the international marketing environment.

5. Explain how international marketers adapt to environmental changes.

6. Discuss the demographic, economic, natural, technological, political and cultural environments.

7. Explain the international marketing task and the sources of uncertainty faced by international marketers.

8. “Successful international marketing depends upon environmental adaptation.” Discuss.

9. Explain the role of marketing managers as trend trackers and opportunity seekers.

10. Discuss reactive and proactive approaches to environmental management.

---

53. Quick Revision Chart

Topic	Key Point
International Marketing	Marketing activities in more than one country
Marketing Environment	Factors/forces affecting marketing decisions
Internal Environment	Factors within the organization
External Environment	Forces outside the organization
Micro Environment	Suppliers, customers, competitors, intermediaries, publics
Macro Environment	Demographic, economic, natural, technological, political, cultural
Controllable	Marketing decisions made by the company
Domestic Uncontrollables	Home-country external forces
Foreign Uncontrollables	Foreign-country external forces
Adaptation	Adjusting marketing activities to environmental differences
Demographic	Population characteristics
Economic	Income and purchasing power
Natural	Resources and environmental conditions
Technological	Technology and innovation
Political	Government, laws and policies
Cultural	Values, perceptions and behaviour
Reactive	Respond after change
Proactive	Anticipate and prepare for change

---

54. Final Takeaway for Students

The International Marketing Environment can be remembered through this simple chain:

Environment → Opportunity/Threat → Analysis → Strategy → Adaptation → Competitive Advantage

A company cannot control everything around it. However, it can study the environment, anticipate changes, adapt its marketing strategy and make better decisions.

The most important lesson is therefore:

“Understand the environment before designing the international marketing strategy.”

And the final strategic principle from the source is especially important:

Be proactive, not merely reactive.

Successful companies continuously monitor environmental changes, identify opportunities and threats, and adapt their strategies accordingly.

Dr. S. Anthony Rahul Golden
M.Com., M.Phil., NET., Ph.D., MBA.,SET., NET., M.A., M.Sc. (Psy)., M.A.,  PGDBA., 

Asst. Professor of Commerce., Loyola College (Autonomous), Chennai - 34
Mobile No- 91+9176313545
https://yesrahul.blogspot.com/

https://orcid.org/0000-0001-8071-4801

https://vidwan.inflibnet.ac.in/profile/339311

https://www.researchgate.net/profile/Anthony-Golden-S 

https://scholar.google.com/citations?hl=en&user=faw7X-UAAAAJ
Anthony Rahul Golden, S. - Author details - Scopus Preview

Unit - 3

PRODUCT DECISIONS IN GLOBAL MARKETS

---

Slide 1: Product Decisions – Introduction

Product decisions involve deciding:

• What product to offer?
• Which market to target?
• What features and quality to provide?
• Whether to standardize or adapt the product?
• How to brand, package and label it?
• What services should accompany the product?

Key Idea

The right product must satisfy customer needs in the target international market.

---

Slide 2: Product Planning for Global Markets

Product planning means designing and managing products according to the needs of international markets.

Major decisions:

• Product features
• Quality
• Design
• Size and varieties
• Brand name
• Packaging
• Labelling
• After-sales service
• Product positioning

Factors to consider:

• Customer preferences
• Culture
• Income
• Climate
• Laws and regulations
• Competition
• Technology

---

Slide 3: Global Product Planning Process

Identify Global Customer Needs
            ↓
Market Research
            ↓
Select Target Market
            ↓
Develop Product
            ↓
Standardize or Adapt
            ↓
Branding + Packaging + Labelling
            ↓
Launch
            ↓
Monitor & Improve

---

Slide 4: Standardisation vs Product Adaptation

Standardisation

Offering the same or nearly the same product in different countries.

Advantages:

• Lower production cost
• Economies of scale
• Consistent global brand
• Easier management
• Consistent quality

Example:

A technology company may offer the same basic smartphone model globally.

---

Slide 5: Product Adaptation

Product adaptation means modifying a product according to the requirements of a particular country or market.

Reasons:

• Different tastes
• Culture
• Climate
• Regulations
• Consumer income
• Usage habits
• Local preferences

Example:

A food company may change flavour, ingredients or packaging for different countries.

---

Slide 6: Standardisation vs Adaptation

Standardisation	Adaptation
Same product globally	Product modified locally
Lower cost	Higher cost
Consistent brand image	Better local acceptance
Economies of scale	Meets local needs
Less flexibility	More flexibility

Best approach:

“Think Global, Act Local.”

Many companies use a hybrid approach—standardizing core features while adapting selected elements.

---

Slide 7: New Product Development (NPD)

New Product Development is the systematic process of creating and introducing a new product into the market.

Main stages:

Idea Generation
↓
Idea Screening
↓
Concept Development & Testing
↓
Business Analysis
↓
Product Development
↓
Test Marketing
↓
Commercialisation

---

Slide 8: NPD in Global Markets

International NPD should consider:

• Global customer needs
• Local culture
• Technology
• Competition
• Regulations
• Production cost
• Market potential

Key Question:

Should the same new product be launched globally or should different versions be developed for different markets?

---

Slide 9: Management of International Brands

An international/global brand is a brand marketed across different countries.

Brand management involves:

• Brand name
• Logo
• Positioning
• Brand identity
• Brand image
• Brand communication
• Brand equity
• Consistency across markets

Objective:

Build a strong and recognizable brand while remaining relevant to local customers.

---

Slide 10: Challenges in International Brand Management

Companies must manage:

• Different languages
• Cultural meanings
• Consumer perceptions
• Local competitors
• Trademark issues
• Brand consistency
• Global vs local positioning

Key Principle:

Global Brand Identity + Local Relevance

---

Slide 11: Packaging

Packaging means designing the container or wrapping used to protect, handle, transport and present the product.

Functions:

• Protects the product
• Facilitates transportation
• Provides information
• Attracts customers
• Supports branding
• Provides convenience
• Differentiates the product

International considerations:

• Climate
• Transportation conditions
• Cultural preferences
• Package size
• Environmental regulations

---

Slide 12: Labelling

Labelling provides important information about the product.

Common information:

• Product name
• Ingredients
• Quantity
• Price
• Manufacturing details
• Expiry/best-before date
• Usage instructions
• Safety warnings
• Country of origin

International challenge:

Labels may need to comply with different languages and regulations in different countries.

---

Slide 13: Packaging vs Labelling

Packaging	Labelling
Protects and presents the product	Provides product information
Includes container/wrapper	Includes written/printed information
Supports transportation	Supports identification and legal compliance
Attracts customers	Educates customers

Easy memory:

Packaging = Protection + Presentation

Labelling = Information + Identification

---

Slide 14: Provision of Sales-Related Services

Sales-related services are additional services provided before, during or after the sale.

Examples:

• Installation
• Demonstration
• Delivery
• Warranty
• Repairs
• Maintenance
• Technical support
• Customer training
• Spare parts
• After-sales service

---

Slide 15: Importance of Sales-Related Services

Good services help to:

• Increase customer satisfaction
• Build customer loyalty
• Differentiate the product
• Improve brand image
• Encourage repeat purchases
• Reduce customer complaints
• Create competitive advantage

Example: For an international machinery company, installation + training + maintenance + spare parts can be as important as the machine itself.

---

Slide 16: Product Decisions 

GLOBAL PRODUCT DECISIONS
          ↓
Product Planning
          ↓
Standardisation or Adaptation
          ↓
New Product Development
          ↓
Brand Management
          ↓
Packaging & Labelling
          ↓
Sales-Related Services
          ↓
Customer Satisfaction
          ↓
Global Competitive Advantage

---

Slide 17: Quick Revision

Topic	Key Point
Product Planning	Designing product for global markets
Standardisation	Same product across markets
Adaptation	Modify product for local needs
NPD	Process of developing new products
International Branding	Managing brand across countries
Packaging	Protection, presentation & convenience
Labelling	Product information & compliance
Sales Services	Installation, warranty, repair, support

Thus, 

“A successful global product combines appropriate product planning, the right balance between standardisation and adaptation, strong international branding, effective packaging and labelling, and excellent sales-related services.”

Certainly. For teaching, it is useful to go one level deeper than the PPT bullets. Below are the important terms from Product Decisions in Global Marketing, explained in simple language with examples.

Product Decisions – Important Terms Explained

1. Product Planning

Meaning:
Product planning is deciding what product to offer, to whom, where, and with what features.

It includes decisions about:

• Product quality

• Design

• Features

• Size

• Colour

• Brand

• Packaging

• Labelling

• Warranty

• After-sales service

Example

An Indian company planning to sell a food product in Japan must decide whether the taste, package size, ingredients and instructions should remain the same or be modified.

Remember:

Product Planning = Deciding the right product for the right market.

---

2. Global Product

A global product is a product marketed in several countries, either in the same form or with selected modifications.

Example

A smartphone may have the same:

• Basic design

• Brand

• Operating system

but different:

• Chargers

• Language settings

• Features

• Packaging

in different countries.

---

3. Standardisation

Standardisation means offering a product with the same or nearly the same features in different countries.

Why standardise?

• Lower production cost

• Economies of scale

• Consistent quality

• Consistent brand image

• Easier global management

Example

A company may manufacture one basic smartphone model and sell it in several countries.

Simple formula:

One Product → Many Countries

---

4. Economies of Scale

This is an important term connected with standardisation.

Economies of scale means that the average cost per unit decreases when production increases.

Example

If a company produces:

• 1,000 units → ₹500 per unit

• 100,000 units → ₹300 per unit

the larger production volume may reduce the average cost.

Therefore, standardisation can help companies achieve economies of scale.

Remember:

More production → Lower average cost

---

5. Product Adaptation

Product adaptation means modifying a product to suit the specific needs of a particular country or customer group.

Adaptation may involve:

• Taste

• Size

• Colour

• Design

• Ingredients

• Features

• Packaging

• Language

Example

A food company may change the spice level of its product according to local preferences.

Simple formula:

One Core Product → Different Local Versions

---

6. Why is Adaptation Necessary?

A product successful in one country may not automatically succeed elsewhere.

Reasons include:

Cultural differences

People have different tastes, beliefs and habits.

Climate differences

Products may need modification according to weather.

Legal differences

Countries have different product standards and regulations.

Income differences

Consumers may have different purchasing power.

Usage differences

Customers may use the same product differently.

---

7. Standardisation vs Adaptation

This is an important exam and PPT concept.

Standardisation asks:

“Can we sell essentially the same product everywhere?”

Adaptation asks:

“What changes are necessary for this market?”

Modern approach

Many international companies use a combination:

Standardise what can be standardised + Adapt what must be adapted.

This is often called a glocal approach.

---

8. Glocalisation

Glocalisation = Global thinking + Local adaptation

A company maintains its global identity but modifies certain aspects to suit local markets.

Example

A global fast-food brand may maintain:

• Same brand

• Same logo

• Same basic identity

but modify:

• Menu

• Ingredients

• Flavours

• Promotional messages

according to local preferences.

Easy phrase:

“Think Global, Act Local.”

---

9. New Product Development (NPD)

New Product Development means the systematic process of creating and introducing a new product.

It begins with an idea and ends with commercialization.

Main stages:

Idea Generation
↓
Idea Screening
↓
Concept Development
↓
Business Analysis
↓
Product Development
↓
Test Marketing
↓
Commercialisation

---

10. Idea Generation

Finding possible ideas for new products.

Sources include:

• Customers

• Employees

• Competitors

• Market research

• Technology

• Dealers

• Suppliers

Example

Customers repeatedly complain that a product is difficult to carry.

The company may develop a portable version.

---

11. Idea Screening

Not every idea is good enough to develop.

Idea screening means evaluating ideas and removing those that are:

• Too expensive

• Technically difficult

• Unprofitable

• Unwanted by customers

• Inconsistent with company objectives

Simple meaning:

“Which ideas are worth developing?”

---

12. Product Concept

A product concept is a clear description of the proposed product and the value it will provide to customers.

Example

Instead of saying:

“We will make a new bottle.”

Concept:

“A lightweight reusable bottle designed for students who need convenient and environmentally friendly drinking solutions.”

The second statement explains the customer benefit.

---

13. Test Marketing

Test marketing means introducing a product on a limited scale before launching it widely.

Purpose:

To find out:

• Customer response

• Sales potential

• Pricing acceptance

• Packaging effectiveness

• Promotional effectiveness

Example

A company launches a new snack in a few cities before introducing it nationally or internationally.

---

14. Commercialisation

Commercialisation means the full-scale launch of the product in the target market.

It involves decisions about:

• Where to launch

• When to launch

• Pricing

• Distribution

• Promotion

• Production capacity

Simple meaning:

Test launch → Successful evaluation → Full launch

---

15. International Brand

An international brand is a brand marketed in more than one country.

Examples include global brands such as:

• Coca-Cola

• Apple

• Nike

• Samsung

The important point is that the brand operates across national boundaries.

---

16. Brand Name

A brand name is the part of a brand that can be spoken or written.

Examples:

• Apple

• Nike

• Samsung

A good international brand name should ideally be:

• Easy to pronounce

• Easy to remember

• Meaningful or distinctive

• Legally protectable

• Suitable across cultures

---

17. Brand Image

Brand image means how customers perceive a brand.

For example, customers may perceive a brand as:

• Premium

• Affordable

• Reliable

• Innovative

• Eco-friendly

Important distinction:

Brand Identity = What the company wants the brand to represent.

Brand Image = What customers actually think about the brand.

---

18. Brand Positioning

Brand positioning means creating a distinct place for the brand in the customer's mind compared with competitors.

Example

A brand may position itself as:

“Affordable premium smartphone”

while another positions itself as:

“Professional high-performance smartphone.”

Simple question:

“What should customers think of when they hear our brand name?”

---

19. Brand Equity

Brand equity refers to the value a brand gains from customer awareness, recognition, trust and positive associations.

A strong brand can:

• Attract customers

• Charge premium prices

• Encourage loyalty

• Reduce perceived risk

• Create competitive advantage

Example

Customers may be willing to pay more for a well-known trusted brand than an unknown brand offering a similar product.

---

20. Global Brand Consistency

This means maintaining the core identity of the brand across countries.

For example, the company may maintain:

• Same logo

• Same basic brand name

• Same core values

• Similar visual identity

while adapting communication to local markets.

Key idea:

Consistency builds recognition; adaptation creates relevance.

---

21. Packaging

Packaging is the material/container used to protect, contain, handle, transport and present a product.

Functions of packaging:

1. Protection

2. Convenience

3. Transportation

4. Storage

5. Product identification

6. Promotion

7. Differentiation

Example

A strong package protects a product during international transportation while also attracting customers.

---

22. Primary, Secondary and Tertiary Packaging

Primary Packaging

Directly touches the product.

Example: Bottle containing shampoo.

Secondary Packaging

Groups primary packages.

Example: Box containing several shampoo bottles.

Tertiary Packaging

Used mainly for transportation and distribution.

Example: Large carton containing multiple boxes.

Easy memory:

Primary = Product

Secondary = Group

Tertiary = Transport

---

23. Labelling

Labelling means providing important written or printed information about a product.

It may include:

• Product name

• Ingredients

• Quantity

• Manufacturing details

• Expiry date

• Instructions

• Warnings

• Country of origin

In international marketing, labels may need to comply with different countries' laws and language requirements.

---

24. Packaging vs Labelling

Packaging

Protects + Presents

Labelling

Informs + Identifies

Example

For a juice bottle:

Bottle → Packaging

Nutrition information + ingredients + expiry date → Label

---

25. Sales-Related Services

These are additional services provided before, during or after the sale to support the product and customer.

Examples:

• Installation

• Demonstration

• Delivery

• Training

• Warranty

• Repairs

• Maintenance

• Technical support

• Spare parts

---

26. After-Sales Service

After-sales service means support provided after the customer purchases the product.

Examples:

Car → Servicing

Laptop → Technical support

Washing machine → Installation and repair

Industrial machinery → Maintenance and spare parts

Why important?

Good after-sales service creates:

Customer Satisfaction → Trust → Loyalty → Repeat Purchase

---

27. Warranty

A warranty is a commitment by the seller/manufacturer to repair, replace or otherwise address specified defects or problems under stated conditions for a specified period.

Example

A manufacturer provides a 2-year warranty for a washing machine.

Warranty reduces the customer's perceived risk of purchasing the product.

---

28. Customer Support

Customer support helps customers:

• Understand the product

• Solve problems

• Obtain technical assistance

• Make complaints

• Get repairs or replacements

In international markets, support may need to be provided in different languages and through different communication channels.

---

29. Competitive Advantage Through Services

Sometimes two companies sell similar products.

The company providing better:

• Warranty

• Delivery

• Installation

• Training

• Maintenance

• Customer support

may gain a competitive advantage.

Important teaching point:

The product is not only the physical item; the total customer offering includes supporting services.

---

30. Important Terms – One-Page Revision

Term	Simple Meaning
Product Planning	Deciding what product to offer and how
Standardisation	Same/nearly same product across markets
Adaptation	Modifying product for local needs
Economies of Scale	Lower average cost through larger production
Glocalisation	Global approach + local adaptation
NPD	Process of developing a new product
Idea Generation	Finding new product ideas
Idea Screening	Selecting promising ideas
Concept Development	Defining the product and customer benefit
Test Marketing	Limited market launch for evaluation
Commercialisation	Full-scale product launch
International Brand	Brand marketed in multiple countries
Brand Image	Customer's perception of the brand
Brand Positioning	Desired place of brand in customer's mind
Brand Equity	Value created by a strong brand
Packaging	Protection and presentation of product
Labelling	Product information and identification
Warranty	Manufacturer's specified commitment for defects/problems
After-Sales Service	Support provided after purchase
Competitive Advantage	Superior value compared with competitors

⭐ One Concept to Emphasize in Class

Global Product Strategy =

Right Product + Right Market + Right Level of Standardisation/Adaptation + Strong Brand + Attractive Packaging + Clear Labelling + Good Service

That is the easiest way for students to connect all the terms in this unit.

Dr. S. Anthony Rahul Golden
M.Com., M.Phil., NET., Ph.D., MBA.,SET., NET., M.A., M.Sc. (Psy)., M.A.,  PGDBA., 

Asst. Professor of Commerce., Loyola College (Autonomous), Chennai - 34
Mobile No- 91+9176313545
https://yesrahul.blogspot.com/

https://orcid.org/0000-0001-8071-4801

https://vidwan.inflibnet.ac.in/profile/339311

https://www.researchgate.net/profile/Anthony-Golden-S 

https://scholar.google.com/citations?hl=en&user=faw7X-UAAAAJ
Anthony Rahul Golden, S. - Author details - Scopus Preview

 

UNIT:IV

PRICING AND PROMOTION DECISIONS IN INTERNATIONAL MARKETING

---

PRICING DECISIONS

Slide 1: Meaning of International Pricing

International pricing means deciding the price at which a product or service is offered in foreign markets.

It involves considering:

• Product cost
• Customer purchasing power
• Competition
• Taxes and duties
• Exchange rates
• Government regulations
• Distribution costs
• Market conditions

An Indian company selling a product for ₹1,000 in India may have to charge a different price in the USA because of shipping, taxes, exchange rates, competition and customer expectations.

Slide 2: Environmental Influences on Pricing

International pricing is influenced by both internal and external factors.

Major environmental factors:

• Economic environment
• Political environment
• Legal environment
• Competition
• Culture
• Exchange rates
• Inflation
• Taxes and tariffs
• Distribution structure
• Consumer purchasing power

Key idea:

The same product may require different pricing in different countries.

---

Slide 3: Economic Influences

The economic environment strongly affects pricing.

Important factors:

Purchasing Power

Ability of customers to buy products.

Inflation

General increase in prices, which can increase business costs.

Income Level

Higher-income markets may accept premium prices.

Economic Growth

Growing economies may provide greater demand.

Example:

A premium product may be successful in a high-income market but may need a lower price in a low-income market.

---

Slide 4: Exchange Rate

Exchange rate is the value of one country's currency in relation to another country's currency.

Changes in exchange rates can affect:

• Export price
• Import cost
• Profit margin
• Competitiveness

Example:

If the Indian rupee depreciates against the US dollar, Indian exporters may become more price-competitive in the US market, although imported inputs may become more expensive.

Remember:

Currency fluctuation = Pricing uncertainty

---

Slide 5: Political and Legal Influences

Government policies can directly influence international prices.

Examples:

• Import duties
• Export duties
• Taxes
• Tariffs
• Price controls
• Subsidies
• Anti-dumping regulations
• Competition laws

Example:

If a country imposes a high import tariff, the final selling price of an imported product may increase.

---

Slide 6: Competitive Influences

Before fixing an international price, companies must study:

• Number of competitors
• Competitors' prices
• Competitors' quality
• Local brands
• Global brands
• Market share

Key question:

“How much are customers willing to pay compared with competing products?”

---

Slide 7: International Pricing Policies

A pricing policy is a general approach or guideline used by a company to determine prices.

Common international pricing policies include:

1. Standardised Pricing

Similar price approach across countries.

2. Differential Pricing

Different prices in different countries.

3. Market-Based Pricing

Price is determined according to each market's conditions.

4. Cost-Based Pricing

Price is calculated mainly from cost plus desired margin.

---

Slide 8: International Pricing Strategies

1. Market Penetration Pricing

Set a relatively low initial price to enter the market and gain market share quickly.

Suitable when:

• Market is price-sensitive
• Competition is strong
• Large sales volume is possible

---

2. Price Skimming

Set a high initial price and gradually reduce it.

Suitable for:

• Innovative products
• Premium products
• Products with limited initial competition

Example:

A newly launched advanced electronic product may initially be sold at a premium price.

---

Slide 9: Cost-Based Pricing

The company determines price based on:

Cost + Profit Margin = Selling Price

Example:

Cost = ₹700
Desired profit = ₹300

Price = ₹1,000

However, in international markets, the company must also consider:

• Freight
• Insurance
• Customs duties
• Taxes
• Distributor margins
• Currency changes

---

Slide 10: Price Escalation

Price escalation occurs when the final price becomes much higher in the foreign market because of additional costs.

Example:

Factory Cost
     ↓
Transportation
     ↓
Insurance
     ↓
Import Duty
     ↓
Distributor Margin
     ↓
Retailer Margin
     ↓
Final Consumer Price

Therefore, a product that is affordable in the home country may become expensive in a foreign market.

Important term:

Price escalation = Increase in final price due to additional international costs.

---

Slide 11: Transfer Pricing

Transfer pricing refers to the price charged for goods, services or intellectual property transferred between related companies within the same multinational group.

Example:

Indian subsidiary → sells component → US parent company.

The price charged between them is a transfer price.

It is an important issue because of:

• Taxation
• Profit allocation
• International regulations
• Compliance

---

PART B – PROMOTION DECISIONS

Slide 12: Meaning of International Promotion

International promotion means communicating information about products or services to customers in foreign markets to create:

• Awareness
• Interest
• Desire
• Purchase
• Loyalty

Major promotional tools:

1. Advertising
2. Personal selling
3. Sales promotion
4. Public relations

---

Slide 13: Complexities in International Promotion

Promotion becomes more difficult internationally because of differences in:

• Language
• Culture
• Religion
• Consumer behaviour
• Media availability
• Laws and regulations
• Literacy
• Technology
• Advertising standards
• Economic conditions

Key idea:

A promotional message successful in one country may fail or create misunderstanding in another.

---

Slide 14: Communication Process

International promotion can be understood as:

Sender
  ↓
Message
  ↓
Communication Channel
  ↓
Foreign Customer
  ↓
Response

But cultural and language differences can create noise or misunderstanding.

Example:

An advertisement translated literally into another language may produce an unintended or embarrassing meaning.

---

Slide 15: International Advertising

International advertising is paid communication about a product, service or brand through media in foreign markets.

Common media:

• Television
• Newspapers
• Magazines
• Radio
• Internet
• Social media
• Outdoor advertising
• Mobile advertising

Objectives:

• Create awareness
• Inform customers
• Persuade customers
• Build brand image
• Support sales

---

Slide 16: Standardisation vs Adaptation in Advertising

Standardised Advertising

Same or similar advertising message across countries.

Advantages:

• Consistent global image
• Lower cost
• Easier management

Adapted Advertising

Advertising message is modified according to the local market.

Advantages:

• Better cultural relevance
• Better local understanding
• More effective communication

Key idea:

Global message + Local execution

---

Slide 17: Important Advertising Issues

International advertisers must consider:

Language

Translation must convey the correct meaning.

Culture

Images, symbols and messages must suit local culture.

Laws

Advertising must comply with local regulations.

Media

Media availability differs between countries.

Consumer Behaviour

Customers in different countries respond differently to advertisements.

Religion and Social Values

Promotional content should respect local beliefs and sensitivities.

---

Slide 18: Personal Selling

Personal selling means direct communication between a salesperson and a potential customer to explain, persuade and facilitate purchase.

Particularly useful for:

• Industrial products
• Machinery
• Technical products
• Expensive products
• Complex products

Main advantages:

• Two-way communication
• Immediate feedback
• Product demonstration
• Relationship building
• Handling customer objections

---

Slide 19: International Personal Selling

International salespeople need to understand:

• Local language
• Culture
• Business etiquette
• Negotiation style
• Customer expectations
• Legal requirements

Example:

A salesperson negotiating with customers in Japan may need a different approach from one negotiating in the USA because business communication and etiquette can differ.

---

Slide 20: Sales Promotion

Sales promotion consists of short-term incentives designed to encourage purchase or sales.

Consumer-oriented tools:

• Discounts
• Coupons
• Samples
• Contests
• Free gifts
• Cashback
• Buy-one-get-one offers

Trade-oriented tools:

• Dealer incentives
• Trade discounts
• Dealer contests
• Display allowances

---

Slide 21: International Sales Promotion

Sales promotions must be adapted to:

• Local customer behaviour
• Regulations
• Income levels
• Retail structure
• Cultural expectations

Example:

A discount campaign may be highly effective in one market but less effective where customers place greater importance on premium quality and brand status.

---

Slide 22: Public Relations (PR)

Public Relations is the process of building and maintaining a positive relationship between an organization and its various publics.

Publics include:

• Customers
• Employees
• Media
• Government
• Investors
• Communities
• Business partners

PR tools:

• Press releases
• News conferences
• Events
• Sponsorships
• Corporate social responsibility
• Community programmes
• Media relations

---

Slide 23: Importance of International PR

International PR helps to:

• Build corporate reputation
• Create public trust
• Manage crises
• Maintain government relationships
• Improve brand image
• Build community acceptance

Example:

If a multinational company enters a new country, community-development activities can help establish a positive relationship with local communities.

---

Slide 24: Advertising vs Personal Selling vs Sales Promotion vs PR

Tool	Main Purpose	Example
Advertising	Mass communication	TV/online advertisement
Personal Selling	Direct persuasion	Salesperson meeting buyer
Sales Promotion	Short-term purchase incentive	Discount/coupon
Public Relations	Reputation & relationships	Press conference/CSR

Easy memory:

Advertising → Inform

Personal Selling → Persuade

Sales Promotion → Incentivise

PR → Build Relationships

---

Slide 25: Overall International Promotion Mix

             INTERNATIONAL PROMOTION
                      │
       ┌──────────────┼──────────────┐
       ↓              ↓              ↓
 Advertising   Personal Selling  Sales Promotion
                      │
                      ↓
               Public Relations
                      │
                      ↓
             CUSTOMER RESPONSE
                      │
                      ↓
            SALES + BRAND IMAGE

---

Slide 26: Key Terms – Quick Revision

Term	Simple Meaning
International Pricing	Setting prices in foreign markets
Price Escalation	Increase in price due to international costs
Exchange Rate	Value of one currency against another
Penetration Pricing	Low initial price to gain market share
Price Skimming	High initial price followed by reductions
Transfer Pricing	Price between related companies
International Promotion	Communication with foreign customers
International Advertising	Paid promotional communication abroad
Personal Selling	Direct salesperson-customer communication
Sales Promotion	Short-term incentives to increase sales
Public Relations	Managing relationships and reputation

International Pricing

Right Price + Right Market + Right Competitive Position

International Promotion

Right Message + Right Audience + Right Medium + Right Cultural Adaptation

Overall:

International Marketing Success = Appropriate Pricing + Effective Promotion + Cultural Adaptation.

Dr. S. Anthony Rahul Golden
M.Com., M.Phil., NET., Ph.D., MBA.,SET., NET., M.A., M.Sc. (Psy)., M.A.,  PGDBA., 

Asst. Professor of Commerce., Loyola College (Autonomous), Chennai - 34
Mobile No- 91+9176313545
https://yesrahul.blogspot.com/

https://orcid.org/0000-0001-8071-4801

https://vidwan.inflibnet.ac.in/profile/339311

https://www.researchgate.net/profile/Anthony-Golden-S 

https://scholar.google.com/citations?hl=en&user=faw7X-UAAAAJ
Anthony Rahul Golden, S. - Author details - Scopus Preview

DISTRIBUTION CHANNELS AND LOGISTICS

---

1. Meaning of Distribution Channel

A distribution channel is the route through which a product moves from the producer/manufacturer to the final customer.

It may involve intermediaries such as:

• Agents
• Wholesalers
• Distributors
• Retailers
• E-commerce platforms

Simple example

Manufacturer
      ↓
Distributor
      ↓
Wholesaler
      ↓
Retailer
      ↓
Consumer

Example

A mobile-phone manufacturer may sell its products through an authorised distributor, retailers and online platforms before the product reaches the final customer.

Exam definition

A distribution channel is a set of organizations or intermediaries involved in making a product available to the final consumer or industrial user.

---

2. Functions of Distribution Channels

Distribution channels perform several important functions.

A. Physical Distribution

Moving products from the producer to the customer.

Example: Transporting smartphones from a factory to retail stores.

B. Storage

Products may need to be stored before reaching customers.

Example: A distributor stores products in a warehouse.

C. Risk Bearing

Intermediaries may bear risks associated with:

• Damage
• Theft
• Obsolescence
• Price fluctuations
• Unsold inventory

D. Financing

Intermediaries may provide credit to retailers or customers.

E. Market Information

Distributors and retailers provide information about:

• Customer preferences
• Competitors
• Demand
• Market trends

F. Promotion

Intermediaries may support promotional activities and product displays.

G. Negotiation

They may negotiate:

• Price
• Quantity
• Delivery
• Payment terms

Easy memory:

Distribution = Movement + Storage + Financing + Information + Promotion + Risk

---

3. Types of Distribution Channels

Distribution channels can be classified according to the number of intermediaries involved.

A. Direct Channel

The manufacturer sells directly to the customer.

Producer → Consumer

Examples

• Company-owned website
• Company showroom
• Direct sales team

Advantages

• Greater control
• Direct customer relationship
• Better customer information
• No intermediary margin

Limitation

The company must manage distribution activities itself.

---

4. Indirect Channel

The producer uses one or more intermediaries.

One-level channel

Producer → Retailer → Consumer

Two-level channel

Producer → Wholesaler → Retailer → Consumer

Three-level channel

Producer → Agent → Wholesaler → Retailer → Consumer

Key point

More intermediaries = Longer channel

---

5. Agent

An agent is an intermediary who helps the producer find customers or conduct business but generally does not take ownership of the goods.

The agent usually receives a:

Commission / Fee

Example

An Indian manufacturer appoints a sales agent in Germany to find buyers.

---

6. Distributor

A distributor purchases or handles products from the manufacturer and distributes them to retailers or customers.

A distributor generally performs functions such as:

• Storage
• Transportation
• Sales
• Market development
• Customer support

Agent vs Distributor

Agent	Distributor
Usually does not take ownership	Generally purchases/takes ownership
Earns commission/fee	Earns margin
Represents the supplier	Buys and resells/distributes
Lower inventory responsibility	Greater inventory responsibility

---

7. Wholesaler

A wholesaler purchases products in relatively large quantities and sells them to:

• Retailers
• Businesses
• Other intermediaries

rather than mainly selling directly to final consumers.

Example

A wholesaler buys 1,000 units from a distributor and supplies smaller quantities to several retailers.

---

8. Retailer

A retailer sells products directly to the final consumer.

Examples:

• Supermarkets
• Department stores
• Specialty stores
• Online retailers

Channel:

Manufacturer → Distributor → Retailer → Consumer

---

9. Channel Length

Channel length refers to the number of intermediary levels between the producer and final customer.

Short channel

Producer → Consumer

Long channel

Producer → Distributor → Wholesaler → Retailer → Consumer

Important point

Short channels generally provide greater control, while long channels may provide wider market reach.

---

10. Channel Selection Decisions

Channel selection means deciding which distribution route and intermediaries should be used to reach customers in a foreign market.

The company must decide:

• Direct or indirect channel?
• Number of intermediaries?
• Type of distributor?
• Exclusive or multiple distributors?
• Online or offline?
• National or regional distribution?

---

11. Factors Affecting Channel Selection

A. Market Factors

Consider:

• Market size
• Number of customers
• Geographic concentration
• Purchasing habits
• Market growth

Example

If customers are widely scattered across a country, intermediaries may be useful for wider coverage.

---

B. Product Factors

Consider:

• Product value
• Product perishability
• Product complexity
• Product size
• Technical requirements

Example

Expensive industrial machinery may require direct selling because customers need technical explanation and installation.

---

C. Company Factors

Consider:

• Financial resources
• International experience
• Distribution capability
• Desired level of control
• Marketing objectives

A large company with strong resources may establish its own distribution network.

---

D. Intermediary Factors

Consider:

• Experience
• Reputation
• Market coverage
• Financial strength
• Sales capability
• Warehousing facilities
• Customer relationships

---

12. Intensive, Selective and Exclusive Distribution

These are important channel coverage strategies.

Intensive Distribution

The product is made available through as many suitable outlets as possible.

Suitable for:

• Soft drinks
• Snacks
• Everyday consumer products

Objective:

Maximum market coverage

---

Selective Distribution

The company chooses a limited number of intermediaries.

Suitable for:

• Electronics
• Furniture
• Appliances

Objective:

Balance between:

Market coverage + Control

---

Exclusive Distribution

The company gives distribution rights to one or very few intermediaries in a particular territory.

Suitable for:

• Luxury products
• Premium automobiles
• High-end products

Objective:

High control + Premium positioning

---

13. Selection of Foreign Distributors/Agents

Choosing the right foreign distributor or agent is a critical international marketing decision.

The company should examine:

1. Financial Strength

Can the distributor finance inventory and operations?

2. Market Knowledge

Does the distributor understand:

• Local customers
• Competitors
• Regulations
• Market trends?

3. Reputation

A distributor with a good reputation can strengthen the company's brand.

4. Sales Capability

Does it have an effective sales force?

5. Market Coverage

Can it reach the required geographical areas?

6. Infrastructure

Does it have:

• Warehouses
• Transport facilities
• Technology
• Customer service capability?

7. Experience

Experience in the relevant industry is valuable.

8. Commitment

The distributor should be genuinely interested in developing the company's product.

---

14. Due Diligence

Due diligence means carefully investigating and evaluating a potential foreign distributor or agent before entering into an agreement.

The company may examine:

• Financial records
• Business reputation
• Legal status
• Existing customers
• Market coverage
• Management capability
• Past performance

Simple meaning:

“Check before you trust.”

This reduces the risk of selecting an unsuitable partner.

---

15. Managing Relations with Foreign Distributors/Agents

Selecting a distributor is only the beginning. The company must maintain a long-term working relationship.

Important practices include:

Clear Agreement

Specify:

• Territory
• Products
• Prices
• Targets
• Commission/margin
• Payment terms
• Responsibilities
• Reporting requirements

Communication

Regular communication helps identify:

• Sales problems
• Customer complaints
• Market changes
• Competitor activities

Training

The company may train distributors in:

• Product knowledge
• Selling techniques
• Technology
• Customer service

Performance Evaluation

Evaluate:

• Sales volume
• Market coverage
• Customer service
• Target achievement
• Inventory management

---

16. Channel Conflict

Channel conflict occurs when members of a distribution channel disagree or compete with each other.

Example

A manufacturer sells products directly online at ₹10,000 while its authorised retailer sells the same product at ₹12,000.

The retailer may feel that the manufacturer is competing against its own channel partner.

Causes

• Price differences
• Territory disputes
• Sales targets
• Direct selling by manufacturer
• Allocation of customers
• Margin disputes

Ways to reduce conflict

• Clear responsibilities
• Fair pricing
• Communication
• Defined territories
• Incentives
• Performance agreements

---

17. International Logistics

Meaning

International logistics is the planning and management of the movement and storage of goods, information and related activities across international borders, from the point of origin to the final destination.

It includes:

• Transportation
• Warehousing
• Inventory
• Packaging
• Documentation
• Customs
• Order processing
• Information flow

Simple definition:

International logistics ensures that the right product reaches the right place, at the right time, in the right condition and at the right cost.

---

18. International Logistics Decisions

Major decisions include:

1. Transportation

Selecting the appropriate mode:

• Road
• Rail
• Air
• Sea
• Multimodal transport

2. Warehousing

Deciding:

• Where to store products
• How many warehouses are required
• Whether to use company-owned or third-party warehouses

3. Inventory Management

Determining:

• How much inventory to maintain
• When to reorder
• How to avoid stock-outs
• How to reduce excess inventory

4. Packaging

International packaging should protect products against:

• Long-distance transportation
• Handling
• Moisture
• Temperature
• Damage

5. Customs and Documentation

International shipments require appropriate:

• Commercial invoices
• Packing lists
• Shipping documents
• Customs documentation
• Certificates where applicable

---

19. Transportation Mode Selection

The company must select transportation based on:

• Cost
• Speed
• Reliability
• Product nature
• Distance
• Urgency
• Value of goods

Air Transport

Fast but expensive

Suitable for:

• High-value goods
• Urgent shipments
• Perishable goods

Sea Transport

Slow but economical for large shipments

Suitable for:

• Bulk cargo
• Heavy goods
• Large international shipments

Road

Useful for:

• Shorter distances
• Door-to-door movement
• Regional distribution

Rail

Useful for:

• Large quantities
• Long-distance inland transportation

---

20. Freight

Freight refers to goods transported from one place to another and, in commercial usage, may also refer to the charge for transporting those goods.

Example

An exporter shipping 10 tonnes of machinery by sea must pay a freight charge to the carrier.

---

21. Inventory Management

Inventory management means planning and controlling the quantity of goods held by a company.

The objective is:

Right quantity + Right time + Minimum unnecessary cost

Too much inventory → Higher storage cost

Too little inventory → Stock-outs and lost sales

---

22. Warehousing

Warehousing means storing goods safely until they are required for sale or further distribution.

In international marketing, warehouses may be located:

• Near ports
• Near major markets
• Near distribution centres
• In foreign countries

Functions

• Storage
• Consolidation
• Breaking bulk
• Protection
• Order fulfilment
• Inventory control

---

23. Third-Party Logistics (3PL)

A Third-Party Logistics (3PL) provider is an external company hired to perform logistics activities such as:

• Transportation
• Warehousing
• Distribution
• Order fulfilment

Example

Instead of establishing its own warehouse in every foreign country, a company may hire a logistics provider to store and deliver its products.

Advantage

Specialist expertise + Lower investment + Operational flexibility

---

24. Total Logistics Cost

International logistics should not be evaluated based only on transportation cost.

The company should consider the total logistics cost, including:

• Transportation
• Warehousing
• Inventory carrying cost
• Packaging
• Insurance
• Customs
• Order processing
• Handling

Important principle:

Lowest transport cost does not necessarily mean lowest total logistics cost.

---

25. Logistics and Distribution – Difference

These terms are related but not exactly identical.

Distribution

Focuses mainly on getting products to customers through channels and intermediaries.

Logistics

Focuses on the physical flow, storage and coordination of products and information.

Simple understanding:

Distribution = Channel route

Logistics = Physical movement and management

---

26. Distribution Channels vs Logistics

Distribution Channels	International Logistics
Focus on route to customer	Focus on physical flow and storage
Involves intermediaries	Involves transport, warehousing, inventory etc.
Concerned with market reach	Concerned with efficient movement
Distributor/retailer important	Carrier/warehouse/logistics provider important
Marketing-oriented	Operations-oriented

---

27. Important Terms – Exam Revision Table

Term	Simple Meaning
Distribution Channel	Route through which product reaches customer
Direct Channel	Producer sells directly to customer
Indirect Channel	Intermediaries are used
Agent	Facilitates sales, usually without taking ownership
Distributor	Distributes/resells products in a market
Wholesaler	Buys in bulk and sells to retailers/businesses
Retailer	Sells to final consumers
Channel Length	Number of intermediary levels
Intensive Distribution	Maximum suitable outlets
Selective Distribution	Limited selected outlets
Exclusive Distribution	One/few authorised outlets
Due Diligence	Investigation before selecting a partner
Channel Conflict	Disagreement among channel members
International Logistics	Managing movement/storage across borders
Freight	Goods transported or transportation charge
Inventory	Stock held for future use/sale
Warehousing	Storage of goods
3PL	Outsourced logistics service provider
Total Logistics Cost	Combined cost of logistics activities

---

⭐ Most Important Exam Framework

Students can remember the entire chapter through this sequence:

PRODUCER

↓

SELECT DISTRIBUTION CHANNEL

↓

DIRECT / INDIRECT

↓

SELECT FOREIGN AGENT / DISTRIBUTOR

↓

MANAGE CHANNEL RELATIONSHIP

↓

TRANSPORTATION

↓

WAREHOUSING

↓

INVENTORY MANAGEMENT

↓

CUSTOMS & DOCUMENTATION

↓

FINAL CUSTOMER

One-line conclusion for examination:

An effective international distribution and logistics system ensures that products reach the right customers, in the right quantity and condition, at the right time and at the minimum feasible total cost, while maintaining effective relationships with foreign channel partners.

 

UNIT I – INTRODUCTION TO INTERNATIONAL MARKETING

1. Meaning of International Marketing

International Marketing refers to the planning, pricing, promotion, distribution and management of products and services across national borders to satisfy the needs of customers in foreign markets and achieve organizational objectives.

In simple terms, when a business identifies customers outside its home country and develops marketing strategies to serve those customers, it is involved in international marketing.

Example

An Indian company manufacturing ready-to-eat food products may sell them in the United Arab Emirates, Singapore, the United Kingdom and the United States. The company must consider the tastes, income levels, regulations, currencies, distribution systems and cultural preferences of customers in those countries.

Therefore, international marketing is not simply selling a product abroad. It involves adapting and coordinating the entire marketing process to operate successfully in foreign markets.

---

2. Nature of International Marketing

The major characteristics of international marketing are as follows:

2.1 Wider Market Scope

Domestic marketing is confined mainly to one country, whereas international marketing operates across several countries.

2.2 Customer Orientation

The ultimate objective is to identify and satisfy customer needs. However, customer expectations may differ considerably from one country to another.

2.3 Environmental Complexity

An international marketer has to understand different:

• Political systems
• Economic conditions
• Legal systems
• Cultures
• Languages
• Technological environments
• Competitive conditions

2.4 High Level of Risk

International business involves additional risks such as:

• Currency risk
• Political risk
• Country risk
• Transportation risk
• Regulatory risk
• Commercial risk

2.5 Need for Adaptation

A strategy successful in one country may not necessarily work in another country.

For example, the product flavour, packaging, advertising message or pricing may need modification according to local requirements.

---

3. Significance of International Marketing

International marketing is important for both businesses and national economies.

3.1 Market Expansion

It allows firms to reach customers beyond the domestic market.

3.2 Increased Sales and Profit

Foreign markets can provide additional sources of revenue.

3.3 Economies of Scale

Producing for larger international markets can reduce the average cost of production.

3.4 Diversification of Risk

Operating in different countries reduces excessive dependence on one market.

3.5 Global Brand Development

International marketing enables companies to establish globally recognised brands.

3.6 Access to Resources

Companies may gain access to:

• Technology
• Raw materials
• Skills
• Capital
• Knowledge
• International business networks

3.7 Competitive Advantage

International exposure forces firms to improve quality, efficiency, innovation and customer service.

---

4. Complexities in International Marketing

International marketing is more complex than domestic marketing because the marketer operates in different environments.

4.1 Cultural Differences

Culture influences:

• Food habits
• Clothing
• Family patterns
• Buying behaviour
• Communication
• Attitudes towards brands

Example

A food product popular in India may require changes in ingredients or flavour to suit customers in another country.

---

4.2 Language Differences

Different languages create challenges in:

• Advertising
• Product labelling
• Sales communication
• Customer service
• Contract negotiation

Poor translation can sometimes change the intended meaning of a marketing message.

---

4.3 Political Environment

Changes in government policy, political stability, trade restrictions and foreign investment regulations can affect international marketing.

---

4.4 Legal Environment

Different countries have different rules concerning:

• Product standards
• Advertising
• Packaging
• Labelling
• Consumer protection
• Taxation
• Imports and exports

---

4.5 Economic Differences

Countries differ in:

• Income levels
• Inflation
• Interest rates
• Purchasing power
• Economic growth

These differences influence product demand and pricing.

---

4.6 Currency and Exchange Rate

Changes in exchange rates can affect:

• Export prices
• Import costs
• Profit margins
• Competitiveness

---

5. Transition from Domestic to Transnational Marketing

Businesses generally develop international involvement gradually.

Stage 1 – Domestic Marketing

The company concentrates mainly on its home market.

Example:

Indian producer → Indian customers

Stage 2 – Export Marketing

The company begins selling products to foreign markets.

Stage 3 – International Marketing

The company actively develops marketing strategies for several foreign markets.

Stage 4 – Multinational Marketing

The company operates in several countries and may develop country-specific strategies.

Stage 5 – Transnational/Global Orientation

The company integrates its international operations and seeks to combine:

Global efficiency + Local responsiveness

Important distinction

A transnational company does not simply copy its domestic strategy everywhere. It seeks to use global knowledge and resources while responding to local market requirements.

---

6. International Market Orientation – EPRG Framework

The EPRG framework, developed by Howard V. Perlmutter, explains the orientation adopted by companies when managing international operations.

EPRG represents:

E – Ethnocentric
P – Polycentric
R – Regiocentric
G – Geocentric

---

6.1 Ethnocentric Orientation

An ethnocentric company considers its home-country practices and approaches as the primary basis for international operations.

Characteristics

• Home-country management has strong control.
• Domestic practices are extended to foreign markets.
• Decision-making is highly centralised.
• Foreign markets may be treated as extensions of the domestic market.

Advantage

Greater consistency and central control.

Limitation

The company may fail to understand local customer needs.

Easy memory:

Ethnocentric = Home country first

---

7. Polycentric Orientation

A polycentric company considers each foreign country as unique.

The company develops strategies according to local market conditions.

Characteristics

• Local managers have greater autonomy.
• Products may be adapted.
• Marketing strategies differ between countries.
• Local culture receives greater importance.

Advantage

High local responsiveness.

Limitation

May result in higher costs and less coordination among countries.

Easy memory:

Polycentric = Each country is different

---

8. Regiocentric Orientation

A regiocentric company views a geographical region as an important market unit.

For example, a company may develop a regional strategy for:

• South Asia
• Europe
• Southeast Asia
• Middle East

Advantage

It provides a balance between:

Local adaptation + Regional coordination

Easy memory:

Regiocentric = Region

---

9. Geocentric Orientation

A geocentric company views the world as a potential market.

It does not automatically consider either the home country or individual foreign countries as superior.

It searches for the best:

• People
• Technology
• Resources
• Ideas
• Marketing practices

from anywhere in the world.

Advantage

Promotes global integration and learning.

Limitation

Requires sophisticated management and international coordination.

Easy memory:

Geocentric = Global/world perspective

---

10. International Market Entry Strategies

A company must decide how it will enter a foreign market.

Major entry modes include:

10.1 Exporting

Products are produced in the home country and sold in a foreign country.

Advantages:

• Relatively lower investment
• Lower risk
• Easy initial internationalisation

Limitation:

• Less control over foreign operations

---

10.2 Licensing

A company permits a foreign company to use its:

• Brand
• Patent
• Technology
• Know-how

in return for royalties or fees.

Example

A technology owner permits a foreign manufacturer to use its technology for a royalty.

---

10.3 Franchising

The franchisor allows a foreign franchisee to use its:

• Brand
• Business model
• Operating system
• Marketing system

in return for fees and/or royalties.

This is common in food service, hospitality and retail.

---

10.4 Joint Venture

Two or more parties establish or operate a business together.

Advantages

• Shared investment
• Shared risk
• Local market knowledge

Limitation

Potential conflict between partners.

---

10.5 Foreign Direct Investment

The company directly invests in facilities or business operations in another country.

Advantage

Greater control.

Limitation

Higher investment and risk.

---

11. International Market Segmentation

Market segmentation means dividing a large market into smaller groups of customers having similar needs or characteristics.

Major bases

Geographic Segmentation

Based on:

• Country
• Region
• Climate
• Urban/rural location

Demographic Segmentation

Based on:

• Age
• Gender
• Income
• Education
• Occupation
• Family size

Psychographic Segmentation

Based on:

• Lifestyle
• Personality
• Values
• Interests

Behavioural Segmentation

Based on:

• Usage
• Benefits sought
• Loyalty
• Buying behaviour

Importance

Segmentation helps companies identify which customers to serve and how to serve them effectively.

---

UNIT II – PRODUCT DECISIONS

1. Meaning of Product Decisions

Product decisions refer to decisions concerning the features, quality, design, branding, packaging, labelling, product variations and services associated with a product.

In international marketing, the important question is:

Should the company offer the same product worldwide or modify it according to local market requirements?

---

2. Product Planning for Global Markets

Product planning involves deciding:

• What product should be offered?
• Who are the target customers?
• What features should it have?
• What quality should be maintained?
• What size and design are appropriate?
• What packaging should be used?
• What services should accompany the product?

International product planning must consider:

• Customer preferences
• Culture
• Climate
• Income
• Local regulations
• Competitors
• Distribution conditions

---

3. Product Standardisation

Standardisation means offering the same or substantially similar product in different international markets.

Advantages

1. Economies of scale
2. Lower production costs
3. Consistent quality
4. Consistent global brand image
5. Simplified production

Limitations

1. May ignore local tastes.
2. May not comply with local requirements.
3. May reduce customer acceptance.
4. May be unsuitable for different climates or lifestyles.

---

4. Product Adaptation

Product adaptation means modifying a product according to the needs and requirements of a particular foreign market.

Adaptation may involve:

• Ingredients
• Size
• Design
• Colour
• Packaging
• Features
• Language
• Product formulation

Example

A food company may change the flavour, ingredients and package size of a product to suit customers in another country.

---

5. Standardisation vs Adaptation

Standardisation	Adaptation
Same/similar product	Modified product
Lower modification cost	Higher modification cost
Global consistency	Local responsiveness
Economies of scale	Better local fit
Less flexibility	Greater flexibility

Important concept: Glocalisation

Glocalisation = Global strategy + Local adaptation

The company maintains its global identity while adapting selected elements to local markets.

---

6. New Product Development

New Product Development (NPD) is the systematic process of developing a new product and introducing it into the market.

Major stages

Idea Generation

↓

Idea Screening

↓

Concept Development and Testing

↓

Business Analysis

↓

Product Development

↓

Test Marketing

↓

Commercialisation

International NPD

The company must determine whether the new product should be:

• Globally standardised
• Locally adapted
• Developed specifically for a foreign market

---

7. International Brand Management

A brand is a name, symbol, design or combination of elements used to identify and differentiate a product.

Important branding terms include:

Brand Identity

What the company wants the brand to represent.

Brand Image

How customers actually perceive the brand.

Brand Positioning

The place the brand occupies in the customer's mind relative to competitors.

Brand Equity

The additional value created by brand awareness, loyalty, positive associations and perceived quality.

---

8. Packaging and Labelling

Packaging

Packaging protects and presents the product.

Functions include:

• Protection
• Storage
• Transportation
• Convenience
• Identification
• Promotion

Labelling

Labelling provides information about the product.

It may include:

• Product name
• Ingredients
• Quantity
• Instructions
• Warnings
• Dates
• Manufacturer information
• Country of origin

International marketers must comply with the labelling requirements of each target country.

---

9. Sales-Related Services

Sales-related services support customers before, during and after purchase.

Examples include:

• Installation
• Demonstration
• Delivery
• Training
• Warranty
• Repair
• Maintenance
• Technical support
• Spare parts

These services are especially important for industrial products, machinery, automobiles, electronics and other technically complex products.

---

UNIT III – PRICING DECISIONS

1. Meaning of International Pricing

International pricing refers to the process of determining the price of products or services sold in foreign markets.

Pricing is important because it directly influences:

• Sales
• Market share
• Profit
• Brand positioning
• Competitiveness

---

2. Environmental Influences on Pricing

International pricing is influenced by several environmental factors.

Economic Factors

• Income
• Inflation
• Interest rates
• Purchasing power
• Economic growth

Political Factors

• Government policies
• Trade restrictions
• Subsidies
• Political stability

Legal Factors

• Taxes
• Tariffs
• Price controls
• Competition regulations

Competitive Factors

• Competitor prices
• Local competitors
• Substitute products

Cultural Factors

Consumers in different cultures may have different perceptions of:

• Value
• Quality
• Prestige
• Price

---

3. Purchasing Power

Purchasing power refers to the ability of customers to buy products and services with their available income.

A product positioned as premium in a high-income market may need a different pricing strategy in a lower-income market.

---

4. Exchange Rate

An exchange rate represents the value of one currency in relation to another currency.

Exchange-rate changes can affect:

• Export prices
• Import costs
• Profit
• Competitiveness

Example

If the foreign currency weakens against the exporter's currency, the product may become relatively expensive for foreign customers.

---

5. International Pricing Policies

Companies may adopt different pricing policies depending on their objectives.

Cost-Based Pricing

Price is determined by adding a desired margin to cost.

Formula:

Price = Cost + Desired Profit

Market-Based Pricing

Price is determined based on:

• Demand
• Competition
• Customer value
• Market conditions

Competitive Pricing

Price is set with reference to competitors' prices.

---

6. Penetration Pricing

Penetration pricing involves setting a relatively low initial price to enter a foreign market and gain market share quickly.

Suitable when:

• Customers are price-sensitive.
• Competition is strong.
• Large sales volume is possible.

Objective

Rapid market penetration

---

7. Price Skimming

Price skimming involves charging a relatively high initial price for a new or differentiated product and gradually reducing it over time.

Suitable when:

• Product is innovative.
• Customers value uniqueness.
• Early customers are willing to pay a premium.
• Competition is initially limited.

Objective

Recover investment and earn higher margins from early buyers.

---

8. Price Escalation

Price escalation occurs when the final foreign-market price becomes substantially higher because of additional costs.

These may include:

• Transportation
• Insurance
• Customs duties
• Taxes
• Warehousing
• Distributor margins
• Retailer margins

Therefore:

Factory price ≠ Final foreign-market price

---

9. Transfer Pricing

Transfer pricing refers to the price charged for transactions between related companies within the same multinational group.

For example:

Parent company → Foreign subsidiary

Transfer pricing has implications for:

• Profit allocation
• Taxation
• Financial reporting
• Regulatory compliance

---

UNIT IV – PROMOTION DECISIONS

1. Meaning of International Promotion

International promotion refers to communicating information about products, services and brands to customers and other stakeholders in foreign markets.

Main objectives

• Create awareness
• Provide information
• Persuade customers
• Build brand image
• Encourage purchase
• Maintain customer relationships

---

2. Promotion Mix

The major elements are:

1. Advertising

2. Personal Selling

3. Sales Promotion

4. Public Relations

---

3. Complexities in International Promotion

International promotion faces several challenges.

Language

A message may lose its meaning when translated.

Culture

Different societies may interpret:

• Colours
• Symbols
• Images
• Humour
• Gender roles
• Social values

differently.

Religion

Religious beliefs can influence acceptable advertising content and product promotion.

Laws

Countries may have different rules regarding:

• Advertising claims
• Comparative advertising
• Children-focused advertising
• Product claims
• Promotional offers

Media Environment

The availability and popularity of media vary between countries.

---

4. International Advertising

Advertising is paid, non-personal communication delivered through media.

Major media include:

• Television
• Radio
• Newspapers
• Magazines
• Websites
• Search advertising
• Social media
• Outdoor media
• Mobile platforms

Objectives

• Inform
• Persuade
• Remind
• Build awareness
• Build brand image

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5. Advertising Standardisation and Adaptation

Standardisation

Using the same or substantially similar advertising concept across countries.

Benefits:

• Consistent global image
• Lower cost
• Easier global management

Adaptation

Modifying advertising according to local:

• Language
• Culture
• Laws
• Media
• Customer preferences

Practical approach

Many international companies use:

Global brand idea + Local execution

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6. Personal Selling

Personal selling involves direct interaction between salesperson and customer.

Advantages

• Two-way communication
• Immediate feedback
• Demonstration
• Handling objections
• Relationship building

It is particularly useful for:

• Industrial products
• Machinery
• Technical products
• Expensive products
• Customised products

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7. Sales Promotion

Sales promotion consists of short-term incentives designed to encourage purchase or channel support.

Consumer-oriented tools

• Discounts
• Coupons
• Samples
• Cashback
• Contests
• Gifts

Trade-oriented tools

• Dealer incentives
• Trade discounts
• Display allowances
• Sales contests
• Special dealer schemes

Key difference

Advertising communicates value; sales promotion provides an incentive for immediate action.

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8. Public Relations

Public Relations (PR) refers to planned activities designed to build and maintain favourable relationships between an organization and its various publics.

Major publics

• Customers
• Employees
• Government
• Media
• Investors
• Communities
• Business partners

PR tools

• Press releases
• Press conferences
• Events
• Sponsorships
• CSR activities
• Media relations

Main objective

Build trust, credibility and reputation.

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UNIT V – DISTRIBUTION CHANNELS AND LOGISTICS

1. Meaning of Distribution Channel

A distribution channel is the route through which a product moves from the producer to the final customer.

Direct channel

Producer → Consumer

Indirect channel

Producer → Distributor → Retailer → Consumer

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2. Functions of Distribution Channels

Distribution channels perform the following functions:

Physical Distribution

Movement of products.

Storage

Holding products until they are needed.

Financing

Providing financial support or credit in some channel arrangements.

Risk Bearing

Bearing certain risks relating to inventory and distribution.

Information

Providing market and customer information.

Promotion

Supporting local promotion and product display.

Negotiation

Helping negotiate price, quantity and delivery terms.

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3. Types of Distribution Channels

Direct Channel

Producer sells directly to the consumer.

Advantages

• Greater control
• Direct customer relationship
• Better customer information
• No intermediary margin

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One-Level Channel

Producer → Retailer → Consumer

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Two-Level Channel

Producer → Wholesaler → Retailer → Consumer

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Longer Channel

Additional intermediaries such as agents or distributors may be involved.

General principle

More intermediaries = Longer channel

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4. Agent

An agent acts on behalf of the producer and facilitates business transactions.

Usually, an agent:

• Does not take ownership of goods
• Finds customers
• Facilitates sales
• Receives commission or fees

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5. Distributor

A distributor generally purchases or handles products and distributes/resells them within a market.

Functions include:

• Storage
• Transportation
• Sales
• Market development
• Customer support

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6. Channel Selection Decisions

The company must determine the most appropriate distribution structure.

Important factors include:

Market Factors

• Market size
• Geographic spread
• Customer concentration
• Buying habits

Product Factors

• Product value
• Perishability
• Complexity
• Size
• Technical requirements

Company Factors

• Financial resources
• International experience
• Desired control
• Marketing objectives

Intermediary Factors

• Reputation
• Financial strength
• Market coverage
• Sales capability
• Infrastructure

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7. Intensive Distribution

The product is made available through as many suitable outlets as possible.

Suitable for:

• Snacks
• Soft drinks
• Frequently purchased consumer goods

Objective:

Maximum market coverage

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8. Selective Distribution

The company selects a limited number of suitable intermediaries.

Suitable for:

• Electronics
• Appliances
• Furniture

Objective:

Balance:

Coverage + Control

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9. Exclusive Distribution

The company appoints one or very few intermediaries within a particular territory.

Suitable for:

• Luxury goods
• Premium automobiles
• High-end products

Objective:

High control + Premium positioning

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10. Selection of Foreign Distributors/Agents

Selecting the right foreign partner is extremely important.

The company should evaluate:

Financial Strength

Can the distributor finance operations?

Market Knowledge

Does it understand customers and competitors?

Reputation

Does it have a trustworthy market image?

Sales Capability

Does it have an effective sales network?

Market Coverage

Can it reach the required geographical areas?

Infrastructure

Does it have:

• Warehouses
• Transport
• Technology
• Customer service facilities?

Experience

Does it have experience in the relevant industry?

Commitment

Will it actively develop the company's products?

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11. Due Diligence

Due diligence means carefully investigating a potential distributor or agent before entering into a business agreement.

The company may check:

• Financial records
• Legal status
• Reputation
• Existing customers
• Market coverage
• Management
• Past performance

Simple meaning:

Due diligence = Check before you trust.

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12. Managing Relationships with Foreign Distributors

A successful relationship requires:

Clear Agreement

Specify:

• Territory
• Products
• Sales targets
• Commission/margin
• Payment terms
• Responsibilities

Communication

Maintain regular communication about:

• Sales
• Customer feedback
• Competitors
• Market developments

Training

Provide training in:

• Product knowledge
• Selling techniques
• Customer service
• Technology

Performance Evaluation

Measure:

• Sales
• Market coverage
• Target achievement
• Customer service
• Inventory performance

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13. Channel Conflict

Channel conflict occurs when members of a distribution channel disagree or compete with each other.

Example

A manufacturer sells directly through its website at a lower price than its authorised retailer.

The retailer may feel that the manufacturer is competing with it.

Causes

• Price differences
• Territory disputes
• Margin disputes
• Sales targets
• Direct online selling
• Customer allocation

Remedies

• Clear responsibilities
• Fair pricing
• Defined territories
• Communication
• Incentives
• Performance agreements

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14. International Logistics

International logistics is the planning and management of the movement and storage of goods and related information across international borders.

It includes:

• Transportation
• Warehousing
• Inventory
• Packaging
• Documentation
• Customs
• Order processing
• Information management

Main objective

Right product + Right place + Right time + Right condition + Right cost

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15. Transportation Decisions

Major transportation modes include:

Air Transport

Fast but expensive

Suitable for:

• Urgent products
• High-value products
• Time-sensitive goods

Sea Transport

Economical for large shipments but slower

Suitable for:

• Bulk goods
• Heavy goods
• Large international consignments

Road Transport

Useful for:

• Regional distribution
• Door-to-door transportation
• Shorter distances

Rail Transport

Useful for:

• Large quantities
• Long-distance inland movement

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16. Warehousing

Warehousing means storing goods safely until they are required.

International warehouses may be located:

• Near ports
• Near major markets
• Near distribution centres

Functions

• Storage
• Protection
• Inventory control
• Order fulfilment
• Consolidation
• Breaking bulk

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17. Inventory Management

Inventory management involves planning and controlling stock.

Excess inventory

Can result in:

• Higher storage cost
• Capital blockage
• Obsolescence

Insufficient inventory

Can result in:

• Stock-outs
• Delayed delivery
• Lost sales
• Customer dissatisfaction

Objective

Maintain sufficient inventory while avoiding unnecessary inventory costs.

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18. Third-Party Logistics – 3PL

A Third-Party Logistics (3PL) provider is an external organization that performs logistics activities on behalf of another company.

Services may include:

• Transportation
• Warehousing
• Distribution
• Order fulfilment
• Shipment management

Advantages

• Specialist expertise
• Lower infrastructure investment
• Flexibility
• Access to logistics networks

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19. Freight Forwarding

A freight forwarder helps arrange and coordinate the movement of goods.

Activities may include:

• Shipment arrangements
• Carrier coordination
• Freight consolidation
• Documentation assistance
• Customs-related coordination

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20. Total Logistics Cost

A company should not consider transportation cost alone.

Total logistics cost may include:

Transportation + Warehousing + Inventory + Packaging + Insurance + Customs + Handling + Order Processing

Important examination point

The cheapest transportation option does not always result in the lowest total logistics cost.

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21. Distribution and Logistics – Difference

Distribution	Logistics
Focuses on route to customer	Focuses on physical flow and storage
Concerned with channels	Concerned with movement and coordination
Agents/distributors/retailers are important	Transporters/warehouses/3PL are important
Mainly market/channel oriented	Mainly operational/flow oriented

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⭐ INTEGRATED UNDERSTANDING OF ALL FIVE UNITS

The five units are not separate concepts. They form one complete international marketing process.

Step 1 – UNDERSTAND THE MARKET

Study:

• Countries
• Customers
• Culture
• Competition
• Economic environment
• Political/legal environment

↓

Step 2 – SELECT THE MARKET

Use:

• Market segmentation
• Targeting
• Market attractiveness
• Entry strategy

↓

Step 3 – DEVELOP THE PRODUCT

Decide:

• Standardisation
• Adaptation
• Branding
• Packaging
• Labelling
• Services

↓

Step 4 – FIX THE PRICE

Consider:

• Cost
• Demand
• Competition
• Purchasing power
• Currency
• Taxes
• Tariffs

↓

Step 5 – PROMOTE THE PRODUCT

Use:

• Advertising
• Personal selling
• Sales promotion
• Public relations

↓

Step 6 – DISTRIBUTE THE PRODUCT

Select:

• Channels
• Agents
• Distributors
• Wholesalers
• Retailers

↓

Step 7 – MANAGE LOGISTICS

Ensure:

• Transportation
• Warehousing
• Inventory
• Documentation
• Customs
• Customer service

↓

FINAL OBJECTIVE

Customer Satisfaction + Market Share + Profitability + Long-term International Competitiveness

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⭐ IMPORTANT TERMS – FIVE-UNIT REVISION

Unit	Important Terms
I – Introduction	International marketing, EPRG, ethnocentric, polycentric, regiocentric, geocentric, entry strategy, segmentation
II – Product	Standardisation, adaptation, glocalisation, NPD, brand equity, positioning, packaging, labelling
III – Pricing	Purchasing power, exchange rate, penetration pricing, skimming, price escalation, transfer pricing
IV – Promotion	Advertising, personal selling, sales promotion, PR, standardisation, adaptation, cultural barriers
V – Distribution & Logistics	Channel, agent, distributor, intensive, selective, exclusive, due diligence, channel conflict, logistics, 3PL

Final Conceptual Formula

INTERNATIONAL MARKETING = MARKET UNDERSTANDING + PRODUCT DECISION + PRICING DECISION + PROMOTION DECISION + DISTRIBUTION & LOGISTICS