CHAPTER 6:

NATURE AND
SCOPE OF
INTERNATION
AL
MARKETING
INTRODUCTION

The International Marketing Their goal is to help individuals

Group (IMG) is a company that go from struggling financially to
helps people and families becoming financially secure and
become financially independent. IMG wants to
independent. It works with top extend these benefits not only
financial institutions to offer to wealthy individuals but also
services that teach financial to middle-income earners,
literacy, smart money giving more people access to
management, and wealth- financial education and
building strategies. opportunities.
LESSON 6.1 INTERNATIONAL
MARKETING
• INTERNATIONAL MARKETING

is the application of marketing principles to satisfy the varied

needs and wants of different peoples residing across the national
borders.
• MARKET SEGMENTATION

is the practice of dividing the entire market into groups, creating

subsets of a market based on demography, needs, priorities,
common interests, and other psychographic or behavioral criteria
used to better understand the target audience.
• TARGET MARKET

refers to the segment(s) the company wants to serve, and the

process of selecting the target market is referred as market
targeting.
• MARKET TARGETING

is a process of selecting the

target market after market
segmentation has been done.
• MARKET POSITIONING

is a strategic tool used to

establish the image of a brand or
product in the minds of the
consumer.
• PRODUCT

A product is the commodity or good produced or

manufactured to satisfy the wants and needs of customers.
The product can be tangible (goods) or intangible (services);
the service rendered by a service company is its product.
• PRICE

The price of the product is basically the amount that

customers pay so they can have it and enjoy it. Economies of
scale help to reduce costs and consequently, the price of the
product.
• Place

Moving products from the producer to the intended user is

called place. It is how the product is brought and where it is
bought. The how refers to the distribution channel, a reliable
combination of intermediaries such as distributors,
wholesalers and retailers. The where is the location where the
products should be positioned and distributed that is easily
accessible to the targeted customers.
• Promotion

Promotion is a marketing communication process that

helps the company to acquaint the customers with the
product and publicize it and its features to the public. It is the
most expensive and essential component of the marketing
mix.
• People

The company's employees are important in marketing

because they are the ones who deliver the service to clients.
In human resource management, people are the most
important resource of a company as the company's success
depend, to a large extent, on the quality of its people. It is
important to select, hire, train, and compensate the right
people to deliver superior service to the clients.
• Process

Process refers to the flow of activities or mechanism that

takes place when there is in an interaction between the
customers and the business. The marketing mix process talks
about various kinds of processes that one can use to market
products well and, in case of manufacturing companies, the
These processes include the
following:
a. Electronic processes - include the use of barcodes, receipts, and other forms or
graphics or logos, and the information about a product or a company that comes with
them.
b. Technological processes - are the creation of products that are tangible, that
customers could really feel and own. Not only should the manufacturer create products
that the customers need, but also what the customers want.
c. Direct activities - are actual distribution and sales to customers and the reactions of the
customers as they get to try the product and how the company feels about what the
customers have said.
d. Indirect activities - are support that happen before, during, or after the service has
been given, which may even last for a lifetime.
• Physical Evidence

The physical evidence element of the marketing mix refers to the physical environment experienced by the customer.
Another aspect of physical evidence is branding. Branding means that when people hear the name of your company or of the
products and services that you offer, a logo or image of your brand would easily come to mind. In addition, physical evidence
makes customers aware of the company through signage, logos, tarpaulins, web pages/websites, employee uniforms,
packaging, letterheads, business cards, and the like.

• Reasons to go global include the following:

a. Increase sales and profitability i. Make use of excess capacity off-screen

b. Enter new markets j. Travel to new countries

c. Create jobs k. Sharing of costs and risks between
markets
d. Offset slow growth in your home market l. Extending a product’s life cycle
e. Outmaneuver competitors m. Take advantage of a less competitive
market
f. Enlarge the customer base n. Utilize excess capacity
g. Create economies of scale in production o. Taking advantage of geographical
diversification
h. Explore untapped markets with the power of the internet p. Taking advantage of the demand
abroad
LESSON 6.2 FACTORS AFFECTING INTERNATIONAL MARKETING

•In our current ever-changing society, companies need to be competitive under many
challenging environments. The factors that contribute to international marketing are the
following:

a. emerging regional economic and political integration;

b. enhancement in technology;

c. improvements in transportation and telecommunication;

d. world economic growth;

e. transition to market economies; and

f. converging consumer needs.

• Economic integration - consistent with the free trade economic theory, revolves around the
trade agreements/treaties between countries that usually include elimination of trade barriers
and aligning monetary and fiscal policies, leading to a more interconnected global economy.
• Technological advances - are a driving force for development as they make consumers
worldwide aware of products, services, and entertainment.
• Efficient transportation - due to containerization and just-in-time (JIT) technology are creating more
international business opportunities.

• Transition to market economy - leads to economic development and prosperity as in the

case of the Soviet Union.
• Transition to market economy - leads to economic development and prosperity as in the
case of the Soviet Union. An emerging middle class with increasing buying power in large
emerging markets such as China, Brazil, and India makes them viable trade partners.
• International business and trade stimulates long-term world economic growth through
multiple channels. It is evident that the most conducted trades is associated with monetary
and financial system.
• Converging consumer needs - had dictated international business and trade participants
on what to produce and sell in the international markets.
• The PESTLE analysis, a useful scanning tool, identifies the relevant political, economic,
sociocultural, technological, legal, and environmental factors from the external
environment that are to be dealt with by international marketers.
Political - Government policies, political stability, tax policies, trade restrictions, etc.
Economic - Inflation rates, exchange rates, economic growth, unemployment trends, etc.
Sociocultural - Cultural trends, demographics, population growth, lifestyle changes, etc.
Technological - Innovations, automation, R&D activity, technology incentives, etc.
Legal - Laws around employment, health & safety, antitrust, intellectual property, etc.
Environmental - Climate change, environmental regulations, sustainability efforts, etc.
• Infrastructure refers to all the physical systems and facilities needed for the smooth flow of a
country's day-to-day activities enhancing the people's standard of living, including basic facilities
like roads, water supply, power and energy, transportation, telecommunication, health
infrastructure, educational infrastructure, recreational infrastructure, and political infrastructure
(governmental institutions including the courts of law and other regulatory bodies, the police force,
defense, and the like).
There are three types of infrastructures:

a. Soft infrastructure
Soft infrastructure refers to all the institutions that help maintain a healthy economy.
b. Hard infrastructure
Hard infrastructure covers all the physical systems crucial to running a modern, industrialized
economy.
c. Critical infrastructure
Critical infrastructure makes up all the assets that are defined by the government as being crucial to
the functioning of an economy.
Michael Porter, in his The Five Competitive Forces That Shape Strategy, had
identified five factors present in the competitive market applicable in the
international marketing environment. Analyzing the five factors can help
international marketing participants anticipate shifts in competition, shape how
industry structure changes, and find better strategic positions within the industry.
• A competitive industry is highly dynamic in nature; any change can happen
anytime. International marketing participants who do not react maybe left far
behind.
• New entrants enter the market to capture market share. The more barriers there
are for entry, the more the industry becomes attractive.
• Substitute products are products which are essentially the same or similar
enough to another product.
• Bargaining power of customers means the ability of the customers to persuade
the seller to do what they want.
• Like customers, we also have bargaining power of suppliers. Suppliers also have their
bargaining power if they are more concentrated or are more organized.
• Structure of distribution

Distribution channels (place in our 7Ps) are the links between sellers and buyers in
both domestic and international marketing.
• Geography

Geography is the study of the physical features and environment of the earth and its
atmosphere, including the impact of human activity on these factors and vice versa.
LESSON 6.3 LEVELS OF
INTERNATIONAL
MARKETING
 1. International/Export
Marketing
The first level of marketing involvement
based in a single home country. There is no
foreign direct investment in other
countries. The domestic company either
exports to foreign firms or buys (imports)
from foreign firms.
There are three ways of exporting

• Indirect exporting is a common practice by

going through international marketing
intermediaries, companies (could be domestic or
foreign) who will help the domestic company
exporter find buyers in the foreign markets.
• Semi-direct exporting, an exporter usually
initiates the contact through agents, merchant
middlemen, or other manufacturers in the home
country (domestic), where the exporter resides.
• Direct exporting where the company generally
establishes an export department to sell directly
to a foreign market. The company conducts
market research, establishes physical distribution,
and obtains all necessary export documentation.
 2. Multinational Marketing
Multinational companies (MNCs) operate in more than one
country at the same time, having foreign direct
investment in all of them. MNCs have their management
headquarters in the country of origin, known as the home
country, and operate in several other countries, known as
host countries. MNCs have a centralized home office,
where the main decisions will always be taken by the
national headquarters in the home country
 3. Transnational
Marketing

Transnational corporations (TNCs) are a type

of multinational corporations operating in
multiple countries, just like multinationals,
but larger than most multinationals. However,
unlike multinationals, they are decentralized.
They take decisions suitable to the operating
context in the country they are located.
 4. Global Marketing

The highest level of international business activity is

global marketing. A global company does not change
branding, even if the country of operation changes. A
global business has operations worldwide, and it does
not identify with any home country. It has its own
specific identity. Not many companies have achieved
this level of international activity, but more and more
multinationals and transnationals are heading in this
direction.
LESSON 6.4
PARTICIPANTS IN
INTERNATIONAL MARKETING
• International marketing or international
business and trade, which is trade in the
international arena, involves several
participants, in general. Individuals, for-profit
and nonprofit organizations, and
governments all have a vested interest in
understanding and shaping international
business practices and trends.
1. Individuals include households,
workers/employees, managers, and
entrepreneurs. One of the very significant
contributions of the worldwide web and
the internet is the empowerment of
individuals (and small firms) to start
business and to expand their business
horizon.
2. Businesses could be micro, small, medium, or
large, and include even the international,
multinational, transnational, or global companies.
About one-third of the international trade is
estimated to be intra-company transfers. Most
trading companies are merchant exporters, that is,
they export products manufactured by other firms.
3. Governments are participants in
international marketing when they buy
products, machineries and equipment,
services, or when they borrow money directly
or sell bonds and other securities in the
foreign capital market. Most governments
build infrastructures using help from other
countries by buying equipment and services,
like intellectual properties and technology
from the world market.
4. Nongovernmental organizations (NGOs) include any
nonprofit, voluntary citizens' groups that are organized on a
local, national, or international level. International NGOs
were important in the anti-slavery movement, the
movement for women's suffrage, and movement against
child labor, NGOs were formed to emphasize humanitarian
issues, developmental aid, and sustainable development.