05 - Chapter 2 PDF
05 - Chapter 2 PDF
05 - Chapter 2 PDF
INTERNATIONAL MARKETING
STRATEGIES OF INDIAN FIRMS
Culture
45
Chapter-2: International Marketing Strategies of Indian Firms
Political stability
46
Chapter-2: International Marketing Strategies of Indian Firms
Developing economy
Newly-Industrialised country
Industrialised country (also known as a developed country,
advanced economy or first world economy).
47
Chapter-2: International Marketing Strategies of Indian Firms
48
Chapter-2: International Marketing Strategies of Indian Firms
Globalisation:
49
Chapter-2: International Marketing Strategies of Indian Firms
vice versa, as both the United Kingdom and Germany are both EU
member states) by comparison with a British firm trading with
Mexico or Thailand. Such trading blocks can also, conversely,
place restrictions/regulations on trade. To use the earlier example
of the EU again, the EU may place regulations on the packaging,
labelling and distribution of a product. Consequently, a UK firm
trading in Germany would have to adhere to the European Union
regulations, in order to trade legitimately within the European
Union.
Reach
Scope
50
Chapter-2: International Marketing Strategies of Indian Firms
Interactivity
Immediacy
51
Chapter-2: International Marketing Strategies of Indian Firms
52
Chapter-2: International Marketing Strategies of Indian Firms
Disadvantages
53
Chapter-2: International Marketing Strategies of Indian Firms
54
Chapter-2: International Marketing Strategies of Indian Firms
Product
A global company is one that can create a single product and only
have to tweak elements for different markets. For example, Coca-
Cola uses two formulas (one with sugar, one with corn syrup) for
all markets. The product packaging in every country incorporates
the contour bottle design and the dynamic ribbon in some way,
shape, or form. However, the bottle or can also includes the
country’s native language and is the same size as other beverage
bottles or cans in that country.
Price
Price will always vary from market to market. Price is affected by
many variables: cost of product development (produced locally or
imported), cost of ingredients, cost of delivery (transportation,
55
Chapter-2: International Marketing Strategies of Indian Firms
Placement
How the product is distributed is also a country-by-country decision
influenced by how the competition is being offered to the target
market. Using Coca-Cola as an example again, not all cultures use
vending machines. In the United States, beverages are sold by the
pallet via warehouse stores. In India, this is not an option.
Placement decisions must also consider the product’s position in
the market place. For example, a high-end product would not want
to be distributed via a “dollar store” in the United States.
Conversely, a product promoted as the low-cost option in France
would find limited success in a pricey boutique.
Promotion
After product research, development and creation, promotion
(specifically advertising) is generally the largest line item in a
global company’s marketing budget. At this stage of a company’s
development, integrated marketing is the goal. The global
corporation seeks to reduce costs, minimize redundancies in
personnel and work, maximize speed of implementation, and to
speak with one voice. If the goal of a global company is to send the
56
Chapter-2: International Marketing Strategies of Indian Firms
1
J.B. Quinn, "Strategies for Change: Logical Incrementalism" (Richard D. Irwin)
57
Chapter-2: International Marketing Strategies of Indian Firms
58
Chapter-2: International Marketing Strategies of Indian Firms
59
Chapter-2: International Marketing Strategies of Indian Firms
Although these detailed plans may cover each of the 7 P's, the
focus will vary, depending upon your organization's specific
strategies. A product-oriented company will focus its plans for the 7
P's around each of its products. A market or geographically
oriented company will concentrate on each market or geographical
area. Each will base its plans upon the detailed needs of its
customers, and on the strategies chosen to satisfy these needs.
Again, the most important element is, indeed, that of the detailed
plans; which spell out exactly what programs and individual
activities will take place over the period of the plan (usually over
the next year). Without these specified - and preferably quantified -
activities the plan cannot be monitored, even in terms of success in
meeting its objectives. It is these programs and activities which
will then constitute the "marketing" of the organization over the
period. As a result, these detailed marketing programs are the
most important, practical outcome of the whole planning process.
These plans therefore be:
60
Chapter-2: International Marketing Strategies of Indian Firms
2
Badiul A. Majumdar, “Foreign Ownership of America : A Matter of Concern”, Columbia Journal of
World Business, 25 1999.
61
Chapter-2: International Marketing Strategies of Indian Firms
Political Environment
62
Chapter-2: International Marketing Strategies of Indian Firms
63
Chapter-2: International Marketing Strategies of Indian Firms
Political Risk
3
R. Srinivasan, International Marketing, Prentice Hall of India Ltd., New Delhi, 2003.
64
Chapter-2: International Marketing Strategies of Indian Firms
65
Chapter-2: International Marketing Strategies of Indian Firms
Legal Environment
4
Ibid.
66
Chapter-2: International Marketing Strategies of Indian Firms
CULTURAL ENVIRONMENT
67
Chapter-2: International Marketing Strategies of Indian Firms
Cultural Analysis
68
Chapter-2: International Marketing Strategies of Indian Firms
69
Chapter-2: International Marketing Strategies of Indian Firms
70
Chapter-2: International Marketing Strategies of Indian Firms
Trade pattern analysis helps break the patterns into volumes and
prices for better understanding. This can also help in
understanding the debt problems. To quote an example, when
there was an oil price hike in 1973, there was a manor shift in
resources from non-oil producing nations to oil producing nations.
This created enormous pressure on current account of the non-oil
producing nations. These countries resorted to debt to increase
their capital inflow so that the currency could remain stable. In the
process, the Asian and African countries suffered the most.
71
Chapter-2: International Marketing Strategies of Indian Firms
72
Chapter-2: International Marketing Strategies of Indian Firms
There are three reasons for the shift from domestic to global
5
Global Marketing Management, Masaaki Kotabe and Kristiaan Helsen.
73
Chapter-2: International Marketing Strategies of Indian Firms
products that are too expensive for locals but are considered
Worldwide Competition
there were only the big three: General Motors, Ford, and Chrysler.
E-Commerce
With the proliferation of the Internet and e-commerce (electronic
commerce), if a business is online, it is a global business. With
more people becoming Internet users daily, this market is
constantly growing. Customers can come from anywhere.
According to the book, “Global Marketing Management,” business-
to-business (B2B) e-commerce is larger, growing faster, and has
fewer geographical distribution obstacles than even business-to-
consumer (B2C) e-commerce. With e-commerce, a brick and
mortar storefront is unnecessary.7
6
Global Marketing Management— Masaaki Kotabe and Kristiaan Helsen, 2004.
7
Kotabe & Helsen, p.4 op. cit.
74
Chapter-2: International Marketing Strategies of Indian Firms
75
Chapter-2: International Marketing Strategies of Indian Firms
9
R. Srinivasan, International Marketing, Prentice Hall of India Ltd., New Delhi, 2003.
76
Chapter-2: International Marketing Strategies of Indian Firms
77
Chapter-2: International Marketing Strategies of Indian Firms
78
Chapter-2: International Marketing Strategies of Indian Firms
79
Chapter-2: International Marketing Strategies of Indian Firms
80
Chapter-2: International Marketing Strategies of Indian Firms
81
Chapter-2: International Marketing Strategies of Indian Firms
10
Hamel, G. and Prahalad, C.K. (1996) Competing for the future. Harvard Business School Press.
82
Chapter-2: International Marketing Strategies of Indian Firms
83
Chapter-2: International Marketing Strategies of Indian Firms
84
Chapter-2: International Marketing Strategies of Indian Firms
Some of the terms that are used in export marketing in the Indian
context are explained below:
85
Chapter-2: International Marketing Strategies of Indian Firms
seller to buyer when the goods cross the ship’s rail at the port of
departure.
Goods moving at buyer’s risk and seller’s cost and freight
(C&F): The seller clears the goods for export, pays the freight
charges, and delivers the goods on board the ship. The risk
passes form seller to buyer when the goods cross the ship’s rail
at the port of departure. The seller undertakes to provide the
buyer with a negotiable bill of lading that can be endorsed to
transfer ownership of the goods or pledge them in a bank.
Cost, insurance and freight (CIF): This is identical to C&F
except that, in addition, the seller insures the goods against loss
and damage at his own cost. The insurance covers the buyers
not the seller, since the goods are travelling at buyer’s risk.
Freight, carriage paid to (FCP): The seller pays the transport
costs. Risk passes to buyer when the seller delivers the goods
into the custody of the first carrier.
Freight, carriage, insurance paid to (CIP): This is identical to
FCP, except that in addition, the seller insures the goods at his
own cost, for the benefit of the buyer.
86
Chapter-2: International Marketing Strategies of Indian Firms
87
Chapter-2: International Marketing Strategies of Indian Firms
88
Chapter-2: International Marketing Strategies of Indian Firms
12
Meenakshi Radhakrishnan Swami in Business Standard.
89
Chapter-2: International Marketing Strategies of Indian Firms
First things first. The rise of organised retail does not mean the end
of traditional retail. According to "Retail in India: getting organised
to drive growth", a joint report by global management consultancy
A T Kearney and the Confederation of Indian Industry, the Indian
retail sector is valued at $320 billion (Rs.14,40,000 crore), of which
organised retail accounts for a minuscule 6 per cent (Rs.86,400
crore or Rs.864 billion). Of course, the latter's 35 per cent growth
is multiple times the 7-8 per cent forecast for the sector as a whole:
which is why Kearney forecasts organised retail will cross $100
billion by 2012. Even at that level, though, it will be far behind
traditional retail. Most manufacturers understand that. "For a very
long time to come, the biggest chunk of business will be from
general trade. The corner shop will not disappear," says V S
Sitaram, executive director, consumer care division, Dabur India.
90
Chapter-2: International Marketing Strategies of Indian Firms
What's in store
FMCG companies in India have had a fairly smooth run until now -
given that the average kirana is 150-200 sq ft and has space for
less than 1,000 SKUs, they didn't need to create endless product
variations and extensions of the same brands. Compare this with
Barry Schwartz's list in his 2004 bestseller The Paradox of Choice:
Why Less is More, based on a visit to his local supermarket in the
US: 285 types of cookies (21 options in chocolate chip alone), 95
different snacks, 360 shampoo types, 40 options for toothpaste,
275 varieties of breakfast cereal, 175 types of teabags. Schwartz's
supermarket was a "not particularly large store", but Indian
consumer goods companies would struggle (and fail) to stock even
that level of products (and remember, this book is three years old):
Cadbury India has over 100 SKUs in two categories, Procter &
Gamble sells over 320 SKUs across five categories, while
Hindustan Lever [ Get Quote ] has more than 700 SKUs in over 20
categories.
91
Chapter-2: International Marketing Strategies of Indian Firms
Big packs and varying SKUs is just one angle to the product
strategy. Unlike traditional outlets, where space and ambience are
serious constraints, modern format stores also provide an ideal
environment for FMCG companies to initiate product trials and
launch premium or niche products. In mid-2006, for instance,
Dabur India launched a 400 gram squeeze pack of Dabur Honey
only through modern format stores. In the past year or so, the
company has also launched two variants of its chyawanprash, a
sugar-free version and another that claims to combat stress - both
were launched in modern format stores where the target customer
is likely to shop and, perhaps more importantly, is willing to pay the
30 per cent premium these products charge over regular
chyawanprash. "It is probably easier to sell such concepts through
the organised retail route," agrees Sitaram.
92
Chapter-2: International Marketing Strategies of Indian Firms
93
Chapter-2: International Marketing Strategies of Indian Firms
94
Chapter-2: International Marketing Strategies of Indian Firms
Cadbury India's Sethi points out that retailers are more open to
brand promotions and displays - including posters, gondolas and
danglers - when manufacturers back up their ideas with shopper
insights. "There will be a shift from traditional media to increased
communication at the point of purchase," he says. Initiatives that
help grow the category as a whole are particularly welcome, say
analysts, since that boosts the retailers' revenue. And many FMCG
companies are predicting that spends on promotion, in-store and
point of purchase displays will increase significantly from the
present 20-30 per cent share of the marketing budget.
95
Chapter-2: International Marketing Strategies of Indian Firms
96
Chapter-2: International Marketing Strategies of Indian Firms
So marketers must do the same and consider that the new market
place we are in is in constant warfare against itself. We must
balance our use of technological digital devices with our analog,
instinctively creative minds, always looking for new ways to
understand this biomorphic marketplace that is rapidly changing.
97
Chapter-2: International Marketing Strategies of Indian Firms
98
Chapter-2: International Marketing Strategies of Indian Firms
99
Chapter-2: International Marketing Strategies of Indian Firms
100
Chapter-2: International Marketing Strategies of Indian Firms
101
Chapter-2: International Marketing Strategies of Indian Firms
firms have into three distinct groups of firms: (1) internal focus; (2)
external focus; and (3) dual focus. Based on the nature and type
of competitive advantage, the choice of international entry that we
specifically explore ranges from (1) shared control typical in joint
ventures; (2) to high control typical in owned subsidiaries. The
three international strategies in our conceptual model are: (1) a
global strategy to address forces of global integration; (2)
multifocal strategy to address pressures of local responsiveness;
and (3) a transnational strategy that combine aspects global
integration along aspects with high local responsiveness.
Internal focus firms are likely to prefer high control over operations
in order to protect their assets and other firm-specific resources,
and am likely to prefer wholly (or majority) owned subsidiaries as
preferred entry mode, and for these reasons unlikely to choose
joint ventures. Such firms would do this in order to internalize
operations and maximize returns on firm-specific attributes.
However, these firms are likely to perform poorly in joint venture
arrangements as they do not have the capability to meaningfully
share control.
102
Chapter-2: International Marketing Strategies of Indian Firms
103