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Post Graduate and Research Center
Why these differences in Trades?
How many State Visits does Office
bearing PM of India HE Narendra Modi
5of them are Asian countries.
“Neighborhood first and act
2015 Jan Sri Lanka
International Marketing Environment
Importance of IME in Business
WTO in IME
“Global village“, “World economy“,
“Globalization” fashionable terms.
These terms talk about a new market place
World Economic growth renders every
corner of the earth as a potential market
Goods and service 4 trillion $ (WTO,2013)
Marketing goods and services on a global
scale can happen in an "engineered" way.
Fruit Pulp from Denmark, Processed and
Packed in Sri Lanka , Exported to India under
ISFTA by an Indian company.
Understanding the IME
Identify Customer Values
The international marketing environment
is a complex constellation of demands
and constraints which the firm faces as it
attempts to compete and grow in an
international arena. (Matino Gogolova,
All the Factors effecting the International
Business in an International Market
Place are called International Marketing
Elements of the IME
country market A
Promotion Channels of
Internal environment status
Micro environment is much closer to the
marketer than the macro environment
It directly deals with the operational
It comprises of
○ Competitors- Direct and Indirect
○ Customers of a business/marketer
Important element of all
“With money everything is possible(well
most of the things)” – For the marketer
World Economic growth renders every
corner of the earth as a potential market
Changes of International
Capital movements rather than trade have become
the driving force of the world economy.
○ Goods and service 4 trillion $ (WTO,2013)
○ but London FOREX EUR/USD 400 billion$ each day world
wide 250 trillion $ per year
The world economy dominates the scene. The
macroeconomics of individual countries no longer
control economic outcomes.
The real secret of the economic success of Germany and
Japan is the fact that business leaders and policy makers
focus on the world economy and world markets; a top
priority for government and business in both Japan and
Germany has been their competitive position in the world
The growth of commerce via the Internet diminishes
the importance of national
Consumers “write” the economic plan by
deciding what will be produced by whom. The
market system is an economic democracy—
citizens have the right to vote with their vallets
for the goods of their choice.
The role of the state in a market economy is to
promote competition and ensure consumer
The United States, most Western European
countries, and Japan-the triad countries that
account for three quarters of gross world
product-are examples of predominantly market
The state has broad powers to serve the
public interest. These include deciding which
products to make and how to make them.
Consumers are free to spend their money
on what is available, but decisions about
what is produced and, therefore, what is
available are made’ by state planners.
Because demand exceeds supply, the
elements of the marketing mix are not used
as strategic variables. Earlier USSR India
and China. Cuba
There are, in reality, no pure market or
command allocation systems among the
world’s economies. All market systems have
a command sector, ‘and all command
systems have a market sector; in other
words, they are “mixed.”
32% of GDP in the United States Planned
64% in Sweden
Development stages of
GNP is used to categories markets in IME
Low Income Countries
less than $786 per capita
37 percent of the world population but less than 3
percent of world GNP (Rich get Richer, Poor gets
Limited industrialization and a high percentage of the
population engaged in agriculture and subsistence
Low literacy rates
Heavy reliance on foreign aid
Political instability and unrest
Development stages of
Concentration in Africa, south of the Sahara
Bangladesh, GNP per capita is $366 (Cheap
LIRNEasia – Learning Initiative (2007), Pro Poor
Lower Middle Income Countries
More than $786 and less than’ $3,125,
39percent of the world population but only 11
percent of world GNP.
These countries are at the early stages of
Indonesia, Sri Lanka
Development stages of
Upper Middle Income Countries
Between $3,126 and $9,6$5
Most of the Countries
Malaysia – “Truly Asia”
Development stages of
High Income Countries
Advanced, industrialized, postindustrial,
GNP per capita above $9,655
16 percent of world population but 82 percent of
A basket case is a country with economic, social,
and political problems that are so serious they make
the country unattractive for investment and
Civil struggles, Terrorist prone,
What you will market to Basket Countries?
Income and PPP in IME
A market can be also defined as a group of people willing
and able to buy a particular product.
For some products, particularly those that have a very low
unit cost - cigarettes, for example population is a more
valuable predictor of market potential than income.
For the vast range of industrial and consumer products in
international markets today, the single most valuable and
important indicator of potential is income.
The per capita GNP for Brazil and Chile are similar,
$4,986 and $5,822, respectively. However, the PPP per
capita GNP is quite different, $5,536 and $12,035,
respectively. The typical” consumer in Chile has more
than twice the purchasing power than the Brazilian
Wealth and income are concentrated
regionally, nationally, and within nations.
The implications of this reality. Are
crucial for the global marketer. A
company that decides to diversify
geographically can accomplish this
objective by establishing operations in a
handful of national markets.
Location of Population With
The 10 most populous countries in the
world accounted for 59 percent of world
income, and the 5 largest accounted for
US, Japan, Russian Federation, China,
A general quick indicator of Economic
India 1870bn$ China 9181 bn$ (WTO, 2013)
Can be misleading.
What is the nation which almost doubled it’s
GDP in one night?
2014 GDP is 509bn $
By shifting the base year from 1990 to
Africa’s Largest Economy
Inflow of Investments
Nestle, Heiniken, Standard Bank, MTB
Other Economic environment
Currency floating (Open/fixed) issue.
Balance of Payment (BOP) status
Economy base (Import/Export).
Rate of Economic Growth.
State of Inflation.
Environment – Barriers
Duties imposed when goods or services
cross the border
Developing Countries - Licensing, Quotas
Developed Countries – Voluntary export
Export Quota (Protect Local consumer),
Import Quota (Protect Local producer)
Quotas are implemented through
licensing. (limited number of licenses
issued for Importers and exporters)
Voluntary Export Restrains
Exporting country voluntarily restricts its
export to a country to protect the interest
of the importing country.
To reduce trade deficits
Levels of EI
Free Trade Area/Agreement
Economic and Monetary Union
Free Trade Area is a group of countries
that have agreed to abolish all internal
barriers to trade among themselves.
ASEAN, NAFTA, EU-EFTA, GCC (Oman-UAE)
Free Trade Agreement is a bilateral or
multi lateral agreement which the
signatories agrees to trade certain goods
and services without barriers.
FTA for Professional Services in ISLFTA
Quotas Zero Duty Tea 15mn Kg/yr , 8mn
pieces of garments , 2500 MT Pepper
Countries group together and form a
single entity which has
Same a Tariff rates with non members
Commercial Sovereignty is lost for Individual
It also includes Free Trade Area among
South African Customs Union (SACU)
Total elimination of Internal tarrifs
Common external tariffs
Goods as well as services
It includes Customs Union
E.g: European Economic Area, EFTA,
Common Economic Space(CEA)
Is a type of trade bloc which is composed
of a common market with a customs union.
The participant countries have both
common policies on product
regulation, freedom of movement
of goods,services and the factors of
production (capital andlabour) and a
common external trade policy.
E.g. Russia-Belarus, Monaco-EU,
Economic and Monetary Union
Economic Union With single currency.
E.g: East Caribbean Currency Union,
Other Economic Integration
Commodity Agreement – Food for Oil
Quota Agreement – Fixed price
Buffer Stock Agreement – Stabilizing
Cartels – OPEC, IATA
Trade blocks and Intra Regional Trade –
EI and IME
Create conducive Marketing
Freedom of movement
Huge market access
Single trade negotiations
Single rules and tariffs
German law, “verpackungerordun”, has
forced manufacturers to eliminate
nonessential packaging materials that
cannot be recycled and to adopt other
innovative approaches to producing and
Companies are developing new packaging
that uses less material and includes more
recycled content. More than 1,900 non-
German companies are currently
participating in the program.
The German packaging law is one
example of the impact that political, legal,
and regulatory environments can have
on marketing activities
Activities of political parties
Make in India
Refreshingly Sri Lanka
God’s Own Country
Eradicating Micro-Nutrient Deficiency
Economic, Technological, IT, Business,
“There are no
Elements to Consider
Governing Parties Attitude towards
Threat of equity dilution
Supreme and Independent Political
Developing countries exercise
Protectionism with extreme laws and
regulations to encourage domestic
Changes in policies are frequent and risk for
Developed countries consider any practice
against free trade is illegal.
Changes in policies are less frequent and
considered less risky
Risks under Sovereignty
Dilution of Equity Control
Taxing policies will vary with the ruling
party’s monetary policies.
Companies usually avoid taxes by
shifting its operation base to suitable
Bangladesh, Sri Lanka
Dilution of Equity
Host nation governments sometimes
attempt to control ownership of foreign
owned companies operating within their
borders. In underdeveloped countries,
political pressures frequently cause
companies to take in local partners.
Governmental action to dispossess a
company or investor.
Government’s taking ownership of a
property without compensation
Social disorder is caused by such underlying conditions
as economic hardship, internal dissension and insurgency,
and ideological, religious, racial, and cultural differences.
Lebanon, Greece, Sri Lanka, Telangana
Attitudes of Nationals
Negative attitudes towards the firms home country.
Anti US, Anti China, Anti Pakistan, Anti NGOs
For the best long-term interests of the company, it is
wise not to become involved in political disputes
among local groups or between countries.
The international legal environment
International Court of Justice
International Criminal Court
How these laws and conventions are Rectified in Constitutions
New Sharia Laws – Women selling to women in KSA
Consumer Protection Laws
Anti Dumping acts
National Treatment by Law
Settlement of Disputes
Some are settled by WTO.
Judicial dispute settlement.
Extra judicial Dispute settlement.
1. Atificial man-made environment - no human
society is without culture
2. Complex material, institutional and spiritual
creations used to satisfy human need
3. Personality of the group
As the second definition suggests, culture is
characterized by human creations of cultural
elements. From a marketing perspective we are
trying to capture a unifying or differentiating
power of cultural elements on the purchasing
behaviour of consumers.
The effects of culture are linked to the relevant
factors that may affect the marketing approaches to
Culture is learned.
Culture is not inherited issues - genetic, not innate.
Culture must be learned. The process of acquiring culture
is called enculturation. It can be consciously and
subconsciously. (nationality, religion)
Culture is transmitted from generation to
generation. Cultural factors have a great
momentum in its effect on consumer behavior. A clear
manifestation of a cultural tradition. Another important
feature is the maintenance of cultural continuity, which
makes signs and returns the response in retromarketin
Culture is shared. It is a common concern
groups and therefore consumer groups. The
similarity in consumer culture leads to the
application of the same marketing approach
in a given cultural environment. Considering
the cultural similarities is to decide what size,
what criteria used for evaluationof cultural
Culture is different. The content varies with
the culture of the area. Cultural environment
is different in content, there are differentiated
culture. At the same time, there are
distinctive in parallel cultures.
From a marketing perspective, it is essential
that manifests itself in different cultures,
different consumer behavior. As an
example for the relationship to cosmetics -
French women acceding to more coherent
than Scandinavian women.
Levi Strauss. Jeans in
France - sexy direction,
UK - Theme of cowboys and the Wild West
Japan - Topic Heroes.
Fox Brand – Fox And Deer Story
Culture is Contagious
Culture spreads in verbal and nonverbal communication.
Culture is adaptive - dynamic. Although a relatively inertial effect
that does not mean that it does not change.
Early understanding of cultural change brings:
The potential competitive advantage
Decrease the potential weaknesses of the company ("green behaviour"),
India follows US in style. India is not sensitive to Gluten. Marketers are
pro active and market with the name gluten free
The cultural change can be understood as a change in some cultural
elements with subsequent changes in social behavior.
Endogenous or internal changes - cultural innovation is based on
the invention. (I-phone Proposal)
Exogenous or external cultural changes.
• Acculturation: constant intercourse of two or more
different cultures leads to changes in the original
cultural patterns. Sri Lankan Tamils, Sri Lankan
Cultural diffusion: the dispersion from the
original culture center
Arabian culture diffused to all other regions
Bhudism from India to Easter par of the world
Social networking culture – US to Everywhere
Aggression - forcing the cultural elements
Forcing to wear certain dress code as a rule
Stimulation - In culture, there is a need of reception -
cultural elements that are part of other cultures
Cultural Values Analysis
Rokea set of Values
Terminal values - a comfortable life - the
○ equality - pleasure -safety - freedom - happiness
Instrumental values: ambition - thoughtfulness -
cleanliness - honesty – obedience
Distribution of power
Men and Women
Who is the purchase decision maker
Syria, Nigeria, Hyderabad, Sri Lanka
Metro sexual – Men (sharing traditional
New Traditionalism – MBA/MSC/PhD
How many of you?
High context cultures – Japanese, Indian
Context is equally important as words
Body language, a person's status, and tone of
Low context cultures – US
Words is the major means of communication
The Elements of Culture
Language – Verbal, Written, Multi Lingual,
Religion – Secular, Dominant Religion,
Mono Religious society.
Manners and Customs
Attitudes and values
Mark Zuckerberg CEO of FB addressed
30 mins in Pure Mandarin to the
Chinese Students of Tsinghua Lab.
Does he loves Mandarin?
Every internet user is his
One third of them are
from China. 0.6bn.
One Click on Face Book advertisement
assume = 0.01 $
One click per person per month.
600 mn X 0.01$ = 6mn$ per Month
Not Amazing Isn’t it???
Talk Mandarin walk Mandarin even
sleep Mandarin…. To tell it in slang
Nature and All living beings
Ecological diversity, Bio-diversity
Natural resource management
Environmental Impact Assessment
Environmental Friendly Attitude
Technology is changing always
Marketers have to be vigilant about it
and adapt to change
Innovations are faster than
Some innovations make products and
processors improve dynamically and
some times they even replaces the old
products and make them obsolete
Elements of Technological
9.7bn $ budget for broadband in India
Demography of Internet Usage
2G, 3G, 4G
Satellite subscriptions (One communication
satellite for South Asia)
What happened to typewriters,
records, audio and video cassettes,
What happened to standard post with
email and SMS
What will happened to CDs
Robots doing dangerous factory
A Key Challenge For International
Marketers Is To Develop A Good
Understanding Of The International
EPG model is one way
Ethnocentric (Based on Ethnicity)
Polycentric (political orientations and
Geo-centric (Based on Geography)
For US-based companies, 75% of sales
potential is outside the US.
About 90% of Coca-Cola’s operating income
is generated outside the US.
For Japanese companies, 85% of
potential is outside Japan. (Toyota)
For German and EU companies,
94% of potential is outside Germany.
In his famous book “Rich Dad, poor
Dad” Guy Kawashaki quotes The
Founder of McDonald’s as
“They think I do Hamburger Business
but what I really do is Real Estate
Correct Environment is Half The
Understanding, Adapting and
Manipulating the Environmental Factors
are the basis of a Successful Marketing
Internal Factors as well as the External
Factors are too Important
The difference between Domestic and
International Marketing is the Extent of
Variation in External Factors.
Composition and Direction
Increasing Share of Gross National
Less percentage of World Trade
Increase in Volume and Value of Trade
Change in the Composition of Export
Change in the Composition of Imports
Increasing Share of Gross
In 1990-91, share of India’s foreign trade
(import export) in net national income
was 17 per cent
In 2006-07 rose to 25 per cent. Exports
and imports as percentage of GDP were
14.0 per cent and 21 per cent
21% growth in Exports from 2005-2014
16% growth in Imports
Less Percentage of World
Share of India’s foreign trade in world
trade has been declining. In 1950-51,
India’s share in total import trade of the
world was 1.8 per cent and in export
trade it was 2 per cent.
According to World Trade Statistics,
India’s share in world trade has gone-up
from 1.4 per cent in 2004 to 1.5 per cent
in 2006. 1.7 in 2013
Most of India’s trade is by sea, India has
very little trade relations with its
neighboring countries like Nepal,
Afghanistan, Myanmar, Sri Lanka, etc.
68 % of India’s trade is oceanic trade
Share of these neighboring countries in
India’s export trade was 21.8 per cent
and in import trade 19.1 per cent. 2014
Increase in Volume and Value
Since 1990-91, volume and value of
India’s foreign trade has gone up. India
now exports and imports goods which
are several times more in value and
In 1990-91, total value of India’s foreign
trade was Rs 75,751 and in 2008-09, it
rose to Rs 22, 15,191 crore. Of it, value
of exports was Rs 8, 40,755 crore and
that of imports was Rs 13, 74,436 crore
Change in the Composition
Since independence, composition of export
trade of India has undergone a change. Prior
to independence, India used to export
agricultural products and raw materials, like ,
cotton, tea, oil seeds, leather, food grains,
cashew nuts, and mineral products. It also
exported manufactured goods.
But now in its export included mostly
manufactured items like, machines, ready-
made garments, gems and jewellery, tea, jute
manufactures, Cashew Kernels, electronic
goods, especially hardware’s and software’s
which occupy prime place in exports.
Change in the Composition
Since Independence, composition of
India’s import trade has also witnessed a
Prior to Independence, India used to import
mostly consumption goods like medicines,
cloth, motor vehicles, electrical goods, iron,
Now it has been importing mostly petrol
and petroleum products, machines,
chemicals-, fertilizers, oil seeds, raw
materials, steel, edible oils, etc.
1 Mauritius 50,164 42.00
2 Singapore 11,275 9.00
3 USA 8,914 7.00
4 UK 6,158 5.00
5 Netherlands 4,968 4.00
India has been dramatically increased
its global Marketing share since trade
Service sector is rapidly increasing its
share in International Marketing of India
Current government policy indicates that
India will be a global manufacturing
powerhouse in future.