Page 16 - DMGT547_INTERNATIONAL_MARKETING

Unit 1: Basics of International Marketing

is coming up with milk based products as majority of the Indians and Asians do not relish Notes
the taste of aerated drinks which are supposed to be having caffeine and is addictive.

Diversification: In the international market cyclical factors as recession and such seasonal
factors as climate affect the demand for most of the product. Due to these variables there
are sales fluctuations, which frequently is substantial enough to cause, lay off of personnel.
One way of diversifying a company’s risk is to consider foreign markets as a solution for
variable demands.

Inflation and wholesale price index: The best way to control inflation is to earn foreign
exchange through exports. Imports can also be highly beneficial to a country because they
constitute reserve capacity of the local economy. Without imports, there is no incentive
for domestic firms to moderate their prices. The lack of imported product alternatives
forces consumers to pay more, resulting in inflation and excessive profits for local firms.
This development usually acts as a prelude to workers to demand higher wages, further
exacerbating the problem of inflation. Import quotas imposed on Japanese automobiles
in 1980s saved 46,200 US production jobs but at a cost of $ 160 thousand per job per year.

Employment and placements: Tariff barriers and trade restrictions in certain countries
contributed significantly to the great depression of 1930 and have the potential to cause
widespread unemployment again. Unrestricted trade on the other hand, improves the
world’s GNP and enhances employment generally for all nations. With the liberalization
of economic policy 1991, India has gained tremendously with the inflow of foreign direct
investment as a result of which the employment in the country has tremendously improved.
Standard of living/style: Trade affords countries and their citizen’s higher standard of
living than otherwise possible. Without trade, product shortages force people to pay
more for less. Products taken for granted such as coffee and bananas may become
unavailable overnight. Life in most of the countries will be more difficult were it not
being for the many strategic metals that must be imported. Trade also makes it easier for
industries to specialize and gain access to raw materials, while at the same time fostering
competition and efficiency.

Marketing process: International marketing should be considered a special case of domestic
marketing. It has earlier been explained that there is very little difference between domestic
and international marketing. Only thing is that the word multinational has been added in
the international marketing process. Otherwise, the marketing mix is the same for both.
With the improvement in information technology the access to international market has
become easy as the whole world has become a small global village.

Task Prepare a comparative analysis on – Ethnocentrism vs. Polycentrism. Give few
examples to bring out the comparison.

Self Assessment

Fill in the blanks:

13. For USA ……………………. is the biggest market in the world for consumer and
engineering products.
14. According to experts, the best way to control inflation is to earn ……………… through
exports.

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