Download International Marketing EX (1)

Executive Master of Business Administration (International Business)(5sem /3year)
International Marketing
1. Write short notes on any two of the following :
(a) Social and cultural environment of international marketing
Ans- Social and cultural aspects of a society form its very nature. As "culture" is the essence of
a society, this chapter will concentrate on a discussion of it only.
Of all the so called "environmental uncontrollables", culture, or at least the study of it, is one of
the most difficult to comprehend, take account of and harness to advantage. This is particularly
so when the product or service is "culture bound". Such products and services include those
which are generally indigenous by nature and/or of relatively small value and very common.
This is particularly true of foodstuffs. Sadza in Zimbabwe, a staple food made from maize meal,
would not go down well in Beverley Hills, California. Neither would Middle Eastern sheeps eyes
menus. Products of a more technical nature, like computers, on the other hand, have a
universal appeal.
However there is plenty of evidence to suggest that, with shrinking communications and with
more people than ever travelling, even the most culture bound product or service can, and is,
finding a world market niche. So even the infamous Veldschoen footwear of the South African
pioneers has found its way into most corners of the world.
What is culture
Much has been written on the subject of culture and its consequences. Whilst on the surface
most countries of the world demonstrate cultural similarities, there are many differences, hidden
below the surface. One can talk about "the West", but Italians and English, both belonging to the
so called "West", are very different in outlook when one looks below the surface. The task of the
global marketer is to find the similarities and differences in culture and account for these in
designing and developing marketing plans. Failure to do so can be disasterous.
Terpstran9 (1987) has defined culture as follows:
"The integrated sum total of learned behavioral traits that are manifest and shared by members
of society"
Culture, therefore, according to this definition, is not transmitted genealogically. It is not, also
innate, but learned. Facets of culture are interrelated and it is shared by members of a group
who define the boundaries. Often different cultures exist side by side within countries, especially
in Africa. It is not uncommon to have a European culture, alongside an indigenous culture, say,
for example, Shona, in Zimbabwe. Culture also reveals itself in many ways and in preferences
for colours, styles, religion, family ties and so on. The colour red is very popular in the west, but
not popular in Islamic countries, where sober colours like black are preferred.
Much argument in the study of culture has revolved around the "standardisation" versus
"adaption" question. In the search for standardisation certain "universals" can be identified.
Murdock7 (1954) suggested a list, including age grading, religious rituals and athletic sport.
Levitt5 (1982) suggested that traditional differences in task and doing business were breaking
down and this meant that standardisation rather than adaption is becoming increasingly
prevalent.
Culture, alongside economic factors, is probably one of the most important environmental
variables to consider in global marketing. Culture is very often hidden from view and can be
easily overlooked. Similarly, the need to overcome cultural myopia is paramount.
(b) International product standardization
Ans- Components
o
Standardize the basic components of all your products. Look at your product
line and determine where you can create similar component sections across
several products. If necessary, modify your products so similar components
can be used. For example, if you produce light fixtures, standardize the
socket and ceiling attachment mechanisms across all your products. Make
your product according to standards that designers use when designing
different models. Not only will you save on production costs, you can
standardize installation instructions and decrease testing costs. When you
have a high number of similar components, you can quickly introduce new
products to the market to capitalize on changes in customer preferences.
Packaging
o
Slight changes in packaging can help you standardize your product offers
globally. Without needing to make changes to your actual product, you can
alter your product packaging to reflect differences in legal requirements such
as warnings, language, promotions and branding. Products shipped to
international destinations may also require additional protection against
moisture, extreme temperatures and harsher sales conditions. For example, if
you sell candy in the U.S. and want to expand to Spain, change your existing
packaging to Spanish and change colors to be more appealing to a Spanish
consumer, but sell the same candy you sell in the U.S.
Quantity
o
Sell your standardized product in different quantities. Make large packages for
warehouse stores and small packages for international markets. Most
international customers do not buy products in bulk due to lack of space,
transportation limitations and monetary differences. You can take advantage
of product standardization savings by selling different quantities in different
marketing channels. Consider selling your product in different quantities in the
same store to capitalize on consumers that want a volume discount. For
example, if you sell potato chips, sell a snack-size package and a family-size
package.
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(c) Counter-trade
(d) Inter-depend ence of products and services
2. Distinguish between any two of the following :
(a) Licensing and Contract manufacturing
Ans- If you start a small business that markets your product designs, you will most likely begin
by manufacturing the items yourself. However, growth will quickly make that impossible.
Demand for your products will be higher than your ability to hand-manufacture them. At that
point, you may have to contract with someone else to do the manufacturing. However, if demand
becomes too high, you may need many thousands of units. In that case you may have to license
your design to a manufacturer.
Contract Manufacturing
You should always seek to contract for the manufacture of your product before considering
licensing. Contracting maintains your complete ownership of the product. You simply agree on a
price for manufacturing the product, and the manufacturer delivers the number of units you
request. You will pay cash upfront for this.
Licensing
If you need a large number of units, you should consider licensing. This arrangement puts all the
risk on the manufacturer. Under a licensing agreement, you agree to let a manufacturer make as
many copies of your product as it can, and you get paid a licensing fee. The manufacturer will
expect to make money on the product as well, so you must be prepared to make less on a
percentage basis than you would if you retained full ownership of the rights to the product.
However, large volume can make up for the lower percentage per unit you receive.
Distribution
Manufacturers are not always distributors. If you license your product to a manufacturer that also
distributes products, your licensing agreement should pay you even if the manufacturer can't sell
the product. However, if you have a separate distributor from the manufacturer, you can use the
distribution agreement to entice the manufacturer, which will see a ready market for the product.
Time Limits
You can limit the amount of time a manufacturer has to make your product. At a date in the
future, you can regain full rights to your product, which will allow you to find a new
manufacturer or to alter the product into a follow-up product.
(b) Local brands and Global brands
Ans- Quality Signal. Consumers watch the fierce battles that transnational companies wage over
quality and are impressed by the victors. A focus-group participant in Russia told us: "The more
people who buy [a] brand…the better quality it is." A Spanish consumer agreed: "I like [global]
brands because they usually offer more quality and better guarantees than other products." That
perception often serves as a rationale for global brands to charge premiums. Global brands "are
expensive, but the price is reasonable when you think of the quality," pointed out a Thai participant.
Consumers also believe that transnational companies compete by trying to develop new products
and breakthrough technologies faster than rivals. Global brands "are very dynamic, always
upgrading themselves," said an Indian. An Australian added that global brands "are more exciting
because they come up with new products all the time, whereas you know what you'll get with local
ones."
That's a significant shift. Until recently, people's perceptions about quality for value and technological
prowess were tied to the nations from which products originated. "Made in the USA" was once
important; so were Japanese quality and Italian design in some industries. Increasingly, however, a
company's global stature indicates whether it excels on quality. We included measures for countryof-origin associations in our study as a basis for comparison and found that, while they are still
important, they are only one-third as strong as the perceptions driven by a brand's "globalness."
Consumers all over the world associate global brands with three characteristics.
Global Myth. Consumers look to global brands as symbols of cultural ideals. They use brands to
create an imagined global identity that they share with like-minded people. Transnational companies
therefore compete not only to offer the highest value products but also to deliver cultural myths with
global appeal.
"Global brands make us feel like citizens of the world, and … they somehow give us an identity," an
Argentinean consumer observed. A New Zealander echoed: "Global brands make you feel part of
something bigger and give you a sense of belonging." A Costa Rican best expressed the aspirations
that consumers associate with global brands: "Local brands show what we are; global brands show
what we want to be." That isn't exactly new. In the post-World War II era, companies like Disney,
McDonald's, Levi Strauss, and Jack Daniel's spun American myths for the rest of the world. But
today's global myths have less to do with the American way of life. Further, no longer are myths
created only by lifestyle and luxury brands; myths are now spun by virtually all global brands, in
industries as diverse as information technology and oil.
(c) Promotion mix and Marketing mix
(d) Export house and Export broker
3. Explain various steps involved in the international marketing process.
Ans- Notwithstanding all the benefits of exporting, it remains a complicated process that is fraught
with risks. It is not a question of simply becoming an exporter from one day to the next. There are
many steps involved in becoming an exporter and each of these steps may have several sub
components to it. The 20 steps to exporting are highlighted below:
Understanding and preparing for exports
1. Considering exporting? - If you are considering exporting, you should get yourself up to
speed by understanding why you want to export, what the difference is between domestic
marketing and export marketing, what the various environments are that you will encounter
in international trade and the trade barriers you may face in the international marketplace.
2. Current business viability - If you are not managing to survive in your current business, then
don't consider exporting.
3. Export readiness - Besides for having an existing base (i.e. a viable business) to build on,
there are several other factors that contribute to your readiness to export.
4. Set a broad export mission statement and initial research budget for your firm - If you're
ready to export, then you need to set a broad statement indicating that intention to export
(which you may revise later), and you will also identify a small budget that will allow you to do
the research and preparation necessary to plan and implement an export strategy.
5. Confirm management's commitment to exports - probably one of the main reasons why firms
fail with their export endeavours is because management only pay lip service to the firms'
export efforts. This is not enough! Get management to commit on paper to the firm's exports
efforts and have them approve the budget you submitted for your export research (see step
4).
B: Researching and segmenting export markets
6. Undertaking an initial export SWOT analysis of the firm - as it is important to understand
what the export capabilities of the firm are, as this knowledge is used as an input to the
export marketing research process (see the next step), it is necessary at this point in the
export process to undertake an export SWOT analysis. But as you do not yet have the
foreign market information at your disposal, this SWOT analysis will need to be reviewed
again later in the export process as an introduction to the export plan.
7. Selecting and researching potential countries/markets abroad - It is a fact; you cannot export
to all the countries in the world. Indeed, even established companies can only concentrate
on two or three countries at most (and usually only those that are close to each other either
geographically, culturally or in terms of language or some other factor). Smaller companies
will barely be able to cope with one additional country (over and above the domestic market).
The question is which country? At this point in the export process your firm must evaluate the
many potential countries open to you and narrow the list down to no more than three to five
countries with the greatest potential to look at more closely (a shortlist of countries). Once
you established a shortlist of countries, the next step is to do some desk research and inmarket research to identify the most suitable country (or perhaps two countries) from your
shortlist. In the case of large countries such as the US, Germany, the UK, etc., you may also
want to segment the country into more accessible segments (such as males under 30, or
households with an income of $50 000 or more per annum) that you can focus your
marketing efforts on. The purpose of this research will be to understand the foreign
environment you intend to enter and to identify potential foreign customers and their needs
so that you can plan an export marketing strategy that will meet your potential customers'
needs.
1.
C: Compiling an export plan
8. Preparing your export plan - This is one of the most important steps in the export process
and will incorporate a situational analysis (export SWOT), your export objectives and an
export marketing strategy.
D: Implementing the export plan
9. Obtain financing/resources for your exports - You will almost certainly need to finance your
export efforts in some way and you will have to give thought to how much you need and
where you will find the money. You may also need to find the staff and facilities necessary to
support your export activities (which, in turn, will cost money).
10. Managing your export risk - When you negotiate and eventually sign an export contract, you
need to be aware that you are committing your firm to certain responsibilities (such as
delivering on time and according to a certain standard) and that you are making certain
assumptions about your business partner (that they will pay, for example). These
responsibilities and assumptions represent a serious risk for your firm and you need to be
aware of what these risks are and you need to take steps to manage these risks as best
possible.
11. Promoting the firm and its products abroad - This involves letting the world know about your
firm and what it offers and there are many promotional channels that you could use (such as
advertising in trade magazines, e-mail marketing or participating in a trade fair). The channel
you use will depend on what your promotional strategy is that you outlined in your export
plan.
12. Negotiating and quoting in export markets - You need to approach your customers, convince
them to buy from you, negotiate a deal and price that that find acceptable, and present them
with a quote (usually in the form of a proforma invoice).
13. Revising your export costings and price - Following your negotiations, you will in all
probability have to consider lowering your price or other sales terms. This may require you to
revisit your costing exercise and pricing strategy.
14. Obtaining the export order - This is all about closing that sale and signing the contract!
15. Producing the goods - With the export order in hand, you now have to get down to producing
the goods that you have promised to deliver. This will mean securing raw materials and
components from your suppliers, and producing, packaging and labelling the goods for
export.
4. Briefly discuss the bases of international market segmentation
Ans- With the increasing globalization of the business world, international segmentation becomes an ever more important
concept
in marketing. The globalization forces now at work push many companies to extend or reorganize their marketing strategies
across borders and target international segments of consumers. It is the purpose of this paper to review the international market
segmentation literature and to identify its future prospects and threats. We critically assess the current status of international
market segmentation research and provide a systematic overview of 25 previous empirical studies with respect to the samples
used for segmentation, segmentation bases and methods, geographic configuration of segments, and validation efforts. We
discuss a number of conceptual and methodological issues that deserve more attention if international market segmentation is to
fulfill its high potential. The conceptual issues include construct equivalence of the segmentation basis used, level of aggregation
in the segmentation process, and choice of the segmentation basis. The methodological issues include measure equivalence and
sample equivalence of the segmentation basis, segmentation methods employed, and whether national sample sizes should be
proportional to population sizes. We describe a case study to illustrate and integrate the various issues and conclude with
suggestions for future research to stimulate further advances in the area.
International market segmentation has become an
important issue in developing, positioning, and selling
products across national borders. It helps companies
to target potential customers at the international-segment
level and to obtain an appropriate positioning
across borders. A key challenge for companies is to
effectively deal with the structure of heterogeneity in
consumer needs and wants across borders and to
target segments of consumers in different countries.
These segments reflect geographic groupings or
groups of individuals and consist of potential consumers
who are likely to exhibit similar responses to
marketing efforts.
A natural form of international segmentation is to
adopt a multi-domestic strategy where each country
represents a separate segment (Jeannet & Hennessey,
1998). A multi-domestic strategy amounts to selection
of countries on the basis of their local advantages.
Traditionally, multinational companies implemented
such multi-domestic strategies by tailoring national
brands to the needs shared by groups of consumers
International segmentation becomes a particularly
challenging issue when companies adopt a global or
pan-regional strategy, that is, a strategy integrated
across national borders. In many industries, national
borders are becoming less and less important as an
organizing principle for international activities, rendering
multi-domestic strategies less relevant (Yip, 1995).
Developments accelerating this trend include regional
unification, shifts to open economies, global investment,
manufacturing, and production strategies,
expansion of world travel, rapid increase in education,
literacy levels, and urbanization among developing
countries, convergence of purchasing power, lifestyles
and tastes, advances in information and communication
technologies, the emergence of global media,
and the increasing flow of information, labor, money,
and technology across borders (Gielens & Dekimpe,
2001; Hassan & Katsanis, 1994; Hassan & Kaynak,
1994; Parker & Tavassoli, 2000; Yip, 1995). Many
global companies such as Coca-Cola, McDonald’s,
Sony, British Airways, Ikea, Toyota, and Levi-Strauss
have successfully integrated their international strategies.
The forces that are now at work drive many
5. State the relationship between international market targeting and positioning. Describe
international market targeting strategies.
Ans- Market segmentation involves grouping your various customers into segments that have
common needs or will respond similarly to a marketing action. Each segment will respond to a
different marketing mix strategy, with each offering alternate growth and profit opportunities.
Some different ways you can segment your market include the following;

Demographics which focuses on the characteristics of the customer. For example age,
gender, income bracket, education, job and cultural background.

Psychographics which refers to the customer group's lifestyle. For example, their social
class, lifestyle, personality, opinions, and attitudes.

Behaviour which is based on customer behaviour. For example, online shoppers,
shopping centre customers, brand preference and prior purchases.

Geographical location such as continent, country, state, province, city or rural that the
customer group resides.
Targeting
After segmenting the market based on the different groups
and classes, you will need to choose your targets. No one strategy will suit all consumer groups,
so being able to develop specific strategies for your target markets is very important.
There are three general strategies for selecting your target markets:

Undifferentiated Targeting: This approach views the market as one group with no
individual segments, therefore using a single marketing strategy. This strategy may be
useful for a business or product with little competition where you may not need to tailor
strategies for different preferences.

Concentrated Targeting: This approach focuses on selecting a particular market niche on
which marketing efforts are targeted. Your firm is focusing on a single segment so you
can concentrate on understanding the needs and wants of that particular market
intimately. Small firms often benefit from this strategy as focusing on one segment
enables them to compete effectively against larger firms.

Multi-Segment Targeting: This approach is used if you need to focus on two or more well
defined market segments and want to develop different strategies for them. Multi
segment targeting offers many benefits but can be costly as it involves greater input from
management, increased market research and increased promotional strategies.
Prior to selecting a particular targeting strategy, you should perform a cost benefit analysis
between all available strategies and determine which will suit your situation best.
Positioning
Positioning is developing a product and brand image in the minds of consumers. It can also
include improving a customer's perception about the experience they will have if they choose to
purchase your product or service. The business can positively influence the perceptions of its
chosen customer base through strategic promotional activities and by carefully defining your
business' marketing mix.
Effective positioning involves a good understanding of competing products and the benefits that
are sought by your target market. It also requires you to identify a differential advantage with
which it will deliver the required benefits to the market effectively against the competition.
Business should aim to define themselves in the eyes of their customers in regards to their
competition.
6. A company wants to enter international markets by involving another company in the
foreign country. Discuss various modes of international market entry where the scope for
involvement of a foreign company is possible. Critically evaluate in which situations
each of those modes is suitable.
7. Describe the international product life cycle theory. Explain various life cycle stretching
strategies.
8. Differentiate between personal selling and sales prornotion. Explain different sales
promotion tools in international marketing.