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Biyani's Think Tank

Concept based notes

International Marketing
MBA Part-III

Miss Shashi Gurjar


Lecturer MBA Department Biyani institute of Science and Management Jaipur

Published by :

Think Tanks Biyani Group of Colleges

Concept & Copyright :

Biyani Shikshan Samiti


Sector-3, Vidhyadhar Nagar, Jaipur-302 023 (Rajasthan) Ph : 0141-2338371, 2338591-95 Fax : 0141-2338007 E-mail : acad@biyanicolleges.org Website :www.gurukpo.com; www.biyanicolleges.org

First Edition : 2011

While every effort is taken to avoid errors or omissions in this Publication, any mistake or omission that may have crept in is not intentional. It may be taken note of that neither the publisher nor the author will be responsible for any damage or loss of any kind arising to anyone in any manner on account of such errors and omissions.

Leaser Type Setted by : Biyani College Printing Department

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Preface

am glad to present this book, especially designed to serve the needs of

the students. The book has been written keeping in mind the general weakness in understanding the fundamental concepts of the topics. The book is selfexplanatory and adopts the Teach Yourself style. It is based on questionanswer pattern. The language of book is quite easy and understandable based on scientific approach. Any further improvement in the contents of the book by making corrections, omission and inclusion is keen to be achieved based on suggestions from the readers for which the author shall be obliged. I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay Biyani, Director (Acad.) Biyani Group of Colleges, who are the backbones and main concept provider and also have been constant source of motivation throughout this Endeavour. They played an active role in coordinating the various stages of this Endeavour and spearheaded the publishing work. I look forward to receiving valuable suggestions from professors of various educational institutions, other faculty members and students for improvement of the quality of the book. The reader may feel free to send in their comments and suggestions to the under mentioned address. Author

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Contents
S.No. Name of Topic Page No.
3-22

1. International Market Environment:-

1.1)Meaning(InternationalMarketing&InternationalEnvironment) 1.2)Characteristics 1.3)Importance 1.4)Identifying&AnalyzingOpportunities 1.5)Changesintheworldtradingenvironment 1.6)IMF,WTO,WorldBank 1.7)Cfactors(Countries,Currency,Competitors) 2332

2.Understandingcustomerbuyingbehavior:
2.1)whatiscustomerBuyingBehavior 2.2) Factorsinfluencingbuyingbehavior 2.3) Identifydifferentstagesofeconomicandpoliticaldevelopment

3.InternationalMarketingResearch 3.1)Meaning
3.2)Characteristics 3.3)MarketingResearch 3.4)SelectionofMRAgency 3.5)ComparativeAnalysisininternationalmarketingappraisal 3.6)InternationalMarketstrategy

3346

3.7) International Marketing Planning

4. International Product Management


4.1) International Product Strategies
4.2)ProductPortfolios 4.3)Standardization&Adaptation 4.4)Evaluationofstabilitywithreferencetomarketingandfinancialimplications.

47-55

5. Marketing Communication
5.1) Meaning 5.2) Characteristics 5.3) Importance 5.4) Availability, Constraints, Suitability, Selection of agencies

56-60

6. Distribution & Logistics


6.1) Channel Management

61-74

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6.2) Characteristics and Importance 6.3) Foreign-Market Channel Management 6.4) Appropriateness for financial, distribution, marketing and international trade purposes, customer service levels-demand generation and costs.

7. Pricing Strategies
7.1) Meaning 7.2) Types of Pricing Strategies 7.3) Currency Considerations

75-79

8. Evaluating & Controlling


8.1) Evaluation and Control 8.2) Difficulties in evaluation &Control

80-82

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ChapterI

International Market Environment and International Marketing


Q.1DefineInternationalMarketing.Explaintheimportance&ScopeofInternational Marketing. Ans.AccordingtoCateora:InternationalMarketingistheperformanceofbusiness activities Thatdirectstheflowofgoodsandservicestoconsumersorusersinmorethanone nation. AccordingtoCateora&Graham:Itistheperformanceofbusinessactivitiesdesigned toplan,price,andpromote&directtheflowofacompanysgoods&servicesto consumersorusersinmorethanonenationforaprofit AccordingtoKotler:GlobalMarketingisconcernedwithintegratingor standardizingmarketingactionsacrossanumberofgeographicmarkets.

NatureofInternationalMarketing 1. MultinationalMarketingManagement 2. Controllableanduncontrollablefactors:forinternationalmarketuncertaintyis createdbyuncontrollablefactors. 3. BroaderCompetence 4. IntenseCompetition 5.CreditOriented Politicalrisk 6.Comprehensiverisk export&Import Payments Changes in fashion & Styles Sudden War

Rules and Regulations Changes in Government

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7. Political Nature

Importance and Benefits of International Marketing 1) Survival 2) Growth of Overseas Markets 3) Sales & Profits 4) Diversification 5) Inflation & Price Moderation 6) Employment 7) Standard of Living 8) Understanding of Marketing Process Scope of International Marketing 1. Exporting (Selling to foreign markets) 2. Importing (Buying from abroad) 3. Re-exporting (Importing semi-finished goods & Exporting final goods) 4. Management of International Operations 4.1) Operating, Marketing & Sales Facilities abroad 4.2) Establishing Production or assembly facilities in foreign countries. 4.3) Monitoring Operation of marketing practices of multinationals & other agencies.

Q.2 Define the Characteristics of International Marketing. What are the differences between Domestic Trade and International Trade? Ans. Characteristics of International Marketing:a) Large Scale Operations b) Dominance of Multinationals c) International Restrictions & Trading Blocks d) Need of Marketing Research e) Importance or Advanced Technology f) Keep and acute competition g) Need for long term Planning h) Develops cultural relations & maintains world peace

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Differences between Domestic Trade & International Trade


The following are the major differences between domestic trade and international trade:-

1. Mobility in Factor Of Production Domestic Trade: Free to move around factors of production like land, labor, capital and labor capital and entrepreneurship from one state to another within the same country International Trade: Quite restricted

2. Movement Of Goods Domestic trade: easier to move goods without much restrictions. Maybe need to pay sales tax,etc International Trade: Restricted due to complicated custom procedures and trade barriers like tariff, quotas or embargo

3. Usage of different currencies Domestic trade: same type of currency used International trade: different countries used different currencies

4. Broader markets Domestic trade: limited market due to limits in population, etc International trade: Broader markets

5. Language And Cultural Barriers Domestic trade: speak same language and practice same culture International trade: Communication challenges due to language and cultural barriers

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Q.3 Define the terms in international Marketing a) Domestic Marketing b) International Marketing c) Global Marketing d) Foreign Marketing And the difference between Domestic Marketing and International Marketing. Ans.3a) Domestic Marketing:-It is concerned with the marketing practices within the researchers or Marketers home country (domestic market). 3b) International Marketing: - It focuses on the firm level marketing practices across the broader including market, identification &targeting, Entry mode selection & marketing mix & Strategic decisions. 3c) Global Marketing: - It treats the whole world as a single market & standardizes the marketing mix of companies. Eg- Mc Donald have designed a restaurant anywhere in the world. It has customized its menu offering according to local customers. 3d) Foreign- Marketing: - Marketing methods used outside the home market. It encompasses the domestic operations with a foreign country. Eg- A U.S. Company considers marketing in India as foreign marketing.

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Differences between Direct Marketing and International Marketing

Domestic

Marketing International Marketing 1. Marketing practices outside the marketer home country. 2. Two or more set of uncontrollable variable. 3. Deals with 2 or more culture. 4. Deals with many language.

1. Marketing practices within the marketers home country. 2. One set of uncontrollable variables. 3. Deals with one culture. 4. Deals with one language.

5. Single currency is used. 6. Easy to understand domestic competitive forces. 7. Easy to conduct research. 8. Product development & product planning according to local environment. 9. Only local regulation.

5. Transactions are carried out in various currency. 6. Difficult to understand. 7. Very expensive and difficult . 8. Product development & product planning varies from country to country. 9. International and host country

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Domestic 10. Advertising, Personal selling and other promotional methods not restricted through legal framework. 11. Domestic players are involved.

International 10. Different countries have different legal framework.

11. International players are involved.

Q.4 Define the process of international marketing. What are the reasons for entering international markets? Ans. Process:Motivation for international Marketing Growth Profitability Risk Spread

SWOT Analysis

Decision to enter international markets

Enter International markets

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Review Performance

Consolidate Marketing efforts in global Marketing

Reasons for entering International Markets:-

Reasons for Entering International Markets


Profitability Growth Achieving economies of scale

Spreading R &D cost

Why International Market

Risk spread

Marketing opportunities due to life cycle

Uniqueness of product or services

Reasons for Entering International markets1. Growth When the domestic market potential saturates. Firm enter international markets to explore opportunities their. Companies having small home market like-Singapore, Hongkong, Japan. Example - Healthcare companies Cipla, Dr. Reddy, Candilla Pharma entered into South America countries like Brazil and Argentania.

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2. Profitability Price differentials and enhanced profits in international markets. Exemption from indirect taxes and duties, several incentives by government for export oriented production, marketing support schemes contribute to enhance the profitability of firms. Example- Apple earn 390 million U.S dollar net profit from foreign land and 310 m U.S dollar from domestic land.

3. Achieving Economics of Scale Large scale production capabilities in international markets. Large scale production, reduction in unit production cost. Example- world market is 4 times larger than U.S market

4. Risk spread Overseas markets provide an opportunity to reduce their dependence on one market and spread the market risks. It reduces dependence on one market only.

5. Uniqueness of product or service The products with unique attributes in order to meet competition in the overseas markets and enjoy enormous opportunities in international markets. Herbal products, Handicraft, Software, B.P.O sell at competitive price provide Indian firms edge over other countries.

6. Quality Quality and cost are the two important determinants of demand & these can better achieved in global firm. International marketing strategies can generate greater revenue and greater operating margins. Example- Nissan, Caterpillar, Matsushita etc.

7. World Economic TrendsFast growth of developing economies has created new marketing opportunities and has provided a major incentive for companies to expand globally.

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8. L.P.G movement Liberalization, privatization and globalization movement is opening up closed markets and has provided opportunities and threats. Example- Privatization of telephone system.

9. Leverage Leverage is an advantage that a company enjoys that conducts business in more than one country. Example -Experience transfers, scale economics, resource utilization, global strategy.

Management Orientations/ EPRG Concept


1. ETHNOCENTRIC ORIENTATION It assumes home country superior to the rest of world. Opportunities outside the home country are ignored. It has a belief that the same marketing strategy can work in domestic and international market.

Environmental differences between markets are ignored. Example - Indian products sold outside as Sal war- kurta ,Saris, Dosa mix, Idli mix, Sambhar mix etc.

2. POLYCENTRIC ORIENTATION It is a strong orientation to the host country. It emphasizes differences between markets. Each subsidiary develops its own unique business and marketing strategies to succeed. The marketing mix decisions, product development strategies, pricing strategies are different for different countries. Example- Citicorps financial services

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3. REGIOCENTRIC ORIENTATION Firm treats a region as a uniform market segment and adapts a similar marketing strategy within the region. Example- Mc Donalds strategy to not to serve pork and to slaughter animals through the Halal process is followed in Middle East or Muslim dominated countries.

4. GEOCENTRIC ORIENTATION It considers the whole world rather than any particular country as the target market. It identifies similarities between various markets and formulates a uniform marketing strategy.

Q.5 Success in international markets depends upon identifying opportunities in global business environment, analyzing them and encashing them for developing ones own business. Please elaborate this by explaining what you understand by international Trading Environment and what strategies should be applied for success? A Step 1: -Identify Basic Appeal For a potential market this entails determining basic product demand. For a Potential site this involves determining the availability of resources required. 1. Determining Basic Demand Must explore the suitability of a nations climate, and whether there are bans on a product (such as alcohol in Islamic nations). 2. Determining Availability of Resources a. Raw materials for manufacturing must be local or imported. Imports may face tariffs, quotas, or other trade barriers. b. Labor is essential to production in any country. Many companies relocate to lowerwage countries, Especially those with labor intensive products. c. Financing can send production abroad if it is not available at home or when interest rates are high at home. d. Markets and sites not meeting requirements are dropped.

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B. Step 2: Assess the National Business Environment

Managers must understand differences in cultures, politics, laws, and economies and incorporate that understanding into market and site selection decisions. 1. Cultural Forces a. Countries differ in language, attitudes towards business, religious beliefs, traditions, and customs. Cultural elements can influence what kinds of products are sold and how. b. Cultural elements such as work ethic, educational attainment, or the level of managerial skills of the local people affect site selection decisions. 2. Political and Legal Forces a. Government Regulation i. Nations differ in their attitudes toward trade and investment based on culture , history, and current events. ii. Can quickly eliminate a market or site from further consideration. They create investment barriers to ensure domestic control of a company or industry by imposing investment rules on business ownership. iii. Restrict international companies from freely removing profits, forcing them to hold cash in the host country or to reinvest it in new projects there. b. Government Bureaucracy Lean and smoothly operating bureaucracy can encourage investment while an inefficient, cumbersome, or corrupt one can discourage it. c. Political Stability i. Companies must monitor political events that threaten operations and future earnings. Political risk can threaten activities of any international business activity. ii. Key to political risk is unforeseen political change: if a company cannot estimate the future political Environment with accuracy, political risk is increased.

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3. Economic and Financial Forces a. Poor fiscal and monetary policies can increase inflation and budget deficits, weaken a currency, lower productivity levels, and slow innovation. These reduce investor confidence and cause companies to scale back or cancel proposed investments. b. Currency and liquidity issues: a volatile currency complicates the prediction of future earnings in the home-country currency. c. Managers can obtain information about economic and financial conditions from international agencies.

4. Other Forces A countrys image and the cost of transporting materials and goods are important in assessing a nations business environment. a. Cost of Transporting Materials and Goods I) can affect where manufacturing facilities are located. II) Logistics is managing the physical flow of products from point of origin as raw materials to end users as finished products. Logistics weds production to delivery b. Country Image i. Embodies all facets of a nations business environment and affects the selection of sites for any activity. ii. Affects product image because products are stamped with labels identifying country of origin or assembly. iii. Country image can be good for certain products but unfavorable for others.

C. Step 3: Measure Market or Site Potential Despite local demand for a product and/or availability of resources, consumers might not be ready or able to buy a product and/or certain sites may be unable to supply the resources needed. 1. Measuring Market Potential Level of economic development affects the products sold, how they are sold, and their features. Different levels of economic development Require varying approaches to researching market potential. For more detail: - http://www.gurukpo.com

a. Industrialized Markets i. Great deal of information on market potential is available about industrialized countries. ii. Information in a typical industry analysis: Names, production volumes, and market shares of largest competitors. Volume of exports and imports of the product. Structure of wholesale and retail distribution networks. Market background, including population, social trends, and marketing approaches used. Total expenditure on product (and similar products). Retail sales volume and market prices of product. Future market outlook and potential opportunities. b. Emerging Markets i. Companies often face a lack of information. Data on market size or potential may be unavailable. ii. Can rank locations using a market-potential indicator if company is considering exporting: Market size: snapshot of market size at the moment. Market growth rate: Identify large (but shrinking) markets and small (but expanding) markets. Commercial infrastructure: Assess channels of distribution and communication. Country risk: Estimate risk of doing business, including political, economic, and financial risks. 2. Measuring Site Potential a) Managers must assess the quality of resources they will employ locally. For many companies, the most important resource will be labor and management. b) Wages are lower if labor is abundant, relatively less skilled (though perhaps welleducated), or both. Yet, training local managers requires a substantial investment of time and money. c) Managers should examine local infrastructure, including roads, bridges, airports, seaports, and telecommunications 3. Select the Market or Site Managers visit each location to confirm earlier expectations and perform a competitor analysis. Managers evaluate each potential locations Contribution to cash flows by undertaking a financial evaluation. a) Field Trips Trips to each remaining site let managers experience the culture, observe the workforce, or make personal contact with potential new customers And distributors. b) Competitor Analysis Competitor analysis should address the following: Number of competitors in each market (domestic and international). Market share of each competitor Whether each competitors product appeals to a small market segment or has mass appeal Whether each competitor focuses on high quality or low price

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Whether competitors tightly control channels of distribution Customer loyalty commanded by competitors Potential threat from substitute products

Q.6 Define the terms, WTO, IMF, World Bank. Ans.The World trade Organisation (WTO) is an organisation that deals with the rules of trade between nations at a global level.

A set of Agreements
The WTO agreements are at the core of the WTO. They are the result of negotiations by the different members inside the WTO. These agreements are negotiated, agreed by consensus, and signed by the members. (the bulk of the worlds countries) The agreements provide the legal ground-rules for international commerce. They are essentially contracts or promises that governments have to respect.

Whos there?
The WTO members are the governments of 148 countries. Over are developing countries and countries in transition to market economies. Its members resolve to abide by its rules by becoming a member (Regional trade agreements are exempted and fall outside the scope of the WTO)

History
Already in 1948, there was a failed attempt to create an International Trade Organisation. From 1948 to 1994, the GATT (General Agreement on Tariffs and Trade) provided the rules for world trade. GATT was a provisional agreement and organisation under whose umbrella negotiation rounds were held. From 1948 to 1995, there have been 8 trade rounds. At first, the rounds focussed on lowering tariffs (customs duties) on imported goods. As each round had more countries involved, it also discussed more issues (e.g. anti-dumping measures, specific sector agreements, services, problem solving,). The most comprehensive round was the Uruguay round (1986 - 1994). 123 countries took part in the discussions. One of the results was 22.500 pages listing commitments by countries on specific categories of goods and services.

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A ninth round, the Doha Development agenda is currently ongoing.

Start of the WTO


The WTO, as an organisation, was established on 1 January 1995. It is based in Geneva. It has a staff of about 550 and is headed by a director-general, Supachai, Panitchpakdi.

Who does what?


The WTO has a very limited staff at its headquarters. It largely consists of technical staff. The General Council (i.e. the ambassadors of the different countries) is in charge of the day-to-day work at the WTO. Negotiations are undertaken by experts. In the end, the ministers (representing their governments) adopt the results of the negotiations. This takes place at the WTO ministerial which is the highest authority.

Many different WTO Agreements


9 The WTO agreements cover three broad areas: goods, services and intellectual property. For each of these, there is main agreement (containing broad principles): 9 Goods: the General agreement on tariffs and Trade (GATT) 9 Services: the General Agreements on Trade in Services (GATS) 9 Intellectual property: Trade Related Aspects of Intellectual property Rights (TRIPS) 9 Under each of these broad agreements, there are extra (sub-) agreements and annexes dealing with specific sectors or issues. E.g. there are agreements on agriculture or textiles as part of the GATT agreement (goods). 9 Finally, there are the detailed and lengthy schedules (or lists) of commitments made by individual countries allowing specific foreign products or serviceproviders access to their markets.

The IFIs (International Financial Institutions) IMF and World Bank


The World Bank (WB) and International Monetary Fund (IMF) were founded in 1944 in Bretton Woods, USA. They were created as companion organisations to the United Nations.

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The IFIs are meant to contribute to financial stability and economic growth, leading to a more stable and prosperous global economy.

What do they do? IMF


The IMF main responsibilities: international monetary co-operation; growth of international trade; Exchange rate stability; establishment of a multilateral system of payments; and Making its resources available (under adequate safeguards) to members experiencing balance of payments difficulties. The main functions of the IMF Surveillance: Regular dialogue and policy advice The IMF discusses with countrys authorities (usually annually) the policies that are most conducive to stable exchange rates and a growing and prosperous economy. Technical assistance: Offered in several areas, including fiscal policy monetary and exchange rate policies, banking and financial system supervision and regulation and statistics Financial assistance Available to give member countries the breathing room they need to correct balance of payments problems Continued financial support is conditional on effective implementation of this programme. Reducing poverty The IMF provides financial support through its concessional lending facility, the Poverty Reduction and Growth Facility (PRGF) and through the HIPC (Heavily Indebted Poor Countries) initiative.

World Bank
The World Bank promotes long-term economic development and poverty reduction It provides technical and financial support to help countries reform particular sectors or implement specific projects. For example, building schools and health centres, providing water and electricity, fighting disease, and protecting the environment.

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World Bank
One group - Five agencies IBRD (The International Bank For Reconstruction and Development): provides loans and development assistance to middle-income countries IDA (International Development Agency): Interest free loans and grants to poorest countries IFC (International Finance Corporation): Financing private sector investments and technical assistance to governments and business MIGA (Multilateral Investment Guarantee Agency): Provides guarantees to foreign investors also technical assistance to help developing countries promote investment ICSID (International Centre for the Settlement of Investment Disputes)

Co-operation and overlap IMF World Bank


There is a lot of co-operation between the IMF and the World Bank as there are many areas of overlapping responsibilities. There are many joint-meetings and missions. (E.g. the annual meeting of the boards of governors of the IMF and the World Bank) The membership of both organisations is the same.

Joint initiatives
The IMF and World Bank have jointly launched two major initiatives to help poor countries. In 1996, the IMF and the World Bank introduced the Heavily Indebted poor Countries (HIPC) initiative Reduce the external debt burdens of the most heavily indebted poor countries. In 1999, the IMF and the World Bank initiated the Poverty Reduction Strategy Paper (PRSP) approach A country-led strategy for linking national policies, donor support, and the development outcomes needed to reduce poverty in low-income countries. Q.7 What are the Changes in the world trading environment?

Ans.
New trends in international Trade:1) Trade in agricultural and manufactured goods 2) Developing Countries trade 3) Global Production Network 4) Intra-firm Trade (Trade within the same company) 5) E-commerce (Doing business electronically)

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Changes in Indias Trading Environment 1. Change in the value of trade 2. Change in the composition and direction of trade By direction of trade-----i) Patterns of imports or composition of imports a) Consumer goods b) Raw-Materials and Intermediates goods c) Capital Goods ii) Sources of imports or direction of imports Indias trading partners can be classified into 5 broad categories. a) Organization for economic Corporation and development b) Organization of petroleum Exporting Countries c) Eastern Europe d) Developing countries e) Others iii) Pattern of exports or Composition of exports iv) Direction of exports 3) Export Promotion 4) Trading Policy Reforms 5) Export-Import Policy

Q.8 Elaborate briefly the impact of three C factors on the firms marketing decisions. Ans. Country of Origin, Currency and Competition are the most vital factors which help the international marketers for deciding their marketing strategies at global level.

1. Country of Origin
a) Country of Origin:-Country of origin, often abbreviated as COO, is the country of manufacture, production or growth where an article or product comes from. b) It is believed that the country of origin has an impact on the willingness to buy a product, and consumers may tend to have a relative preference for or aversion to certain products that originate from certain countries. c) The origin of design can be more important than the country of origin. Country of origin feature may be changed according to the following themes: a) an identity system 2) added value 3) a legal instrument 4) a differentiate device 5) an image in the consumers mind 6) a relationship etc. These important themes may be seen in the most admired international companies. The important themes may be seen in the most admired international companies. a) General Electric(US) b) Microsoft(US) c) Toyota (Japan) d) IBM)( US) e) WalMart(US) f) Coca-Cola(US) g) Dell(US)

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The country of origin forms an integral part of the brand culture. Country of origin has an influence on the brand image, for example, Taj Mahal depicts Indian culture and has strong Indian brand image. Indian firms such as Dabur, Zandu, Himalaya, Balsara, reflect traditional strength in their international market strategy

2. Currency
Every country has its own currency. The world currency environments worth billions annually. Foreign exchange market is a market where one currency is traded for another is called foreign exchange market. Foreign exchange transactions are derived from transactions in the market for commodities, services and assets among the people of two nations Foreign Exchange facilitates business across national boundries, usually expressed in foreign currency bought or sold on foreign exchange markets. European Union (EU) have created a common currency Euro as means of avoiding fluctuations The UK decided not to join the Euro although the strong pound is damaging some of its exports. Foreign currency (FOREX) transactions increase the risks involved in cross-border marketing. The prices charged in different markets are influenced by the exchange rate of the currencies involved. The three major transactions in the foreign exchange market are the Spot, Forward,Swap transactions. Forward contracts require execution of the transaction on the date of contract maturity because they are generally used by large international banks and MNCs. Current Swap is an agreement in which currency is exchanged at a specified rate only to be reversed at a future date. Most currency transactions are channeled through the worldwide interbank m arket,the wholesale market in which banks trade with one another. The purpose of the foreign exchange market is to permit transfers of purchasing power denominated in one currency to another that is to trade one currency for another currency. For example a Japanese Exporter sells automobiles to a US dealer for dollars and a US manufacture sells machine tools to a Japanese company for Yen.

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3. Competition
The heightened impact of competition in world markets has influenced many aspects of international marketing strategy. The main areas are:a) The development of more integrated and coordinated international and global marketing approaches. Good examples are Coca-Cola, Kodak and Sony. b) The development of world regional markets. The nature of international competition is clear that:a) The new competition is between networks rather than single organizations. b) The size of the foreign competitors is increasing and they have more resources to compete e.g. Microsoft and Apple in computer operating systems, Glaxo-SmithKline and Pfizer in drugs, Shell and B.P. in the oil etc.

Competitors face five forces including a) The threat of substitutes b)the threat of new entrants c) the bargaining power of buyers d) the bargaining power of suppliers e) intensity of rivalry Kotler describes following steps to assess competition: a) b) c) d) e) Identity competitors strategies Identity the organizations competitors Determine competitors objectives Assess competitors strengths and weaknesses Estimate competitors reactions

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Chapter-2

Understanding Customer Buying Behavior


Q.1 Define the Consumer buying behavior. Draw a flow chart of consumer buying Behavior. Consumer Buying Behavior: The process by which individuals search for, select, purchase, use, and dispose of goods and services, in satisfaction of their needs and wants. See also consumer decision making. Learning Objectives: Understand the major factors influencing consumer behavior Know and recognize the types of buying decision behavior Understand the stages in the buying decision process

Consumer Market: Consists of all the individuals and households who buy or acquire goods and services for personal consumption. Types of Buying Behavior: Routine Response Limited Decision Extension Decision Impulse Buying

Consumer Buying Decision Process


Problem Recognition Information Search Evaluation of Alternatives

Purchase Decision

Post-Purchase Evaluation

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Consumer Decision Making Process/Consumer Buying Process

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1. Need Recognition:-The buying process starts when an unsatisfied need creates tension. 2. Product Awareness: - This awareness may be on account of the search conducted by the consumer or due to promotional campaign of the marketing company about its product. 3. Interest:-It may be viewed as a state of mind that exists when a consumer perceives a need and is aware of alternative products capable of satisfying that need. 4. Evaluation of alternatives:-Once all the reasonable alternatives are identified, the consumer then evaluates each one to purchase decision. Consumer also uses the opinions of members of their families and other reference groups as guidelines in the selection of a particular brand. 5. Purchase Decision: - This is the final stage in the buying decision. 6. Post Purchase Decision: - Post Purchase Behavior of the consumer plays a significant role in the generation of favorable or unfavorable public opinion for the companys product. 7. Post purchase Behavior

Cognitive Dissonance: - Post-purchase cognitive dissonance is very important in this regard. It is a state of anxiety in the mind of consumer due to the difficulty choosing a specific brand, out of several brands available in the market.

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Q.2 Define the factors or determinants of the consumer buyer behavior.

Five Stage Model Of Consumer Buying Process

Five Stage Model Of Consumer Buying Process


Problem Recognition

Information Search

Evaluation Of Alternatives

Purchase Decision

Post Purchase Behavior

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Q.3 Define the types of consumer buying behavior, and how the consumer behavior is measured in international marketing? The four types of consumer buying behavior are: 1. Routine Response/Programmed Behavior: Buyer low involvement frequently purchased low cost items. Need very little search and decision effort. Consumer purchase on regular basis. Examples include soft drinks, snack foods, milk etc 3. Limited Decision Making Shopping goods Goods consume purchase on suitability, quality, price & style. Example- Furniture and clothing. 3. Extensive Decision Making/Complex high involvement- Specialty goods Unfamiliar, expensive infrequently bought products. High degree of economic risk. Examples include cars, homes, computers, education. 4. Impulse buyingPurchase without planning or search effort. Consumer-Behavior in International Marketing Culture affects the psychological and social processes an thus affects consumer behavior. 1. Motivation Rational Motives-price, durability etc. Non Rational Appeals-prestige, comfort, pleasure. Example- Chinese consumers place greater emphasis on convenience of location. American are more concerned with Quality than the mannerism of the sales person. 2. Learning Learning is a change in behavior that occur overtime. Food and drink habits are learned. Example-American style cocktails prove to be too much for Europeans who are accustomed to milder drinks. 4. Personality Individual characteristics that make a person unique. A. National Characteristics It states that people of each nation have a distinctive behavior and personality characteristics. Koreans see themselves as being driven by 2 complementary passion-Han( bitterness) and Jang (devoted love). Japanese prefer personal relationships. Canadians sought fast decisions. B. Consumer EthnocentrismDue to patriotic and nationalistic sentiments Consumer tends to buy domestic products. Interpret others from the perspective of their own group. Reject those who are culturally dissimilar. C. Power Distance- degree to which a culture fosters social inequality. High power distance cultures emphasize prestige and wealth.

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Example- Greece, Mexico, Pakistan, Philippines, Taiwan, Thailand& Venezuela. Low power distance- Australia, Canada, UK, USA, New Zealand, Swedon, Denmark. 4. Psychographics Lifestyle or Activities, interest, opinion. It is an Analysis of consumers lifestyle and activities with purpose of relating these to buyer behavior. Lifestyle groups on worldwide basis are as follows1. Strivers- 26%, young people who work hard and seek convenience. 2. Achievers - 22%, style leaders who makes statement about status and quality. 3. Pressured- 13%, Women who contend with economic & family pressures and have Little room for pleasure. 4. Adopters -18%, older customers who respect new ideas without losing values. 5. Traditional-16%, follow oldest values of their countries and culture and resist change, Prefer familiar products. Example- U.S lifestyle create social pressure, mostly Americans use sedatives as valium &Other pain relievers for headache Caused by stress. Japanese demand for drugs is small because these they take sound sleep after whole day work. 5. Perception Ones culture greatly affects ones perception. Example- The Chinese perceive coke to look & taste like medicine. Indians believe non-violence is a part of their culture. American prefer to cook big pieces of meat and to cut up on serving plate, while Chinese prefer to cut the meet into small bite sized pieces before cooking. In Spain accepting credit is considered shameful situation. 1. Country of origin- Mexican products are considered of inferior quality to those made in Japan and U.S and Germany. 2. Product Country match Animosity Consumers may prefer automobiles from Japan, Germany or U.S. Consumers make their own preferences regarding product country match. Chinese consumers have been found to hold animosity towards Japanese products in general. Older Mexican consumers are less likely to buy U.S. products than younger Mexicans. 6. Attitude -Learned tendency to respond to an object favorably or unfavorably. -Attitude is influenced by culture. -Most people have favorable attitude towards automobiles as Mercedes Benz, BMW etc. Viewing them as status symbol. For more detail: - http://www.gurukpo.com

-Ford use Quality theme to affect consumers attitude. -As person grows older, attitude becomes more established. 7. Social Class -In U.S all are supposed to be equal. - Many Asian and Middle East countries view status difference positively. -Chinese social classes found that income occupation, education, residence, Family background affects Purchase decision. -In U.S occupation, source of income, house type construct social group. - Social class influences store selection, product selection, media selection, advertising appeal selection and sales promotion selection. 8. Reference Group It has direct or indirect influence on a persons attitude or behavior. The more the product is visible & stands out more conspicuous it becomes. It allows a reference group to operate. Philip Morriss Galaxy brand was at one time perceived as diet cigarette & for the Reason Brazilians became ashamed to be seen with it because of social and personal pressures. 9. Family Familys are Nuclear Extended Example- American emphasizes individual freedom and children are taught to be independent. Japanese have a strong sense of responsibility and obligation to their families. 10. Opinion Leader Individuals in a social group who influence attitudes of the members towards all the products. It is able to influence other members & affect their thinking and behavior in desired direction. In marketing products overseas MNC should appeal them. Q.4 Explain consumer buying behavior, business buyer behavior and government buyer behavior in different Economic and Political Systems?

Consumer buying behavior in different Economies and Political System A) Consumer behavior in Democratic and Developed Nations (capitalistic economy):Nations have economic prosperity, freedom of business activity, technological superiority. Individuals are motivated towards higher needs.

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Buying behavior must be matched to market. B) Consumer Behavior in Democratic and Developing NationsLess disposable income for consumers, purchase important product only. Due to increasing growth potential of developing countries their buying behavior is changing. These are very attractive and more foreign retailers are investing their. C) Consumer Behavior in Democratic and less Developed Nations These countries are poor and low level of economic and social infrastructure. Consumers have low income and little spending power and small market size. D) Consumer Behavior in Autocratic and Developed Nations Political power is in hands of people Who are concerned with rules & regulations. Consumers have limited choice of goods because of govt. control. Consumers have high disposable income, they engage in purchase of costly products. E) Consumer Behavior in Communist Nations Political power is in hands of people Who believe in equal distribution of goods . Consumer has limited choice of goods because of government control and low disposable income. Business Buyer Behavior in Different Countries at different stages of Economic and Political Development 1. Business Buyer Behavior in Democratic and Developed CountriesBusiness Buyers judge products on careful evaluation. Businesses are trying to cut costs. They offer reliable high Quality products at lower price. 2. Business Buyer Behavior in Democratic and Developing CountriesIncreased opportunities and demand for Infrastructure improvement ,power and communication ,education and health care. Competition is high. Business buyer favor local supplier, lower price. 3. Buyer behavior in Democratic & Less Developed Countries Few business buyers Limited industrial development. L.D.C encourages export from their country and discourages imports. Government Buyer Behavior in different country at different stage of Economic and Political Development 1. Elements of buying by govt. InstitutionsGovt. and governmental institutions are important buyers in most national markets. 2. Tender systemPublic announcement of a contract for specific goods or services inviting to submitting a quotation for contract in tender. Details of contract & criteria for selection are made available to interested parties. 3. Political Influence4. National PreferenceGovt. institutions try to buy from their own nations.

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5. Type of business and govt. buyingExample- Defense equipments 1. Govt. Buyer Behavior in Democratic and Developed CountriesDifficult to get contract 2. Govt. Buyer Behavior in Democratic & Developing Countries3. Govt. Buyer behavior in Democratic & less Developed countriesIn L.D.C influence of govt. is high.

Chapter -3

International Marketing Research


Q1.What is International Marketing Research? Define the Classification and the process of International Marketing Research. Marketing -Research Marketing research is systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services. International marketing research: - It is the systematic design, collection, recording, analysis, interpretation, and reporting of information pertinent to a particular marketing decision facing a company operating internationally. Objectives of I.M.R To carry out country screening and selection. To evaluate a countrys market potential. To identify problems To identify aspects of countrys environment that needs further study. To evaluate components of marketing mix. To facilitate in developing a strategic marketing plan. Classification of I.M.R a) Single Country Research- The marketer Based in country x wants to know Whether the marketing strategies that works well in domestic environment can be translated to country Y market. b) Multi country Research-Research conducted in more than one market. c) Sequential Multi country researchIt is used for a geographical market one or two markets are researched and then it is applied to other countries. d) Simultaneous Multi country Research It involves conducting marketing research studies in multiple country market simultaneously. For more detail: - http://www.gurukpo.com

e) Independent Multi country ResearchWhen subsidiaries or branches of multinational companies independently conduct similar research on same products in a number of countries. Example- Awareness checks on international brands and test marketing of new products.

International Marketing Research Process


STEP 1 Define the international research problem and agree on the research
objectives Exploratory Research Descriptive Research Causal Research

STEP 2 Set specific objectives


STEP 3 Develop the International Research Plan

STEP 4 Define Information Sources Primary Data: - Information collected for a specific purpose, to address the problem at hand. Primary Data Research Approaches: Qualitative research has been particularly useful as a first step in studying international marketing phenomena. Focus Groups Observation Quantitative researches are more structured, involving either descriptive research approaches, such as survey research, or causal research approaches, such as experiments. Content Analysis Survey Research Experimental Research

Secondary Data

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Researchers must determine if the information is available, and, if so, how reliable it is Internal data is useful only if company has collected similar info from relevant respondents in a country with similar environment Secondary Data Constraints Conceptual Equivalence Concepts have different meanings in different cultural environments Functional Equivalence Products themselves may be used for different purposes in different country environments Availability, Reliability, and Validity Accuracy of secondary data can be questionable: Published statistics may be unreliable Sources of reliable data: World Bank United Nations Development Program Organization of Economic Cooperation and Development (OECD)

STEP 5 Design Data Collection Instrument Emic instruments measure phenomena specific to each culture. Etic instruments measure the same phenomenon in different cultures. STEP 6 Decide on the Sampling Plan Sample Unit Sample Size Sampling Procedure STEP 7 Collect, Analyze, and Interpret Data

Q.2 What type of factors are needed while selecting the Foreign Market? Internal factors in Foreign market selection Personnel This section includes not only that of management but also employees. Ethnocentric Management of an organisation see the home market as superior, but see similarities in other markets to their own. Polycentric Management view each country as unique and outline the differences associated with each new country. Regio centric both the similarities and differences are viewed of each country in relation to the world. Geocentric Management have a worldwide view and can see the differences and similarities in home and host countries.

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Management Management or the owner of the organisation will be an influencing factor in selecting a specific country for international trading. Customers Organisations customers may influence the market in which an organisation will select to compete in Capital requirements The organization will outline a cost-benefit analysis on each specific country and more importantly the capital requirements that Will be required for the initial outlay of a global orientation, into this country. Corporate social responsibility The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations That society has of organisations at a given point in time. Social responsibility also incorporates the environment and the pollution restrictions imposed by each specific government. Time and research The decision on which country to select for international trading has an effect on the strategic development of an organisation, Yet this decision will be affected by the element of time allotted for the decision. 2. External factors in foreign market selection A) Market potential Aa)Marketsize Ab)Marketgrowth Ac)Competitiveintensity Ad)Competitiveentry Ae)Entrybarriers B) Political environment Ba)Politicalissuesforconsiderationinmarketselection

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Bc)Riskassessment C) Legal environment A countrys legal environment can be identified as the rules and principles that nation states regard as binding upon themselves D) Economic environment Economic growth affects a countries attitude towards foreign business activity, the demand for goods and the distribution system found within the country. The economic environment is an important issue for international marketers to examine in choosing markets In which to expand their business. E) Culture Global marketers who understand and recognize the meaning and substance of cultures other than their own and the associated behaviors In those cultures will have a significant global advantage? Q.3 what is Research Agency? How the selection of agency is taken place?

Research Agency Selection


When a firm may not have the required knowledge of foreign marketing environment for conducting the research. Research agencies have professional expertise, credibility and knowledge of marketing environment. Advantages of research agenciesExpertise Knowledge Creditability Cost-effective

1. 2. 3. 4.

Selection of Agency The choice of Research agency to run a multi country research project may be made by headquarter or locally by regional headquarter.. 1. Collection of information about research agencies sources of information include export promotion organization, trade association, advertising agencies, importers, distributors in foreign market etc. 2. Small no. of research agencies are selected by preliminary screening- firms provide general information, services, expertise, list of references. 3. List should be pruned down to 2 or3 for detailed discussion. 4. Agencies may be asked to submit written research proposal i.e research methodology, time , total cost. 5. It helps client to select best agency. Several consideration in agency selection decision1. Coordination-

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2. 3.

4. 5. 6. 1. 2. 3. 4. 5.

Company should examine willingness of agency to be flexible and coordination among members. Level of Expertise- Qualification of staff, fieldwork. Track record of AgencyHow long the agency has been in business? What sort of problem has it dealt with? What clients it has served? Level of confidentiality requiredBack ground check-Does agency have any tie with potential competitor. Does it have good reputation in keeping matter confidential? Cost Letter of Agreement There is a written contract or letter of agreement which includesType of agreement Geographic coverage Remuneration Duration and termination Nature of report

Q.4Explainindetailtheuseofmarketingresearchforcomparativeanalysisin internationalmarketappraisal. ComparativeAnalysisininternationalmarketingappraisal

1. Value 2. Religion 3. Aesthetics 4. Communication 5. Custom and Manner 6.Attitudes A) Culture: Culture is a set of traditional beliefs and values that are transmitted and shared in society. It includes norms, values, customs etc. Kind of behavior considered acceptable in society. E.g. - Consumption of wine acceptable in west but not in India. Culture is based on social interaction. Example- Chinese parents preferred their children to have small feet.

Culture can be learned. E.g. Westernization in India. For more detail: - http://www.gurukpo.com

People in different culture have different ideas about the same subject. E.g.Dowry Culture is shared and passed from generation to generation .E.g. Respect towards elders.

Cultural pride can make many nations reject foreign ideas and products. What is right and wrong is based on culture.

E.g. To be honest and straightforward are considered right in U.S B) Attitudes: Consumption pattern- American Europeans and Arabians consume beef Whereas Thais, Chinese and majority of Indian not. Eating habits- Asian consumer prefer boiled chicken. American preferred fried chicken. Muslims dont use alcoholic drink So a non alcoholic beer from Switzerland Moussy was manufactured. Lifestyle- dressing habits like-Indians prefer East women. sarees, wearing burke by Middle

C) Aesthetics It relates the artistic taste of culture. Aesthetically related area is color. In many countries color black is associating with mourning, White with joy and purity. In many Asian countries white is color for mourning. Green is favorable in Islam, But associated with sickness across much Asia. D) Religion1. Hinduism 2. Christianity

Protestantism- In U.S.A, Canada and Australia. Catholicism Latin America, Southern Europe countries. 3. Islam- North Africa, Middle east, Malaysia, Indonesia. 4. Buddhism- Japan, Korea, china.

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E) Communication a) Verbal communication (Language)More than 5000 spoken language in world. Chinese-20% English-6% Hindi-5% Russian-4% Spanish-3% Others-62% b) Non Verbal communication It means differently in different nature. Japanese view eye contact as rude. American feel avoidance of eye contact impolite F) Manners Indians meet their business partners with folded hands. Indonesians avoid use of left hand while offering food and other objects. In Arab countries it is considered bad manners to attempt to shake hands with person of higher authority. But In U.S it is reverse G) Value Marriage, right of women, truth and justice, honesty and loyalty. NormsI. Folk way- time conscious In America 7 means 7. In Great Britain 7 means 7.30 to 8. In Argentina 7 means its far too early. Ii MoresAmerica- alcohol good. Saudi Arabia alcohol is punishable.

Cross cultural analysis.


Cross Cultural Analysis is effort to determine to what extent the consumer of 2 or more nations are similar or different.

ItProvidesmarketerunderstandingofpsychological,social&culturalcharacteristics offoreignconsumers

Variation in Cultural values


1. Other oriented values Relationship between individual and groups within society. A) Individualism- America, Australia, U.K, Canada, New-Zealand etc. Collective- Taiwan, Hong- Kong, Korea, Mexico, Japan and India. B) AgeAmerican-youth oriented Asian- wisdom comes from age.

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C) Extended /limited familyU.S- Narrowly defined In Japan, India- Extended families In Mexico-Adolescents seek parental advice. D) Masculine/ Feminine Are rank, prestige & important social roles assigned primarily to men or woman? Due to increasing % of working woman in Japan Led to increased demand for time saving products. Example-Perfect Rouge Shiseido brand lipstick targeted working woman.

E) Competitive/ Cooperative Germany and Spain ban competitive ads and U.S encourages. 2. Environment Oriented Values Society relationship to its economic & technical as well physical environment. a.) CleanlinessIn U.S high value is placed on Cleanliness. In poor countries It is not valued. Example-Mc Donald has introduced more hygienic food preparation and toilets in east Asian markets and china. b.) Power DistanceDegree to which people accept inequality in power, authority, status, wealth in society. India, Brazil, France, Hong-kong, Japan are high in acceptance in power. Australia, Denmark, New-zealand, U.S are low. c). ChangeIn comparison to Americans, Koreans and Chinese feel less comfortable dealing with new situations. d) .Nature Most Northern European countries place high value on environment. Example-Packaging and other environmental regulations are stronger in countries than in America. China doesnt have strong environmental orientation. 3. Self Oriented Values Approaches to life that the individual members of society find desirable. a). Active/PassiveAmerican show quick response to problem. Take action oriented approach. b). Hard work/LeisureIn Latin America work is viewed as necessary evil c). Religious/SecularIslamic countries and Catholic countries are religiously oriented. For more detail: - http://www.gurukpo.com

It plays small role in Chinese culture. 4. Cultural Variation in Non-Verbal Communication Ford Motors face problems. Fiera (A low cost truck designed for developing countries) faced sales problems because Fiera means terrible, cruel, ugly in Spain. Whirlpool faced problems in Spain where its name is unpronounceable in Spain. Popular ford car Camet has limited sales in Maxico Where Caliente is slang for streetwalker.

a). Time Perspective Monochromic PerspectiveAmericans, Canadians, Europeans, Australians tends to view time as inseparable, fixed in nature. Polychromic PerspectiveMost Latin Americans, Asians, Indians view time as discrete and less important. b). Use of timePromptness is considered v. important in America and Japan. c). SpaceAmerica and Northern Europe bigger space is better. In Latin America space is shorter. d). Symbol A leading U.S Golf ball manufacturer failed to penetrate Japanese market because it packaged balls in set of 4.4 is symbol of death in Japan. Pepsi lost its market share in Southern Asia when it changed color of vending equipment from deep regal blue to ice blue. Ice blue is associated with death in South Asia.

e). FriendshipChinese relationships are complex. In most Asians and Latin American good personal relationships matters. Americans rely on legal system for business obligations. In China character of trading partner is important.

f). Negotiation Americans assume prices are uniform. In Latin America, Asia, Middle east prices are negotiated prior to sale.

g). Things Clock is similar to word for funeral in China.

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In China gifts should be presented privately. In Arab countries they are given in front of others.

h). EtiquetteWay of behaving in social situation. Japanese executives will seldom say no directly during negotiation as it is considered impolite. Japanese find American tendency to look into eyes to be rude. Q.5WhataretheinternationalMarketingStrategiesthataMarketerhastoadoptwhile enteringintheForeignMarket? Ans. The Development of International Marketing Strategy Marketing strategy decisions will be based on based on information about market potential, customer requirement, industry and market trends, present and future competitive behavior, expected sales, market segment size and requirements, sales and profit performance for customers, products and territories. a) Selection of target customers & market is one of the basic strategies in international marketer. b) Choice of target customers and market segments facilitates adequate allocation of resources within the supplier present and future market. c) Market opportunities and risks associated with operating in different countries influence market choice at country level. d) Global strategies are formulated at the corporate level and determination of overall allocation of company resources across countries, product market and target segments. e) At the customer level actual and potential customers in each market of operation should be evaluated. The market decision process for each target customer at S.B.U (strategic Business level) would involve. The analysis of demand (customer Requirement).

1.

2. The Analysis of competition offerings (differentiation Analysis). 3. The setting of objectives (market share, profit). 4. 5. The definition of a strategy. Planning

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6. 7.

Implementation Control and evaluation

Q.6 How the International Marketing Planning is taken place in International Market? Ans. International Marketing Planning:Planningisasystematizedwayofrelatingtothefuture.Itisanattempttomanagethe effectsofexternal,uncontrollablefactorsonthefirm'sstrengths,weaknesses, objectives,andgoalstoattainadesiredend.Further,itisacommitmentofresourcesto acountrymarkettoachievespecificgoals.Inotherwords,planningisthejobofmaking thingshappensthatmaynototherwiseoccur. PHASEI A)PreliminaryAnalysisandScreening
THERESULTSOFPHASE(1)PROVIDETHEMARKETERWITHTHEBASICINFORMATIONNECESSARYTO:

9 9 9 9

Evaluatethepotentialofaproposedcountrymarket. Identifyproblemsthatwouldeliminatethecountryfromfurtherconsideration. Identifyenvironmentalelementswhichneedfurtheranalysis. Developandimplementamarketingactionplan.

PHASE2 B)Adaptingthemarketingmixtotargetmarkets. THEANSWERSTOTHREEMAJORQUESTIONSAREGENERATED


INPHASE2: Whichelementsofthemarketingmixcanbestandardizedandwhereisstandardizationnot

Culturallypossible? Whichcultural/environmentaladaptationsarenecessaryforsuccessfulacceptanceofthe marketingmix?

Willadaptationcostsallowprofitablemarket?
PHASE3

Developingthemarketingplan
PHASE4

Implementationandcontrol

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Chapter4

InternationalProductManagement
Q.1 What are the International product strategies? Define the terms of Product Portfolio and Product Positioning in International Market.

International product strategy


International Competitive Posture Matrix-Given by Google and Larreche BARONS KINGS

COMMONERS

CRUSADERS

` Product Strengthening is used to create and maintain product competitive position in market. ` Geographical expansion is used to grab opportunities and respond to competitors. 1. KingsStrong product portfolio and wide geographic coverage. Example- Coke, Pepsi, Mc Donald, Sony etc. 2. Barons` High product strength and low geographic coverage. ` Strategic Alliance is used by firms to enter in foreign market. ` Example- Tata motors with high product strength in motor vehicles acquired Daewoo Company. 3. Crusaders` Firms having high geographical coverage and low product strength. Outsourcing, acquisition or international product development is required by firms 4. Commoners` Firms with low product strength and limited geographical coverage. ` Firms sustain in domestic market or limited overseas market due to regulations. Firms need to strengthen their portfolio

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Product Portfolio
A product is anything that can be offered to a market to satisfy want or need. It may include physical goods, services, experiences, events, persons, places, organisations, information and ideas. It is set of companys product mix and brands at different levels of P.L.C. Decision relating to international product planning is based on marketing potential in host market and careful analysis. Product portfolio approach is used for product planning. It classifies a firms international performance on the basis of relative market share & growth rate. Correnche (1980) notes that product portfolio approach is useful in formulating international marketing strategies. Difference between countries in terms of market growth and structure lead to the consideration of multiple market entries for given product. Product portfolio Analysis gives a correct picture of competitive situation. It offers global view of international competitive structure. It acts as guide for formulation of global international marketing strategy.

Types of Products
1. Local Products- Products available in a portion of a national market. Example-Cape Cod potato chips was a local product in England market. 2. National Product- It is offered in a single national market. Example- Coca-Cola develops a non-carbonated ginseng flavored beverage for sale in Japan. 3. International Products - These products are offered in multinational regional markets. Example-Renault was a European product, then Renault entered the Brazilian market and became multiregional company. Renault acquire Nissan and capture the Europe, Latin America, Asia, America, Middle East, Africa. 4. Global ProductsThese products are offered in global Markets. Example- Sony is a Global brand. Its portable. Its portable personal sound system or personal stereos are global products.

Product -Positioning
Kotler Positioning is act of designing the company image & value offer so that segment customer understand and appreciate what the company stands for in relation to its competitors. 1. Product positioning can be achieved by emphasizing the attributes of products or benefits that consumers seek. Example- Toyota launches its lexus range as very luxurious cars.

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2. Positioning by product categoryPitching a product against similar product with difference in quality or price. Example-Unilever launched Radion in U.k as a detergent that removes stale odour in washed clothes. 3. Positioning by use/user- according to user characteristics and life style. Example- Rolex watches are positioned as exclusive products for wealthy. In International market each market is unique in character & present different set of market opportunities and problems. A single product is positioned differently in each market.

Q.2 What types of product promotion strategies are adopted by International Market? INTERNATIONAL PRODUCT PROMOTION STRATEGIES 1. Straight Extension Where the product function, needs satisfied and conditions of product use is same. This strategy is used. Example- Coke and Lux brand of soaps etc. Example-Gillette Razor:Consumer needs satisfied-disposable, easy to use product 2. Product Extension-Promotion Adaptation It is used in market where the product function and the needs satisfied are different but The conditions of product use are same. Products remain same but their promotional Strategy is customized. Example-Bicycles are cost effective and affordable means of transport in low income countries. It is used as means of recreation and health care in high income countries. Example-In India chewing gum is viewed as children products Whereas it is used as a substitute to smoking in U.S. 3. Product Adaptation-Promotion extensionIn markets where conditions of product use are different but the product performs the Same function or satisfies the same needs. Example- Washing habits of people vary in various markets. Indian housewives use Lukewarm water, French use scalding hot water and Australian use cold water. Difference in electrical voltage, difference in operating system require product modification 4. Dual AdaptationIn countries where the functions of the product and need satisfied are different and the conditions of product use are also different. A firm has to customize both product and promotion strategies.

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Example-In low income countries clothing serves the basic purpose of physical protection whereas in high income countries it symbolizes the personality and status.

5. Developing New Product It is used in the market where product function, need satisfied remain same but conditions of product use differ and consumers dont possess ability to pay for the product. Example- Philips introduced a hand wound radio in 2003,to suit the needs of rural India where electricity supply is erratic and use of batteries makes the radio expensive Q3. Define the different stages of product life cycle in international market. Product Life Cycle in International Markets: 1. IntroductionA majority of new product interventions are made in highly developed countries. Price of product is high. Emphasizes on customer feedback and frequent modifications. Marketed in home country and export to other developed countries. New products are made in highly industrialized and developed countries 2. Growth Firm gets better opportunities for exports Price competition Standardization of products. Production in other developed countries. Competition determines prices. Export grows to other developed countries and developing countries. 3. Maturity` Production at multiple location ` Emphasis on creating product differentiation, innovating company establishes production in other developed countries to face local competition. ` A firm establish its operations in middle and low income countries . 4. Decline` Technical know-how and skills become widely available. ` Emphasis on cost effective locations. ` Product attributes are offered by several competitors ` Price and cost competitiveness. U.k which has been largest manufacturer and exporter of bicycle ,import them. Bicycles are at declining stage in developed countries and maturity stage in developing countries. ` Chemical and hazardous industries are shifting from high income countries to low income countries.

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Example-Perrier has adopted differentiated positioning strategy. In France its sparkling water is positioned as ordinary bottled water and in U.K it is positioned as substitute for soft drinks with snob appeal. So marketer has to strike a balance between product features, user characters & culture & benefit from product to determine ideal positioning strategy. Q.4 Define the concept of Product Standardization and Product Adaptation in International Marketing.

Product Standardization & Adaptation in International Marketing

` Product Standardization:-Process of marketing a product in overseas market with little changes (modified packaging and labeling, translation of words and other cosmetic changes).Eg Revlon, Amway etc.

Factors that favor product standardization


1. High level of technology Intensity` ` To reduce confusion and promote compatibility. Example- Computer servers, micro & macro processors and VAN (Value Added Networks).

2. Formidable Adaptation cost` Production and distribution of product and services through standardization is simple and cost effective.

3. Convergence of customer needs worldwide-

` When a consistent company or product image is needed, product uniformity is required. ` When customers from different countries share similar needs and want identical products. ` Example- Levis jeans, MTV, Mc Donald, Watches, Diamond.

Product -Adaptation
Making changes in a product in response to needs of target market. Food, fashion and style are highly sensitive and customer preference varies. Firm customize the features, packaging, labeling, Support services and payment to suit target market. Benefits ` Enable firm to tap market. ` Fulfill the need and expectation of customers For more detail: - http://www.gurukpo.com

` Helps in gaining market share ` Increases sales Product Adaptation by Mc Donald ` Mc Donald9 Hum burger in U.S. 9 Maharaja Mac in India 9 Chicken Tatsuta and Teriyaki Chicken in Japan 9 Kiwi burger in New Zealand 9 Mc Palta-Hong kong 9 Japanese firms have always adapted their automobile to American customers. 9 Du pont has customized its manufacturing and marketing for Japanese market and design parts to their specification. 9 The lime taste of sprite was taken out because Japanese prefer a purer lemon flavor. Q.5 What are the trade off strategies are adopted between Product Standardization and Product Adaptation? Trade-Off Strategy between Product Standardization and Adaptation

STANDARDIZATI ON

ADAPTATION

` A firm has to carry out cost benefit analysis of its decisions. ` The purpose of business organization is not to save the cost but to maximize market share and profitability. ` Firm needs to carry out product customization. If a firm sells standardized products it leads to decline in market share and generate profitability to company. Product Quality Decisions ` Quality plays an important role in maintaining goodwill and image in the market. ` A firm has to not any adapt mandatory quality requirement of target market but also attempt to achieve quality excellence. Packaging and Labeling for International Market ` Packaging and labeling should meet importers specification and the regulations of the importing countries. 1. Physical Protection2. Quality Protection 3. Product Promotion 4. Product Information 5. Efficiency in use 6. Convenience in use 7. Storage 8. Transport 9. Recyclability

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10.

Trade Appeal

Q.6 What types of approaches are there while entering foreign market? Timing of Foreign Entry New Product Launch
Waterfall Approach ` Products are launched in international market in a sequential manner. ` Longer time is available to customize a product in Foreign market. ` Firms having low growth potential and resources. ` Example-Mc Donalds took 22 yrs to market outside the U.S. ` Coca-cola took 20 yrs etc. Sprinkler Approach ` Product is launched simultaneously in various countries. ` It is suitable in` High competition ` Short life cycle ` High potential markets ` Large resources Example- luxury consumer goods, I.T software products etc.

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Microsoft Windows 95 - Global roll out: 4-6 million customers worldwide bought the operating system in the first three weeks after the launch. Q.7 Write a detailed note on Evaluation of stability with reference to marketing and financial implications.

Ans.Evaluation of Stability with reference to Marketing and Financial Implications


Risk is inherent in all strategic decisions, budgets and action plans relating to marketing and financing the product planning and its development. Most of the reasons for failure of new products can be eliminated by the firm itself by properly evaluating the stability if products in terms of marketing and financial implications. An evaluation of stability is therefore an important task of the product manager. a) b) c) d) 1) 2) 3) External business environment analysis External competitive survey Internal capability audit Feasibility Analysis:-This study involves the following the following:Estimation of demand in target market at different price levels. Forecasting sales based on demand estimation and competitive analysis Estimate the cost of serving the market segment, taking into account cost of transportation, warehousing, margins required by the trade to market the new product, promotion, promotion expenses and sales force cost. 4) Based on the cost and anticipated sales revenue, calculation of break even price and the sales- volume

e) Test Marketing Analysis


The new product is tested on 4 parameters: trial, first purchase, adoption (repeat purchase) frequency and the volume bought each time. f) Financial Analysis: - A financial analysis needs to take place in order to assess whether the product concept can be made into a profitable proposition. An income and expenditure statement, together with the associated balance sheet and cash flow analysis, therefore need to be prepared.

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Chapter-5

Marketing Communication
Q.1 What is Marketing Communication? Define the functions and the process of International marketing communication. Marketing -Communication Market communication is the means by which firms attempts to inform, persuade and remind consumers directly or indirectly about the products and brands that they sell. International Promotional Mix: Understanding the norms, motivations, attitudes, interests, and opinions of the target market is crucial to company success in marketing to and communicating with different cultures around the globe. Functions of Marketing Communication Consumers can be told how & why a product is used, by which and when. Consumers can learn about who makes the product and what the company and brand stands for. It allows company to link their brands to other people, place, events, experience, feelings etc. Communication mix 1. Advertising-Any paid form of non personal presentation & promotion of ideas, goods and services by sponsor. -It is carried out through newspapers, magazines, radio, t.v & other mass media. 2. Sales Promotion-Short term incentive to encourage trial or purchase of product or service. -It includes rebates and price discounts, catalogues, brochures, samples, coupons and gifts. 3. Public relation and publicity-Programmes designed to promote or protect a company image or its products. It includes sponsorship of sports, cultural events, company magazine, annual report, seminars etc. 4. Direct MarketingFirm has direct interaction with customers. Use of mail, telephone, fax, email, internet etc. 5. Personal sellingDirect selling by firms sales force & it is considered to be 2 way method of communication.

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Sales presentation, sales meetings, samples, fair and trade shows.

Non personal communication Media


Broadcast media Interactive media Salespeople Telemarketers Trade show and exhibits

Communication Process

Source's environmental factors

Receivers Environmental factors

Source's field of experience

Receivers Field of

Source

Encoding

Information

Decoding

Receiver

Noise Feedback

Process of International Marketing

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Communication It aims at conveying a firms message effectively and accurately. 1. Sender Marketing firm conveying the message. 2. Encoding Putting ideas, thoughts or information into a symbolic form. Language and cultural issues are considered. 3. Message It can be non-verbal, oral, written or symbolic. Marketing message has an object is product (Marlboro cigarettes), a sign or symbol (Marlboro cowboy) and interpret ant (rugged, individualistic American). 4. Medium The channel used to convey the encoded message. Personal- face to face, word of mouth. Non-Personal-Mass communication channels. 5. DecodingProcess of transforming the sender message into thoughts. 6. ReceiverCustomer who receive message by reading, hearing or seeing. 7. Feedback Feedback is used to assess the effectiveness of communication process. Immediate response is obtained by personal selling. It takes longer time in advertisement.

Q.2 What are the cultural issues that a marketer has to face while entering the foreign market?
International Marketing Communication SALES PROMOTION PUBLIC RELATION DIRECT MARKETING Cultural Issues and International Marketing Communications Cultural issues that international marketers need to consider when communicating with target audiences in different cultures. Language will always be a challenge. One cannot use a single language for an international campaign. The work ethic of employees and customers to be targeted by media. Levels of literacy and the availability of education for the national population. The similarity or diversity of beliefs, religion, morality and values in the target nation. The family and the roles of those within it are factors to take into account.

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1. SALES PROMOTION -S.P is marketing activities that stimulate consumer purchases & improve retailer or middle Man effectiveness and cooperation. - It is short term efforts directed to the consumers or retailers to achieve specific goals. - Demonstration, samples, coupons, gifts, contest, point of purchase etc. 1. Consumer Promotion 2. Trade promotion It is effective in low developed countries. When product concept is new & has small market share. International marketer should know the specific law of each country, marketer must consult local lawyers and authorities before launching a promotional compaign. P & G introduction of Ariel detergent in Egypt through road show and puppet show in rural areas. 1. Premium and Gifts In Argentina ,Australia, Brazil, Chille, Columbia, U.K, Ireland, Malaysia, Mexico, New Zealand, Poland, Singapore etc premium and gift vouchers are legal. In Belgium, Finland, France, hungry, Italy, Japan, Spain, Sweden, U.S its legal but some restriction apply. Some countries have set limit to premium. Italy- 20% tax on prize value, Govt. notification required. Japan- 10% Belgium- 5% 2. Price Reduction & Discounts Austria has a discount law prohibiting cash reduction. In France it is illegal to sell the product less than cost. In Germany marketer must notify authorities in advance. In Austria and Germany special sales may be made only during specified period of time. Discount for payment on delivery may not exceed 3%. 3. Samples In Argentina, Australia, Belgium, Brazil, Chile, Columbia, France, Israel, Italy, Mexico, New Zealand, Spain, Sweden it is legal. In U.S product sampling is legal with restrictions on alcohol, tobacco, drugs and some agricultural products. In Poland, Holland, Hungry it is legal ,except pharmaceutical ,alcoholic beverages. In Japan legal, except medicine. In UK legal but some restrictions on alcohol, tobacco, medicines and some food. Germany restricts door to door sampling. 4. Games and Contests In Argentina, Australia, Brazil, Japan, Mexico, New Zealand etc it is legal. In Spain, Venezuela, govt. registration is required. Singapore-legal but requires permission from authorities.

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Italy- legal 45% tax on prize value & govt. notification required. UK subject to compliance with lotteries & Amusements Act.

2. PUBLIC RELATIONS Public relations aim at building corporate image and influencing media and other target groups to have a favorable publicity. A public relation effort should foster goodwill and understanding both inside and outside the company. It includes sponsorship of sports, cultural events, contribution to sports and other events, release of news about company. Nike was able to overtake Adidas in U.S with effective publicity & sales promotion compaign. Indian firm J.K Tyres sponsor sports events in Europe, as public relation activity. P.R practices in countries can be affected by cultural traditions, social and political contexts, economic environment. In high income countries, professional firms offer specialized public relation services. In low income countries the word of mouth mode of publicity is used.

3. DIRECT MARKETING Selling products and services to customers without using any market intermediary is termed as direct marketing. Technological advances as proliferation of telecommunication and I.T has facilitated direct marketing. The rapid growth in credit card usage has increased payment over Internet. Provide direct contact with the customers. Eliminate intermediaries. Personalized service. Helps in building customer relationships. 1) Direct Marketing- sending letters, brochures, e-mails, faxes and other directly to consumer. 2) Door to Door Marketing- In Japan motorcars are sold door to door, Example-Amway, Avon and Tupperware rely on door to door marketing worldwide. 3) Multi-level MarketingA core group of distributor is recruited who pay registration fee to company and works as sponsor. Example- Amway, Avon, Mary kay cosmetics etc.

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