International Marketing

1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – SEPT/OCT. 2015

M.I.B. – III SEMESTER

P211305: INTERNATIONAL MARKETING

Duration: 3 Hours                                                                              Max. Marks: 100

 

Section – A

 

1. Answer any SEVEN questions. Each carries 5 marks.              (7 x 5  = 35)

 

1. “Most products fall in between the spectrum of “standardisation” to “adaptation” extremes. Explain the factors encouraging Standardisation and Adaptation.
2. “Contract manufacturing is a win-win situation for any company”. Justify.
3. 3. Explain the relevance of business ethics in context of international marketing.
4. Discuss various modes of international market entry where the scope for involvement of a foreign company is possible.
5. “Comparative advantage trade theory rests on the number of assumptions”. Explain.
6. Write a brief note on Non-Tariff barriers.
7. Explain the need and significance of overseas Market Reasearch.
8. Is it beneficial for nations to become dependent on one another? Give reasons.
9. Explain the Implications of Culture on Marketing. Cultural affinity zones.
10. What is International Marketing? What are its salient features?

 

Section – B

 

1. II) Answer any THREE questions. Each carries 15 marks.                            (3 x 15 = 45)

 

11. “The companies can go global only after a thorough analysis of various factors. “Explain the significant factors considered before going global.

 

12. “International segmentation (micro segmentation as well as macro segmentation) must be performed at Country level and at Consumer level.”Explain in detail.

 

13. “Operating in international markets is much more complex than marketing domestically”. Critically evaluate the statement with suitable examples.

 

14. “The marketing concept is the philosophy that the companies should focus on and strive to satisfy customer needs while also making profits.”In the light of the same, explain the modern trends in marketing.

 

15. “Porter’s five forces model is an outline for the market analysis and business strategy development.” Explain.

Section – C

III)Case study – Compulsory question                                                                (20 marks)

 

16. Debbie Shrimpton working in a call centre for two years had left frustrated and fed up at being tied to long and rigid hours. Before that she had been a Line Manager at a KP factory where despite the stringent working condition, she got a valuable insight in to the snack food industries. She has started “Sanck-In-The-Box”. (SITB) is a people Business. SITB Franchisees deliver top branded confectionery and sarvoury snacks directly to the workplace.  She bought a ‘Self Service Box Franchise, which relies on its customers leaving money in the box in exchange for the snacks they take away.  This was a unique feature of this business but it is the honesty box policy that the customers leave the correct amount of money in the box.  Today she has more than 100 franchisees serving over 16000 customers each week.

 

Questions:

 

1. What is meant by Franchise? Highlight the possible reasons why Debbie started   SITB.
2. Do you think that her decision of relying on the customers for putting the exact change/money for the box, was right? Why or why not?

 

 

 

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ANSWERS– INTERNATIONAL MARKETING – M.I.B. – III SEM

 

 

Ans 1.   Factors encouraging standardisation are:

1. i) economies of scale in production and marketing
   ii) consumer mobility – the more consumers travel the more is the demand
   iii) technology
   iv) image, for example “Japanese”, “made in”.

Factors encouraging adaptation are:

1. i) Differing usage conditions.
2. ii) General market factors – incomes, tastes etc.

iii) Government – taxation, import quotas, non tariff barriers, labelling, health requirements. Non tariff barriers are an attempt, despite their supposed impartiality, at restricting or eliminating competition.

1. iv) History. Sometimes, as a result of colonialism, production facilities have been established overseas.
2. v) Financial considerations.
3. vi) Pressure. Sometimes, as in the case of the EU, suppliers are forced to adapt to the rules and regulations imposed on them if they wish to enter into the market.

 

 

Ans. 2.  Contract  manufacturing is when a firm contracts with manufacturers in the foreign market to product its product or provide its service.

Benefits include

faster startup,

less risk,

opportunity to form a partnership or to buy out the local manufacturer.

 

Ans 3. The students are expected to answer the significance of Ethics in the various fields of international maketing.

 

Ans4. Various modes of entry like licensing, franchising, setting up a subsidiary, joint venture, etc.

 

Ans.5. Assumptions –

1. Occupational mobility of factors of production (land, labour, capital)
2.  Constant returns to scale (i.e. doubling the inputs used in the production process leads to a doubling of output)
3. Insignificant externalities from production and/or consumption

Ans6. Non tariff barriers includes all those measures, other than traditional tariffs, that are used to distort international trade flows, they raise prices of both imports and import competing goods and favour domestic over foreign supply sources by causing importers to charge higher prices and to restrict import volumes.

‘Nontariff Barrier‘ is a  form of restrictive trade wherebarriers to trade are set up and take a form other than a tariff. Nontariff barriers include quotas, levies, embargoes, sanctions and other restrictions, and are frequently used by large and developed economies.

Non-tariff barriers to trade (NTBs) or sometimes called “Non-Tariff Measures (NTMs)” are trade barriers that restrictimports, but are unlike the usual form of a tariff; And Tariff Barriers restricts Exports. Some common examples of NTB’s are anti-dumping measures and countervailing duties, which, although called non-tariff barriers, have the effect of tariffs once they are enacted. Example of Tariff Barrier is Export Duty.

Some of non-tariff barriers are not directly related to foreign economic regulations but nevertheless have a significant impact on foreign-economic activity and foreign trade between countries.

Trade between countries is referred to trade in goods, services and factors of production. Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc. Sometimes in this list they include macroeconomic measures affecting trade.

Ans7. Identify attractive new mkts, monitor change in customer needs, enhance profitability by pinpointing opportunities and threats, facilitate awareness of general market trends, knowledge of competitor pans and strategies, monitor political, legal, social, economic and technological trends, enhance the level of quality of information available for planning.

 

Ans 8. Allotment of marks to be based on the reasons cited.

 

Ans 9. Cultural affinity classes exist in terms of age brackets and across socio-demographic categories

(example: the teenagers in France, Japan, USA)

• Cultural affinity zones correspond to national cultural groups or cultural groups with similar dimensions

(example: the teenagers in Scandinavia)

• Understanding the general patterns and themes of culture is not enough for the international marketer. He/she must learn the specifics of the culture which affect the marketing of the firm’s products or services.

Ans 10.  International marketing is defined as the performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit Marketing concepts,

It is an approach of a company processes, and with truly global outlook, seeking principles are its profit impartially around the universally world, on a planned and applicable all systematic basis.

 

Ans 11.   Factors considered before going global are

Factors to consider

• Global competition in the home market
• Stagnant or shrinking home market
• Foreign markets with more opportunity
• Expansion of customers to international markets.

 

Factors as to Which markets to enter –

• Foreign sales volume
• How many countries to market to
• Types of countries to market to based on:
  • Geography
  • Income and population
  • Political climate

Rank potential global markets based on:

• Market size
• Market growth
• Cost of doing business
• Competitive advantage
• Risk level

 

Ans 12. International Macro-Segmentation

• Market potential – indicators:
  • Gross domestic product (GDP) per capita
  • Industrial and agricultural sector statistics
  • Market size and potential
  • Consumer buying power
  • Investment figures (FDI, other trade statistics)

 

• Political, legal and financial environment of country
  • Ethnic conflict
  • History of war engagement
  • Antiforeigner sentiment
  • Recent nationalization activities
  • Legal ambiguity
  • Trade barriers
  • Exchange rate controls
• Marketing support infrastructure
  • Availability and reliability of distribution and logistics providers
  • Availability of competent partners for strategic alliances
  • Quality of telecommunication and transportation infrastructure
  • Availability of other service providers:
    • Marketing research firms
    • Financial firms

Management consulting firms

• Strength of brand – brand franchise
• Degree of market fit with company policies, goals, and resources
• MICRO segmentation
• Basis for Segmentation
  • Demographic
  • Psychographic: lifestyles, values, attitudes, interests, opinions
  • Hofstede dimensions:
  • Power-distance
  • Masculinity-femininity
  • Uncertainty avoidance
  • Individualism-collectivism
  • Global segments:
  • Global teenagers
  • Global elite

Usage

• Nonusers
• Occasional users
• Medium users
• Heavy users
• User Status
  • User of competitors’ products
  • Ex-users
  • Potential users
  • First-time users
  • Regular users

 

Ans 13. Highlight the complexities involved in the international market wrt culture, language, political system, legal system, different tax system etc.

Ans 14.Explanation on Societal marketing, relationship marketing, business or Industrial marketing, E-marketing, online marketing.

 

Relationship Marketing

Relationship marketing refers to a short-term arrangement where the buyer and seller have an interest in providing a more satisfying exchange. This approach tries to transcend the simple post-purchase exchange with a customer to make a deeper connection by providing a holistic, personalized experience to create stronger ties. Relationship marketing is often applied when there are competitive alternatives for customers to choose from and when there is an ongoing and periodic desire for the product or service.

Business/Industrial Marketing

Business marketing is the practice of selling products and services to other companies or organizations that either resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing, business marketing is at times called business-to-business marketing, or B2B marketing.

The tremendous growth and change in business marketing is due to three “revolutions” occurring around the world today. First is the technological revolution. Technology is changing at an unprecedented pace, speeding up the pace of new product and service development.

Second is the entrepreneurial revolution. To stay competitive, many companies have downsized and reinvented themselves. Adaptability, flexibility, speed, aggressiveness, and innovation are the keys to remaining competitive. Marketing is taking the entrepreneurial lead by finding market segments, untapped needs, and new uses for existing products; and by creating new processes for sales, distribution, and customer service.

 

Societal Marketing

Societal marketing holds that the organization’s task is to determine the needs, wants, and interests of a target market and to deliver satisfaction more effectively and efficiently than competitors in a way that preserves or enhances social, ethical, and ecological well-being. It is linked with corporate social responsibility and sustainable development. The main focus of societal marketing is on customer satisfaction and the welfare of society at large, which can be attained through providing eco-friendly products–for example, those that remove social and environmental ills like drugs and pollution.

 

 

 

 

Ans 15, Porters five forces model. – explanation.

The framework is widely used to understand the profitability of an industry by looking at the 5 main forces that impact businesses in the industry.

1. Suppliers
2. Buyers
3. New entrants
4. Substitute products
5. Rivals
6. The bargaining power of suppliers— These are the guys from whom you buy stuff from. If the suppliers are monopolistic and your industry is fragmented. You are quite screwed. Think of the PC industry, where Microsoft and Intel are the suppliers of companies such as HP, Dell and Lenovo. You will find that the suppliers enjoy a huge margin advantage compared to the PC manufacturers, since they are practically monopolies. Other factors that impact pricing:

• Cost of switching suppliers (if you can replace suppliers easily, you can bargain hard on pricing)
• How differentiated is the input?
• Competition among suppliers
• Impact of distribution channel

2. The bargaining power of buyers– If the buyers have a lot of options to choose from and there are a few buyers who command a big slice of the market, they can eat into the profits of the industry. For instance, if you are selling website development services, you are forced to take low margins as your industry is a lot more fragmented and commoditized. Other factors that affect the buyer’s power are:

• Price sensitivity of buyers (are they very price conscious?)
• Switching costs and learning curve (can they switch to a competitor easily)
• How critical is the product for the buyer?
• Information availability (is the pricing transparent enough)

3. Threat of new entrants– Can a new comer enter your industry and affect your margins? If there is little barriers to entry, the margins will go down significantly. Think about the margins in selling groceries. Since anybody can start a grocery store with little barriers, you will have a hard time getting high margins. Other factors that impact:

• Is there a brand premium? For instance, if you are selling a new Cola, you have to fight the brand power of Coke and Pepsi.
• Customer loyalty.
• Cost of setting up new plants
• Impact of Intellectual Property (IP) – Software industry and biotech industries can claim higher margins due to this.

4. Threat of substitutes– If your products can be easily replaced with substitutes, you will find a problem getting margins. Think of restaurants. Even if you are the only restaurant in the area, your margins will still be impacted if people can substitute your food with home cooked food.

   5. Competitive Rivalry – This is the advantage that you have over the competition. If the competition produces quite undifferentiated products and nobody has a brand advantage or economy of scale. Also if a competitor can’t leave the industry easily then the margin for everybody will go down.

   It is very important for entrepreneurs to look at their industry’s forces and determine how each force impacts their industry. If the forces are not quite strong, you have a higher chance of getting a good profit margin.

 

Section c

The answers to the case study is an individual opinion and granting the marks  solely depends on the justifications provided.

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