Paper/Subject Code: 86009/Marketing: International Marketing
Marketing: International Marketing
(Q.P. November 2023 with Solution)
Duration: 2½ hrs Total Marks: 75
N. B.: 1. All Questions are compulsory
2. All Questions carry equal marks
3. Figures to the right indicate full marks
Q1 A. Fill in the blanks with appropriate option: (any 8) (8)
1. _________ orientation refers to exporter viewing international marketing as secondary to domestic operations
a. Ethnocentric
b. Polycentric
c. Regiocentric
d. Geocentric
2. _________ licensing is a type of international licensing
a. Strategic alliance
b. takeovers
c. cross
d. partnerships
3. .....is not a positive impact of trade barriers
a. Accelerates growth
b. additional revenue
c. protection to domestic industries
d. free movement of goods and services
4. ________ is a sister institution of IMF
a. World bank
b. IFO
c. UNICEF
d. RBI
5. ....is the simplest form of economic integration
a. Common market
b. customs union
c. economic union
d. free trade area
6. Anti-dumping duty is a ________ tariff
a. revenue
b. protectionist
c. transit
d. none of the above
7. .......is not an element of culture
a. knowledge
b. ideals
c. preferences
d. political activities
8. __________ refers to product line contraction
a. line pruning
b. line stretching
c. line addition
d. none of the above
9. Segmentation according to social class, lifestyles etc is known as __________
a. demographic
b. behaviouristic
c. geographic
d. psychographic
10. Pricing of a product based on the benefits it provides to consumers is known as
a. value pricing
b. demand based pricing
c. mark up pricing
d. marginal pricing
1. B) Match the following (any 7): 7 marks
1 | Concentrated marketing | A | Free movement of labour and capital |
2 | Modern technique of control | B | Uniform fiscal and monetary policies |
3 | Distribution channel | C | Regional economic grouping |
4 | Low prices in introduction stage | D | Identifying potential market |
5 | International marketing research | E | Export consortia |
6 | Common market | F | Penetration pricing |
7 | Economic union | G | One single target market |
8 | Trading bloc | H | Management by objectives |
9 | Standardization | I | Buyback |
10 | Counter trade | J | Uniformity in products offered |
|
1 |
Concentrated
marketing |
G |
One single target market |
|
2 |
Modern
technique of control |
H |
Management by objectives |
|
3 |
Distribution
channel |
A |
Free movement of labour and capital |
|
4 |
Low
prices in introduction stage |
F |
Penetration pricing |
|
5 |
International
marketing research |
D |
Identifying potential market |
|
6 |
Common
market |
B |
Uniform fiscal and monetary policies |
|
7 |
Economic
union |
C |
Regional economic grouping |
|
8 |
Trading
bloc |
E |
Export consortia |
|
9 |
Standardization |
J |
Uniformity in products offered |
|
10 |
Counter
trade |
I |
Buyback |
2. A) Differentiate between Domestic marketing and international marketing, 8
Ans: Domestic marketing and international marketing are two distinct approaches to promoting and selling products or services, each with its own set of challenges, strategies, and considerations. Here's a detailed comparison between the two:
1. Scope:
- Domestic Marketing: Domestic marketing refers to marketing activities within a single country's borders. The target market consists of individuals or organizations located within that country.
- International Marketing: International marketing involves marketing activities across national borders. The target market may include multiple countries with diverse cultures, languages, and economic conditions.
2. Market Size:
- Domestic Marketing: The market size in domestic marketing is limited to the population, economic conditions, and geographic area of the country where the marketing activities take place.
- International Marketing: The market size in international marketing is significantly larger as it includes potential customers from multiple countries, offering greater opportunities for expansion and growth.
3. Cultural and Language Considerations:
- Domestic Marketing: Marketers in domestic marketing are typically familiar with the culture, language, and preferences of their target audience, which simplifies communication and market understanding.
- International Marketing: International marketing requires a deep understanding of diverse cultures, languages, customs, and consumer behaviors. Marketers must adapt their strategies to resonate with each target market effectively.
4. Legal and Regulatory Compliance:
- Domestic Marketing: Marketers in domestic marketing need to comply with the laws and regulations of their own country, which they are usually familiar with.
- International Marketing: International marketing requires compliance with the laws and regulations of multiple countries, which can vary significantly. Marketers must navigate complexities such as tariffs, trade restrictions, taxation, and intellectual property laws.
5. Distribution Channels:
- Domestic Marketing: Distribution channels in domestic marketing are often well-established and easily accessible, allowing for efficient product distribution and logistics management.
- International Marketing: International marketing involves complex distribution channels due to logistical challenges, distance, customs regulations, and cultural differences. Marketers may need to establish partnerships with local distributors or set up their own distribution networks.
6. Marketing Strategies:
-Domestic Marketing: Marketing strategies in domestic marketing focus on understanding and meeting the needs and preferences of the local target market through tailored campaigns, pricing strategies, and product offerings.
- International Marketing: International marketing strategies require adaptation to diverse markets. Marketers may employ standardized or localized approaches, considering factors such as product adaptation, pricing strategies, promotional tactics, and distribution channels.
7. Risk and Uncertainty:
- Domestic Marketing: Risks in domestic marketing are typically lower due to familiarity with the market environment, regulations, and consumer behaviors.
- International Marketing: International marketing involves higher levels of risk and uncertainty due to factors such as currency fluctuations, political instability, cultural misunderstandings, and unfamiliar market dynamics.
8. Communication and Promotion:
- Domestic Marketing: Communication and promotional strategies in domestic marketing can be standardized to a large extent, focusing on common language and cultural references.
- International Marketing: International marketing requires tailored communication and promotional strategies that resonate with diverse cultural backgrounds and languages. Marketers may need to localize advertising campaigns, messaging, and branding to connect with each target market effectively.
B) Enumerate on different types of tariff barriers. 7
Ans: Tariff barriers are a type of trade barrier imposed by governments to regulate the flow of goods and services across international borders. These tariffs are essentially taxes levied on imported goods, making them more expensive and less competitive compared to domestically produced goods. Tariff barriers can take various forms, each with its own impact on international trade. Here are some common types of tariff barriers:
1. Ad Valorem Tariffs:
- Ad valorem tariffs are levied as a percentage of the value of the imported goods. For example, if the ad valorem tariff on a particular product is 10%, then the importer must pay 10% of the product's declared value as a tariff.
2. Specific Tariffs:
- Specific tariffs are fixed charges levied on imported goods based on factors such as quantity, weight, or volume. Unlike ad valorem tariffs, specific tariffs do not vary with the value of the goods. For instance, a specific tariff of $5 per kilogram would apply to all imports of a particular product regardless of its value.
3. Compound Tariffs:
- Compound tariffs combine elements of both ad valorem and specific tariffs. They involve a fixed component along with a percentage of the imported goods' value. This hybrid approach allows governments to generate revenue while also protecting domestic industries.
4. Protective Tariffs:
- Protective tariffs are designed to shield domestic industries from foreign competition by imposing high taxes on imported goods. These tariffs aim to artificially raise the prices of imported products, making domestic alternatives more attractive to consumers.
5. Revenue Tariffs:
- Revenue tariffs are imposed primarily to generate government revenue rather than to protect domestic industries. Governments may use revenue tariffs as a source of income to fund public services and infrastructure projects.
6. Retaliatory Tariffs:
- Retaliatory tariffs are imposed in response to trade barriers or unfair trade practices implemented by other countries. When a country believes that its exporters are facing discrimination or unfair treatment abroad, it may retaliate by imposing tariffs on imports from the offending country.
7. Tariff Rate Quotas (TRQs):
- Tariff rate quotas establish a two-tiered tariff structure for specific goods. Within a predetermined quota, lower tariffs or no tariffs are applied. However, once the quota is exceeded, higher tariffs are imposed. TRQs aim to balance the need to protect domestic industries with the desire to maintain access to foreign markets.
8. Import Licensing:
- Import licensing requirements impose administrative barriers on imported goods by requiring importers to obtain licenses or permits before importing certain products. These licenses may be used to restrict the quantity of imports or to ensure compliance with health, safety, or quality standards.
9. Embargoes and Trade Sanctions:
- Embargoes and trade sanctions involve the complete prohibition or restriction of trade with specific countries or regions for political, economic, or national security reasons. These measures can effectively block imports from targeted countries, severely limiting international trade.
10. Voluntary Export Restraints (VERs):
- Voluntary export restraints are agreements between exporting and importing countries where the exporting country voluntarily limits the quantity of goods it exports to the importing country. While technically not tariffs, VERs have a similar effect of restricting imports and protecting domestic industries.
These are some of the key types of tariff barriers that governments may employ to regulate international trade. Each type of tariff barrier has its own implications for global commerce, affecting importers, exporters, consumers, and industries in different ways.
OR
C)Explain briefly about SAARC and its objectives. 8
Ans: SAARC stands for the South Asian Association for Regional Cooperation. It is an intergovernmental organization established in 1985 to promote regional cooperation and development among South Asian countries. The member states of SAARC are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
The objectives of SAARC are:
1. Promotion of Economic and Regional Integration: SAARC aims to promote economic growth, social progress, and cultural development in the South Asian region through regional integration and cooperation. This includes facilitating trade, investment, and technology transfer among member states.
2. Enhancement of Social and Cultural Ties: SAARC seeks to strengthen social and cultural ties among South Asian countries by promoting cultural exchanges, people-to-people contacts, and cooperation in areas such as education, science, and technology.
3. Poverty Alleviation and Socio-Economic Development: SAARC is committed to addressing common socio-economic challenges in the region, including poverty, inequality, unemployment, and food insecurity. It aims to foster sustainable development and improve the quality of life for the people of South Asia.
4. Promotion of Peace and Stability: SAARC works towards promoting peace, stability, and security in the South Asian region by fostering mutual trust, understanding, and cooperation among member states. It encourages dialogue, conflict resolution, and confidence-building measures to prevent conflicts and disputes.
5. Environmental Protection and Sustainable Development: SAARC recognizes the importance of environmental conservation and sustainable development in the region. It promotes cooperation among member states to address environmental challenges such as climate change, natural disasters, pollution, and biodiversity loss.
6. Enhancement of Connectivity and Infrastructure Development: SAARC aims to enhance connectivity and infrastructure development in South Asia to facilitate trade, investment, and regional integration. This includes initiatives to improve transportation, communication, energy, and connectivity networks among member states.
SAARC serves as a platform for South Asian countries to collaborate on common issues, promote regional peace and stability, and foster economic and social development in the region. Despite facing challenges such as political tensions and divergent interests among member states, SAARC continues to play a significant role in promoting cooperation and integration in South Asia.
D) As an international marketing student suggest any three international market entry methods. 7
Ans: As an international marketing student, there are several market entry methods you can consider for expanding into international markets. Here are three commonly used methods:
1. Exporting:
- Exporting involves selling products or services produced in one country to customers located in another country. It is one of the simplest and least risky market entry methods, particularly suitable for companies with limited international experience or resources. Exporting can be done through various channels such as direct sales to customers, distributors, agents, or online platforms.
- Advantages:
- Low investment and risk.
- Quick entry into foreign markets.
- Can test market demand and gather market information.
- Disadvantages:
- Limited control over distribution and marketing.
- High transportation costs and logistics complexities.
- Currency fluctuations and trade barriers may affect profitability.
2. Joint Ventures:
- Joint ventures involve forming a partnership or alliance with a local company in the target market to establish a new business entity. Both parties contribute resources, expertise, and capital to the venture and share risks and rewards. Joint ventures allow companies to leverage the local partner's knowledge of the market, distribution networks, and regulatory environment.
- Advantages:
- Access to local market knowledge, resources, and networks.
- Shared investment and risk with local partner.
- Facilitates compliance with local regulations and cultural norms.
- Disadvantages:
- Potential conflicts and disagreements with partners.
- Loss of control and decision-making autonomy.
- Cultural and operational differences may pose challenges.
3. Foreign Direct Investment (FDI):
- Foreign direct investment involves establishing wholly-owned subsidiaries, branches, or manufacturing facilities in the target market. FDI allows companies to have full control over their operations and strategy in the foreign market. It is typically preferred by companies seeking long-term commitment and strategic control over their international expansion.
- Advantages:
- Full control over operations, brand, and strategy.
- Ability to customize products/services to local market preferences.
- Potential for higher profits and market share in the long term.
- Disadvantages:
- High initial investment and operational costs.
- Complexities of managing foreign operations, including legal, cultural, and logistical challenges.
- Greater exposure to political, economic, and regulatory risks in the host country.
These are just three examples of international market entry methods, and there are other options such as licensing, franchising, strategic alliances, and acquisitions that you can explore based on your specific business objectives, resources, and market conditions. It's essential to carefully evaluate each method and consider factors such as market potential, competitive landscape, cultural differences, and regulatory environment before making a decision.
3. A) Explain briefly the steps in international marketing research 8
Ans: International marketing research involves a systematic process of collecting, analyzing, and interpreting data to make informed decisions about entering or expanding into foreign markets. Here are the key steps in international marketing research:
1. Define Objectives and Research Questions:
- Clearly define the objectives of the research and the specific questions you want to address. Identify what information is needed to support your international marketing strategy, such as market potential, consumer preferences, competitive landscape, or regulatory requirements.
2. Develop Research Plan:
- Design a research plan outlining the methodology, data collection techniques, sample size, and timeline for the research project. Consider factors such as budget constraints, available resources, and the complexity of the international market.
3. Conduct Desk Research:
- Start by conducting desk research to gather secondary data from existing sources such as market reports, industry publications, government databases, academic journals, and online sources. This helps in gaining insights into the target market, industry trends, competitor analysis, and regulatory environment.
4. Define Target Market and Sampling:
- Define the target market segments based on demographic, psychographic, geographic, and behavioral factors. Determine the appropriate sampling method and sample size to ensure representativeness and reliability of the data collected. Consider factors such as accessibility, diversity, and relevance of the sample population.
5. Collect Primary Data:
- Collect primary data through various research methods such as surveys, interviews, focus groups, observations, or experiments. Depending on the target market and research objectives, choose the most suitable data collection techniques. If conducting surveys or interviews, consider language, cultural nuances, and local customs to ensure accurate data collection.
6. Data Analysis and Interpretation:
- Analyze the collected data using quantitative and qualitative techniques such as statistical analysis, regression analysis, content analysis, or thematic coding. Identify patterns, trends, correlations, and insights that provide valuable information about the target market, consumer behavior, competitor strategies, and market opportunities.
7. Draw Conclusions and Recommendations:
- Draw conclusions based on the analysis of the data and findings from the research. Evaluate the implications of the research findings for your international marketing strategy. Generate actionable recommendations and strategic insights to guide decision-making and market entry or expansion efforts.
8. Report Findings:
- Prepare a comprehensive report documenting the research methodology, findings, analysis, conclusions, and recommendations. Present the findings in a clear and concise manner, using charts, graphs, tables, and visual aids to enhance understanding. Tailor the report to the needs of different stakeholders, such as senior management, marketing teams, or external partners.
9. Implement Recommendations:
- Implement the recommendations derived from the research findings into your international marketing strategy and operational plans. Monitor and evaluate the effectiveness of the implemented strategies over time, and be prepared to adapt and refine your approach based on changing market dynamics and feedback.
B) Discuss Hofstede's six dimension of culture. 7
Ans: Hofstede's six dimensions of culture are a framework developed by the Dutch social psychologist Geert Hofstede to analyze and understand cultural differences across countries. These dimensions provide insights into how societies differ in terms of values, beliefs, behaviors, and social norms. Here are the six dimensions:
1. Power Distance Index (PDI):
- Power distance refers to the extent to which less powerful members of a society accept and expect unequal distribution of power. In cultures with high power distance, there is a strong emphasis on hierarchy, authority, and respect for authority figures. Conversely, in cultures with low power distance, there is a greater emphasis on equality, autonomy, and participative decision-making.
2. Individualism vs. Collectivism (IDV):
- Individualism vs. collectivism refers to the degree to which individuals prioritize their own interests and goals over those of the group, or vice versa. In individualistic cultures, such as those found in Western societies, there is a focus on individual rights, personal achievement, and autonomy. In collectivistic cultures, such as many Asian societies, there is a stronger emphasis on group harmony, loyalty, and interdependence.
3. Masculinity vs. Femininity (MAS):
- Masculinity vs. femininity describes the distribution of roles and values between genders within a society. Cultures with a high masculinity score tend to prioritize assertiveness, ambition, and competitiveness, often associated with traditional gender roles. Cultures with a high femininity score emphasize nurturing, cooperation, and quality of life, with less emphasis on assertiveness and competitiveness.
4. Uncertainty Avoidance Index (UAI):
- Uncertainty avoidance refers to the extent to which members of a society feel uncomfortable with uncertainty, ambiguity, or unpredictability. Cultures with high uncertainty avoidance tend to have strict rules, norms, and rituals to minimize risk and maintain stability. In contrast, cultures with low uncertainty avoidance are more open to change, innovation, and risk-taking.
5. Long-Term Orientation vs. Short-Term Orientation (LTO):
- Long-term orientation vs. short-term orientation reflects the degree to which a society values future-oriented behaviors such as persistence, thriftiness, and perseverance, versus present-oriented behaviors such as tradition, instant gratification, and maintaining social norms. Cultures with a long-term orientation place greater emphasis on long-term planning, investment in education, and perseverance, while cultures with a short-term orientation focus more on immediate rewards and gratification.
6. Indulgence vs. Restraint (IND):
- Indulgence vs. restraint measures the extent to which members of a society allow themselves to enjoy life's pleasures and gratifications without guilt or restraint. Cultures with high indulgence tend to value leisure, enjoyment, and self-expression, while cultures with high restraint emphasize self-discipline, moderation, and strict social norms.
These dimensions provide a framework for understanding and comparing cultural differences across countries, which can be valuable for businesses, policymakers, and individuals operating in multicultural environments. However, it's important to recognize that cultural norms and values may vary within countries and that individuals may not always conform to cultural stereotypes. Hofstede's dimensions are best used as tools for understanding broad cultural tendencies rather than making assumptions about individual behavior.
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3. C) What is international marketing environment? Explain economic environment. 8
Ans: The international marketing environment refers to the external factors and forces that influence a company's ability to conduct business effectively in foreign markets. It encompasses a wide range of elements, including economic, political, legal, social, cultural, technological, and competitive factors. Understanding the international marketing environment is crucial for businesses to identify opportunities, assess risks, and develop effective strategies for entering or expanding into global markets.
The economic environment is one of the key components of the international marketing environment. It refers to the economic conditions, trends, and factors that affect the buying behavior, consumption patterns, and overall business environment in a particular country or region. Here's an overview of the economic environment and its key aspects:
1. Macroeconomic Indicators:
- Macroeconomic indicators such as GDP (Gross Domestic Product), inflation rate, unemployment rate, interest rates, exchange rates, and economic growth rate provide insights into the overall health and performance of a country's economy. These indicators help businesses assess market potential, consumer purchasing power, and investment opportunities in foreign markets.
2. Market Size and Growth Potential:
- The economic environment influences market size and growth potential by determining the level of consumer demand, income levels, and consumption patterns. Businesses evaluate the size of the target market and its growth prospects to assess the attractiveness of investing in foreign markets.
3. Consumer Behavior and Spending Patterns:
- Economic conditions shape consumer behavior and spending patterns, impacting purchasing decisions, brand preferences, and product demand. Businesses need to understand how economic factors such as income levels, inflation, and employment rates influence consumer purchasing power and behavior in foreign markets.
4. Currency and Exchange Rates:
- Currency values and exchange rates affect international trade, pricing strategies, and profitability for businesses operating in foreign markets. Fluctuations in exchange rates can impact the cost of imports and exports, the competitiveness of products in foreign markets, and the value of foreign investments.
5. Trade Policies and Regulations:
- Economic policies, trade agreements, tariffs, and trade barriers imposed by governments influence international trade and investment activities. Businesses need to navigate complex trade regulations and tariff structures to minimize costs, comply with legal requirements, and maximize market access in foreign markets.
6. Competitive Environment:
- Economic conditions shape the competitive landscape by influencing factors such as market concentration, industry structure, and competitive dynamics. Businesses analyze competitors' strategies, market positioning, and pricing practices to identify opportunities and threats in foreign markets.
7. Business Environment and Investment Climate:
- Economic stability, business regulations, taxation policies, infrastructure development, and ease of doing business impact the investment climate and business environment in foreign markets. Businesses assess the risks and opportunities associated with investing in different countries based on the economic and regulatory conditions.
D) Explain economic integration and its types 7
Ans: Economic integration refers to the process by which countries or regions coordinate and combine their economic policies, systems, and activities to promote closer economic cooperation and integration. The goal of economic integration is to enhance economic efficiency, competitiveness, and welfare by removing barriers to trade, investment, and movement of goods, services, capital, and labor across borders. Economic integration can take various forms, each representing different levels of integration and cooperation among participating countries or regions.
Here are the main types of economic integration:
1. Free Trade Area (FTA):
- A free trade area eliminates tariffs, quotas, and other trade barriers among member countries while allowing each member to maintain its own external trade policies with non-member countries. Countries within a free trade area can trade goods and services freely with each other without facing tariffs or restrictions.
However, each member country retains the ability to set its own trade policies with non-member countries. Examples of free trade areas include the North American Free Trade Agreement (NAFTA) and the ASEAN Free Trade Area (AFTA).
2. Customs Union:
- A customs union goes beyond a free trade area by not only eliminating tariffs and trade barriers among member countries but also establishing a common external trade policy. Member countries agree to apply a common external tariff (CET) to imports from non-member countries, allowing for the free movement of goods within the customs union while imposing a common tariff on imports from outside the union.
This promotes deeper integration and facilitates trade among member countries while presenting a unified trade front to non-member countries. The European Union (EU) is an example of a customs union.
3. Common Market:
- A common market builds upon the foundation of a customs union by not only eliminating tariffs and trade barriers but also allowing for the free movement of factors of production, including labor and capital, among member countries. In addition to a common external trade policy, a common market aims to create a single, integrated market where goods, services, capital, and labor can move freely without restrictions.
This deeper level of integration promotes greater economic efficiency, competitiveness, and mobility within the common market. The European Economic Community (EEC), which later evolved into the European Union's Single Market, is an example of a common market.
4. Economic Union:
- An economic union represents the highest level of economic integration, characterized by the harmonization of economic policies, institutions, and regulations among member countries. In addition to the features of a common market, an economic union typically involves deeper coordination of monetary, fiscal, and social policies, as well as the establishment of common institutions to oversee economic integration.
Economic unions aim to achieve greater economic convergence, stability, and cooperation among member countries. The Eurozone, where member countries share a common currency (the euro) and monetary policy, is an example of an economic union within the European Union.
5. Political Union (Optional):
- In some cases, economic integration may be accompanied by political integration, leading to the formation of a political union. A political union involves the centralization of political authority, decision-making, and governance structures among member countries, often resulting in a shared government, legal system, and citizenship.
Political unions aim to deepen political cooperation and integration beyond economic matters, ultimately leading to closer political ties and shared sovereignty among member countries. The European Union is moving towards greater political integration through initiatives such as the European Parliament and common foreign and security policies.
These types of economic integration represent varying degrees of cooperation and integration among countries or regions, each offering benefits and challenges depending on the specific goals, circumstances, and preferences of participating nations. Economic integration can lead to increased trade flows, investment, economic growth, and welfare gains for member countries while also posing challenges such as adjustment costs, distributional impacts, and loss of national sovereignty. Therefore, the success and effectiveness of economic integration initiatives depend on careful planning, negotiation, and implementation to maximize benefits and minimize drawbacks for all participating countries.
4. A) Discuss bases for market segmentation in international marketing 8
Ans: International distribution channels refer to the various pathways through which goods and services move from producers to consumers in different countries or regions. Choosing the right distribution channel is crucial for reaching target markets efficiently and effectively. Here are some different types of international distribution channels:
1. Direct Exporting:
- Direct exporting involves selling products directly to customers in foreign markets without intermediaries. This can be done through e-commerce platforms, company-owned retail stores, sales representatives, or sales teams located in target countries. Direct exporting gives companies greater control over their distribution and customer relationships but requires significant investment in marketing, logistics, and market development.
2. Indirect Exporting:
- Indirect exporting involves using intermediaries such as export agents, export merchants, trading companies, or export management companies to sell products in foreign markets. These intermediaries handle tasks such as market research, order processing, logistics, and payment collection on behalf of the exporter. Indirect exporting can be less costly and less risky than direct exporting, especially for companies with limited international experience or resources.
3. Distributors/Wholesalers:
- Distributors or wholesalers purchase goods from manufacturers in bulk quantities and distribute them to retailers, resellers, or end customers within a specific geographic area or market segment. Distributors often have established networks, relationships, and infrastructure in target markets, making them valuable partners for reaching customers and expanding market reach.
4. Retailers:
- Retailers purchase goods from manufacturers or wholesalers and sell them directly to consumers through physical stores, online platforms, or catalogs. Retailers play a crucial role in the distribution chain by providing convenient access to products, offering customer service, and influencing purchasing decisions through marketing and merchandising efforts.
5. Franchise Networks:
- Franchise networks involve granting third-party individuals or businesses (franchisees) the right to operate under a company's brand name and business model in exchange for fees, royalties, or revenue sharing. Franchise networks allow companies to expand rapidly into international markets while leveraging the local knowledge, resources, and entrepreneurship of franchisees.
6. Joint Ventures and Strategic Alliances:
- Joint ventures and strategic alliances involve forming partnerships with local companies or organizations in foreign markets to establish joint distribution channels or share distribution infrastructure, resources, and expertise. Joint ventures and alliances can provide access to local market knowledge, distribution networks, and regulatory compliance while mitigating risks and sharing costs.
7. Agent or Broker Networks:
- Agent or broker networks consist of independent sales agents, representatives, or brokers who act on behalf of manufacturers or exporters to sell products in foreign markets. Agents typically work on a commission basis and facilitate transactions, negotiations, and relationship-building with buyers, distributors, or retailers in target markets.
8. Supply Chain Management (SCM) Systems:
- Supply chain management systems involve coordinating and integrating the flow of materials, information, and resources across multiple stages of the distribution process, from raw material suppliers to end customers. SCM systems optimize efficiency, reduce costs, and enhance visibility and control over the entire distribution network, ensuring timely delivery and customer satisfaction.
The main types of international distribution channels that companies can utilize to reach customers and distribute products in foreign markets. The choice of distribution channel depends on factors such as market characteristics, product attributes, competitive landscape, regulatory environment, and company resources and capabilities. It's essential for companies to carefully evaluate their options and develop a distribution strategy that aligns with their business goals and market objectives.
B) Mention different types of international distribution channels 7.
Ans: Market segmentation is the process of dividing a heterogeneous market into smaller, more homogeneous segments based on certain characteristics or criteria. In international marketing, the bases for segmentation may vary depending on factors such as cultural, economic, social, and legal differences across countries or regions. Here are some common bases for market segmentation in international marketing:
1. Geographic Segmentation:
- Geographic segmentation involves dividing the market based on geographical factors such as country, region, city, climate, population density, or urban-rural divide. Different countries or regions may have distinct preferences, needs, and buying behaviors due to variations in climate, culture, language, infrastructure, and economic conditions.
2. Demographic Segmentation:
- Demographic segmentation involves categorizing consumers based on demographic variables such as age, gender, income, education, occupation, family size, and ethnicity. Demographic factors can influence purchasing decisions, lifestyle choices, and product preferences across different countries and cultures.
3. Psychographic Segmentation:
- Psychographic segmentation divides the market based on psychographic variables such as values, beliefs, attitudes, interests, lifestyles, personality traits, and cultural values. Psychographic segmentation helps marketers understand consumers' motivations, aspirations, and behaviors in diverse cultural contexts, allowing for more targeted marketing strategies.
4. Behavioral Segmentation:
- Behavioral segmentation categorizes consumers based on their behaviors, usage patterns, purchasing habits, brand loyalty, product benefits sought, and decision-making processes. Behavioral segmentation enables marketers to identify and target customers with specific needs, preferences, and purchase intentions in different international markets.
5. Cultural Segmentation:
- Cultural segmentation considers cultural factors such as language, religion, customs, traditions, symbols, and cultural values in dividing the market. Cultural differences influence consumer behaviors, perceptions, and preferences across countries and cultures, requiring marketers to adapt their products, messaging, and marketing strategies accordingly.
6. Socioeconomic Segmentation:
- Socioeconomic segmentation classifies consumers based on socioeconomic variables such as income levels, social class, wealth distribution, and economic development indicators. Socioeconomic factors impact purchasing power, affordability, and consumption patterns in different countries, shaping market demand and opportunities for businesses.
7. Technological Segmentation:
- Technological segmentation divides the market based on technology adoption, usage, preferences, and access to digital resources. Differences in technological infrastructure, internet penetration, mobile connectivity, and digital literacy influence consumer behaviors, communication channels, and e-commerce opportunities in international markets.
8. Global Segmentation:
- Global segmentation involves identifying segments that transcend national borders and have similar characteristics or needs across multiple countries or regions. Global segments may be based on factors such as lifestyle trends, brand preferences, product categories, or consumer values that are relevant on a global scale.
These are some of the bases for market segmentation in international marketing, each offering insights into consumer behavior, preferences, and market opportunities across different countries and cultures. Effective market segmentation enables businesses to tailor their marketing strategies, product offerings, and communication efforts to meet the diverse needs and preferences of target segments in international markets, ultimately driving sales, market share, and profitability.
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4. C) Highlight various international pricing methods. 8
Ans: International pricing methods refer to the strategies and approaches that businesses use to set prices for their products or services in foreign markets. The choice of pricing method depends on various factors such as market conditions, competitive landscape, cost structure, customer preferences, and strategic objectives. Here are some common international pricing methods:
1. Cost-Plus Pricing:
- Cost-plus pricing involves setting prices based on the cost of production, distribution, and other expenses, plus a markup to generate a desired level of profit. This method ensures that prices cover costs and provide a reasonable profit margin. Cost-plus pricing is straightforward and commonly used in industries with high production costs or where pricing transparency is important.
2. Market-Based Pricing:
- Market-based pricing, also known as competitive pricing, involves setting prices based on market conditions, competitor pricing, and customer demand. This method considers factors such as price elasticity, market positioning, and perceived value to determine optimal pricing levels relative to competitors. Market-based pricing aims to capture market share while remaining competitive in the marketplace.
3. Skimming Pricing:
- Skimming pricing involves setting high initial prices for new or innovative products to maximize revenue from early adopters or customers willing to pay a premium. Skimming pricing takes advantage of the willingness of some customers to pay higher prices for unique or cutting-edge products, gradually lowering prices over time as competition increases or market saturation occurs.
4. Penetration Pricing:
- Penetration pricing involves setting low initial prices to quickly penetrate a new market or gain market share. The goal of penetration pricing is to attract price-sensitive customers, stimulate demand, and establish a foothold in the market. Over time, prices may be adjusted upward to reflect the product's value or to cover costs more effectively.
5. Price Discrimination:
- Price discrimination involves setting different prices for the same product or service based on factors such as geographic location, customer segment, or purchasing power. Price discrimination allows businesses to capture additional revenue by charging higher prices to customers willing to pay more while offering discounts or promotions to price-sensitive segments.
6. Value-Based Pricing:
- Value-based pricing focuses on setting prices based on the perceived value of the product or service to the customer rather than on costs or competition. This method considers factors such as customer preferences, benefits, quality, brand reputation, and the unique value proposition offered by the product. Value-based pricing aims to capture the value created for customers and maximize profitability.
7. Bundle Pricing:
- Bundle pricing involves offering multiple products or services together as a package at a discounted price compared to purchasing each item individually. Bundle pricing encourages customers to buy more products or services and can increase overall sales volume and revenue. Bundling can be effective in cross-selling, promoting related products, or clearing excess inventory.
8. Dynamic Pricing:
- Dynamic pricing, also known as demand-based pricing or surge pricing, involves adjusting prices in real-time based on changes in demand, supply, or market conditions. Dynamic pricing algorithms analyze factors such as customer behavior, competitor prices, time of day, seasonality, and inventory levels to optimize prices for maximum profitability.
D) Explain various international promotional tools. 7
Ans: International promotional tools are marketing strategies and tactics used by businesses to communicate with target audiences in foreign markets, promote their products or services, and influence purchasing behavior. Effective international promotional tools help businesses build brand awareness, generate interest, stimulate demand, and ultimately drive sales in global markets. Here are various international promotional tools commonly used by businesses:
1. Advertising:
- Advertising involves paid communication through various media channels such as television, radio, print publications, outdoor billboards, online platforms, and social media. International advertising campaigns are designed to reach a broad audience and convey key messages about the brand, products, or services to potential customers in different countries or regions.
2. Sales Promotion:
- Sales promotion includes short-term incentives or promotions aimed at encouraging purchase or trial of a product or service. Examples of sales promotion tactics include discounts, coupons, rebates, free samples, contests, sweepstakes, loyalty programs, and special offers. Sales promotions can stimulate immediate sales, create urgency, and differentiate the brand from competitors in international markets.
3. Public Relations (PR):
- Public relations involves managing the company's public image, reputation, and relationships with various stakeholders, including customers, media, investors, government agencies, and the public. International PR activities include press releases, media relations, publicity events, corporate social responsibility (CSR) initiatives, sponsorships, and crisis management efforts to build trust, credibility, and goodwill in foreign markets.
4. Personal Selling:
- Personal selling involves direct, face-to-face communication between sales representatives or sales teams and potential customers. In international markets, personal selling may involve building relationships with distributors, retailers, wholesalers, or key decision-makers in target markets through sales meetings, presentations, trade shows, exhibitions, and one-on-one interactions to educate, persuade, and close sales.
5. Direct Marketing:
- Direct marketing involves reaching target customers directly through various channels such as direct mail, email, telemarketing, SMS, social media, and digital advertising. Direct marketing campaigns allow businesses to deliver personalized messages, offers, and promotional materials to specific segments or individuals in international markets, driving engagement, leads, and sales.
6. Digital Marketing:
- Digital marketing encompasses online strategies and tactics to promote products or services using digital channels such as websites, search engines, social media, email, mobile apps, content marketing, and influencer partnerships. Digital marketing offers businesses the ability to reach global audiences, target specific demographics, track performance metrics, and engage with customers in real-time across borders.
7. Trade Shows and Events:
- Trade shows, exhibitions, conferences, and events provide opportunities for businesses to showcase their products or services, network with industry professionals, and connect with potential customers in international markets. Participating in trade shows and events allows companies to generate leads, demonstrate products, conduct market research, and build relationships with distributors, partners, and customers.
8. Branding and Sponsorship:
- Branding and sponsorship activities involve associating the brand with events, organizations, celebrities, sports teams, or cultural initiatives to enhance brand visibility, credibility, and relevance in international markets. Branding and sponsorship opportunities can include logo placement, product placement, endorsements, and co-branding partnerships to reinforce brand identity and values.
9. Word-of-Mouth (WOM) Marketing:
- Word-of-mouth marketing relies on recommendations, referrals, and endorsements from satisfied customers, influencers, or advocates to promote products or services to others. In international markets, word-of-mouth marketing can be amplified through social media, online reviews, testimonials, and viral campaigns that leverage the power of social networks and peer influence.
5. A) Mention the steps in selection of overseas market 8
Ans: Selecting overseas markets is a critical decision for businesses aiming to expand internationally. The process involves careful evaluation of various factors to identify the most suitable markets for entering or expanding operations. Here are the steps in the selection of overseas markets:
1. Market Research:
- Conduct comprehensive market research to identify potential overseas markets. Gather information on factors such as market size, growth potential, consumer demographics, purchasing power, competition, regulatory environment, cultural differences, economic conditions, and trade barriers. Analyze market trends, opportunities, and risks to prioritize target markets.
2. Define Selection Criteria:
- Define selection criteria based on the company's strategic objectives, resources, capabilities, and market preferences. Consider factors such as market attractiveness, market accessibility, strategic fit, competitive advantage, risk tolerance, investment requirements, and potential returns. Establish clear criteria to evaluate and compare different markets effectively.
3. Screening and Shortlisting:
- Screen potential overseas markets based on the defined selection criteria. Evaluate each market against the criteria to identify the most promising opportunities and eliminate unsuitable options. Shortlist a subset of markets that align with the company's strategic goals and have the greatest potential for success.
4. Market Assessment:
- Conduct a detailed assessment of the shortlisted markets to gather additional insights and validate initial findings. Dive deeper into market dynamics, consumer behavior, regulatory framework, competitive landscape, distribution channels, cultural nuances, and entry barriers. Assess market entry strategies, market entry costs, and potential risks associated with each market.
5. Market Entry Strategy:
- Develop a market entry strategy tailored to the specific characteristics and requirements of each target market. Consider factors such as market penetration, market development, product adaptation, pricing strategy, distribution channels, promotional tactics, and legal considerations. Choose the most appropriate market entry mode, such as exporting, licensing, joint ventures, or direct investment, based on market conditions and strategic objectives.
6. Risk Assessment and Mitigation:
- Evaluate potential risks and challenges associated with entering each overseas market. Identify political, economic, legal, operational, cultural, and competitive risks that may affect market entry and business operations. Develop risk mitigation strategies and contingency plans to address potential challenges and minimize exposure to risks.
7. Feasibility Analysis:
- Conduct a feasibility analysis to assess the feasibility and viability of entering each target market. Evaluate factors such as market demand, competitive intensity, resource requirements, revenue potential, profitability projections, and return on investment (ROI). Determine the feasibility of entering each market and prioritize markets with the highest potential for success.
8. Decision Making:
- Make informed decisions based on the findings of the market selection process and feasibility analysis. Select the overseas markets that best align with the company's strategic objectives, offer the greatest growth opportunities, and have the most favorable risk-reward profile. Develop an action plan and allocate resources to execute market entry strategies effectively.
9. Market Entry and Implementation:
- Execute the chosen market entry strategies and implement the action plan for entering the selected overseas markets. Establish local operations, build distribution networks, launch marketing campaigns, and engage with customers to penetrate the market successfully. Monitor market performance, adapt strategies as needed, and continue to refine market entry efforts over time.
B) Distinguish between Multi domestic strategy and global strategy 7
Ans: Multi-domestic strategy and global strategy are two distinct approaches to international business that companies can adopt based on their objectives, market conditions, and competitive landscape. Here's a comparison between the two:
1. Multi-Domestic Strategy:
- Definition: A multi-domestic strategy involves tailoring products, services, marketing strategies, and operations to meet the specific needs and preferences of local markets. Companies operating under a multi-domestic strategy decentralize decision-making authority to local subsidiaries or divisions, allowing them to adapt to local market conditions independently.
- Localization: In a multi-domestic strategy, products and services are often customized or localized to address cultural differences, language preferences, regulatory requirements, and consumer preferences in each market. This may involve offering different product variations, packaging, pricing, branding, and marketing campaigns tailored to each market.
- Autonomy: Local subsidiaries or divisions have a high degree of autonomy and flexibility to make decisions regarding product design, pricing, distribution, and promotional activities based on local market needs and dynamics. This decentralized approach allows companies to be more responsive to local customer demands and competitive pressures.
- Examples: Companies that pursue a multi-domestic strategy include consumer goods companies like Procter & Gamble, food and beverage companies like Nestlé, and retail chains like Walmart, which customize their offerings to suit local tastes and preferences in different countries.
2. Global Strategy:
- Definition: A global strategy involves standardizing products, services, processes, and marketing strategies across multiple markets to achieve economies of scale, efficiency, and consistency. Companies operating under a global strategy centralize decision-making authority at the corporate level, focusing on standardized products and processes that can be replicated globally.
- Standardization: In a global strategy, companies aim for standardization of products, services, branding, pricing, distribution channels, and marketing communications across different markets. The goal is to create a consistent brand image, customer experience, and operational efficiency worldwide.
- Efficiency: Global strategies leverage economies of scale, production efficiencies, and centralized management to reduce costs, streamline operations, and enhance profitability. By standardizing products and processes, companies can achieve cost savings in manufacturing, procurement, marketing, and distribution.
- Examples: Companies that pursue a global strategy include technology firms like Apple, automotive companies like Toyota, and fast-food chains like McDonald's, which offer standardized products, branding, and customer experiences across diverse markets worldwide.
OR
5. Write short notes on - (any 3): 15
a. Transnational strategy
b. Service culture
Ans: Service culture refers to the set of values, beliefs, and behaviors within an organization that prioritize excellent customer service. It's about creating an environment where everyone, from top management to frontline staff, is committed to delivering exceptional service to customers or clients.
A strong service culture typically includes the following components:
1. Customer focus: Putting the needs and preferences of customers at the center of decision-making and operations.
2. Empowerment: Empowering employees to take ownership of customer interactions and make decisions that benefit the customer without needing constant approval from higher-ups.
3. Continuous improvement: Encouraging a mindset of ongoing improvement in service delivery, processes, and systems to adapt to changing customer needs and market conditions.
4. Clear communication: Ensuring that communication channels are open and transparent, both internally among employees and externally with customers, to foster trust and understanding.
5. Training and development: Investing in training programs to equip employees with the skills and knowledge they need to provide excellent service and handle various customer situations effectively.
6. Recognition and rewards: Recognizing and rewarding employees who demonstrate exceptional service or go above and beyond to satisfy customers, which helps reinforce the desired service-oriented behaviors.
7. Alignment with organizational values: Ensuring that the values and principles of the service culture align with the overall mission and values of the organization, creating consistency and coherence in customer interactions.
8. Accountability: Holding employees accountable for delivering on service standards and addressing any gaps or shortcomings promptly and constructively.
Organizations with a strong service culture tend to enjoy higher levels of customer satisfaction, loyalty, and advocacy, which can ultimately lead to improved financial performance and long-term success.
c. Transfer pricing
Ans: Transfer pricing refers to the pricing of goods, services, or intangible assets transferred between affiliated companies within a multinational corporation (MNC). It involves setting prices for transactions between different divisions, subsidiaries, or entities of the same corporate group, often located in different countries.
Key points about transfer pricing include:
1. Purpose: The primary purpose of transfer pricing is to allocate revenues, costs, and profits fairly and accurately among the various entities within the multinational corporation. Transfer pricing helps determine how profits are distributed across different jurisdictions, impacting tax liabilities, financial reporting, and performance evaluation.
2. Complexity: Transfer pricing can be complex due to the different tax laws, regulations, and accounting standards across countries. Multinational corporations must comply with transfer pricing rules set by tax authorities to prevent tax evasion, profit shifting, and double taxation. These rules typically require transfer prices to be set based on arm's length transactions, meaning prices should be similar to what unrelated parties would agree to in similar circumstances.
3. Methods: Various methods can be used to determine transfer prices, including comparable uncontrolled price (CUP), cost-plus pricing, resale price method, profit split method, and transactional net margin method (TNMM). Each method has its advantages and limitations, and the choice of method depends on factors such as the nature of the transaction, availability of comparable data, and tax regulations in each jurisdiction.
4. Compliance: Multinational corporations must comply with transfer pricing regulations in each country where they operate. This involves documenting transfer pricing policies, conducting benchmarking studies, maintaining relevant financial records, and filing transfer pricing documentation with tax authorities to demonstrate compliance with arm's length principles.
5. Tax Optimization: While transfer pricing is primarily aimed at ensuring fairness and compliance with tax laws, it also presents opportunities for tax optimization within multinational corporations. By strategically setting transfer prices, companies can minimize tax liabilities, optimize cash flows, and enhance overall tax efficiency. However, aggressive transfer pricing practices may attract scrutiny from tax authorities and lead to disputes or penalties.
d. Product adaptation
Ans: Product adaptation, also known as product localization or customization, refers to the process of modifying a product or service to suit the specific needs, preferences, and cultural characteristics of target markets. It involves making adjustments to product features, design, packaging, branding, messaging, and functionality to better align with local market requirements and consumer expectations.
Key aspects of product adaptation include:
1. Market Research: Conducting thorough market research to understand the unique characteristics, preferences, and demands of the target market. This involves analyzing consumer behavior, cultural norms, language preferences, lifestyle trends, regulatory requirements, and competitive dynamics to identify areas for product adaptation.
2. Customization of Features and Design: Adapting product features, specifications, design elements, and functionalities to meet the preferences and expectations of local consumers. This may include adjusting product sizes, colors, shapes, materials, technical specifications, and performance attributes to better suit local tastes, preferences, and usage patterns.
3. Localization of Packaging and Labeling: Modifying product packaging, labeling, and branding elements to resonate with the cultural, linguistic, and regulatory requirements of the target market. This may involve translating product information, instructions, and labeling into local languages, adhering to packaging regulations, and incorporating culturally relevant symbols, colors, and imagery.
4. Branding and Messaging: Tailoring branding strategies, messaging, and communication materials to appeal to the values, beliefs, and aspirations of local consumers. This may involve adapting brand names, logos, slogans, and advertising campaigns to ensure cultural relevance, authenticity, and resonance with the target audience.
5. Adjustment of Pricing and Positioning: Aligning product pricing, positioning, and value proposition with local market conditions, purchasing power, and competitive landscape. This may involve adjusting pricing strategies, discount structures, and promotional offers to reflect local economic factors, consumer behavior, and market dynamics.
6. Compliance with Regulatory Standards: Ensuring compliance with local regulatory standards, product safety regulations, quality certifications, and industry-specific requirements in the target market. This may involve conducting product testing, obtaining certifications, and adhering to labeling, packaging, and environmental regulations to meet local legal and regulatory requirements.
7. Adaptation of Distribution Channels: Modifying distribution channels, logistics, and supply chain processes to accommodate local market conditions, infrastructure, and distribution networks. This may involve establishing partnerships with local distributors, retailers, or e-commerce platforms to ensure efficient product delivery and availability to consumers.
8. Feedback and Iteration: Collecting feedback from local customers, sales channels, and stakeholders to evaluate the effectiveness of product adaptations and identify opportunities for further improvement or refinement. Continuous monitoring, analysis, and iteration of product adaptation strategies help companies stay responsive to evolving market needs and maintain competitiveness in international markets.
e. World bank
Ans: The World Bank is an international financial institution that provides loans, grants, technical assistance, and policy advice to developing countries with the aim of reducing poverty and promoting sustainable development. Established in 1944, the World Bank is comprised of two main institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
Key points about the World Bank include:
1. Mission: The World Bank's mission is to reduce poverty and improve living standards by promoting sustainable development and investing in projects that address key development challenges, such as infrastructure development, education, healthcare, agriculture, environmental conservation, and governance reform.
2. Structure: The World Bank Group consists of five organizations, namely the IBRD, IDA, International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID). Each institution has a specific mandate and focuses on different aspects of development finance and support.
3. Financing: The World Bank provides financial assistance to developing countries through a variety of instruments, including loans, credits, grants, and guarantees. The IBRD primarily lends to middle-income and creditworthy low-income countries, while the IDA provides concessional loans and grants to the world's poorest countries.
4. Policy Advice and Technical Assistance: In addition to financial assistance, the World Bank offers policy advice, technical expertise, and capacity-building support to governments and institutions in developing countries. This includes assistance in areas such as economic policy reform, governance improvement, institutional capacity building, and project implementation.
5. Focus Areas: The World Bank's work spans a wide range of sectors and themes, including poverty reduction, education, healthcare, infrastructure development, climate change mitigation and adaptation, gender equality, social inclusion, private sector development, and disaster risk management.
6. Governance: The World Bank is governed by its member countries, with each member country having a certain number of votes based on its financial contributions. The Board of Governors, consisting of representatives from member countries, provides overall strategic direction and oversight. The day-to-day operations are managed by the Board of Executive Directors, which represents the interests of member countries.
7. Impact: Over the years, the World Bank has played a significant role in supporting development efforts around the world. It has funded thousands of projects in various sectors and countries, contributing to improvements in infrastructure, healthcare, education, agriculture, and other areas. However, it has also faced criticism and controversy over issues such as project effectiveness, environmental impact, social inclusion, and governance.
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