TYBMS SEM 6 Marketing: International Marketing (Q.P. April 2024 with Solution)

 Paper/Subject Code: 86009/Marketing: International Marketing

TYBMS SEM 6: 

Marketing: 

International Marketing 

(Q.P. April 2024 with Solution)

N. B.: 1. All Questions are compulsory

2. All Questions carry equal marks

3. Figures to the right indicate full marks

1. A) Choose the correct alternatives (any 8)            (8M)

1. ..........orientation refers to exporter viewing international marketing as secondary to domestic operations.

a. Ethnocentric Geocentric

b. Polycentric

c. Regio centric

d. Geocentric

Ans: b. Polycentric

2. ............ licensing is a type of international licensing,

a. Strategic alliance

b. takeovers

c. cross

d. partnerships

Ans: c. cross

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

Ans: d. free movement of goods and services

4. ________ is a sister institution of IMF

a. World bank

b. IFO

c, UNICEF

d. RBI

Ans: a. World bank

5. Custom regulations are barriers of trade.

a. tariff 

b. non tariff

c. political

d. social

Ans: b. non tariff

6. Health and safety warnings are included in ________.

a. packaging

b. branding

c. labelling

d. pricing

Ans: c. labelling

7. International marketing is dominated by _______ countries.

a. poor 

b. developing

c. developed

d. rich

Ans:  c. developed

8. Trading blocs give benefits to ________ countries.

a. member

b. non-member

c. rich

d. poor

Ans: a. member

9. Macro environment represents _______ environment.

a. external

b. internal

c. international

d. domestic

Ans: a. external

10. Break Even Pricing means ________ 

a. Only Profit

b. Marginal Profit

c. Only loss

d. No Profit no Loss

Ans:  d. No Profit no Loss

1. B) Match the following (any 7)                (7)

	Column A		Column B
1	Concentrated marketing		Free movement of labour and capital
2	Modern technique of control		Uniform fiscal and monetary policies
3	Distribution channel		Regional economic grouping
4	Low prices in introduction stage		Identifying potential market
5	International marketing research		Export consortia
6	Common market		Penetration pricing
7	Economic union		One single target market
8	Trading bloc		Management by objectives
9	Standardization		Buyback
10	Counter trade		Uniformity in products offered

Ans:

2. A) Differentiate between Domestic marketing and international marketing.    8

Ans:

	Domestics Market	International Marketing
1. Scope	Focuses on marketing within the home country’s boundaries. It involves understanding and serving the local market, where economic, social, cultural, and legal factors are uniform or familiar.	Involves marketing goods or services across multiple countries. This requires understanding and adapting to various economic, social, cultural, and legal environments.
2. Target Market	The target market is limited to a single country or region, making it easier to segment and understand consumer behavior.	The target market spans multiple countries, requiring marketers to deal with a more diverse set of customers with varying needs, preferences, and cultural differences.
3. Competition	Competition is usually within the same country and limited to domestic competitors. The market is more predictable.	Competition is global and includes both domestic and foreign companies. Competitors may have diverse strategies and advantages.
4. Environmental Factors	Focuses on one set of environmental factors such as local culture, politics, economic conditions, and legal requirements.	Marketers must navigate multiple environments, dealing with different cultural, political, economic, and legal landscapes in each country.
5. Complexity	Comparatively simpler as it deals with a homogenous market, familiar language, and common regulations.	More complex due to the diversity of markets, languages, legal systems, and the need for product adaptation to meet local tastes and regulations.
6. Customization	Less need for customization since the products and marketing strategies are tailored to one specific group of consumers.	Often requires significant product adaptation, pricing adjustments, and different marketing strategies to cater to the unique preferences and regulations in each foreign market.
7. Regulation	Subject to a single set of laws and regulations within the home country.	Must comply with multiple sets of regulations and trade laws, including import/export laws, tariffs, and standards across different countries.
8. Currency and exchange rate	No currency risk or concerns about exchange rates, as transactions are conducted in the local currency.	Companies must deal with multiple currencies and manage exchange rate fluctuations, which can impact pricing and profitability.
9. Culture Differences	Marketers deal with a relatively uniform culture, making communication and marketing easier.	Requires sensitivity to a wide variety of cultures, languages, and consumer behaviors, and marketing messages often need to be localized.
10. Risk	Risks are lower and more predictable, as marketers operate in a familiar environment.	Higher risks due to political instability, fluctuating exchange rates, and changing regulations in foreign countries.

B) Enumerate on different types of tariff barriers.        7

Ans:

Tariff barriers are taxes or duties imposed on imported goods to protect domestic industries, regulate trade, or generate revenue. These barriers influence the cost of imported goods, often making them less competitive in the domestic market. Below are the main types of tariff barriers:

1. Specific Tariffs

• Definition: A fixed amount of tax or duty levied per unit of imported goods, regardless of the value of the goods.
• Example: $5 per kilogram of imported rice.
• Impact: Benefits goods with high value but low weight or volume, as the tariff impact on total cost is smaller.

2. Ad Valorem Tariffs

• Definition: A tariff expressed as a percentage of the value of the imported goods.
• Example: A 10% tariff on the total cost of imported electronics.
• Impact: Proportionally higher on expensive goods, making luxury or high-value imports costlier.

3. Compound Tariffs

• Definition: A combination of specific and ad valorem tariffs. Importers pay both a fixed duty and a percentage of the goods’ value.
• Example: $2 per liter of wine plus 5% of the total value.
• Impact: Balances the advantages of both specific and ad valorem tariffs.

4. Revenue Tariffs

• Definition: Tariffs imposed to generate income for the government rather than protect domestic industries.
• Example: Duties on luxury items like jewelry or high-end cars.
• Impact: Common in countries with limited taxation systems or developing economies.

5. Protective Tariffs

• Definition: Designed to shield domestic industries from foreign competition by making imports more expensive.
• Example: High tariffs on imported steel to protect local steel manufacturers.
• Impact: Encourages local production but may lead to inefficiencies or higher prices for consumers.

6. Anti-Dumping Tariffs

• Definition: Special duties imposed on imported goods sold below their fair market value to prevent dumping and protect local industries.
• Example: Tariffs on underpriced foreign steel or textiles.
• Impact: Protects domestic businesses from unfair competition.

7. Retaliatory Tariffs

• Definition: Tariffs imposed as a response to similar measures by another country, often during trade disputes.
• Example: The U.S. imposing tariffs on Chinese goods in response to Chinese tariffs on American goods.
• Impact: Can escalate trade wars and increase tensions between countries.

8. Preferential Tariffs

• Definition: Lower or zero tariffs granted to goods from specific countries under trade agreements.
• Example: Zero tariffs on imports from ASEAN countries under a free trade agreement.
• Impact: Promotes trade within preferential regions but may disadvantage non-participating nations.

9. Seasonal Tariffs

• Definition: Tariffs imposed during specific times of the year, often to protect domestic industries during their peak production seasons.
• Example: Higher tariffs on imported fruits during the local harvest season.
• Impact: Protects local farmers from competition during critical periods.

10. Transit Tariffs

• Definition: Tariffs imposed on goods passing through a country on the way to another destination.
• Example: A transit fee charged for goods transported via a specific country’s ports or land routes.
• Impact: Raises the cost of international trade and discourages certain trade routes.

11. Export Tariffs

• Definition: Duties imposed on goods leaving a country to regulate exports or raise government revenue.
• Example: Tariffs on rare raw materials to conserve resources or encourage domestic processing.
• Impact: Reduces exports of certain goods, promoting local value addition.

OR

2. C) Explain briefly about SAARC and its objectives.        8

Ans:

The South Asian Association for Regional Cooperation (SAARC) is a regional intergovernmental organization founded in 1985 with the aim of promoting economic, social, and cultural development among its member countries in South Asia. It also seeks to foster mutual understanding and collaboration to address regional challenges.

Member Countries

The organization comprises eight member states:

1. Afghanistan
2. Bangladesh
3. Bhutan
4. India
5. Maldives
6. Nepal
7. Pakistan
8. Sri Lanka

Objectives of SAARC

SAARC focuses on cooperation and collaboration among its members to achieve the following objectives:

1. Economic Growth and Development:

   • Promote regional trade, investments, and economic cooperation.
   • Enhance collective self-reliance among member countries.

2. Social Progress:

   • Improve the quality of life through programs targeting health, education, and poverty alleviation.
   • Support initiatives for women empowerment and child welfare.

3. Cultural Collaboration:

   • Promote and preserve the cultural heritage and traditions of the region.
   • Encourage people-to-people contact through exchanges and joint activities.

4. Peace and Stability:

   • Foster good neighborly relations among member states.
   • Address shared security concerns, including terrorism, climate change, and disaster management.

5. Technological and Scientific Advancement:

   • Encourage sharing of knowledge, research, and technology.
   • Support innovation and technical collaboration.

6. Sustainable Development:

   • Address environmental issues and ensure sustainable use of resources.
   • Cooperate on regional challenges like water management and energy security.

 Areas of Cooperation

SAARC operates through collaborative efforts in areas such as:

• Trade and economic integration (e.g., SAARC Preferential Trading Arrangement - SAPTA, South Asian Free Trade Area - SAFTA).
• Education, health, and agriculture.
• Environment, disaster response, and sustainable development.
• Science, technology, and poverty alleviation.

Challenges

Despite its objectives, SAARC faces challenges, including:

• Political tensions among member states, especially between India and Pakistan.
• Inequality in economic development among members.
• Ineffective implementation of agreements due to a lack of political will.

D) As an international marketing student suggest any three international market entry methods. 7

Ans:

As an international marketing student, you can suggest several market entry methods, depending on factors such as the level of investment, control, risk tolerance, and market potential. Here are three commonly used international market entry methods:

1. Exporting

• Description: Selling goods or services produced in one country to customers in another country.
• Types:
  • Direct Exporting: The company directly manages sales and shipping to the foreign market.
  • Indirect Exporting: Using intermediaries like agents, distributors, or export management companies.
• Advantages:
  • Low investment and risk.
  • Retain production control in the home country.
  • Quick entry into foreign markets.
• Disadvantages:
  • Limited control over distribution and customer relationships in the foreign market.
  • Vulnerability to trade barriers and exchange rate fluctuations.
• Example: A small business exporting its products via e-commerce platforms like Amazon to international customers.

2. Licensing and Franchising

• Description: Granting the rights to a foreign company or individual to use your intellectual property (licensing) or business model (franchising) in exchange for fees or royalties.
• Licensing:
  • The licensee produces and sells products under the licensor's brand or patents.
• Franchising:
  • The franchisee operates a business using the franchisor's model, branding, and support systems.
• Advantages:
  • Low-cost market entry.
  • Leverages local expertise and resources.
  • Reduces operational and regulatory challenges.
• Disadvantages:
  • Less control over brand and operations.
  • Risk of intellectual property theft or misuse.
• Example:
  • Licensing: Coca-Cola licensing its bottling rights to local bottlers in different countries.
  • Franchising: McDonald's expanding globally through franchise agreements.

3. Joint Ventures (JV)

• Description: Establishing a new entity with a foreign partner, sharing ownership, resources, and profits.
• Advantages:
  • Access to local market knowledge and networks.
  • Shared financial burden and risk.
  • Helps navigate regulatory restrictions requiring local partnerships.
• Disadvantages:
  • Potential conflicts in management and strategic goals.
  • Profits are shared with the partner.
  • Risk of losing control over critical operations.
• Example: Toyota forming joint ventures with local companies like GAC Toyota Motor in China to penetrate the Chinese automotive market.

3. A) Explain briefly the steps in international marketing research

Ans:

International marketing research involves gathering and analyzing information to aid in making informed decisions about entering and succeeding in global markets. The process includes several systematic steps to ensure the data collected is relevant, accurate, and actionable.

Steps in International Marketing Research

1. Define the Research Problem and Objectives:

   • Clearly outline the purpose of the research.
   • Identify the specific questions to be answered (e.g., market potential, consumer behavior, competition).
   • Set objectives such as understanding cultural differences or estimating market demand.

2. Develop the Research Plan:

   • Decide on the type of data required (primary or secondary).
   • Choose appropriate research methods (e.g., surveys, interviews, focus groups).
   • Identify target markets and populations.
   • Plan the sampling technique and size.

3. Collect Secondary Data:

   • Gather existing information from reliable sources such as government reports, industry publications, trade associations, or online databases.
   • Secondary data helps provide context and reduces the scope of primary research.

4. Conduct Primary Research:

   • Gather original data specific to the research objectives using techniques like:
     • Surveys: To understand consumer preferences and perceptions.
     • Interviews: For detailed qualitative insights.
     • Focus Groups: To test product concepts or marketing messages.
     • Observation: To study consumer behavior in natural settings.
   • Use local expertise or partnerships to overcome cultural and language barriers.

5. Analyze Cultural and Environmental Factors:

   • Account for cultural, social, legal, and economic differences in the target markets.
   • Adapt research tools to ensure data validity (e.g., translating questionnaires, addressing social norms).

6. Analyze and Interpret the Data:

   • Process and clean the data to ensure accuracy.
   • Use statistical tools to identify trends, correlations, and patterns.
   • Interpret findings in the context of the international market environment.

7. Report Findings and Make Recommendations:

   • Summarize insights clearly and concisely.
   • Highlight key findings relevant to the research objectives.
   • Provide actionable recommendations for decision-making (e.g., market entry strategies, product adaptation).

8. Monitor and Evaluate the Research Process:

   • Review the research methodology to ensure it meets the objectives.
   • Incorporate lessons learned into future research initiatives.

B) Discuss Hofstede's six dimension of culture.

Ans:

Hofstede's Six Dimensions of Culture provide a framework for understanding cultural differences across nations and their impact on behavior in personal and business contexts. Developed by Geert Hofstede, this model is widely used in international marketing, cross-cultural communication, and management to navigate cultural diversity effectively.

1. Power Distance Index (PDI)

• Definition: Measures the degree to which less powerful members of a society accept and expect unequal power distribution.
• Characteristics:
  • High PDI: Societies accept hierarchical structures and authority without much question. Subordinates are less likely to challenge decisions. (e.g., Malaysia, Mexico)
  • Low PDI: Societies emphasize equality and participatory decision-making. Power structures are flatter. (e.g., Denmark, Sweden)
• Implications:
  • High PDI cultures prefer centralized authority, formal management structures, and clear hierarchies.
  • Low PDI cultures value decentralized decision-making and employee empowerment.

2. Individualism vs. Collectivism (IDV)

• Definition: Explores the extent to which people prioritize personal goals over group goals.
• Characteristics:
  • Individualistic Cultures: Focus on personal achievements, independence, and self-expression. Relationships are more transactional. (e.g., USA, UK)
  • Collectivist Cultures: Emphasize group harmony, loyalty, and interdependence. Relationships are based on long-term commitment. (e.g., China, India)
• Implications:
  • Marketing in individualistic cultures may focus on personal benefits and uniqueness.
  • In collectivist cultures, messaging should highlight group benefits, family, and community values.

3. Masculinity vs. Femininity (MAS)

• Definition: Examines the preference for traditionally "masculine" traits like competitiveness and success versus "feminine" traits like caring and quality of life.
• Characteristics:
  • Masculine Cultures: Value ambition, material success, and assertiveness. (e.g., Japan, Germany)
  • Feminine Cultures: Focus on cooperation, modesty, and work-life balance. (e.g., Sweden, Netherlands)
• Implications:
  • Masculine cultures may respond to advertising emphasizing achievement, success, and status.
  • Feminine cultures prefer messages that stress well-being, relationships, and sustainability.

4. Uncertainty Avoidance Index (UAI)

• Definition: Reflects how comfortable a society is with uncertainty, ambiguity, and risk.
• Characteristics:
  • High UAI: Prefer strict rules, clear instructions, and structured environments to minimize risk. (e.g., Greece, Portugal)
  • Low UAI: More open to change, innovation, and risk-taking. Flexibility is valued. (e.g., Singapore, Denmark)
• Implications:
  • In high UAI cultures, businesses should emphasize stability, security, and detailed planning.
  • In low UAI cultures, highlight creativity, innovation, and adaptability in offerings.

5. Long-Term Orientation vs. Short-Term Normative Orientation (LTO)

• Definition: Indicates whether a culture focuses on long-term planning and future rewards or values tradition and immediate results.
• Characteristics:
  • Long-Term Orientation: Focus on perseverance, savings, and future planning. Adaptable to changing circumstances. (e.g., China, South Korea)
  • Short-Term Orientation: Emphasize tradition, social obligations, and quick results. Resistant to change. (e.g., USA, Pakistan)
• Implications:
  • Long-term cultures respond well to strategies that emphasize durability, sustainability, and future growth.
  • Short-term cultures may prefer promotions, discounts, and immediate gratification.

6. Indulgence vs. Restraint (IVR)

• Definition: Measures the extent to which a culture allows gratification of basic human desires versus regulating them through strict norms.
• Characteristics:
  • Indulgent Cultures: Encourage fun, leisure, and personal freedom. (e.g., USA, Australia)
  • Restrained Cultures: Value self-discipline, societal norms, and control of desires. (e.g., Russia, China)
• Implications:
  • Indulgent cultures may respond positively to campaigns focusing on lifestyle, entertainment, and pleasure.
  • Restrained cultures may prefer messaging that emphasizes responsibility, tradition, and practicality.

Application in International Marketing

Understanding these dimensions helps businesses adapt their strategies to fit cultural preferences. For example:

• Product Development: Products should align with cultural values, e.g., luxury goods in high masculinity cultures.
• Promotion: Messaging must resonate with cultural norms, e.g., family-oriented ads in collectivist cultures.
• Negotiation: Business practices should respect cultural hierarchies (PDI) and risk tolerance (UAI).

OR

3. C) What is international marketing environment? Explain economic environment. 8

Ans:

The international marketing environment refers to the external forces and conditions that influence a company's ability to operate and succeed in foreign markets. It encompasses a broad range of factors, both controllable and uncontrollable, that shape how a business markets its products or services internationally.

The international marketing environment is divided into three primary categories:

1. Economic Environment
2. Political and Legal Environment
3. Cultural and Social Environment
4. Technological Environment
5. Competitive Environment
6. Demographic Environment

Each of these factors varies across countries, influencing decisions such as market entry, pricing, distribution, and promotional strategies.

Economic Environment

The economic environment in international marketing refers to the overall economic conditions and structures of a country or region that affect business operations. It encompasses factors like income levels, market size, economic systems, trade policies, and infrastructure. Understanding the economic environment is crucial for companies to assess market potential, anticipate risks, and design effective marketing strategies.

Components of the Economic Environment

1. Economic Systems:

   • Capitalist (Market Economy): Private ownership of resources; decisions are driven by supply and demand (e.g., USA).
   • Socialist (Planned Economy): Government controls and plans economic activities (e.g., North Korea, Cuba).
   • Mixed Economy: Combines elements of both capitalism and socialism (e.g., India, France).

2. Economic Development Levels:

   • Developed Economies: High-income countries with advanced infrastructure, technology, and stable economies (e.g., Germany, Japan).
   • Developing Economies: Countries in transition with moderate income levels and growth potential (e.g., Brazil, India).
   • Emerging Markets: Rapidly growing economies with significant investment opportunities (e.g., China, South Africa).
   • Underdeveloped Economies: Low-income countries with limited infrastructure and market potential.

3. Market Size and Income Distribution:

   • Population size and purchasing power influence market demand.
   • Income inequality affects segmentation and product positioning.

4. Currency and Exchange Rates:

   • Fluctuations in currency values can impact pricing, profitability, and competitiveness in foreign markets.
   • Stable currencies attract foreign investment.

5. Economic Indicators:

   • Gross Domestic Product (GDP): Measures the size and health of the economy.
   • Inflation Rate: Affects consumer purchasing power and pricing strategies.
   • Unemployment Rate: Indicates labor market conditions and consumer spending capacity.

6. Trade Policies:

   • Tariffs, quotas, and trade agreements shape the ease of doing business internationally.
   • Free trade agreements (e.g., USMCA, ASEAN) can reduce trade barriers.

7. Infrastructure:

   • Transportation, communication networks, energy supply, and technology are essential for distribution and marketing.
   • Well-developed infrastructure supports efficient market entry and operations.

8. Industry Structure and Competition:

   • Analyzing the local industry structure (e.g., monopolies, oligopolies) helps identify competitive dynamics.

9. Foreign Direct Investment (FDI) Policies:

   • Governments' openness to foreign investment influences market entry decisions.

Impact of the Economic Environment on International Marketing

1. Market Selection:

   • Companies prioritize countries with favorable economic conditions and growth potential.

2. Pricing Strategies:

   • Cost structures and consumer affordability influence pricing decisions.

3. Product Adaptation:

   • Products may need to be tailored to match local economic realities (e.g., lower-cost versions in price-sensitive markets).

4. Distribution Channels:

   • Infrastructure development impacts supply chain design and logistics.

5. Promotion and Branding:

   • Marketing messages may be adapted to resonate with consumers' economic realities.

D) Explain economic integration and its types            7

Ans:

Economic Integration refers to the process by which different countries or regions come together to reduce or eliminate trade barriers, coordinate monetary and fiscal policies, and enhance economic cooperation. The ultimate goal is to create a unified economic region that fosters trade, investment, and overall economic growth among its members.

Economic integration is achieved through agreements that vary in scope and intensity. Below are the types of economic integration, from the least to the most integrated forms:

1. Preferential Trade Agreement (PTA)

• Definition: A basic form of integration where member countries agree to reduce tariffs and other trade barriers on certain goods from participating nations.
• Features:
  • Limited to specific goods or sectors.
  • Tariff reductions are not extended to non-member countries.
• Examples:
  • The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement.
• Objective: Promote trade in selected sectors without full trade liberalization.

2. Free Trade Area (FTA)

• Definition: Member countries agree to eliminate tariffs, quotas, and trade barriers on goods and services traded among them.
• Features:
  • Members maintain their own trade policies with non-member countries.
  • No common external tariff.
• Examples:
  • North American Free Trade Agreement (NAFTA), now replaced by the United States-Mexico-Canada Agreement (USMCA).
  • Association of Southeast Asian Nations Free Trade Area (AFTA).
• Objective: Enhance trade between member countries while preserving autonomy in external trade.

3. Customs Union

• Definition: Builds on an FTA by adding a common external tariff for non-member countries.
• Features:
  • Free trade among members.
  • Uniform tariff rates on imports from non-member countries.
• Examples:
  • The Southern African Customs Union (SACU).
  • The Gulf Cooperation Council (GCC) Customs Union.
• Objective: Simplify trade relations with the rest of the world and strengthen internal trade.

4. Common Market

• Definition: Extends a customs union by allowing the free movement of goods, services, capital, and labor among member states.
• Features:
  • Removes non-tariff barriers, such as immigration restrictions and licensing requirements.
  • Promotes mobility of factors of production (e.g., workers and investments).
• Examples:
  • The European Economic Area (EEA).
  • The Caribbean Community (CARICOM).
• Objective: Create a more integrated regional economy.

5. Economic Union

• Definition: A highly integrated system where member countries coordinate economic policies in addition to having a common market.
• Features:
  • Harmonization of fiscal, monetary, and social policies.
  • Members may share a common currency.
• Examples:
  • The European Union (EU) is the most notable example, especially within the Eurozone where members use the euro as their currency.
• Objective: Achieve deeper integration to reduce disparities and improve economic efficiency.

6. Political Union

• Definition: The most advanced form of economic integration, where member states merge their economies, political institutions, and governance.
• Features:
  • Centralized authority governs key economic and political decisions.
  • Unified foreign policy and possibly a single government structure.
• Examples:
  • While no perfect example exists today, the European Union exhibits some characteristics of a political union, such as a shared parliament and judiciary.
• Objective: Form a single political and economic entity.

Advantages of Economic Integration

• Trade Expansion: Reduces barriers and promotes free trade.
• Economic Efficiency: Specialization and resource optimization.
• Market Access: Larger markets for goods and services.
• Investment Opportunities: Attracts foreign direct investment (FDI).
• Political Cooperation: Reduces conflicts and fosters stability.

Challenges of Economic Integration

• Loss of national sovereignty in higher forms of integration.
• Unequal benefits among member countries.
• Adjustment costs for industries exposed to new competition.
• Risk of dependency on larger economies within the group.

4. A) Discuss bases for market segmentation in international marketing.         8

Ans:

Market segmentation in international marketing involves dividing a diverse market into distinct groups based on specific characteristics to tailor marketing efforts and products to each segment. This strategy helps businesses address the unique needs and preferences of customers in different regions or countries. The primary bases for market segmentation in international marketing are:

1. Geographic Segmentation

• Definition: Dividing the market based on location.
• Examples:
  • Country (e.g., USA, India, Japan)
  • Region (e.g., North America, Asia-Pacific)
  • Climate (e.g., tropical, temperate, arid)
  • Urban vs. rural areas
• Importance:
  • Addresses regional preferences, climate conditions, or logistical factors.
  • Tailors products for local regulations and cultural norms.

2. Demographic Segmentation

• Definition: Dividing the market based on population characteristics.
• Examples:
  • Age (children, millennials, seniors)
  • Gender
  • Income level (low, middle, high income)
  • Education level
  • Occupation
  • Family size and lifecycle stage
• Importance:
  • Aligns products and pricing with the economic capacity and needs of different groups.
  • Targets specific groups like students, professionals, or retirees.

3. Psychographic Segmentation

• Definition: Grouping customers based on psychological traits and lifestyle.
• Examples:
  • Values and beliefs (e.g., environmental consciousness)
  • Attitudes (e.g., risk-averse vs. risk-takers)
  • Lifestyle (e.g., luxury-seeking, fitness-focused)
  • Social status (e.g., working-class, elite)
• Importance:
  • Helps in crafting messages and products that resonate with the emotional and psychological needs of customers.

4. Behavioral Segmentation

• Definition: Categorizing consumers based on their behavior and interaction with the product or brand.
• Examples:
  • Purchase behavior (frequent vs. occasional buyers)
  • Usage rate (light, medium, heavy users)
  • Brand loyalty (loyal customers, switchers)
  • Benefits sought (e.g., quality, convenience, value for money)
• Importance:
  • Helps in designing loyalty programs and targeting high-value customers.
  • Offers insights for positioning based on usage or benefits.

5. Cultural Segmentation

• Definition: Segmentation based on cultural factors and shared traditions.
• Examples:
  • Language
  • Religion
  • Customs and traditions
  • Festivals and events
• Importance:
  • Ensures sensitivity to cultural values and avoids marketing blunders.
  • Adapts advertising and branding to align with local customs.

6. Economic Segmentation

• Definition: Dividing the market based on economic conditions and purchasing power.
• Examples:
  • Developed, developing, or emerging economies
  • Per capita income
  • Market size and growth potential
• Importance:
  • Prioritizes markets with high purchasing power or growth opportunities.
  • Tailors product offerings to fit the economic context (e.g., luxury vs. value products).

7. Technological Segmentation

• Definition: Segmentation based on technological adoption and usage.
• Examples:
  • Tech-savvy users vs. non-tech users
  • Mobile-first consumers
  • Adoption of digital platforms
• Importance:
  • Targets markets with specific technological needs or readiness.
  • Adapts products for different levels of digital infrastructure.

8. Legal and Political Segmentation

• Definition: Segmentation based on the regulatory and political environment.
• Examples:
  • Countries with strict regulations vs. lenient regulations
  • Free-trade zones vs. protected economies
• Importance:
  • Identifies markets that align with the company’s operational capabilities.
  • Plans for regulatory compliance and risk management.

9. Benefit-Based Segmentation

• Definition: Grouping customers based on the specific benefits they seek.
• Examples:
  • Price-sensitive vs. quality-focused customers
  • Convenience seekers
  • Health-conscious consumers
• Importance:
  • Focuses on delivering the value customers prioritize.
  • Differentiates products to meet specific expectations.

10. Global vs. Local Segmentation

• Definition: Segmentation based on similarities or differences in global and local preferences.
• Examples:
  • Global segments: Similar preferences across regions (e.g., youth interested in global fashion brands).
  • Local segments: Specific preferences tied to local tastes and traditions.
• Importance:
  • Balances global standardization with local customization for efficiency and relevance.

B) Mention different types of international distribution channels.            7

Ans:

International distribution channels refer to the pathways through which goods and services are delivered from producers to consumers in foreign markets. These channels are critical for companies seeking to expand globally. Below are the primary types of international distribution channels:

1. Direct Distribution Channels

• Exporting: Selling products directly to foreign buyers or through online platforms without intermediaries.
• Direct Sales Offices: Establishing a branch or sales office in the foreign market to sell products directly.
• E-commerce: Utilizing online marketplaces or company-owned websites to sell directly to international consumers.

2. Indirect Distribution Channels

• Export Agents/Brokers: Independent agents that facilitate sales between exporters and foreign buyers.
• Export Management Companies (EMCs): Specialized firms that handle export operations on behalf of manufacturers.
• Trading Companies: Large firms that purchase goods from manufacturers and resell them in foreign markets.

3. Distributors

• Foreign distributors purchase products from the manufacturer, assume ownership, and resell them in the target market. They handle logistics, marketing, and after-sales services.

4. Retailers

• Selling products through large retail chains, local shops, or online platforms in the target country.

5. Franchising

• Allowing foreign businesses to operate under the company’s brand and business model in exchange for fees or royalties.

6. Licensing

• Permitting foreign companies to produce and distribute products under the company’s brand name in exchange for a licensing fee.

7. Joint Ventures

• Partnering with a local company to jointly produce and distribute goods, leveraging local knowledge and networks.

8. Piggybacking

• Using another company’s established distribution network in the target country to distribute your products.

9. Strategic Alliances

• Forming partnerships with foreign businesses to share resources and distribution channels.

10. Third-Party Logistics Providers (3PLs)

• Outsourcing logistics and distribution tasks to specialized international firms, such as DHL or FedEx.

11. International Wholesalers

• Selling products in bulk to foreign wholesalers who then distribute them to retailers or final customers.

12. Government or Institutional Channels

• Selling directly to foreign governments or institutions (e.g., via government tenders or contracts).

OR

4. C) Highlight various international pricing methods.        8

Ans:

International pricing methods are strategies used by companies to determine the price of their products or services in different countries. Pricing in international markets must account for factors such as production costs, market demand, competition, currency fluctuations, and local economic conditions. The main international pricing methods include:

1. Cost-Plus Pricing

• Description: Adding a fixed markup to the cost of production to set the selling price.
• Advantages:
  • Simple to calculate.
  • Ensures all costs are covered.
• Disadvantages:
  • May not reflect market demand or competition.
• Example: A manufacturer calculates the cost of producing a product (including shipping and tariffs) and adds a 20% profit margin.

2. Market-Oriented Pricing

• Description: Setting prices based on the demand, purchasing power, and competitive conditions in the target market.
• Advantages:
  • Aligns with consumer expectations.
  • More competitive in local markets.
• Disadvantages:
  • Requires extensive market research.
  • May lead to price disparities across regions.
• Example: A company prices products lower in developing countries to match local affordability while maintaining higher prices in developed markets.

3. Penetration Pricing

• Description: Setting a low initial price to gain market share and attract customers.
• Advantages:
  • Builds market share quickly.
  • Discourages competitors from entering the market.
• Disadvantages:
  • Can lead to lower profit margins initially.
  • Difficult to raise prices later without resistance.
• Example: A new smartphone brand enters an international market with aggressive pricing to attract budget-conscious consumers.

4. Skimming Pricing

• Description: Setting a high price initially to target affluent or less price-sensitive customers, then gradually lowering it.
• Advantages:
  • Maximizes profits in the early stages.
  • Helps recover high development and marketing costs.
• Disadvantages:
  • May attract competitors quickly.
  • Limited appeal to price-sensitive consumers.
• Example: Apple pricing new iPhone models at a premium during launch and reducing prices later.

5. Dynamic Pricing

• Description: Adjusting prices based on real-time factors like demand, competition, and currency fluctuations.
• Advantages:
  • Maximizes revenue opportunities.
  • Reflects current market conditions.
• Disadvantages:
  • Complex to manage.
  • May confuse or alienate customers.
• Example: Airlines or hotel chains adjusting prices based on demand during peak travel seasons.

6. Geographical Pricing

• Description: Setting prices based on the geographic location of the target market, considering factors like tariffs, transportation costs, and local economic conditions.
• Advantages:
  • Accounts for local market variations.
  • Supports affordability in diverse regions.
• Disadvantages:
  • May create pricing discrepancies across markets.
• Example: A product costing $100 in the U.S. may be priced at $80 in India due to local affordability.

7. Psychological Pricing

• Description: Pricing products in a way that appeals to consumer psychology, such as setting prices just below a round number (e.g., $9.99 instead of $10).
• Advantages:
  • Creates a perception of better value.
• Disadvantages:
  • May not work in all cultural contexts.
• Example: Global retailers like Walmart using psychological pricing for international customers.

8. Premium Pricing

• Description: Setting a high price to reflect superior quality, exclusivity, or brand prestige.
• Advantages:
  • Enhances brand image.
  • Attracts luxury market segments.
• Disadvantages:
  • Limited to affluent consumers.
• Example: Luxury brands like Gucci maintaining high prices to emphasize exclusivity.

9. Transfer Pricing

• Description: Pricing goods or services exchanged between subsidiaries of the same multinational company in different countries.
• Advantages:
  • Helps optimize global tax liabilities.
• Disadvantages:
  • Subject to strict regulatory scrutiny.
• Example: A U.S.-based parent company selling raw materials to its subsidiary in Europe at a specified transfer price.

10. Bundle Pricing

• Description: Offering a package of products or services at a single price, often at a discount compared to buying items individually.
• Advantages:
  • Encourages larger purchases.
  • Appeals to value-conscious customers.
• Disadvantages:
  • May not work if customers prefer individual options.
• Example: Software companies like Microsoft offering bundles of Office tools at discounted rates in international markets.

D) Explain various international promotional tools.    7

Ans:

International promotional tools are methods used by companies to communicate with and persuade global audiences about their products or services. These tools must be adapted to cultural, economic, and legal differences across markets. The main international promotional tools include:

1. Advertising

• Description: Paid, non-personal communication designed to inform and persuade a global audience about a product or service.
• Mediums: Television, radio, print, online ads, and billboards.
• Advantages: Broad reach, customizable for cultural preferences, and strong brand-building potential.
• Examples: Coca-Cola’s localized TV commercials tailored to regional festivals or holidays.

2. Sales Promotion

• Description: Short-term incentives designed to stimulate immediate purchase or action.
• Tools:
  • Discounts and coupons.
  • Free samples and trials.
  • Contests and sweepstakes.
  • Loyalty programs.
• Advantages: Drives quick sales, enhances brand awareness, and encourages trial in new markets.
• Examples: McDonald’s promotions tailored to local tastes, like special menu deals during cultural festivals.

3. Personal Selling

• Description: Direct interaction between a company’s salesforce and customers to build relationships and close deals.
• Advantages: Personalized communication, effective for complex or high-value products.
• Challenges: Requires culturally aware sales representatives and significant investment.
• Examples: Luxury car brands like BMW using personal sales teams to interact with high-net-worth individuals globally.

4. Public Relations (PR)

• Description: Building and maintaining a positive image and fostering goodwill in international markets.
• Tools:
  • Press releases and media coverage.
  • Sponsorship of local events.
  • Corporate social responsibility (CSR) activities.
• Advantages: Enhances credibility and trust, builds long-term relationships.
• Examples: Companies like Nike sponsoring local sports events or engaging in sustainable initiatives.

5. Direct Marketing

• Description: Direct communication with consumers to generate a response or transaction.
• Tools:
  • Email campaigns.
  • Catalogs and brochures.
  • Mobile messaging.
• Advantages: High customization and measurable results.
• Examples: Amazon using email marketing to suggest personalized recommendations to international customers.

6. Digital and Social Media Marketing

• Description: Leveraging online platforms and social networks to reach global audiences.
• Tools:
  • Search engine marketing (SEM).
  • Social media campaigns (Facebook, Instagram, TikTok, etc.).
  • Influencer partnerships.
• Advantages: Cost-effective, interactive, and allows precise targeting of diverse audiences.
• Examples: Global brands like Adidas partnering with local influencers for social media campaigns.

7. Trade Shows and Exhibitions

• Description: Participating in international events to showcase products and network with potential buyers.
• Advantages: Facilitates direct interactions, networking opportunities, and market visibility.
• Examples: Technology companies showcasing innovations at global events like CES (Consumer Electronics Show).

8. Sponsorship and Event Marketing

• Description: Supporting events, sports teams, or cultural activities to enhance brand visibility and association.
• Advantages: Builds goodwill and connects with audiences emotionally.
• Examples: Visa sponsoring the Olympics to strengthen its global presence.

5. A) Mention the steps in selection of overseas market        8

Ans:

Selecting an overseas market involves a systematic process to identify the most suitable and profitable market for a business's products or services. The key steps include:

1. Define Objectives and Resources:

   • Identify the company's export goals and assess the resources available for international expansion.

2. Market Research and Screening:

   • Analyze potential markets based on factors like demand, competition, market size, and growth potential.
   • Use macroeconomic indicators (GDP, population, income levels) and trade data to shortlist promising markets.

3. Assess Market Environment:

   • Evaluate political, economic, social, technological, legal, and environmental factors (PESTLE analysis).
   • Consider trade policies, tariffs, and non-tariff barriers.

4. Analyze Market Entry Barriers:

   • Study cultural differences, language barriers, regulatory requirements, and operational challenges in potential markets.

5. Assess Competitive Landscape:

   • Identify competitors, their market shares, strategies, and customer preferences.

6. Select Entry Modes:

   • Decide on an appropriate mode of entry (e.g., exporting, licensing, joint ventures, or direct investment).

7. Conduct Risk Assessment:

   • Evaluate financial, political, and operational risks associated with entering each market.

8. Pilot Testing or Feasibility Study:

   • Test the market with small-scale operations or conduct feasibility studies to validate assumptions.

9. Finalize Market Selection:

   • Based on the analysis, choose the market(s) that align with the company’s objectives, resources, and risk tolerance.

10. Develop a Market Entry Strategy:

    • Create a tailored plan for marketing, distribution, pricing, and operational setup in the selected market.

B) Distinguish between Multi domestic strategy and global strategy    7

Ans:

	Multi-Domestic Strategy	Global Strategy
1. Defination	A multi-domestic strategy involves tailoring products, marketing, and operations to meet the specific needs and preferences of each local market. Companies adopting this strategy operate independently in each country, allowing them to respond effectively to local demands and cultural nuances.	A global strategy seeks to standardize products, marketing, and operations across multiple countries. Companies employing this strategy aim for a unified approach that leverages economies of scale and presents a consistent brand image worldwide.
2. Product offering	Customization: Products are often adapted or customized to fit local tastes, cultural preferences, and regulatory requirements.   Examples: Fast food chains like McDonald's offer menu items that cater to local tastes, such as the McSpicy Paneer in India.	Standardization: Products are standardized with minimal adaptation, focusing on a universal appeal. The aim is to present a consistent brand across markets.   Examples: Companies like Coca-Cola offer the same core product worldwide, with minimal variations.
3. Marketing Approach	Local Focus: Marketing strategies are developed specifically for each market, considering local culture, language, and consumer behavior. Promotional Strategies: Local advertising channels, messages, and campaigns are utilized to resonate with the target audience.	Unified Approach: Marketing strategies are developed to appeal to a global audience, emphasizing commonalities across markets. Promotional Strategies: A consistent advertising campaign is used worldwide, with only minor adjustments to suit local languages or regulations.
4. Organizational Structure	Decentralized Structure: Each country operation is often run independently, with significant autonomy in decision-making. Local managers have the authority to adapt strategies based on market conditions.	Centralized Structure: Decision-making is often centralized at the headquarters, with a focus on maintaining control over global branding and operations.
5. Cost Structure	Higher Costs: Customization leads to higher operational costs due to the need for separate product development, marketing strategies, and management for each market.   Economies of Scale: Limited economies of scale as operations are tailored to local markets.	Lower Costs: Standardization can lead to significant cost savings through economies of scale in production, marketing, and distribution.   Cost Efficiency: More efficient use of resources by avoiding redundancy in operations.
6. Competition Advantages	Local Responsiveness: The ability to adapt to local market conditions provides a competitive edge, particularly in diverse and fragmented markets.   Customer Satisfaction: Higher levels of customer satisfaction due to tailored offerings.	Often requires significant product adaptation, pricing adjustments, and different marketing strategies to cater to the unique preferences and regulations in each foreign market.
7. Risk Management	Localized Risk: Risks are often localized; issues in one market may not significantly impact others.   Flexibility: Ability to adapt strategies quickly in response to local challenges or changes.	Global Risk: More exposure to global economic fluctuations, regulatory changes, and competitive pressures.   Less Flexibility: Slower response times due to centralized decision-making.

 

OR

5. Write short notes on - (any 3)        (15)

a. Transnational strategy

Ans:

Transnational strategy is a business approach used by multinational companies to achieve a balance between global efficiency and local responsiveness. It focuses on integrating global operations while adapting products and services to meet the specific needs of local markets.

Characteristics:

1. Global Efficiency: Streamlines operations to reduce costs and leverage economies of scale.
2. Local Responsiveness: Customizes offerings to suit cultural, regulatory, and market-specific demands.
3. Knowledge Sharing: Promotes collaboration and innovation by sharing resources, expertise, and best practices across borders.
4. Integrated Structure: Combines centralized and decentralized decision-making to optimize global and local advantages.

Benefits:

• Competitive edge in diverse markets.
• Flexibility to adapt to changing global and regional trends.
• Enhanced customer satisfaction through tailored solutions.

Example:

Unilever follows a transnational strategy by standardizing core products like Dove soap while customizing other products and marketing strategies to fit regional tastes and preferences.

This strategy is complex to implement but can yield significant benefits by addressing global and local market needs simultaneously.

b. Service culture

Ans:

Service culture refers to the values, behaviors, and attitudes within an organization that prioritize exceptional customer service. It is a shared commitment by employees at all levels to deliver high-quality experiences to customers, fostering loyalty and satisfaction.

Elements:

1. Customer-Centric Values: Emphasizes meeting and exceeding customer expectations.
2. Employee Empowerment: Encourages employees to take initiative and make decisions that benefit the customer.
3. Continuous Improvement: Focuses on learning, feedback, and innovation to enhance service delivery.
4. Leadership Support: Leaders model and reinforce a service-oriented mindset.

Benefits:

• Builds strong customer relationships.
• Differentiates the organization in competitive markets.
• Improves employee engagement and morale.

Example:

Brands like Disney and Ritz-Carlton are known for their strong service cultures, where employees are trained and motivated to deliver memorable customer experiences consistently.

Cultivating a service culture requires alignment of policies, training, and recognition programs with the organization’s customer service goals.

c. Transfer pricing

Ans:

Transfer pricing refers to the pricing of goods, services, or intellectual property transferred between divisions, subsidiaries, or entities within the same multinational company. It determines how profits are allocated across different jurisdictions where the company operates.

Aspects:

1. Purpose: Often used for operational efficiency, resource allocation, and tax optimization.
2. Arm’s Length Principle: Pricing should reflect market conditions as if the transactions were between unrelated parties.
3. Tax Implications: Transfer pricing can affect the taxable income of subsidiaries in various countries, leading to scrutiny by tax authorities.
4. Regulations: Governments and international organizations, like the OECD, provide guidelines to ensure compliance and prevent tax avoidance.

Example:

A U.S.-based parent company may sell products to its European subsidiary. The transfer price impacts the profits reported in each region, which affects tax liabilities.

Proper documentation and adherence to local regulations are crucial to avoid disputes and penalties related to transfer pricing.

d. Mass marketing strategy

Ans:

Mass marketing is a marketing strategy that targets a large, broad audience with a single, unified message or product offering. Unlike segmented or niche marketing, it assumes that the majority of consumers have similar needs and preferences, aiming to appeal to as many people as possible.

Features:

1. Standardized Products: Products or services are not customized but designed to meet the general needs of the entire market.
2. Wide Reach: Channels like TV, radio, newspapers, and social media are used to reach large audiences.
3. Cost Efficiency: Economies of scale in production, distribution, and advertising reduce costs.
4. Focus on Volume: The strategy emphasizes generating high sales volumes rather than catering to specific customer segments.

Example:

Coca-Cola's global campaigns promoting a single product line with universal themes of happiness and sharing exemplify mass marketing.

While this approach can be highly effective for building brand awareness and reaching a broad audience, it may lack personalization and may not cater to the unique needs of specific customer groups.

e. World bank

Ans:

The World Bank is an international financial institution established in 1944 as part of the Bretton Woods Agreement. Its primary goal is to reduce poverty and promote sustainable economic development worldwide by providing financial and technical assistance to developing countries.

Headquartered in Washington, D.C., the World Bank consists of five institutions:

1. International Bank for Reconstruction and Development (IBRD): Offers loans to middle-income and creditworthy low-income countries.
2. International Development Association (IDA): Provides concessional loans and grants to the world’s poorest countries.
3. International Finance Corporation (IFC): Supports private sector investment in developing nations.
4. Multilateral Investment Guarantee Agency (MIGA): Offers political risk insurance and credit enhancement.
5. International Centre for Settlement of Investment Disputes (ICSID): Provides facilities for settling international investment disputes.

The World Bank works across diverse sectors, including education, health, infrastructure, and climate change, to help nations achieve long-term growth and resilience. It collaborates with governments, NGOs, and other development partners to address global challenges and advance sustainable development goals (SDGs).