Mba IV International Marketing Management [12mbamm418] Solution

INTERNATIONAL MARKETING MANAGEMENT 12MBAMM418

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Questions and Answers

MODULE-01

1) Define international marketing. (June/July 09)

International marketing is defined as the performance of business activities designed

to plan, price, promote, and direct the flow of a company’s goods and services to

consumers or users in more than one nation for a profit

Marketing concepts, processes, and principles are universally applicable all Over the

world

2) Explain the different stages of international marketing involvement.

(Dec/Jan11, June/July13)

3) Define uncontrollable environmental factors of international marketing

(June/July10)

Differences are in the uncontrollable environment of international marketing Firms

must adapt to uncontrollable environment of international marketing by adjusting the

marketing mix (product, price, promotion, and distribution)

Adaptation

(of Marketing Mix)

Standardization

(of Marketing Mix)

Continuum

INFLUENCED BY 7 ENVIRONMENTAL FACTORS

In general, firms go through five different phases in going

international:

Infrequent Foreign Marketing

No Direct Foreign Marketing

International Marketing

Regular Foreign Marketing

Global Marketing


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4) Explain the concept of EPRG schema (June/July 09)

Strategic Orientation: EPRG

Schema Orientation EPRG Schema

Domestic

Marketing

Extension

Multi-Domestic

Marketing

Global Marketing

(Ethnocentric)

(Polycentric)

(Regio/Geocentric)

The International Marketing Environment

7

3. ECONOMY

Environmental uncontrollables country market A

Environmental uncontrollables country market B

Environmental uncontrollables country market C

1. Competition

1. Competition

2. Technology Price Product

Promotion Place or Distribution

6. Geography and Infrastructure

Foreign Environment (Uncontrollables)

7. Structure of Distribution

3. Economy

5. Political- Legal

Domestic environment (Uncontrollables)

(Controllables)

2 .Technology

4. Culture

5. Political- Legal

4. Culture

Target

Market


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5) Explain the recent global business trends in international business

marketing. (June/July10

The rapid growth of the World Trade Organization and regional free trade

areas, e.g., NAFTA and the European Union

General acceptance of the free market system among developing countries in

Latin America, Asia, and Eastern Europe

Impact of the Internet and other global media on the dissolution of national

borders, and Managing global environmental resources

6) Explain the importance of international marketing. (June/July 09)

International expansion helps firm:

Keep pace with competition

Reach a larger market

Reap higher profits

Prolong the lifecycle of their products

7) Which are the drivers of international expansion? (Dec/Jan11)

Competition

Regional Economic and Political Integration

Technology

Improvements in Transportation and Telecommunication

Economic Growth

Transition to Market Economy

Converging Consumer Needs

Firm-Specific Drivers

Product Life Cycle Considerations: opportunity to prolong product lifecycle by

entering growth markets.


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8) Explain the process of transition from domestic to international business.

(June/July10)

Pre – Export Behaviour

1. Firm Characteristics

2. Perceived External Export Stimuli

3. Perceived Internal Export Stimuli

4. Level Of Organizational Commitment

Motivation To Export

a. Bulk Sales

b. Relative Profitability

c. Insufficiency Of Domestic Demand

d. Reducing Business Risks

e. Legal Restrictions

f. Obtaining Imported Inputs

g. Social Responsibility

h. Increased Productivity

i. Technological Improvements

How Much Commitment

a) No Involvement

b) Temporary Involvement

c) Continued Involvement

d) Global Involvement

e) Producing For Export

Sales

Intro Growth Maturity Decline

Profits

Sales


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9) What is balance of payment? Explain the different concepts constitute the

balance of payments. (June/July 12, June/July13)

1. When countries trade there are financial transactions among businesses or

consumers of different nations

2. Money constantly flows into and out of a country

3. The system of accounts that records a nation’s international financial

transactions is called its balance of payments (BP)

4. It records all financial transactions between a country’s firms, and residents,

and the rest of the world usually over a year

5. The BP is maintained on a double-entry bookkeeping system

(1) Current account—a record of all merchandise exports, imports, and services plus

unilateral transfers of funds;

(2) The capital account—a record of direct investment, portfolio investment, and

short-term capital movements to and from countries;

• merchandise export sales.

• money spent by foreign tourists.

• transportation.

• payments of dividends and interest from FDI abroad.

• new foreign investments in the

U.S.

BP Receipts

• costs of goods imported.

• spending by U.S. tourists overseas.

• new overseas investments.

• cost of foreign military and economic aid.

BP Payments


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(3) The official reserves account—a record of exports and imports of gold, increases

or decreases in foreign exchange, and increases or decreases in liabilities to foreign

central banks;

Changing Balance Of Payments

1. If a country’s expenditures consistently exceed its income, its standard of

living falls

2. Its exchange rate vis-à-vis foreign monies declines

3. When foreign currencies can be traded for more dollars, U.S. products are less

expensive for foreign customers and exports increase

4. Simultaneously foreign products are more expensive for U.S. buyers and the

demand for imported goods is reduced

Balance Of Payments Equilibrium

A nation’s balance of payments is said to be in equilibrium when it is neither drawing

upon its international reserves to make excess payments nor accumulating such

reserves as a result of its receipts. The disturbance in balance of payments may be

either short-term or long-term. Long –term disturbances effect a lasting alteration in

relations of one nation’s economy to other nation’s economy. They result from

changes in the forces which govern the kinds or amounts of a country’s exports and

its imports, its position as a long-term debtor or creditor or the character of the

international services it renders. Each such disturbance upsets the pre-existing

stability in the balance of payments and sets in motion a number of consequences

which bring it to a stable position again.

10) What are the different levels of international marketing? (Dec/Jan11)

Domestic Marketing Export Marketing International Marketing Global

Marketing

Least

international

commitment

Domestic

focus

Limited

international

commitment

Involves direct

or indirect export

Substantial

international

commitment

Focus on

individual

countries or

Extensive

international

commitment

Focus on

segments,

rather than


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Ethnocentric regions

Polycentric or

Regiocentric

countries or

regions

Geocentric

11) Explain the hierarchy of international marketing of a company. (June/July

09)

12) List the different kinds of tariff barriers and its impact? (Dec/Jan11)

Tariff Barriers tend to Increase:

1. Inflationary pressures

COMMITMENT TO

EXPORT

ANALYSE

DECIDE

EXPORT

SET

IMPLEMENT

INTERNAL FACTORS

•PRODUCT

•RESOURCES

•TARGET MARKET

•MARKET SEGMENT

•ENTRY METHOD

•MARKETING STRATEGY

EXTERNAL FACTORS

•MARKET ENVIRONMENT

•COMPETITIVE PROFILE

ORGANISE

•DEPARTMENT

•SUBSIDIARY

•JOINT VENTURE

•EXPORT HOUSE

ALLOCATE RESOURCES

•BUDGET

•ARRANGE

RESOURCES

TA RGET


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2. Special interests’ privileges

3. Government control and political considerations in economic matters

4. The number of tariffs they beget via reciprocity

Tariff Barriers tend to Weaken:

1. Balance-of-payments positions

2. Supply-and-demand patterns

3. International relations (they can start trade wars)

Tariff Barriers tend to Restrict:

1. Manufacturer’ supply sources

2. Choices available to consumers

3. Competition

13) List the different kinds of non-tariff barriers and its impact?

Specific Limitations on Trade:

1. Quotas

2. Import Licensing requirements

3. Proportion restrictions of foreign to domestic goods (local content

requirements)

4. Minimum import price limits

5. Embargoes

(2) Customs and Administrative Entry Procedures:

1. Valuation systems

2. Antidumping practices

3. Tariff classifications

4. Documentation requirements

5. Fees

(3) Standards:

1. Standard disparities

2. Intergovernmental acceptances of testing methods and standards

3. Packaging, labeling, and marking


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(4) Government Participation in Trade:

1. Government procurement policies

2. Export subsidies

3. Countervailing duties

4. Domestic assistance programs

(5) Charges on imports:

1. Prior import deposit subsidies

2. Administrative fees

3. Special supplementary duties

4. Import credit discriminations

5. Variable levies

6. Border taxes

(6) Others:

1. Voluntary export restraints

2. Orderly marketing agreements

14) Distinguish between international marketing Vs domestic marketing.

(Dec/Jan11)

Sovereign political entities

I. Tariffs Or Customs Duties

II. Quantitative Restrictions

III. Exchange Controls

IV. Local Taxes

Different Legal Systems

Different Monetary Systems

Lower Mobility Of Factors Of Production

Differences In Market Characteristics

Differences In Procedures And Documentation

Greater Degree Of Risk


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15) Explain the different kinds of monetary barriers. (June/July 12)

Three types of monetary barriers include:

1. Blocked currency: Blockage is accomplished by refusing to allow importers

to exchange its national currency for the sellers’ currency.

2. Differential exchange rates: It encourages the importation of goods the

government deems desirable and discourages importation of goods the

government does not want by adjusting the exchange rate. The exchange rate

for importation of a desirable product is favorable and vice-versa

3. Government approval: In countries where there is a severe shortage of

foreign exchange, an exchange permit to import foreign goods is required

from the government

16) What is protectionism? Explain the tools of protectionism. (June/July 10)

Arguments for Protectionism

• Excess productive capacity

• Excess labor

• Infant industry argument and industrialization

• Natural resources conservation

and environmental protection

• Consumer protection

• National defense

Licenses

Non-automatic import licenses

Restrict volume and/or quantity of imports

Automatic import licenses

Granted freely to importing companies

Facilitate import surveillance

Discourage import surges

Place administrative and financial burdens on importer


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May raise costs by delaying shipments

“Voluntary” Expansion and Restraints

Voluntary import expansion

Governments agree to allow imports from a particular country as result of

pressure from another country

Increases foreign access to a domestic market

Increases competition and reduces local prices

Voluntary export restraints

Self-imposed export quotas–imposed to avoid a greater penalty

Used by the importing country to protect local industries

Standards

Environmental, performance, manufacturing and other standards used as

barriers to imports; primarily imposed by highly industrialized countries

Excessive standards can help local and international industry alike, by

deterring gray markets

Percentage Requirements

Requirement that a percentage of the products imported be locally produced

Local content requirement

Met by manipulating and/or assembling the product on the territory of

the importing country, usually in a foreign trade zone

Favoring local contribution and labor

Alternatively, limiting foreign ownership to a certain percentage

Boycotts, Embargos, Sanctions

Boycotts

– Action group calling for a ban on all goods associated with a particular

company and/or country


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– Target company may be representative of, or even synonymous with,

its country of origin

Embargos

– Prohibiting all business deals with the target country; affects third

parties

Sanctions

– Punitive trade restrictions applied by a country or group against

another country for noncompliance

Currency Controls

Blocked currency

– Does not allow importers to exchange of local currency for currency a

seller is willing to accept as payment

Differential exchange rates

– Favorable and less favorable exchange rates imposed on imports, based

on the extent to which they are necessary and desirable

– Can also be the difference between black market and government

exchange rates

Foreign exchange permits

– Give priority to imports in the national interest

– Delay access to hard currency exchange for products not deemed

essential


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MODULE-02

1). what is Global Marketing? (Dec/Jan11)

Global Marketing is the marketing on a worldwide scale reconciling or taking

commercial advantage of global operational differences, similarities and opportunities

in order to meet global objectives.

2). What is Product adaptation ? (June/July 09, June/July13)

A product that is perfectly good for one market may have to be adapted for

another. There can be many reasons for this. Physical conditions may be different.

Functional requirements may vary from market to market. People in different places

may use products differently or for different type of finish than furniture used indoors.

Finally tastes, levels of skill and technical development may be different and may

dictate changes in products. Adaptation may pertain to size, functions, materials,

design, style, colour, tastes and standards.

3). What is product standardization? (June/July 09)

Even though product adaptation becomes inevitable in the case of certain products,

it should be realized that there is sound economics logic behind a product policy

which suggests uniformity in all markets. Terpstra has identified six factors which

may favour international product standardization.

They are:

1.Economies of Scale in Production

2.Economies in Product Research and development

3.Economies in Marketing

4.Consumer Mobility

5. Made-in Image

6.Impact of Technology

4). What are the different alternative market entry statergies? (June/July10,

June/July13)

Import regulations may be imposed to protect health, conserve foreign

exchange, serve as economic reprisals, protect home industry, or provide revenue in

the form of tariffs.


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A company has four different modes of foreign market entry from which to select

exporting

contractual agreements

strategic alliances, and

direct foreign investment

5).What is Green Marketing? (June/July 09, 12, June/July13)

At the forefront of the ―green movement,‖ with strong public opinion and specific

legislation favoring environmentally friendly marketing and products.

•Green marketing is a term used to identify concern with the environmental

consequences of a variety of marketing activities.

•The designation that a product is ―environmentally friendly‖ is voluntary, and

environmental success depends on the consumer selecting the eco-friendly product

•In some countries each level of the distribution chain is responsible for returning all

packaging, packing, and other waste materials up the chain

6). What are characteristics of marketing of service globally? (Dec/Jan11)

Many consumer services are distinguished by four unique characteistics:

1.intangibility,

2.inseparability,

3.heterogeneity, and

4.perishability

Most services are inseparable and require production and consumption to occur

almost simultaneously; thus, exporting is not a viable entry method for them.


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MODULE-03

1). What are the reasons for the markets to shift from domestic to global?

(June/July10)

Here are three reasons for the shift from domestic to global marketing

Saturation of Domestic Markets

For a company to keep growing, it must increase sales. Industrialized nations

have, in many product and service categories, saturated their domestic markets

and have turned to other countries for new marketing opportunities.

Companies in some developing economies have found profitability by

exporting products that are too expensive for locals but are considered

inexpensive in wealthier countries.

World Wide Competition

One of the product categories in which global competition has been easy to

track is in U.S. automotive sales. Three decades ago, there were only the big

three: General Motors, Ford, and Chrysler. Now, Toyota, Honda, and

Volkswagen are among the most popular manufacturers. Companies are on a

global playing field whether they had planned to be global marketers or not.

E-Commerce

With the proliferation of the Internet and e-commerce (electronic commerce),

if a business is online, it is a global business. With more people becoming

Internet users daily, this market is constantly growing. Customers can come

from anywhere. According to the book, ―Global Marketing Management,‖

business-to-business (B2B) e-commerce is larger, growing faster, and has

fewer geographical distribution obstacles than even business-to-consumer

(B2C) e-commerce.

2). What are the advantage and disadvantage of global marketing? (June/July

09)

Benefits Of Global Marketing:


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Economies of scale in production and marketing can be important competitive

advantages for global companies

Unifying product development, purchasing, and supply activities across

several countries it can save costs

Transfer of experience and know-how across countries through improved

coordination and integration of marketing activities

Diversity of markets by spreading the portfolio of markets served brings an

important stability of revenues and operations to many global firms

Helps to establish relationships outside of the "political arena"

Helps to encourage ancillary industries to be set up to cater the needs of the

global player.

Disadvantages

Differences in consumer needs, wants, and usage patterns for products

Differences in consumer response to marketing mix elements

Differences in brand and product development and the competitive

environment

Differences in the legal environment, some of which may conflict with those

of the home market

Differences in the institutions available, some of which may call for the

creation of entirely new ones (e.g. infrastructure)

Differences in administrative procedures

Differences in product placement.

3). Explain the organizing for global competition with the structure? (Dec/Jan11)

An international marketing plan should optimize the resources committed to

company objectives. The organizational plan includes the type of organizational

arrangements to be used, and the scope and location of responsibility. Companies are

usually structured around one of three alternatives:

(1) global product divisions responsible for product sales throughout the world;

(2) geographical divisions responsible for all products and functions within a given

geographical area; or


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(3) a matrix organization consisting of either of these arrangements with centralized

sales and marketing run by a centralized functional staff, or a combination of area

operations and global product management.

5). What is product adaptation? What are the environment factors which necessitates

the design factor?

A product that is perfectly good for one market may have to be adapted for another.

There can be many reasons for this. Physical conditions may be different. Functional

requirements may vary from market to market. People in different places may use

products differently or for different type of finish than furniture used indoors. Finally

tastes, levels of skill and technical development may be different and may dictate

changes in products.

Adaptation may pertain to size, functions, materials, design, style, colour, tastes

and standards. Sometimes this could be done easily and at low cost but at times it

may cost much. Robinson has identified thirteen environment factors which may

necessitate design changes. The factors are –

Environmental factor Design change

1. Level of technical skills product simplification

2. Level of labour cost Automation or manulization of product

3. Level of literacy Remarking and simplification of product.

4. Level of income Quality and price change.


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5. Level of interest rates Quality and price change.

6. Level of maintenance Change of tolerance

7. Climatic differences Product adaptation

8. Isolation (heavy repair difficult and Product adaptation and durability

expensive) improvement.

9. Differences in standards Recalibration of product and resizing.

10.Availability of other products Greater or leaser product integration.

11..Availability of materials Change in product structure and fuel.

12. Power availability Resizing of product.

13.Special conditions Product redesign or invention.

All these factors are relevant in the marketing of durable consumer goods or

machinery items.

5. Explain in detail the international planning process? (June/July 12)

Planning is a systematized way of relating to the future. It is an attempt to manage

the effects of external, uncontrollable factors on the firm’s strengths, weakness,

objectives and goals to attain a desired end. Planning is the job of making things

happen that might not otherwise occur. Planning allows for rapid growth of the

international function, changing markets, increasing competition, and the turbluent

challenges of different national markets. The plan must be blend the changing

parameters of external country environments with corporate objectives and

capabilities to develop a sound, workable marketing program.

Planning relates to the formulation of goals and methods of accomplishing them,

so it is both a process and a philosophy. Structurally, planning may be viewed as

corporate, strategic, or tactical. International Corporate Planning is essentially long

term, incorporating generalized goals for the enterprise as a whole. Strategic planning

is conducted at the highest levels of management and deals with products, capital, and

research, and long and short-term goals of the company. Tactical planning or market

planning, pertains to specific and to the allocation of resources used to implement

strategic planning goals in specific markets.


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THE PLANNING PROCESS

Guidelines and systematic procedures are necessary for evaluating international

opportunities and risks and for developing strategic plans :

International planning process includes 4 phases:

T

Phase 1: Preliminary Analysis and Screening-Matching Comapany and Country

Needs

A critical first step in the international planning process is deciding in which

existing country market to make a market investment. A company’s strengths and

weakness, products, philosophies, and objectives must be matched with a country’s


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constraining factors and market potential. In the first part of the planning process,

countries are analyzed and screened to eliminate those that do not offer sufficient

potential for further considerations. The next step is to establish screening criteria

against which prospective countries can be evaluated. These criteria are ascertained

by an analysis of company objectives, resources, and other corporate capabilities and

limitations. It is important to determine the reasons for enetering a foreign market

and the returns expected from such an investment. Minimum market potential,

minimum profit, return on investment, accepatable competitive levels.

Phase 2: Adapting the Marketing Mix to Target Makets:

When target markets are slelected, the market mix must be evaluated in light of the

data generated in the phase 1. Incorrect decisions at this point lead to products

inappropriate for the intended market or to costly mistakes in pricing, advertising, and

promotion. The primary goal of phase 2 is to decide on am marketing mix adjusted to

the cultural constraints imposed by the uncontrollable elements of the environment

that effectively achieves corporate objectives and goals. Phase 2 also permits the

marketer to determine possibilities for applying marketing tactics across national

markets.//

Phase 3: Developing the Marketing Plan

At this stage of the planning process, a marketing plan is developed for the target

market-whether it is a single country or a global market segment. The marketing plan

begins witn a situation analysis and culminates in the selection of an entry mode and a

specific action program for the market. The specific plan establishes what is to be

done, by whom, how it is to be done, and when. Included are budgets and sales and

profit expectations.

Phase 4: Implementation and Control

A ―go‖ decision in phase 3 triggers implementation of specific plans and

anticipation of successful marketing. However, the planning process does not end at

this point. All marketing plans require coordination and control during the period of

implementation. An evaluation and control system requires performance-objective

action, that is, bringing the plan back on track should standards of perrformances fall

short. A global orientation facilities the difficult but extremely important


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management tasks of coordinating and controlling the complexities of international

marketing.

6. Explain the alternative market entry startegy? (June/July 12)

Import regulations may be imposed to protect health, conserve foreign exchange,

serve as economic reprisals, protect home industry, or provide revenue in the form

of tariffs.

A company has four different modes of foreign market entry from which to select

exporting

contractual agreements

strategic alliances, and

direct foreign investment

EXPORTING

Exporting can be either direct or indirect. In direct exporting the company sells to a

customer in another country. In contrast, indirect exporting usually means that the

company sells to a buyer (importer or distributor) in the home country who in turn

exports the product . The internet is becoming increasingly important as a foreign

market entry method. Direct sales, particularly for high technology and big ticket

industrial products a direct sales force may be required in a foreign country. This

may mean establishing an office with localor expatriate managers and staff

depending of course on the size of the market and potential sales revenues.

CONTRACTUAL AGREEMENTS


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Contractual agreements are long term, noneqauity associations between a company

and another in a foreign market. Contractual agreements involve the transfer of

technology, processes, trademarks, or human skills.

•Contractual forms of market entry include:

(1)Licensing: A means of establishing a foothold in foreign markets without large

capital outlays is licensing of patent rights, trademark rights, and the rights to use

technological

(2)Franchising: In licensing the franchiser provides a standard package of products,

systems, and management services, and the franchisee provides market knowledge,

capital, and personal involvement in management.

STRATEGIC INTERNATIONAL ALLIANCES

Strategic alliances have grown in importance over the last few decades as a

competitive strategy in global marketing management. A strategic international

alliance (SIA) is a business relationship established by two or more companies to

cooperate out of mutual need and to share risk in achieving a common objective..

SIAs are sought as a way to shore up weaknesses and increase competitive strengths. SIAs

offer opportunities for rapid expansion into new markets, access to new technology, more

efficient production and marketing costs.

An example of SIAs in the airlines industry is that of the Oneworld alliance partners made up

of American Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and

Qantas .

INTERNATIONAL JOINT VENTURES

•International joint ventures (IJVs) have been increasingly used since 1970s.JVs

are used as a means of lessening political and economic risks by the amount of the

partner’s contribution to the venture. JVs provide a less risky way to enter markets

that pose legal and cultural barriers than would be the case in an acquisition of an


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existing company. A joint venture is different from strategic alliances or

collaborative relationships in that a joint venture is a partnership of two or more

participating companies that have joined forces to create a separate legal entity. Joint

ventures are different from minority holdings by an MNC in a local firm.

Four factors are associated with joint ventures:

1. They are established, separate, legal entities

2. They acknowledge intent by the partners to share in the management of the Jv.

3. They are partnerships between legally incorporated entities such as

companies, chartered organizations, or governments, and not between

indiciduals

4. Equity positions are held by each of the partners.

CONSORTIA

Consortia are similar to joint ventures and could be classified as such except for two

unique characteristics.

(1)They typically involve a large number of participants.

(2)They frequently operate in a country or market in which none of the participants is

currently active.

Consortia are developed to pool financial and managerial resources and to lessen risks

DIRECT FOREIGN INVESTMENT

A fourth means of foreign market development and entry is direct foreign investment.

Companies may manufacture locally to capitalize on low-cost labor, to avoid high

import taxes, to reduce the high costs of transportation to market, to gain access to

raw materials, or as a means of gaining market entry. Firms may either invest in or

buy local companies or establish new operations facilities.

7. What is product standardization? What are the factors which favours the

international product standardization? (Dec/Jan11)

Even though product adaptation becomes inevitable in the case of certain products,

it should be realized that there is sound economics logic behind a product policy


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which suggests uniformity in all markets. Terpstra has identified six factors which

may favour international product standardization.

1.Economies of Scale in Production: When only one standard version is marketed in

all the areas, it will be possible to have larger production runs, which will result in

lower manufacturing costs.

2.Economies in Product Research and development: Similarly, product

standardization will allow recovery of all costs incurred in product research and

development from the entire sales. This will reduce the recovery period as also lower

the break-even point. Moreover, additional expenditure on adapting product to each

individual market can be avoided.

3.Economies in Marketing. When the same product is to be launched in different

markets, economies can be achieved in terms of sales literature, sales force training,

inventory management , advertising and after-sales requirements.

There are 3 marketing factors which may reinforce the standardization level:

1.Consumer Mobility: Consumers are becoming increasingly more mobile and

transcontinental travel in now fairly common. A consumer who is loyal to a

particular brand in his home market is more likely to remain loyal in a foreign country

as well when the product in question is the same.

2. Made-in Image: When the name of a country is associated with a high standard of

quality in the minds of the consumers, a product manufactured in that country may

enjoy a psychological premium in the foreign markets.

3. Impact of Technology: Industrial products generally tend to have standard and

specifications and do not require much adaptation for foreign markets unless climatic

and similar considerations call for it.


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MODULE-04

1. Define term Direct and Indirect exporting?

Direct exporting:

The company sells to a customer in another county. This is the most common

approach employed by companies taking their international step because the risks of

loss can be minimized. In contrast,

In direct exporting:

usually means that the company sells to buyer in the home country who in

turn exports the product. Customer include large retailers such as wal mart or sears,

wholesaler supply houses, trading companies, and other that buy to supply customers

abroad

Ex: America’s largest exporter

2. Define term licensing, franchising, and joint venture? (June/July 10)

LICENCING:

A means of establishing a foothold in foreign markets without large capital

outlays is licensing patent right, trademarks right, and the rights to use technological

processes are granted in foreign licensing. It is a favorite strategy for small and

medium sized companies, although it is by no means. Common examples of

industries that use licensing arrangements in foreign markets are television

programming and pharmaceuticals. Not many confine their foreign operation to

licensing alone it is generally viewed as a supplement to exporting or manufacturing

rather than the only mans of entry into foreign market.

Although licensing may be the least profitable way of entering a market, the risks and

headaches are fewer than for direct investments. It is a legitimate means of

capitalizing on intellectual property in a foreign market, and such agreements can also

benefit the economies of target countries.

FRANCHISING:


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Is a rapidly growing form of licensing in which the franchising provides a

standard package of products, systems, and management services, and the franchisee

provides market knowledge, capital and personal involvement in management. The

combination of skills permits flexibility in dealing with local market conditions and

yet provides the parent firm with a reasonable degree of control. The franchisor can

follow through on marketing of the products to the point of final sale.

INTERNATIONAL JOINT VENTURE:

International joint ventures as a means of foreign market entry have

accelerated sharply since the 1970’s. Besides serving as a means of lessening

political and economic risk by the amount of the partner’s contribution to the venture.

IJV provide a less risk way to enter markets that pose and cultural barriers than would

be the case in an acquisition of an existing company.

3. What is channels of distribution? (Dec/Jan11)

Channel of distribution or marketing channels is defined as the whole set of

interrelated marketing agencies which are involved in making the goods available

form the producer to the consumers.

Distribution channels

Getting the product to the target market can be a costly process

Forging an aggressive and reliable channel of distribution may be the most

critical and challenging task facing the international firms

Each market contains a distribution network with many channel choices whose

structures are

In some markets the distribution structure is multi-layered, complex,

inefficient, even strange

Competitive advantage will reside with the marketer best able to build the

most efficient channel


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4. Briefly explain the distribution patterns in international marketing

channels? (June/July 10)

Distribution patterns

Even though patterns of distribution are in a state of change and new patterns

are developing , international marketers need a general awareness of the

traditional distribution base . The ―traditional ― system will not change overnight

and vestiges of it will remain for years to come .Nearly every international firm is

forced by the structure of the market to use at least some middlemen in the

distribution arrangement.

The following description should convey a sense of the variety of distribution

patterns.

General patterns : generalizing about internal distribution channel patterns of

various countries is almost as difficult as generalizing about behaviors patterns of

people. Despite similarities, marketing channels are not the same throughout the

world. Marketing methods taken for granted in the United States are rare in many

countries.

Middlemen Services:- The service attitudes of people in trade vary sharply

at both the retail and whole sale levels from country to country .

Line Breadth:- every nation has a distinct pattern relative to the breadth of

line carried by wholesalers and retailers . The distribution system of some

countries is characterized by middlemen who carry or can get everything

in other every middlemen is a specialist dealing only in extremely narrow

lines. Government regulation in some countries limit the breadth of line

that can be carried by middlemen and licensing requirement to handle

certain merchandise are not uncommon.

Costs and Margins :- cost levels and middlemen margins vary widely from

country to country depending on the level of competition , service offered ,

efficiencies for inefficiencies of scale and geographic and turnover factors

related to market size ,purchasing power , tradition and other basic

determinants.


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Channel Length :-some correlation may be found between the stage of

economic development and the length of marketing channels . In every

country , channels are likely to be shorter for industrial goods and high

priced consumer goods than for low priced products. In general , there is

an inverse relationship between channel length and the size of the purchase

.combinations wholesaler – retailer or semi wholesaler exist in many

countries adding one or two link to the length of the distribution chain.

Nonexistent Channels : one of the things companies discover about

international channel of distribution patterns is that in many countries

adequate market coverage through a simple channel of distribution is

nearly impossible. In many instances , appropriate channels do not exist .

Blocked Channels :- International marketers may be blocked from using

the channel of their choice. Blockage can result from competitors already

established lines in the various channel or from trade associations or cartels

having closed certain channels.

Stocking :- the high cost of credit , the danger of loss through inflation , a

lack of capital and other concerns cause foreign middlemen in many

countries to limit inventories this often results in out of stock conditions

and sales lost to competitors.

Power and Competition :-distribution power tends to concentrate in

countries where a few large wholesalers distribute to a mass of small

middlemen . large wholesalers generally finance middlemen downstream .

the strong allegiances they command from their customers enables them

to effectively block existing channels and force an outsiders to rely on less

effective and more costly distribution .

Distribution patterns are always evolving and new patterns are developing and

marketing channels are not the same throughout the world

Some general distribution patterns that are similar globally include:

Retail Patterns


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Retail Size Patterns: - the extremes in size in retailing are similar to those that

predominate in wholesaling. The retail structure and the problem it engenders

cause real difficulties afro the international marketing firm selling consumer

goods .large dominant retailers can be sold direct , but there is no adequate

way to directly reach small retailers who in the aggregate handle a great

volume of sales.

Direct Marketing :-selling directly to the consumer through the mail , by

telephone or door to door is often the approach of choice market with

insufficient or underdeveloped distribution systems. The approach of course

also works well in the most affluent market.

Resistance to Change :- effort to improve the efficiency of the distribution

system new types of middlemen and other attempts to change traditional

ways as typically viewed as threatening and are thus resisted .

Alternative Middleman Choices :- A marketers options range from

assuming the entire distribution activity to depending on intermediaries for

distribution of the product . channel selection must be given considerable

thought because once initiated it is difficult to change and if proves

inappropriate , future growth of market share may be affected

a) Agent middlemen; - represent the principal rather than themselves

b) merchant middlemen:- take title to the goods and buy and sell on their

own account.

International retailing shows even greater diversity in its structure than does

wholesaling

Some general retailing patterns include:

Home-Country Middlemen: - located in the producing firms country provides

marketing services from a domestic base. By selecting domestic middlemen as

intermediaries in the distribution process, companies relegate foreign market

distribution to others.


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Manufacturers’ Retail Stores: - An important channel of distribution for a

large number of manufactures is the owned or perhaps franchised.

Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , Toys

―R‖ Us and Wall–mart expand their global coverage , they are becoming a

major domestic middlemen for international markets.

Export Management Companies :- is an important middlemen for firms with

relatively small international volume or for those unwilling to involve

their own personnel in the international function.

Trading Companies:- trading companies have a long and honorable history as

important intermediaries in the development of trade between nation.

Trading companies accumulate, transport and distribute goods from many

countries.

U.S. Export Trading Companies :-the ETC act allows producers of similar

products to form export trading companies .A major goal of the ETC Act

was to increase U.S exports by encouraging more efficient export trade

services to producers and suppliers in order to improve the availability of

trade finance and to remove antitrust disincentives to export activities.

Complementary Marketers :-companies with marketing facilities or contacts

in different countries with excess marketing capacity or a desire for a

broader product line sometimes take on additional lines for international

distribution although the formal name for such activities is complementary

marketing.

Manufacturer’s Export Agent :- is an individual agent middlemen or an

agent middlemen firm providing a selling service for manufactures.

Home-country middlemen, or domestic middlemen, provide marketing

services from a domestic base and find foreign markets for products for local

manufacturers

Frequently used types of domestic intermediaries include:

. Home-Country Brokers:- the term broker is a catchall for a variety of

middlemen performing low cost agent services.

. Buying Offices: - a variety of agent middlemen may be classified simply

as buyers or buyer for export. Their common denominator is a primary


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function of seeking and purchasing merchandise on request from principals

as such they do not provide a selling service

. Selling Groups:- several types of arrangement have developed in which

various manufactures or producer cooperate in a joint attempt to sell their

merchandise abroad. This may take the form of complementary exporting or

of selling to a combined business such a Webb –Pomerene export

association.

. Webb-Pomerene Export Associations:-are another major form of group

exporting. WPEAs Act of 1918 made it possible for American business

firms to join forces in export activities without being subject to the

Sherman antitrust . WPEAs cannot participate in cartel or other

international agreement that would reduce competition in the united states

but can offer four major benefits

1. Reduction of export costs

2. Demand expansion through promotion

3. Trade barriers reductions

4. Improvement of trade terms through bilateral bargaining.

Foreign Sales Corporation :- is a sales corporation set up in a foreign country or

U.S possession that can obtain a corporate tax exemption on a portion of the

earnings generated by the sale or lease of export property.

Export Merchants: - are essentially domestic merchants operating in foreign market.

As such they operate much like the domestic wholesaler. specifically they purchase

goods from a large number of manufacturers , ship them to foreign countries and

take full responsibility for their marketing .

Export Jobbers:- deal mostly in commodities they do not take physically

possession of goods but assume responsibility for arranging transportation.


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Foreign-Country Middlemen :- using foreign country middlemen moves the

manufacturers closer to the market and involves the company more closely with

problems of language , physical distribution , communications and financing . foreign

middlemen may be agents or merchants , they may be associated with the parent

company to varying degrees or they may be temporarily hired for special purposes.

Some of the more important foreign country middlemen are manufacturers

representatives and foreign distributors.

Manufacturer’s Representatives:- are agent middlemen who take

responsibility for a producers goods in a city , regional market area entire

country or several adjacent countries . when responsible for an entire

country the middlemen is often called a sole agent.

Distributors :- A foreign distributor is a merchant middleman. This

intermediary often has exclusive sales right in a specific country and works

in close co-operation with the manufacturer . the distributor has a relatively

high degree of dependence on the supplier companies and arrangements are

likely to be on a long run continuous basis.

Foreign-Country Brokers:- are agents who deal largely in commodities and

food products . the foreign brokers are typically part of small brokerage

firms operating in one country or in a few contiguous countries.

Managing Agents and Compradors :- A managing agent conducts business

within a foreign nation under an exclusive contract arrangement with the

parent company. The managing agent in some cases invests in the operation

and in most instances operates under as contract with the parent company.

Dealers :- generally speaking anyone who has a continuing relationship with

a supplier in buying and selling goods is considered a dealer . more

specifically dealers are middlemen selling industrial goods or durable

consumer goods direct to customers they are the last step in the channel of

distribution.

Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goods

directly from the manufacturers and sell to wholesalers and retailers and to

industrial customers . large and small wholesalers and retailers engage in

direct importing for their own outlets and for redistribution to smaller


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middlemen . the combination retailer wholesaler is more important in

foreign countries than in the united states. It is not uncommon to find large

retailers wholesaling goods to local shops and dealers.

Some of the more important foreign-country middlemen, who find markets for

foreign manufacturers include:

5. Explain the factor affecting the choice of channels? (June/July 09)

Factors Affecting Choice of Channels

The international marketers needs clear understanding of market characteristic

and must have established operating policies before beginning the selection of

channel distribution . the following points should be addressed prior to the

selection process

Identify specific target markets within and across countries.

Specify marketing goals in terms of volume, market share, and profit margin

requirements.

Specify financial and personnel commitments to the development of

international distribution.

Identify control, length of channels, terms of sale, and channel ownership

Once these points are established , selecting among alternatives middlemen

choices to forge the best channel can begin . marketers must get their goods

into the hands of consumers and must choose between handling all distribution

or turning part or all of it over to various middlemen . Distribution channels

vary depending on target market ,competition and available distribution

intermediaries.

1. Cost: - There are two kinds of channel cost

a. The capital or investment cost of developing the channel and

b. The continuing cost of maintaining it.


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The later can be in the form of direct expenditure for the maintenance of the

company selling force or in the form of margins , markup or commissions of

various middlemen handling the goods.

2. Capital requirement :- the financial ramifications of a distribution policy are

often overlooked .critical element are capital requirement and cash flow

patterns associated with using a particular type of middlemen .

3. Control ;- the more involved a company is with the distribution , the more

control its exerts . A company own sales force affords the most control , but

often at a cost that is not practical.

4. Coverage :- another major goal is full market coverage to gain the optimum

volume of sales obtainable in each market , secure a reasonable market share.

And attain satisfactory market penetration .coverage may be assessed by

geographic or market segments or both .

5. Character :- the channel of distribution system selected must fit the character

of the company and the markets in which it is doing business. Some obvious

product requirement often the first considered relate to perish ability or bulk of

the product , complexity of sale , sales service required and value of the

product.

6.Continuity :- channel of distribution often pose longevity problems . most

agent middlemen firms tend to be small institution when one individual retires

or moves out of a line of business the company may find it has lost its

distribution in that area. Wholesaler and especially retailers are not noted for

their continuity in business either. Most middlemen have little loyalty to their

vendors.


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MODULE-05

1. What is air transportation and advantages of air transportation? (June/July10)

Air transportation

Air transportation provide only worldwide transportation network which make the

essential for global business tourism .it play vital role in facilitating economic growth

particularly in developing country.

Advantages of air transport

Low inventory carrying costs

Decreased capital costs of goods in transit

less packing lowers cost and reduces chargeable weight

related surface transport costs are reduced

the loss due to rough handling and pilferage is reduced to the minimum

breakage is negligible

deterioration is avoided

obsolescence is eliminated

insurance premium is reduced.

Costs related to administration ,ordering etc are minimized.

2. Distinguish between surface and air transport? (June/July 12)

Surface vs air transport

The choice regarding modes of transport in relation to export marketing revolves

around the appropriateness of transporting goods by ship or by air ,assuming that

both types of transport systems are available to the shipper , the choice should

depend on the estimates he makes as to the total costs of distribution by ship and

air .it is found that the important elements of costs behave in the following fashion

for ocean and air transport.

Cost of element air transport Surface transport

Freight High Low

Depot costs Low High


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Fixed inventory Low High

Packaging Low High

Insurance Low High

3). What is warehousing and explain briefly and Necessity of warehousing

for export marketing? (Dec/Jan11)

Warehousing constitutes an important segment of the physical distribution

management . the need for warehousing in a corporate unit may arise for the

following reasons

Seasonality :- certain products , especially agro- based items , are produced

with in a limited season , while these are sold throughout the year.

Variation in demand :- there are items for which very high demand is

experienced during a short period e.g. demand for sugar during dewali in

India . To meet additional demand , stocks will to have to be built up and

stored over a period of time.

Speculation: - companies tend to maintain a large inventory of items whose

prices are highly volatile . this practice is essentially followed as a hedge

against price variations.

Product conditioning :- some products are to be stored in order to attain

the required level of quality . for example ripening of bananas is carried out

under controlled temperature conditions after they are picked.

Necessity of warehousing for export marketing

Ware housing operations become necessary especially for two reasons so far as

export marketing is concerned .these are

Break bulk:- break bulk operations are called for where the manufacture

ships the goods in bulk and then repacks them into small consignment

according to the orders received form individuals customers . In export

operations this system may prove to be a cost saving device especially

when individual orders are so small that the minimum space stipulation of


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the shipping lines cannot be fulfilled . shipping lines generally indicate the

minimum space that must be booked if the shippers requirements is smaller

than the minimum , he has to pay the freight as fixed for the minimum

space.

Re – assembly:- re assembly operations are also critically important for

many export items , especially for engineering goods . in order to save

shipping space ,many items are exported on completely knocked down

condition .in fact there are certain countries where the government insist

that the goods must be imported in CKD conditions where ever shipment s are

made on this basis the exporter will need warehousing facility in the

importing country where the goods can be re- assembled.


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MODULE-06

1. Define Ad-volorem tariffs. (June/July10, June/July13)

An ad valorem tax (Latin for "according to value") is a tax based on the value of real

estate or personal property. It is more common than a specific tax, a tax based on the

quantity of an item, such as cents per kilogram, regardless of price.

An ad valorem tax is typically imposed at the time of a transaction(s) (a sales

tax or value-added tax (VAT)), but it may be imposed on an annual basis (real or

personal property tax) or in connection with another significant event (inheritance tax,

surrendering citizenship,[1] or tariffs). In some countries stamp duty is imposed as

an ad valorem tax.

2. “Perhaps advertising is the side of international marketing with the greatest similarities

from country to country throughout the world. Paradoxically, despite its many

similarities, it may also be credited with the greatest number of unique problems in

international marketing.” Discuss. (June/July 09, June/July13)

The paradox lies in the fact that advertising methodology is similar from country to

country but that the unique problems of company policy limitations, legal aspects,

linguistics, media limitations, all pose a distinct problem to the international

advertiser. Advertising must be related to the basic and existing motivation patterns.

The unique problem is to find this motivation and orient your campaign to the stimuli

which must make the majority of the people buy the product. But these problems are

generally mechanical and can be easily overcome by long-range research.

3. Someone once commented that advertising is America’s greatest export. Discuss.

(Dec/Jan11)

This comment portrays the fact that America was first to realize that advertising is a

crucial element in the integrated marketing plan. Since the American ―philosophy‖ of

advertising has penetrated the foreign market, it is said to have been ―exported.‖

Many of America’s largest advertising agencies successfully operate in the foreign

market. World advertising is generally patterned after the American advertising

approach and system.

4. With satellite TV able to reach many countries, discuss how a company can use satellite

TV and deal effectively with different languages, different cultures, and different legal

systems. (June/July13)


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The reality of satellite TV provides the means to have truly global advertising. This

raises the question of the effectiveness of standardized advertising versus locally

produced ads. Problems of different languages and laws raise doubts about the

effectiveness of pan-European ads. In European satellite broadcasting, English is the

preferred language for programming since the satellites must cover a territory with 12

languages and 17 national borders. A study done on Sky Channel viewers indicated

that the English language programs are unacceptable for many. Germans watch the

English language programs for about a minute before deciding they have the wrong

station. European programming is developing, but slowly. One of the reasons for

using U.S. made programming is that producing quality programs for each country is

too costly. One approach to language differences and the production costs of

programming is a six-part series called ―Eurocops.‖ It is a police series in which each

country produces one episode based in the country with their own police, in their own

style and with their own problems. Each broadcaster provides the episode produced in

his country to the other five. The five are then dubbed into the local language and

broadcast locally. The idea is to produce European programming but at a much lower

cost per country than if each country had to produce all six shows. There is no

question that cable, satellites, privatization and the advent of Europe 1992 will

revolutionize broadcasting and create greater demand for global advertising.

5. Outline some of the major problems confronting an international advertiser.

(June/July 08)

Of all the elements of the marketing mix, decisions involving advertising are the ones

most often affected by cultural differences among country markets. Consumers reflect

their culture, its style, feelings, value systems, attitudes, beliefs, and perceptions.

Since advertising’s function is to ―interpret or translate the need/want satisfying

qualities of product and services in terms of consumer needs, wants, desires, and

aspirations,‖ the emotional appeals, symbols, persuasive approaches and other

characteristics of an advertisement must coincide with cultural norms to be effective.

Reconciling international advertising and sales promotion effort with cultural

uniqueness of markets is the challenge confronting the international or global

marketer. The global advertiser is confronted with legal and tax considerations,

language limitations, media limitation and production and cost limitations. These


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limitations must all be dealt with effectively if a company is to have an effective

advertisement.

6. Defend either side of the proposition that advertising can be standardized for all

countries. (June/July10)

Yes, the basic theme, objectives, and philosophy of international advertising can be

standardized; but the vast mechanical problems most certainly cannot be solved

through international standardization. The ad man can adapt his basic skills to all

countries. If buying motives and company objectives are the same for various

countries, then the advertising approach may be the same. If they vary, then

customizing your approach to each country is a must.

7. Review the basic areas of advertising regulation. Are such regulations purely foreign

phenomena? Dec/Jan11)

a. The basic areas of advertising regulation are (1) the legal type such as

Germany’s Comparative Terminology and Direct Comparison Laws, and

(2) taxation on advertising, prevalent in Britain, France, and Austria.

b. No, these regulations are not purely foreign. Here in the United States

there are certain advertising codes and standards that one must follow.

These are generally enforced by the advertising industry itself—but the

FCC also imposes strict standards of ―truth in advertising.‖

8. How can advertisers overcome the problems of low literacy in their market?

(June/July10)

They can overcome low literacy by making use of ads that are self-

explanatory, and extensive use of radio which doesn’t have written words.


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MODULE-07

1. What special media problems confront the international advertiser? (Dec/Jan11)

Special problems in media—availability, cost, and coverage—confront the

international advertiser. Local variations and lack of market data are also great

headaches.

Availability of media varies from country to country due to government restrictions.

Countries have either too many or too few media to adequately cover the majority of

the population. As far as price goes, the United States ad man must be prepared to

haggle greatly over costs. Most media costs are subject to negotiation. Agency

discounts are often split with the client to bring costs down. Coverage problems

generally arise when trying to reach certain sections of the population. There are

many uneconomical media divisions which do not permit enough regionality.

Underlying all these problems is the lack of market information which hampers a

good communication mix in foreign markets and causes much waste in ad campaigns.

2. After reading the section in this chapter on direct mail, develop guidelines to be used

by a company when developing a direct mail program. (June/July 10, June/July13)

Guideline for direct mail should be the same as for any advertising program, i.e.,

identify the target market, select a medium that reaches the target market, develop a

message that communicates how the attributes of your product fit the needs of the

target market. On this last point is the issue of translation. You want to avoid the

mistake a catalog producer, R.R. Donnelley, made when a collection of a dozen

American catalogs sent to Japanese consumers received only modest responses and

orders. Failure to receive sufficient response may have reflected more on the

American Showcase package than on the success of direct mail in the Japanese

market. Even though the covering letter and brochure describing the catalogs were in

Japanese, the catalogs were all in English. This error was further amplified by the fact

that the mailing list did not target English-speaking Japanese. In addition to these

general issues, special attention needs to give to characteristics of mail. Are mailing

lists that include your target market without excessive coverage of non-target market

recipients? Does the mailing system impose some additional burden on the recipient?


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For example, the situation in Chile where the person receiving mail must pay a

portion of the postage.

3. Will the ability to broadcast advertisements over TV satellites increase or decrease

the need for standardization of advertisements? What are the problems associated

with satellite broadcasting? Comment. (Dec/Jan11)

The ability to broadcast advertising over TV satellites will increase the need for

standardization of advertisements. The problems associated with satellite broadcasting

will focus on creating an advertisement that will be culturally acceptable in all the

countries receiving the BC satellite broadcast and created in such a manner that

language differences that may exist within the countries will not affect the message

sent. There are those, however, who feel that such an advertisement would be so

bland that it would be relatively ineffective.

4. In many of the world’s marketplaces, a broad variety of media must be utilized to

reach the majority of the market. Explain. (June/July 12)

Due to the uneconomical division of media coverage, a large amount of media must

be engaged to cover a majority of the market. If an advertiser wants to reach his total

market, the expenditure he will have to incur in using a broad variety of media is

great. The media competitors have segmented the market so that one must employ

most of them in a successful campaign.

5. Cinema advertising is unimportant in the United States but a major media in such

countries as Austria. Why? (June/July10)

Austria has 20 percent of all advertising in cinema as a solution to its huge taxes

against the other media; and the effectiveness of this type of advertising is reflected

by its dollar expenditure in this medium—11 percent of the total ad expenditure in the

country per year.

6. “Foreign newspapers obviously cannot be considered as homogeneous advertising

entities.” Explain. (Dec/Jan11)

Literacy rates vary, and this results in coverage not being constant (selective rather

than intensive). Many countries have too many papers to run an effective campaign

because one must utilize all of them if one desires to cover large geographic areas.


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Even then, it is not known if effective readership exists. Political position of the

newspaper in which you decide to run an ad may have a bad effect on the reputation

of the product.

7. Borrow a foreign magazine from the library. Compare the foreign advertising to

that in an American magazine. (Dec/Jan11)

Library project.

8. What is sales promotion and how is it used in international marketing? (June/July10)

Sales promotions include all marketing activities other than advertising, personal

selling, and publicity that stimulate consumer purchases and improve retailer or

middleman effectiveness and cooperation. Sales promotions include such items as

cents-off, in store demonstrations, samples, coupons, product tie-ins, contests,

sweepstakes, sponsorship of special events, and point-of-purchase displays. Sales

promotions are used as short-term efforts directed at consumer and/or retailer to

achieve such specific objectives as (1) consumer product trial and/or immediate

purchase, (2) consumer introduction to the store, (3) gaining retail point-of-purchase

displays, (4) encouraging stores to stock a product, and (5) supporting and

augmenting the advertising, personal sales efforts.


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MODULE-08

1. Show how the communications process can help an international marketer avoid

problems in international advertising. (June/July 12)

Since promotional activities are basically communications processes, all the attendant

problems in developing an effective promotional strategy is domestic marketing plus

all the cultural problems discussed in the chapter must be overcome to have a

successful international promotional program. A major consideration for a foreign

marketer is to ascertain that cultural diversity, media limitations, legal problems and

constraints, or control of the message can be communicated properly. International

advertising and promotional communications fail for a variety of reasons: (1) the

message may not get through because of media inadequacy, (2) the message may be

received by the intended audience but not be understood because of different cultural

interpretations, and (3) the message may be received by the intended audience and be

understood but have no effect because the marketer did not correctly assess the needs

and wants of the target market. Because of the many different influences that may

jeopardize the success of a promotional strategy, those international executives who

understand the communications process will probably be better equipped to manage

that diversity since the communications process forces the international advertiser to

examine all of those areas where problems in promotion may surface.

2. Take each of the steps in the communications process and give an example of how

culture differences can affect the final message received. (Dec/Jan11)

The information source may create a problem because the marketer does not truly

understand the needs and wants of the target market. This is especially important if

the marketer relies on the self-reference criterion and makes the naive assumption that

―if it sells in one country it would sell in another.‖ An example would be bicycles

designed and sold in the United States to consumers fulfilling recreational, exercise

needs which cannot be successfully sold for the same reasons in a market where the

primary use of the bicycle is transportation. The encoding step of the communications

process can also cause problems because such factors as colors, values, beliefs, tastes

and other symbols utilized by the international marketer do not correctly symbolize

the message intended. For example, ―Body by Fisher‖ which decoded meant ―Corpse


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by Fisher‖ was not General Motors’ intended message. The message channel may

create problems because of the difficulty of effectively reaching target markets in

many countries. Problems, such as illiteracy, the availability and types of media,

create problems at this level. Decoding problems are generally created by improper

encoding. The decoding process is one in which the receiver interprets the message in

terms of one’s own culture, thereby receiving an incorrect message. For example,

Pepsi’s ―Come Alive‖ was decoded by many as ―Come Out Of The Grave.‖

Sometimes decoding can create problems even when the encoder purposely attempted

to develop a message with no symbolism. An example was the toothpaste CUE which

was decoded as a pornographic word. Finally, the feedback step can create problems

in the sense that companies do not use feedback to effectively measure their

communications efforts and attempt to correct any problems that may have been

created by the other steps.

3. Discuss the problems created because the communications process is initiated in one

cultural context and ends in another. (June/July 12, June/July13)

The major problem here is that the encoder is in one culture using one’s own SRC and

the message is decoded in another culture where the decoders are using their own

SRC. The challenge is that the encoder needs to be certain that the message is being

encoded in such a manner that it will be decoded in the other culture in a manner in

which it is intended. Thus, cultural decoding misinterpretations can be avoided.

4. What is the importance of feedback in the communications process? Of noise?

(Dec/Jan11)

The importance of feedback is to provide the marketers who are generally in one

cultural context with an immediate interpretation of the message sent so that any

problems created by errors in the communications process or errors created by the

different cultural contexts can be adjusted before significant harm occurs. The

importance of noise in the system is that such things as competitive activity and other

types of confusion can detract from the communications process and affect any or all

of the six steps. The most important factor about noise is that it is generally

uncontrollable and unpredictable, yet it can influence the outcome. Noise is also a

significant reason why feedback in any communications process is so very important.

Mba IV International Marketing Management [12mbamm418] Solution

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