SMU BBA5- BB0024- INTRODUCTION TO INTERNATIONAL MARKETING

Feb/Spring 2013  

Bachelor of Business Administration-BBA Semester 5  

BB0024– Introduction to International Marketing - 4 Credits

(Book ID: BO103)

Assignment (60 Marks)

   Note: Each question carries 10 Marks. Answer all the questions. 

Q.1 Name and explain with suitable examples, three reasons why international marketing is more challenging than domestic marketing.

Ans. International marketing is more challenging than domestic marketing because the scope is much wider - in essence, when a company or individual markets on an international scale, they are marketing to the entire world, rather than a specific country. Since the scope is global, the cost of reaching out to consumers is much higher. However, the Internet Age has made it possible for international marketers to run advertising campaigns without the usual costs of global marketing. Examples of typical international marketing initiatives (on t     he

• Television Commercials (often, these are dubbed into different languages; sometimes, different commercials will be filmed to suit different cultures.
• Website-based marketing
• Search Engine Optimization Marketing (attracting more web traffic by getting strong Google rankings, etc.)
• Billboard campaigns (these billboards will use strong images and brand logos to get attention in different countries.

National marketing has many of the same elements; however, its scope is narrower, and its                          identities, it may be easier to market to nations than to market globally. Often, when a global campaign is planned, a company or individual will hire an ad agency to create and manage an ad campaign. In the case of Internet companies who market to clients all over the world, this sort of ad agency may not be mandatory. 

In fact, in the digital age, it can be quite easy to amalgamate national and international marketing campaigns on the World Wide Web. For example, SEO (search engine optimization) techniques can be used to attract Web traffic from all over the world, and this sort of marketing can be more inexpensive than traditional international marketing tactics. In a sense, the Internet has bridged the gap between international and national marketing.

Q.2. What are the relative advantages and disadvantages of standardization and adaptation? Explain with suitable examples.

Ans. Standardization is the process by which a company makes it methods, especially its production processes, uniform/identical throughout its organization. Whereas for adaptation, a company would change their methods such as the price, promotion, packaging and/or the product itself in order to fit the needs and preferences of the market or a particular country. Adaptation occurs when any element of the marketing strategy is modified to achieve a competitive advantage when entering a foreign market. 
The advantages of standardization is the consistency of the product throughout the world and the cost savings from having identical the product. Standardization helps cut costs when the company produce the same products and reuse the established marketing and distribution systems where the company gets economies of scare benefits in production and buying. It also helps improve communication and performance.
The advantages of standardization is that it helps cuts costs by lowering installation costs, reducing need to maintain large inventories, and lowering maintenance costs thus also allows a company to take advantage of economies of scale when purchasing supplies. It helps improve the management and design with less customization needed, enabling interchangeability of components, and provides practical application of expert knowledge enhancing operability and improves performance. 
The disadvantage of standardization is the loss of uniqueness. If a company builds up a customer base that serves a specialized market, standardizing its processes may mean it loses some of its former customers. Another disadvantage is the loss of responsiveness where when a company expands into a new market there may be cultural differences which leads to different taste and likings of the market. 

Q.3 Suggest five different ways in which India could improve its image as an exporter in international markets, explaining why?

Ans. In India, the various procedures that are followed in the process of export of goods start right from the time of receipt of an indent from abroad till the shipping documents are negotiated and sales proceed is realized. The various procedure usually followed for the export of goods at different stages are as follows:
1. Quotation and Indent An exporter gives a quotation or an offer for sale to the foreign buyer. It is usually in the form of a Pro forma Invoice. Pro forma invoice or quotation gives:
1. Name and Address of the buyer or consignee.
2. Description of goods to be sold.
3. Price
4. Condition of sale
5. Other provisions such as delivery schedules, payments terms, escalation clause due to rising prices/costs, etc.

2. Shipping and Credit Enquiry The exporter may have to arrange for booking of shipping space in advance of actual sending of goods. Usually the exporter hands over this responsibility to a shipping and freight broker who is specialized in this work. He possesses full knowledge of the various shipping lines and gives expert advice to which line is cheaper.

3. Placing the Goods on Board the Ship After having received back the two copies of shipping bill and one copy of the Application to exporter, the shipper makes arrangements to place the goods on board the steamer. He has to hand over one copy of the shipping bill at the dock while the goods are taken in.

4. Mate’s Receipt The Captain of the ship or the Mate, who is the assistant, cannot allow the shipping of the goods unless the shipper presents to either of them a copy of the shipping bill and the shipping order. The Mate issues a receipt after examining the packing and counting of the packages. This receipt is called the “Mate’s Receipt”. If the Mate is not satisfied with the packing of the goods a remark to that effect is made on the receipt

5. Insurance While the work connected with the shipping of the goods is being carried out, the exporter makes arrangement with some Marine Insurance Company for insuring the goods to safeguard them against marine risks. Usually the goods are insured for the amount which covers not only the value of the goods but also a reasonable profit (generally 15 per cent of the value of the goods) and reasonable expenses expected to be incurred in the event of the loss or destruction of the goods by the perils of the sea.

Q.4 Name five different characteristics of the economic environment that need to be analyzed by international marketers and their implications for international marketing strategy.

Ans. The economy of a country is a major part of each company’s macro-environment. In addition, besides purely economic factors such as the economic system or the existing industrial sectors, a modern society is strongly characterized by its human, technological and natural resources. A marketer serving international markets or planning to go international is confronted with a greater number of such economic environments. The international marketer first has to determine the various characteristics of the economic environment which are relevant for company’s business. Having determined the relevant factors of influence from the economic environment, the marketer will need to analyze their current state in the country markets under consideration.

Characteristics of economic environment: Population: The total population of a country, its growth rate, the distribution of age groups within the population and the degree of urbanization are of interest to many international marketers. The size of a potential local product-market is a key element in its viability. The distribution of age groups in a country is closely related to the demand for certain products, and the degree of urbanization represents concentration of potential customers.

Size and Growth Many international marketers are interested in rapidly developing markets in China and India which together represent some 70 percent of Asia’s population and about 40 percent of the population of the world. The size of the population and its rate of growth affect a society’s ability to progress economically and provide for the future.

Immigration Population growth could also be due to immigration. For example, between 1980 and 1990 almost 9 million immigrated into the USA. This inflow represented 39 percent of total population growth for that decade. For the international marketers, this means the creation of new markets or the growth of traditionally less important niches. Immigrants bring considerable job skills and investment capital.

Age Distribution The age composition of a population may also be of interest to international marketers. As people become older, new markets emerge among older age groups. For example, retirement villages have become popular in the USA, Australia and Spain. The need for home-care services for elderly people is growing and both retirement funds and retirement age insurance are booming.

Urbanization This term urbanization refers to the proportion of a population that lives in cities. The degree of urbanization in a society is of interest to international marketers because it represents concentration of potential customers.  Also, urban areas are centers of industrial productivity and economic growth.

Q.5 Describe any two aspects of the current Indian legal environment and its implications for international marketers entering the Indian market for the first time.

Ans. Ans. An entrepreneur has to take into account the basic regulatory requirements of the country in order to ensure sustainability of the profits and productivity of his/her business. The most important regulation relates to the environment. The environmental regulatory requirements envisage a wide legislative framework covering every aspect of environment protection. Broadly, it includes the emission standards for air, noise, water, etc. Separate set of laws for emission of hazardous wastes have also been enacted. Every industry has to abide by these guidelines and parameters for environmental protection. 
An organization for its smooth and effective functioning, must ensure health and safety of its employees. The major legislation relating to Occupational Health and Safety in India are:- the Factories Act, 1948; the Mines Act, 1952 and the Dock Workers (Safety, Health & Welfare) Act, 1986. The Directorate General of Mines Safety (DGMS) and the Directorate General of Factory Advice Service and Labor Institutes (DGFASLI) are the two field organisations of the Ministry of Labour and Employment in the area of occupational safety and health in mines, factories and ports.
Besides, the Government of India has taken steps like, announcing a competition policy, enacting Competition Act, 2002 and setting up of Competition Commission of India, in order to ensure a healthy and fair competition in the market economy. These aim to prohibit the anti-competitive business practices, abuse of dominance by an enterprise as well as regulate various business combinations like mergers and acquisitions.
For regulation of the export and import of goods and services an entrepreneur has to abide by the Foreign Trade (Development and Regulation) Act, 1992 and the EXIM policy announced by the Government from time to time. The Ministry of Commerce and Industry is the most important organ concerned with the promotion and regulation of the foreign trade in India. The Ministry has an elaborate organizational set up to look after the various aspects of trade. Within the Ministry, the Department of Commerce is responsible for formulating and implementing the foreign trade policy. 

Q.6 Select a product of your choice to be introduced in the US market. What are the cultural factors that would have to be considered in developing a marketing strategy for this product?

Ans. Hundreds of patents are issued by the United States Patent Office daily, with thousands issued each year. With so many new products being created, a strong marketing plan can be the difference between being just another patent holder and being in a successful business with a new commercial product. For some, the invention may be easier to develop than the marketing plan let that stop you. A step-by-step approach will help you connect the dots between the effectiveness of your product and why people will want to buy it.

Step 1

List what the competition offers and for what price. If you can find what type of market share your competition has, include this in your evaluation. Of course, a new product is often than other things on the market, but locate the products that are as close to yours as possible.

Step 2 Define your ideal customers whether they are seniors looking for a mobile scooter or families with home security needs. Your customer base will have an innate need or desire for your product--although they may not realize it yet.

Step 3

Separate yourself from the competition. For your customers to choose your product, you will need to clearly define how it is better or different from anything else on the market and why it is worth the money. While the differentiation may be an extensive discussion in a marketing plan, establish a tag line or commercial-length synopsis.

Step 4

Establish a budget for your marketing campaign: low, medium or high. A low budget may start with trade show attendance and small regional press releases to maximize each dollar. As your budget grows, you can add newspaper and magazine ads, and with yet higher budgets, consider adding television or radio spots.

Step 5

Choose what avenues you plan to use to market your new product based on your budget ability. Determine what geographical regions you want to target first.

Step 6

Test your product in your market. Don’t roll the entire marketing campaign out just yet--you may need to make adjustments. Take a small part of the budget and select one area to bring the marketing out in.

Step 7

Adjust your marketing campaign based on what the test market results demonstrated. This may be using new tag lines, alternating packaging or enlarging an ad.

Step 8

Roll the campaign out full force. Monitor your campaign as it goes on to make demographic or strategy modifications.