DRIVE - Spring 2014
PROGRAM/SEMESTER- MBADS (SEM 4/SEM 6) MBAFLEX/ MBAN2 (SEM 4) PGDMMN
(SEM 2)
SUBJECT CODE & NAME- MK0018– International Marketing
Q.NO.1 Discuss the different management orientations of a company. How does it affect
international marketing?
(Management orientations-6, Effect on international marketing-4) 10 marks
ANS:
Management orientations
The form and substance of a company’s response to global business opportunities depend greatly on
management’s assumptions or beliefs –both conscious and unconscious – about the nature of the world.
The worldview of a company’s personnel can be described as ethnocentric, polycentric, regiocentric, and
geocentric. Management at a company with a prevailing ethnocentric orientation may consciously make a
decision to move in the direction of geocentricism.
Figure: Orientations of Management and Companies
Ethnocentric- The ethnocentric orientation mans company personnel see only similarities in markets and
assume the products and practices that succeed in the home country will, due to their demonstrated
superiority, be successful anywhere. At some companies, the ethnocentric orientation means the
opportunities outside the home country are ignored. Such companies are sometimes called domestic
companies. Ethnocentric companies that do conduct business outside the home country can be described as
international companies; they adhere to the notion that the products that succeed in the home country are
superior and, therefore, can be sold everywhere without adaptation.
Polycentric-The polycentric orientation is the opposite of ethnocentrism. The term polycentric describes
management’s often-unconscious belief or assumption that each country in which a company does business
is unique. This assumption lays the groundwork for each subsidiary to develop its own unique business and
marketing strategies in order to succeed; the term multinational company is often used to describe such a
structure.
Regiocentric and geocentric orientations-In a company with a regiocentric orientation,
management views regions as unique and seeks to develop an integrated regional strategy. For example, a
U.S. company that focuses on the countries included in the North American Free Trade Agreement
(NAFTA) – the United States, Canada, and Mexico – has a regiocentric orientation.
Effect on international marketing
In a firm’s internationalization process, one key strategic decision is international market selection.
Entering new markets, in particular foreign markets, involves a major commitment of recourses (strategic,
technical, managerial, and financial). Due to the limitation of resources, a firm has to make a strategic
decision on which markets to enter and allocate resources accordingly. This decision is especially important
in the case of companies that decide to be international from the inception, as INVs. Nevertheless few
efforts have been done in explaining why and how INVs decide to enter in one or more countries. Firms can
use their international market orientation to overcome cultural distance problems, especially information
asymmetry, opportunistic behaviour, and uncertainty. Market-oriented behaviours facilitate acquisition
and dissemination of knowledge and responsiveness to this intelligence about foreign markets what is
especially important when the firm has no international experience
Q.NO.2. Discuss how culture plays an important role in international marketing. Give some
examples of advertisements which failed due to lack of cultural understanding.
(Importance of culture in international marketing, Examples) 6, 4
ANS:
Importance of culture in international marketing
Culture is the way that we do things around here. Culture could relate to a country (national culture), a
distinct section of the community (sub-culture), or an organization (corporate culture). It is widely
accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have
learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artefacts
(i.e. tangible symbols of a culture, such as the Sydney Opera House or the Great Wall of China).
Values and Attitudes
Values and attitudes vary between nations, and even vary within nations. So if you are planning to take a
product or service overseas make sure that you have a good grasp the locality before you enter the market.
For example, in France workers tend to take vacations for the whole of August, whilst in the United States
employees may only take a couple of week’s vacation in an entire year.
Education
The level and nature of education in each international market will vary. This may impact the type of
message or even the medium that you employ. For example, in countries with low literacy levels,
advertisers would avoid communications which depended upon written copy, and would favour radio
advertising with an audio message or visual media such as billboards. The labelling of products may also be
an issue.
Social Organizations
This aspect of Terpstra and Sarathy’s Cultural Framework relates to how a national society is organized. For
example, what is the role of women in a society? How is the country governed – centralized or devolved?
The level influence of class or casts upon a society needs to be considered. For example, India has an
established caste system – and many Western countries still have an embedded class system. So social
mobility could be restricted where caste and class systems are in place. Whether or not there are strong
trade unions will impact upon management decisions if you employ local workers.
Technology and Material Culture
Technology is a term that includes many other elements. It includes questions such as is there energy to
power our products? Is there a transport infrastructure to distribute our goods to consumers? Does the
local port have large enough cranes to offload containers from ships? How quickly does innovation diffuse?
Also of key importance, do consumers actually buy material goods i.e. are they materialistic?
Law and Politics
As with many aspects of Terpstra and Sarathy’s Cultural Framework, the underpinning social culture will
drive the political and legal landscape. The political ideology on which the society is based will impact upon
your decision to market there. For example, the United Kingdom has a largely market-driven, democratic
society with laws based upon precedent and legislation, whilst Iran has a political and legal system based
upon the teachings and principles Islam and a Sharia tradition.
Q.NO.3 what do you mean by international marketing research? Why do marketers go for
such research? (Meaning, Importance) 5, 5
ANS:
International marketing research
International Market Research is a particular discipline of Market Research, focusing on certain
geographical areas.
International Market Research is concerned with consumer goods, but also with any resource or service
within a value chain which will be commercially utilised or further processed – which is the area of
industrial goods and B2B-Marketing. International market research projects may have various objectives
and purposes.
Classical market research very often covers cross-country issues. Same question, but being raised
internationally. This may however lead to differing answers from country to country – due to historical or
cultural reasons. This implies that country-specific answers will also lead to internationally differing
marketing decision.
Importance
International Market Research shall identify new business opportunities and help assure a so-called area
strategy which defines which geographical hemisphere needs to be covered. Generally, market research
intends to provide new ideas, comparisons, and control information for marketing deciders. These deciders
are found not only in Marketing and Sales, Import and Export positions, but also in New Business
Development, in a Strategy staff, in Corporate Planning departments and of course, within top
management. International Market Research provides an information base for strategic decisions. Here,
competitive information needs to be available early, fastly, and with the right filter.
Strategic decision-making requires an outstandingly high quality information base.
Therefore, international market research projects have to consider the following:

globalisation experts are featured by product and industry knowledge, industry-specific
experiences, methodological know-how like research methods, information access (e.g. to
specialising commercial data bases), reputation (e.g. experts with door-opener-quality) and
international experience, language skills, and others more competitive information needs the
right focus, but also needs to be provided fastly, and early enough in order to be effective.

information should be retrieved exclusively for your company – if all the industry enjoys the
information there will not be any competitive gain procurement of information may be done by
internal staff (“make”, e.g. sales force, internal research department), but also by such type of
external market intelligence specialist who are working in the international field.
Q.NO.4 Nestle is marketing bottled water to Pakistan. Which segmentation it adopts there
and what are the other international market segmentations? (Nestlé’s segmentation, Bases of
segmentation) 3, 7
(Nestlé’s segmentation-3, Bases of segmentation-7) 10 marks
ANS:
Nestle’s segmentation
Consumers can be categorized in terms of usage rates – for example, heavy, medium, light, and nonuser.
Consumers can also be segmented according to user status: potential users, nonusers, ex-users, regulars,
first-timers, and users of competitors‟ products. Although bottled water may be considered a luxury
product in some high-income markets, Nestle is marketing bottled water in Pakistan where there is a huge
market of nonusers who, despite their low income, are willing to pay 18 rupees a bottle for clean water
because of the widespread presence of arsenic poisoning in well water and the pollution of surface water.
Benefit segmentation
International benefit segmentation focuses on the numerator of the value equation – the B in V=B/P. This
approach can achieve excellent results by virtue of marketer’s superior understanding of the problem a
product solves or the benefit it offers, regardless of geography. For example, Nestle discovered that cat
owners‟ attitudes toward feeding their pets are the same everywhere. In response, a pan-European
campaign was created for Friskies dry cat food. The appeal was that dry cat food better suits a cat’s
universally recognized independent nature.
Bases of segmentation
Market segmentation is the process of subdividing a market into distinct subsets of customers that behave
in the same way or have similar needs. Some widely used bases of segmentation are discussed below in sub
sections.
Geographic segmentation
Geographic segmentation has major limitations: The mere fact that markets are in the same world
geographic region does not meant that they are similar. Japan and Vietnam are both in East Asia, but one is
a high-income, post-industrial society and the other is an emerging, less developed, pre-industrial society.
Demographic segmentation
A number of demographic trends – aging population, fewer children, more women working outside the
home, and higher incomes and living standards – suggest the emergence of international segments.
Psychographic segmentation
Psychographic segmentation involves grouping people in terms of their attitudes, values, and lifestyles.
Data are obtained from questionnaires that require respondents to indicate the extent to which they agree
or disagree with a series of statements.
Behavioral segmentation Behavioral segmentation focuses on whether people buy and use a product, as
well as how often and how much they use it. Consumers can be categorized in terms of usage rates – for
example, heavy, medium, light, and nonuser.
Benefit segmentation
Segmentation focuses on the numerator of the value equation – the B in V=B/P. This approach can achieve
excellent results by virtue of marketer’s superior understanding of the problem a product solves or the
benefit it offers, regardless of geography.
Q.NO.5 Write short notes on:
a) e Marketing
b) Spot and forward rates
(a. meaning and benefits of e Marketing
b) meaning and role of spot and forward rates) 5, 5
ANS:
a) e Marketing
E marketing refers to the use of the Internet and digital media capabilities to help sell your products or
services. These digital technologies are a valuable addition to traditional marketing approaches regardless
of the size and type of your business. E-marketing is also referred to as Internet marketing (i-marketing),
online marketing or web-marketing.
Its benefits
Following are some of the benefits of e-marketing for small businesses:

Wider prospect reach – the internet has become part of everyone’s life. So for whatever products you
offer, there is already an existing market on the World Wide Web. With e-marketing, it allows you to
find new markets and potentially compete worldwide with only a small investment.

Cost-effective approach – A properly planned and effectively targeted e-marketing campaign can help
your business reach target customers at a much lower cost compared to traditional marketing
methods.

Reduction in costs through automation and use of electronic media – e-marketing presents a strong
business case in cost savings, particularly in the areas of transactional costs, customer service, digital
media channels, print and distribution.

24/7 marketing - with a website your customers can find out about your products and make purchases
even if your physical (bricks & mortar) premises are closed or you don’t have physical premises at all.

Increased ability to track results – e-marketing makes it easier to measure how effective your
campaigns are. It allows you to obtain detailed information about customers' responses to your
advertising, through the use of methods such as pay per click or pay per action, etc.
b) Spot and forward rates
Spot rates
In finance, a spot contract, spot transaction, or simply "spot," is a contract of buying or selling a
commodity, security, or currency for settlement (payment and delivery) on the spot date, which is normally
two business days after the trade date. The settlement price (or rate) is called a "spot price" or "spot rate."
For bonds, spot rates are estimated via the bootstrapping method, which uses prices of the securities
currently trading in market, that is, from the cash or coupon curve. The result is the spot curve, which exists
for fixed income securities.
Forward rate
A spot contract is in contrast with a forward contract where contract terms are agreed now but delivery and
payment will occur at a future date. The settlement price of a forward contract is called a "forward price" or
"forward rate. " Depending on the item being traded, spot prices can indicate market expectations of future
price movements. In other words, spot rates can be used to calculate forward rates.
Role of spot and forward rates
Spot & forward rates are settlement prices of spot & forward contracts; cross rates are the exchange rate
between two unofficial currencies. Spot rates can be used to calculate forward rates. In theory, the
difference in spot and forward prices should be equal to the finance charges, plus any earnings due to the
holder of the security, according to the cost of carry model.
Q.NO.6 Select a product of your choice for export and explain how you will do the pricing
and costing of that product.
(Choosing the product-2, Export pricing and costing-8) 10 marks
ANS:
Choosing the product
Before breaking into the foreign market, marketers must consider factors that influence product adoption.
As explained by Diffusion Theory at least six factors have a bearing on the adoption process: relative
advantage, compatibility, trialability/divisibility, observability, complexity and price. These factors are all
perceptual and thus subjective in nature. For a product to gain acceptance it must demonstrate its relative
advantage over existing alternatives. A product must also be compatible with local customs and habits. A
freezer would not find a ready market in Asia where people prefer fresh food. A new product should also be
compatible with consumers‟ other belongings. If a new product requires replacement of those other items
that are still usable, product adoption becomes a costly preposition.
Export pricing and costing
Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is
the price that we pay/incur for the product. Price includes our profit margin; cost includes only expenses
we have incurred. Export pricing is the most important tool for promoting sales and facing international
competition. The price has to be realistically worked out taking into consideration all export benefits and
expenses. However, there is no fixed formula for successful export pricing. It will differ from exporter to
exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or
exporting through a canalising agency. You should also assess the strength of your competitor and
anticipate the move of the competitor in the market. Pricing strategies will depend on various
circumstantial situations. You can still be competitive with higher prices but with better delivery package or
other advantages. Your prices will be determined by the following factors:
1. Range of products offered.
2. Prompt deliveries and continuity in supply.
3. After-sales service in products like machine tools, consumer durables.
4. Product differentiation and brand image.
5. Frequency of purchase.
6. Presumed relationship between quality and price.
7. Speciality value goods and gift items.
8. Credit offered.
9. Preference or prejudice for products originating from a particular source.
10. Aggressive marketing and sales promotion.
11. Prompt acceptance and settlement of claims.
12. Unique value goods and gift items.
Export Costing is basically a cost accountant‘s job. It consists of fixed cost and variable cost comprising
various elements. It is advisable to prepare an export-costing sheet for every export product.