Important Questions and Answers

IBO-02
International Marketing Management

What are the various environments that influence international marketing

management?

Every business firm is affected by micro and macro environment. No business

organization can exist without these factors. In fact, we can divide business
environment into two categories, such as:
A. Micro-environment
B. Micro-environment

Micro-environment
This type of environment directly affects the working of a business organization. It
includes the following factors or components:
1. Customers
2. Suppliers
3. Resellers
4. Competitors
5. General public

• Customers it is very important for a business organization to know about the

tastes and preferences of the customers. So that it can manufacture goods
and services accordingly. It can frame appropriate marketing strategies to
increase its customer’s base.

• Suppliers a business organization cannot exist without suppliers. In order to

carry out the production process smoothly, it is very important for an
organization to know about the available suppliers of raw materials,
machinery, equipment, etc.

• Resellers an organization must know about the availability of middlemen like

wholesalers and retailers for marketing its products. Accordingly, it chooses
the appropriate channel of distribution.

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 • Competitors an organization must know the strengths and weaknesses of its
competitors. It must be aware of their policies and strategies. Then only it
can face the competition and can sustain in the market.

• General public it is important for a business organization to know the nature

of population living in a particular area such as literacy rate, size of the
families, composition of society etc.

Macro environment
It refers to the factors that affect the performance of the company indirectly. These
factors are external to a business firm. A firm has no control on these factors. These
factors include:
1. Economic environment
2. Political and legal environment
3. Socio-cultural environment
4. Demographic environment
5. Technological environment

1.Economic environment
• It consists of the economic conditions; economic system and economic
policies followed by a country.
• Economic conditions include the nature of economy, economic resources,
level of income, distribution of income and wealth etc.
• Economic system includes whether the country follows capitalism, socialism
or mixed economy system.
• The infrastructure available in a country such as transportation,
communication, power supply etc.
• The important economic indices are national income, per capita income,
GDP, rate of savings, investments, exports, balance of trade, balance of
payment, poverty rates etc.

2.Political and legal environment

• In every country, the government plays an important role in the
development of a business firm.
• The ideology of the government shapes the political environment of the
country.

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 • Political stability influences the economic activities. If there are frequent
elections and political instability, it has an adverse effect on the operations
of the companies.
• The government also prepares legal framework within which the business
operates.
• The legal framework includes the constitutional framework such as different
contracts, acts, rules and regulations, laws etc.

3.Socio-cultural environment
• Every society has its own culture like customs, traditions, habits, languages
etc.
• The culture of a society influences the functioning of a business enterprise.
• The business firm must know the consumption patterns, the dressing and
living styles of the people belonging to different cultures.
• All these factors must be considered before designing the product.

4.Demographic environment
• It deals with the size and composition of population living in a country.
• Demographic factors include size, growth rate of population, life expectancy,
age composition, sex composition, ethnic composition, educational levels,
family size, occupation, nationality, rural urban distribution of population.
• A complete understanding of the demographic features of the society helps
the firms in designing their business strategies properly.

5.Technological environment
• As we know technology is changing very fast these days. It is very important
for a company to adopt these new technological changes in order to survive
in this modern world.
• The technological development creates demand for several new products.
• Therefore, a company should keep its technology up to date.

Discuss the impact of developments in Information Technology (IT) on

international marketing.

The internet and its associated technology have provided an economical and
efficient way for organizations to create an additional e-commerce activity to

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market their products and services over the past several years. Internet affects
the activities of marketing channels in the following ways, such as

1. Communication channels, its principal functions are to inform customers

about availability and characteristics of products/services and helps buyers
to communicate with sellers;
2. Transaction channels, whose primary function is to facilitate financial
exchanges between buyers and sellers and
3. Distribution channels, its main function is to facilitate physical exchanges.
The effect of the internet on the international businesses is making it easier
for companies to participate in foreign markets.
4. Increases sales: Internet can increase the sales. Because the web
advertisements reach many customers all over the world.
5. Reduces costs: A business can reduce its costs by using electronic
commerce in its sales support and order-taking processes, twenty-four
hours online shopping, lower transaction cost, larger purchases for
transaction, People can shop in different ways.

Explain the various methods of collecting primary data pointing out their merits
and demerits.
The data which is collected by the researcher for the first time are called primary
data.
There are basically five methods of collecting primary data:
i) Observation method
ii) Interview method
iii) Reporters
iv) Questionnaire
v) Schedule
i) Observation method: In this method, a researcher collects data by
observing the activities of the interviewer. Observation is nothing but
watching the behaviour of the participants carefully. Few processes of
observation are sensation, attention and perception.
Merits
• This method is suitable for intensive study and provides raw materials for
deep study.

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 • This method is suitable where the participants are reluctant to share
information.
• This method is quite economical.
Demerits
• The observer must be an expert otherwise he cannot predict accurately.
• This method is not suitable for extensive study purpose.
• There is every chance of wrong prediction if the participant does not behave
rationally.
• This method is not reliable and generally not followed by many
organisations.
ii) Interview method This method of collecting data is one of the most
popular and important. An interview is the meeting of two persons
wherein one person tries to gather information from the other person by
asking simple questions. There may be direct personal interview or
indirect personal interview.
Merits
• Interviews have high response rates.
• The method is quite reliable and valuable.
• This method is flexible and questions can be asked according to the facial
expressions of the candidate.
Demerits
• The interviewer must be a trained professional.
• This method is expensive and time consuming.
• It cannot be used when the field of inquiry is large.
iii) Reporters: Under this method, reporters and correspondents are
appointed in different areas to collect data and information about a
particular matter. This method is generally employed by government
departments, newspapers, magazines, radio and TV news channels.
Merits
• This method is more accurate and reliable.
• This method is economical.
• Information can be collected easily and quickly.
• Information can be collected from a wide area extensively.
Demerits

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 • This method is expensive as many reporters had to be appointed.
• It is time consuming.
• Data may not be reliable
iv) Questionnaire under this method, a list of questions is sent to the
informants requesting them to answer. questions are sent either by post
or personally or by email.
Merits
• This method is suitable to cover a wide area.
• This method is economical.
• Reliable and concrete information may be collected through this method.
Demerits
• It is a time-consuming process.
• The informants may not answer the questions honestly.
• This method is not applicable to uneducated people.
v) Schedule is also a type of questionnaire send to the informants asking
them to reply to the questions. Generally, informants are researchers or
enumerators and collect information from the informants. Here
enumerators fill the questionnaire.
Merits
• It is applicable to uneducated people also.
• It is suitable for extensive study.
• The enumerators visit the informants personally to collect information.
Demerits
• It is expensive and time-consuming method.
• The informants may not respond honestly and thus information may not be
reliable.

Describe the process of developing new product for the international markets.
The important steps in product development are:

1. Idea generation
2. Idea screening
3. Concept development
4. Analysis or testing
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 5. Commercialization
6. Evaluation

1. Idea generation product development process starts with sourcing for ideas.
Ideas can come from any source. The most important source of idea is the
user or consumer. The problems faced by the consumers in using the existing
version of the product will give the idea to develop the product. The
management should always keep its eyes ears and mind open for ideas. New
product ideas come from brainstorming, focus groups and attribute analysis.
2. Idea screening Once the ideas have been generated, the next step is to
screen them by grouping. Screening enables the ideas to analyse and
evaluate. have the important ideas are selected out of the total ideas
identified.
3. Concept development the selected data in this stage are transformed into
concept. The new concept about the product is developed in this stage.
4. Analysis or Testing In this stage, detailed analysis is done. It includes
expected sales, cost, price and profits.
5. Commercialization In this stage the new product is launched in the market.
the time and situation should be considered before commercialising the
product. The advertisement and sales promotion techniques should also be
considered.
6. Evaluation After launching the new product it is very important to take
feedback of the consumers. The main object of the company is to find the
performance of the new product.

Write Short note on International Product life Cycle (IPL)

International product life cycle is a model of product life developed by Raymond
Vernon. According to his theory, the product has to pass through 4 stages in the
international market such as:
1. Introduction,
2. Growth,
3. Maturity

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 4. Decline.

• Introduction: In this stage, a product is newly launched in the market. there

is not much competition. the sales volume is low.
• Growth: This is the second stage in the product life cycle. Here the sales
volume grows rapidly. There are a lot of competitors of the product. The
prices of the product fluctuate. A firm earns profits and spends money on
• Maturity: As the name implies the product is at matured stage. But the
demand and sales increases at a slower rate. As a result, the firm has to
reduce the price of the product.
• Decline: This is the final stage of a product life cycle. The sales of the product
decreases. The competitors developed similar products with better quality.
The firm has to reduce the price of its product.
Write a short note on Piggy backing
• Transmission of data is usually bi-directional or duplex.
• So, the control information or acknowledgment also needs to be flowed in
both the directions.
• In two-way communication, wherever a frame is received, the receiver waits
and does not send the acknowledgment back to the sender immediately.
• He waits until its network layer passes in the next day to pocket.
• The delayed acknowledgement is then attached to this outgoing data frame.

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 • This technique of temporary delaying the acknowledgement so that it can be
hooked with next outgoing data frame is known as piggybacking.
• This can be done by making two simple connections such as:
• A separate channel for receiving and sending data from the sender.
• A separate channel for receiving and sending data for the receiver.

• But due to this, the traffic would increase and bandwidth of the channel
would be wasted.
• The new improved solution is piggybacking.
• Piggybacking is a method of attaching acknowledgement to the outgoing
data packet.
• The available channel bandwidth is used efficiently in piggybacking.
What are the social, ethical and environmental issues in international marketing?
The following are the important social, ethical and environmental issues in
international marketing
1. Adulteration: It refers to duplicate products or below standard products and
services. Many international companies sell these products. These products
have a bad affect on customers health.
2. Deceptive advertisements: Most of the MNCs are advertising their products
with false claims and promises which are not actually true. Sometimes,
advertisements are vulgar and not to watched by children.

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 3. Low salaries to the employees: some international firms don’t pay fair and
equitable salaries to their employees. This results in low productivity and
consistency.
4. Poor working conditions: Some foreign companies provide very poor
working conditions for employees such as unsafe working conditions, no
team spirits, pollution, etc. These factors may affect the function of workers.
5. Tax evasion: Many transnational corporations are involved in transfer pricing
to avoid paying taxes in the country where they do business. This creates an
unhealthy competition and closing down of domestic companies.
6. Pollution: Generally, it has been observed that the main object of
international companies is to earn more and more profits. To achieve this
goal, they often exploit the resources of the domestic country and have less
concern about pollution.
7. Exploitation: Most of the MNCs are exploiting the resources of domestic
country in order to maximize their business and profits.
What is segmentation? State it’s objectives and essentials of effective
segmentation of international markets.
• International market segmentation refers to the process of dividing the
international market into parts or segments.
• Each segment shows similar characteristics.
• In simple words, it is a process of identifying a group of potential customers
at international level who exhibit similar behavior.
Objectives of segmentation
• To find differences among consumers.
• To find the marketing opportunities by examining the needs of each
segment.
• To determine the amount of funds to be allocated to each segment.
Essentials of effective segmentation
1. Measurable
2. Accessible
3. Differentiable
4. Actionable
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 5. Substantial
• Measurable: The market size and purchasing powers of the consumers
should be measurable in units.
• Accessible: The market and consumers should be within the reach of the
company.
• Differentiable: Each segment should respond differently. They should not
show similar characteristics.
• Actionable: Each segment should have practical value. It should respond to
a certain market strategy.
• Substantial: Consumers profiles should be clearly defined by gathering data
on their age, gender, job status, etc.
Distinguish between Multinational marketing and Global marketing.
Multi-national marketing Global Marketing
In multinational marketing, each On the other hand, in global marketing
individual market is provided with similar types of goods and services are
specific goods and services provided to all the customers all over
the world.

In multinational marketing, Whereas in global marketing

advertisements are done on the basis advertisements are done all
of local needs. throughout the world.

In multinational marketing, Marketing But in global marketing, marketing

strategy for each country is designed by strategies are planned at the
the branch located in that country. headquarters of the company.

Distinguish between High-tech positioning and High-touch positioning.

High-tech positioning High-touch positioning
In high-tech positioning, products are Whereas, in high-touch positioning
purchased on the basis of product products are purchased on the basis of
features. products image.

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In high-tech positioning, buyers give On the other hand, in high-touch
attention to technical details of the positioning buyers give less attention to
products. the technical details of the product.

In high-tech positioning, products are But in high-touch positioning the

generally expensive. products are mostly cheaper.

Computers, mobile phones, television On the other hand, commonly used

and cars are few items sold in high tech- consumer goods are sold in high-touch
positioning strategy. positioning strategy.

Distinguish between International warranty and international guarantee

• Warranty always comes in written format. Whereas guarantee is generally
oral or spoken words.
• Warranty covers only the products. But guarantee covers both goods and
services.
• To avail warranty buyers, need to incur expenses. On the other hand, product
guarantee is usually free of cost.
• Warranty is formal but guarantee is less formal.

Distinguish between international marketing information and international

marketing research.
International marketing information International marketing research.
System (MIS) (MR)
MIS is the process of collecting and On the other hand, MR is a systematic
supplying marketing information to the process of collecting & analyzing the
management. market information.

MIS system aims at providing market Whereas, the object of marketing

information to the managers. research is to solve a specific marketing
problem.

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 Marketing information is a broad whereas marketing research is a
concept narrow concept.

In marketing information data are whereas in marketing research data are

collected almost daily. collected less frequently.

Marketing information system is a But marketing research is done

continuous process. periodically.

What is EPRG framework

EPRG stands for ethnocentric, polycentric, regio-centric and geocentric framework.
According to EPRG framework the management can make 4 approaches to
promote international trade. They are:
1. The ethnocentric approach.
2. The polycentric approach
3. The regiocentric approach
4. The geocentric approach
1. The ethnocentric Approach: In this approach, the management of a
company thinks that the marketing practices followed in the home country
will succeed in the foreign market as well. No extra efforts are required for
other countries. Foreign markets are looked at as an extension of domestic
market.
2. The Polycentric Approach: This approach is just the opposite of ethnocentric
approach. The management of a company thinks that different marketing
strategies are required for different markets. A company makes its own
marketing strategies to sell their products in foreign markets.
3. The Regio-centric Approach: The management of a company thinks that
similar countries that exist in the same region are similar. Strategies
developed for home countries can also work for regional countries. A
company finds out the economic, social and political similarities between the
countries.
4. The Geocentric Approach: According to this approach, management points
out the similarities and differences between markets and creates a global
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 marketing strategy accordingly. A company looks the whole world as a
potential market. A company thinks that there are minimal differences in the
marketing environment of all the countries.

What are the alternative methods of entry into foreign markets? Explain their
merits and demerits.

There are basically 5 methods of entry into foreign markets:

• Direct Exporting
• Licensing and franchising
• Joint Venture
• Strategic Alliances
• Foreign direct investment

a) Direct Exporting: Under this method, the firm directly sales its goods and
services in the foreign market. It may appoint representatives to look after
the international marketing.
Merits
• It helps to protect patents, trademarks, etc.
• It helps to test a product before making a bigger investment in the foreign
countries.
• Firms can choose their foreign representatives.
Demerits
• This strategy is expensive.
• It needs service and research.
• Difficult for offline marketing.
• It involves high risk.

b) Licensing and franchising: Under this method a foreign firm takes franchises
and pay a fixed royalty or commission. The franchise takes all risks of sales
and payments.
Merits
• It is suitable for retail business.
• It is less expensive.
• It involves less risks.
• It helps to expand market in different countries of the world.
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Demerits
• Practically it is difficult to control all the franchises.
• It requires a lot of legal formalities.
• Franchising may not work with interest.

c) Joint Venture: In this method, a firm joins hands with a foreign company to
do business. The domestic firm has to either invest or share its knowledge
and technology with the foreign firm. The ownership and management are
shared between a foreign and local company. The local company invites an
outside company to join as share owner in the new unit. These are very
successful when the partners share the same goals and the host accepts the
responsibility to carry out the plans.
A joint venture can succeed only if both the partners have something to offer to
each other and have mutual trust and respect.
Merits
• Greater returns from equity participation.
• Greater control over production and marketing.
• Better market feedback.
• Both the firms share their investments and technologies.
• It is less risky because the risk is shared with the local partner.
• It helps to transfer technology.
• The local firms have skills and contacts that are valuable.
• The local firm may have good distribution network which helps to sell the
product easily.
Demerits
• There may be cultural clashes.
• Greater investment of capital and management resources.
• There is a possibility of conflict of interest in joint venture with a local
company.
• Formation and dissolution involve a lot of time and formalities.
• Technology has to be shared.

d) Strategic Alliances: Under this method, a company acquires the controlling

rights of a foreign company. This is the best mode to enter into international
market. Here, the two firms pool their resources directly in a collaboration.
Each partner brings in a particular skill or knowledge that complements the
other. Both are expected to gain profit from each other’s experience. This
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 type of alliances involves either distribution access or technology transfers
or production technology. Both the companies may deal in similar products.

Strategic alliances may be of 3 types such as

• Technology-based alliances where technology is transferred. This is basically
done in IT sectors.
• Production-based alliances This is popular in automobile industries.
• Distribution-based alliances This is based on the principle of franchise where
a company takes responsibility of distributing the products of other company
for a commission.
Merits of strategic alliance
• Readymade infrastructure to expand business.
• It enhances the long-term competitive advantage by forming alliances with
competitors.
• Tables of worm to increase the resource productivity and profitability by
avoiding unnecessary fragmentation of resources.
• It reduces the chances of losses and avoids risks
• The firm games from the expertise knowledge and experience of the existing
firm.
• Fastest mode of entry into international market.
Demerits of strategic alliance
• Possibility of cultural clashes.
• Problems of integration of systems and processes.
• It requires heavy investment.

e) Foreign direct investment: This is the simplest strategy. Generally, it is done

in large scale. A domestic firm can make an investment overseas through
joint ventures strategic alliances and direct investment.
Merits
• Better control of operations.
• Homes can avail rebate subsidies tax duties etc.
Demerits
• Exposed to political risk. Next
• It requires heavy investments.

Differentiate between product standardization and adaptation.

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 Standardization Adaptation
it is an approach to increase the the process of differentiation that exists
commonality of the product in the between products and service.
supply chain

It ensures that the product meets it is a process of changing the product to

certain standards of quality, service meet the needs of customers in the
and appearance. market.

Factors that affect Standardization and Adaptation

1. Customer orientation
2. Stage of market development
3. Legal consideration
4. Climatic conditions

1. Customer orientation: it includes purchasing power, tastes and preferences,

sociocultural factors, literacy, etc. of the consumers.
2. Stage of market development: It includes factors like infrastructure,
transportation, communication, technology, etc. of the market.
3. Legal consideration: These factors include patents, safety standards,
commercial terms, etc.
4. Climatic conditions: These factors include weather, type of climate,
physiography, etc.
For example, McDonald sell cheese burgers in Australia to one segment of the
market as a low-calorie diet food. Similarly, for want of refrigeration facilities lever
brothers introduced dehydrated vegetables in India. Agarbatti exporters from
South India modified the intensity and type of perfumes in incense sticks to suit the
likings of Middle East and North American countries

What is Marketing mix? Briefly describe the different types of marketing mix.

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Meaning of marketing mix: It is a set of tools that a firm uses to achieve the
objectives of the firm. These tools are popularly known as 4P such as product,
price, place and promotion. These are also known as elements of marketing mix.
Elements of marketing mix:
1) Product mix: This strategy is based on products. It determines the quality
and quantity of the product to be produced like size, weight, shape,
packaging, etc. All these elements are prepared based on the market
research. Consumers’ needs are the main aim.
2) Price mix: As the name implies, it fixes the price of the product. Here factors
like cost of production, competitors’ price, objectives of the firm, etc are
considered. It is a complex function of management.
3) Place mix: It includes distribution of goods through various channels of
distribution. It also includes functions like warehousing, transportation, etc.
Its aim is to ensure smooth production and make the goods available in time.
4) Promotion: It includes activities that popularises the product and persuades
the consumers to buy the products. The tools of promotion are advertising,
personal selling, sales promotion schemes, etc. It also informs the consumers
about the features of the products.

Define Market Targeting and explain the procedures on how to target different
markets?

• Market targeting is defined as a set of buyers, sharing common needs or

characteristics that the company decides to serve.
• It is quite important for a company to know the tastes and preferences,
standard of living, income etc. of the targeted consumers so that proper
strategy can be framed.
• Therefore, an understanding of the target markets and its characteristics
would help the marketing managers to prepare suitable plans.

Procedures of market targeting

1. Concentrated marketing
2. Differentiated marketing
3. Undifferentiated marketing
4. Choosing a product

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 1. Concentrated marketing When resources are limited and the competition is
tough and enterprise has to stretch the market budget for market coverage.
It may follow concentrated marketing strategy. A firm decides to capture a
small share in the large market. It is an excellent strategy for small
manufacturers.
2. Differentiated marketing in this strategy several markets are divided into
segments and each segment is analysed. The main object is to cater each
segment and increase the sales volume and profit of the firm.
3. Undifferentiated marketing This approach keeps the overall marketing costs
low and makes it easier to manage and track the market forces uniformly.
Here the focus is to find out the common segments rather than different
segments. The firm designs marketing programs that appeal to the large
number of consumers. The company has to spend a good amount on massive
distribution and advertising programs.
4. Choosing a product, the product life cycle is also another important factor
considered while selecting a market targeting. At the introductory stage of a
product, the company will prefer concentrated marketing strategy whereas
in the maturity stage a firm may employ differentiated marketing strategy.

Explain the key decisions in International Marketing Communications (IMC).

• It refers to integrating all the techniques of brand promotion to promote a
particular product or service.
• All types of marketing communication work together to increase the sales
and profits.
• Companies are using various marketing communication tools to promote
their products which is known as integrated marketing communication
approach.
• The main object is to gain competitive advantage.
• Today, consumers have learned to rely on advertising and other forms of
promotion for information they can use in making purchase decisions.
• It helps companies to identify the most suitable and effective methods to
contact customers.
• The important tools of integrated marketing are:
1. Sales promotion
2. Personal selling
3. Advertising
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 4. Sponsorship
5. Direct marketing
6. Social media marketing
7. Public relations
8. Mobile marketing.

Steps or processes of international marketing communication

1. Identifying the target audience.
2. Objectives of the communication.
3. Determining the message.
4. Budget.
5. channels of communication.

• Identifying the target audience: The first key decisions in international

marketing communication is to identify the potential market and the
customers. A company should consider the factors like the purchasing
power, taste and preference, culture, etc. of the consumers.
• Objective of the communication: The second decision is about the objective
of the communication. It means what information and messages is to be
conveyed to the customers. What is the goal of the communication? All these
questions are answered in this decision process.
• Determining the message: Here the management of a company finds out
what type of messages is to be sent to the customers. The exact message
that fulfills the goals of the organization should be determined.
• Budget: Here the company determines the cost of communication. It
allocates the fund for communication. Larger the communication more will
be the expenses.
• Channel of communication: It refers to the different mediums through
which communication is shared such as TV, radio, Internet, etc. A firm
decides the channel according to its budget and the target area in which the
message has to be sent.

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What is the relationship between international market segmentation, targeting
and positioning?
Market segmentation
• It is the process of dividing the market into segments on the basis of specific
variables.
• The important variables maybe size of the market, income of the consumers,
tastes and preferences of consumers, accessibility of the raw materials,
competitive advantage and profitability.

Market targeting
It is a process of identifying the most profitable segment of the market. Each
segment is targeted on the basis of types of consumers, they’re incomes, tests and
preferences etc.

Market positioning
It is a process of taking advantage and create a position in the consumer’s mind. It
is done through marketing mix tools like branding, sales promotion techniques,
advertisement etc.

Discuss the different methods used in positioning the product.

• Product positioning means relating a product to the market.

• In simple words, it is a process of creating a clear image in the minds of
consumers about a product or service.
• A product or service may be positioned on the basis of an attitude or belief,
use or application, user class, price or quality.

Methods of product positioning

There are three methods:

1. Comparative strategy.
2. Differentiation strategy.
3. Segmentation strategy.

1.Comparative strategy according to this strategy, the product is placed just next
to the other brands to highlight their competitive advantage. The consumer can

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make a comparison between different brands before making a final purchase
decision.

2.Differentiation strategy in this type of marketing strategy, the product is shown

with a unique or special quality or characteristic so that the consumer is attracted
to the product. The company differentiates its own product with other products on
the basis of some special quality or use of the product.

3.Segmentation strategy according to this strategy, the same product is segmented

or divided into different types for different consumers. For example, fair and lovely
is a fairness cream which is segmented into male and female.

What is International Marketing Research? Discuss the important factors that

affect international marketing research.
• Marketing research refers to the collection and analysis of data
systematically.
• When it comes to international level it is quite difficult to collect accurate
information about different countries and market all over the world.
Therefore, it is a very complex process.
Factors which affect international marketing research
1. Economic and political factors
2. Social and cultural factors
3. Expenses
4. Inaccuracy of data
5. Lack of coordination from researching countries
6. Environmental differences

1. Economic and political factors: As we know, different countries are having

different currency units, economic policies, tax rules, infrastructure, import-
export procedures, etc. So, a researcher needs to collect adequate and
accurate data on economic and political environment of different countries.
2. Social and cultural factors: These factors include the religion, language,
literacy level, social status, culture, etc. of the people living in a particular

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 country. The researcher has to study all these factors in the marketing
research.
3. Expenses: A researcher should also take into account the different types of
expenses which are going to incur in collecting data and information about
the different countries. It depends on the amount of funds that is allocated
by the company to do marketing research.
4. Inaccuracy of data: There are two types of data such as primary data and
secondary data. A researcher generally finds it very difficult to collect
accurate data on international marketing. It is quite difficult to check the
reliability and accuracy of the information.
5. Lack of coordination of multi country research report: This is one of the
challenges for a researcher. It has been observed that there are many
countries which do not coordinate on providing accurate information about
their domestic market conditions.
6. Complexity of research design due to environmental differences: Different
countries have diverse environments. We need to prepare different research
designs for different countries. But in practice, it is not possible. So generally,
a researcher prepares a single particular research design to be followed
globally. Therefore, it adds on the complexities to international marketing
research.
Discuss the importance of services in World Trade. Critically evaluate the
opportunities for India in international marketing of services.
The service sector is one of the fastest growing sectors in the world. A major
amount of GDP is contributed by this sector.
Importance of services in World Trade
• The service sector helps to achieve growth and development of developing
countries.
• It helps to improve the competitiveness of the domestic firms.
• It helps to increase the efficiency of an economy due to greater access to
foreign markets.
• It helps to increase the welfare of the consumers. They get international
standard services at cheaper prices. This helps to increase the standard of
living of the people living in developing countries.
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 • It provides employment opportunities to a large number of people all over
the world. In fact, it has created the maximum job opportunities during the
recent years.
• It has been an ideal sector for women folks. This helps to strengthen the role
of women in the society. Women employees are much in demand in the
service sector all around the world.
Opportunities for India in international marketing of services
India has significantly contributed to the growth of service sectors globally. it has
been observed that the Indians are engaged in the service sector all around the
world. the skills and qualifications of Indians is regarded as the best in the world.
So, the Indian employees are much in demand.
The various sectors in which India has opportunities in international marketing of
services include
• Insurance
• Telecommunication
• information and technology sectors
• health care
• banking
• entertainment
• education

What are the main objectives of adopting transfer pricing? Describe the
alternative methods of transfer pricing.
Transfer pricing is done between a company and its subsidiary to avoid taxation. In
simple words, it is a method of pricing between a company add its subsidiary to
save taxes.
Methods of transfer pricing
1. Market-based transfer pricing, the company produces goods in a country
but sales in another country where it has to pay less taxes in the market.
2. Cost-based pricing is based on production process. If taxes on production is
high in a country it can shift its production units to low tax countries.
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 3. Negotiated transfer pricing refers to the mutual understanding of the pricing
between a parent company and its subsidiary based on taxation policy of the
given government.
Objectives of transfer pricing
• To compete in the international market.
• To reduce taxes and tariffs.
• To manage cash flows effectively.
• To avoid conflicts with host and domestic government over tax.
• To evaluate the performance of the subsidiaries.
Guideline for a good international marketing research report.
• Research should be purposeful. It should have a definite goal.
• There should be clear cut procedures to conduct research.
• Every research should have a well-planned resource design.
• Sufficient data should be collected for analysis.
• Research should be systematic and should follow specific steps.
• Every research should have a logic behind its conclusions.
• The research should be repeated and flexible.
• It should be easily understandable.
• Research should be less expensive.
• Research should be completed within the stipulated time.

Direct exporting and indirect exporting

Direct Exporting Indirect Exporting
When the export activity is directly In indirect exporting the manufacturer
carried out by the manufacturer of the hires the services of an export
goods, it is called as direct exporting. intermediary agency to export his
goods through the intermediaries.
Since all the activities such as As the services are outsourced to
packaging, promotion, shipment and export intermediary agencies, no
distribution are carried on own, control exists at the manufacturer’s
manufacturer enjoys the control over end. All the activities are executed by
entire export activity. export agencies.

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 In direct exporting, exporter directly No direct contact exists between the
contacts the customer. This helps the manufacturer and the customer.
customer know the seller better and his
faith and confidence in the exporter
will be better.
Direct exporter engages with the Since the original exporter does not
foreign customer directly. This will help directly brand his products in the
him earn the goodwill of the in the overseas market by outsourcing the
overseas market. same to exporting agencies, it’s not
possible for him to earn the reputation
overseas.

Factors affecting pricing decisions in international marketing.

1. International Marketing Objectives:

Mostly price is decided with a view to capture international market, e.g., when a
company wants to enter in the market the product is sold at lower rates. When it
intends to maximise use of its additional production capacity, marginal cost of
production is considered. When an export target is to be achieved then in that
context price is determined. Other motives like getting entry in market, to get a
certain share in market, to get definite return on investment, etc., are also of
special importance.

2. Cost of Product:

Price in international marketing cannot be determined without considering the

cost of the product. Fixed and variable costs of production, marketing and
transport expenses are included in the cost of production. Sometimes a company
sells at a price lower than cost and increases its share in market. It aims to recover
production cost in long run. Price depends on production cost. Hence, it is
necessary to analyse the cost and to consider the fixed and variable costs while
fixing the price.

3.Demand:

Demand is another factor that determines the prices in the international markets.
The demand in international markets is also affected by a number of factors
SANTOSH SHARMA 26
which are different from those operating in domestic market. Customs and tastes
of foreign customers may differ widely.

Elasticity of demand is another factor which affects the pricing. If the demand of
the product is elastic, a reduction in price may increase the sales volume. On the
other hand, higher price may be fixed if the demand is inelastic and the supply is
limited.

4. Business Competition:

Competition in the foreign market is also an important factor. Competition in

foreign market may be so severe that the exporter has no other option except to
follow the market leader. In monopoly an exporter can fix high price of its
patented product. Greater competition reduces freedom for fixing the price. Price
cannot be determined without considering the strategy of competitors.

5. Exchange Rate:

Foreign exchange rate plays a vital role in the price fixing in international
marketing. For example, when rupee falls against dollar an importer hesitates in
filling tender. An importer has to pay more rupees per dollar. In such
circumstances rupee is considered to have become weaker against dollar.

6.Product Differentiation:

This factor plays a vital role in price fixing. When a product has specialities or is
totally different compared to those of its competitors, the company is more-free
to decide price. Usually, prices of such products are quoted higher than that of
others up to certain extent.

7. Prestige:

Prestige of the producer and of the country is reflected in the price of the
product. Prestigious companies determine higher price for their products.
Underdeveloped countries cannot quote high price, even if their product is better
than that of the developed country. In foreign markets, as a developing country
India finds it difficult to keep prices high though our many items like H.M.T.

SANTOSH SHARMA 27
watches, woollen garments, readymade wear, leather bags and Ayurveda
medicines are of superb quality.

8.Market Characteristics:

In addition to competition the following are some other factors which also
affect price:

(i) Trend of demand

(ii) Consumer income levels

(iii) Importance of the product to the consumer, and

(iv) Margins of profit.

9. Government Factors:

Government’s policy and laws affect pricing as under:

(i) Ceiling and Floor Prices:

Some countries fix top and bottom prices of their products. When government
regulates the price, one has to keep its price between them. India had fixed
minimum export prices of cotton cloth and other products. Normally, such a
policy may be applied for national development, industries position, stock of
goods, and protection of industries.

(ii) Regulation of Margins:

Sometimes government decides the profit margin or percentage of mark-up for

producers or distributors. As a result, marketer loses most of the freedom of
pricing.

(iii) Taxes:

While deciding price of an exportable product, custom duties and other taxes
have to be considered. When import duties are levied, an exporter has to reduce
his price. In foreign markets price has to be kept up because of such taxes.

SANTOSH SHARMA 28
(iv) Tax Concessions, Exemptions and Subsidies:

To promote exports many countries, give tax reliefs or freedom. Products can be
exported at lower prices in such cases. For example, under Duty Draw Back
Scheme, if raw-materials are imported for production of export goods, the import
duty or excise duty paid for this is refundable. To promote export, Govt., gives
financial subsidies also. Such subsidies also affect price determination in export
market.

(v) Other Incentives:

To promote export the government gives many incentives. Among these, supply
of raw-materials, electricity and water supply at lower rates, aid in selling etc. are
main incentives. While fixing prices of export goods these factors are kept in view.

(vi) Government Competition:

Sometimes the government enters in market to keep control on international

prices. For example, the American Government sells aluminium from its stock at a
fixed price to American companies. The companies are unable to increase prices
in such circumstances. Hence, while fixing price Government competition should
also be considered.

(vii) International Agreement:

Prices of some products are controlled by international agreements about stock,

buffer stock agreement, bilateral or multilateral agreements. In view of such
agreement’s companies have to fix prices in international market.

What are the different types of challenges in marketing of services?

The following are the different problems of marketing services:

1. Services are inseparable
2. Services may be heterogeneous
3. Services are intangible in nature
4. No ownership
5. Services are perishable
6. Problems in measuring a service

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 • Services are inseparable there must be a physical contact between the
service provider and a customer. A customer needs to be physically present
to get the service from the provider.
• Services may be heterogeneous a service provider may not render the same
quality of service again and again. It may depend on the mood and situation
of the service provider.
• Services are intangible in nature services cannot be seen, standardised,
patented or stored. This creates uncertainty in the minds of consumers.
• No ownership the ownership of services always lies with its owner. It cannot
be transferred from one person to the other.
• Services are perishable we cannot use the service again and again. Once
used, it perishes. It creates a challenge of balancing demand and supply.
• Problems in measuring a service we cannot measure the services in units.
We cannot measure the quantity and quality of a service provider.

Discuss the various factors you should keep in mind while determining the price
of a product.

Pricing a product is one of the most complex functions of a Marketing manager.

Generally, he considers the following factors:
1. Cost of production
2. Competitors price
3. Demand for the product
4. Object of the form
5. Income of the consumers
6. Government regulations

1. Cost of production this is the most important factors to be kept in mind while
fixing the price of a product. The cost of all the raw materials, labour and
expenses should be added before fixing the price of the product.
2. Competitors price it is very important for a business firm to analyse the
prices of its competitors. It is more important in case of launching of a new
product.
3. Demand for the product before determining the price it is always advisable
to know about the taste and preferences of the consumers. The market
potential, types of customers, income pattern of the customers etc.

SANTOSH SHARMA 30
 4. Object of the form the prices of a product are determined on the basis of the
goals of the firm. If the firm wants to achieve more sales it has to lower its
prices and vice versa.
5. Income of the consumers it is important to know the incomes and
purchasing power of the consumers living in a particular area. If the society
is full of rich people, it can fix its price higher than average.
6. Government regulations a business organization mast comply with all the
rules and regulations of the government before fixing the price of the
product. The various types of taxes which are prevailing in the market should
be analysed and added to the product.
7. Marketing method before determining the price of the product it is
important for a company to remind the marketing methods to be used while
launching the product. There are various methods of marketing like direct
marketing, web marketing, etc.

What is Promotion Mix?

It refers to short term incentives designed to encourage the buyers to buy the
product immediately. The main purpose is to boost the sale of the product. For
ex: cash discount, coupons, free gifts, contests, free samples, etc.
Merits of Sales Promotion
• It attracts the attention of the customers quickly.
• It is very useful in launching a new product.
• It acts as a supplement to advertising and personal selling.

Elements of Promotion Mix

1. Advertising
2. Personal Selling
3. Branding
4. Publicity

1. Advertising
• Advertising is an act of creating demand for the product or service.
• It is a marketing function to create demand for a product through non-
personal message.
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 • Advertising is communicated through different media such as newspaper,
television, magazines, radio, etc. Advertising has a cost and is impersonal.

Merits or importance of advertising:

• It creates demand of the product. It also helps to maintain the existing
customers of the product.
• It creates confidence amongst the buyers about the quality of the product.
• It can appeal to a large number of customers over a wide area.
• It creates goodwill and image of the product.
• It gives employment opportunities to large number of people

Demerits of advertising:
• Advertising is expensive and thereby adds on to the cost of production. This
increases the price of the product.
• It confuses buyers about which product to buy as there are many products
with similar claims.
• It persuades buyers to buy even those products, which are inferior and not
required.
• Some advertisements are vulgar and should not be viewed by children.
• It is not flexible, as it doesn’t appeal to all the groups of buyers.

Personal Selling
It is the art of persuading people to buy the product. It involves face-to-face
conversation with the buyer and convinces them to buy the product. It is also
known as salesmanship. It is a personal form of communication.
Importance of personal selling to seller
1) It helps to promote sales by persuading customers to buy the product.
2) It is quite flexible and can be changed according to the mood of the
customers.
3) It helps to develop relationship with customers and a seller can know about
the taste and preference of them.
4) It helps to introduce new products in the market.
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Importance of Personal Selling to customers
1) It helps to know the taste, preference and fashion of the customers.
2) It provides latest information about the product like uses, price, etc.
3) It gives expert advice to customers while buying the product.
4) It improves the standard of living of the customers by convincing them to
buy new products.
5) It provides employment opportunities to a large number of people.

Branding
Branding: Branding is a process of giving name, sign or symbol to a product. It
makes the product different from others and creates a brand image in the
consumer’s mind. For ex: Raymond, Colgate, Levi’s, etc.
Advantages of Branding:
1) It helps to distinguish the product from other products.
2) It helps a consumer to identify the product.
3) It helps to create a brand image in the mind of consumers.
4) Some brands become status symbol because of their quality.
5) It is easy to introduce new product under a known brand.

Characteristics of a good brand:

1) A brand name should be short and simple.
2) It should suggest the product quality.
3) It should be different and unique.
4) It should be easy to use in packaging and labelling.
5) It should be capable of being registered legally.
2. Publicity
It is similar to advertising. It is a non-paid form of communication. It takes place
when favourable news is presented to the public about a product or service.
Generally, the press spreads the news.
Evaluate the various international branding strategies.

SANTOSH SHARMA 33
 1. Company Name Branding

Well-known brands leverage the popularity of their own company names to

improve brand recognition. Logos, slogans, packaging or colours are generally
recognized by consumers in association with the business as a whole. For
instance, companies like Coca-Cola, Tylenol and Porsche rely on company name
branding to engage with their audiences.

2. Individual Branding

Large companies with a variety of well-known products may opt for an individual
branding strategy by giving each product its own brand name. For example, Apple
is the parent company but relies on an individual branding strategy to market its
different brands such as Mac, iPhone or iPad.

3. Attitude Branding

Sometimes a company will rely on an overall feeling or attitude to market its

products and reflect its business. This branding strategy brings the business to life
by marketing a larger feeling to create an emotional connection between the
brand and its customers. Brands such as Nike use attitude branding not only to
sell athletic shoes, but also to promote a healthy lifestyle that aligns with its
infamous slogan, “just do it.”

4. Brand Extension Branding

An existing strong brand may decide to extend its success into a new venture with
effective use of a brand extension strategy. Many clothing companies use brand
extension strategies to launch a new line of shoes, fragrances or accessories. The
products may be different, but the brand identity stays the same.

5. Private-Label Branding

Successful store brands may use private-label branding strategies to compete

with larger retailers. For example, supermarket chains such as Kroger produce
cost-effective brand options for specific food items.

Distinguish between product and service.

SANTOSH SHARMA 34
 Product Service
Products can be manufactured, stored and But services cannot be stored and
transported from one place to another. transported.
Products are tangible in nature, that Services are intangible in nature,
means we can see, feel and touch the that means we cannot see, feel or
product. touch the service.
Products can be separated from the But services cannot be separated
company producing the product. from its providers.
Quality and quantity of a product is Whereas, services are not
measurable in terms of units. measurable in terms of units.

Briefly explain different approaches to budgeting for international advertising.

• Top-Down Approach
It is called top-down approach because the budgets are made by the top
executive and then the money is passed down the line to various
departments. This approach is applied in sales, competitive parity method
and Return on Investments (ROI)method of budgeting.

Bottom-up Budgeting
In this method promotion objectives are set for the tasks to be performed. All the
necessary activities to achieve the objectives are planned. The cost of these
activities is ascertained. The total promotion budget is then approved by top
management. This is also known as the build-up approach of budgeting.

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