Q. 1. What are the factors involved in planning for global marketing? Outline and

describe the characteristics of various stages in the process of evolving from domestic to

global enterprises.

Answer: When launching a product into foreign markets firms can use a standard marketing mix

or adapt the marketing mix, to suit the country they are carrying out their business activities in.

This article talks you through each element of the marketing mix and the arguments for and

against adapting it suit each foreign market. 

1. International Marketing Mix: Product

Basic marketing concepts tell us that we will sell more of a product if we aim to meet the needs

of our target market. In international markets this will involve taking into consideration a number

of different factors including consumer's cultural backgrounds, religion, buying habits and levels

of personal disposable income. In many circumstances a company will have to adapt their

product and marketing mix strategy to meet local "needs and wants" that cannot be changed.

MCdonal is a global player however; their burgers are adapted to local needs. In India where a

cow is a sacred animal their burgers contain chicken or fish instead of beef. In Mexico

McDonalds burgers come with chili sauce. Coca-Cola is some parts of the world taste sweeter

than in other places.

2. International Marketing Mix: Promotion

As with international product decisions an organization can either adapt or standardize their

promotional strategy and message. Advertising messages in countries may have to be adapted

because of language, political climate, cultural attitudes and religious practices. For example a

promotional strategy in one country could cause offence in another. Every aspect of promotional

detail will require research and planning one example is the use of color; red is lucky in China

and worm by brides in India, whilst white is worn by mourners in India and China and brides in

the United Kingdom. Many organizations adapt promotion strategies to suit local markets as

cultural backgrounds and practices affect what appeals to consumers.

3. International Marketing Mix: Pricing

Pricing on an international scale is a complex task. As well as taking into account traditional

price considerations such as fixed and variable costs, competition and target groups an

organization needs to consider additional factor such as

The cost of transport 

Tariffs or import duties

Exchange rate fluctuations

Personal disposal incomes of the target market

The currency they want to be paid in and

The general economic situation of the country and how this will influence pricing.

The internet has created further challenges as customers can view global prices and purchase

items from around the world. This has increased the level of competition and with it pricing

pressures, as global competitors may have lower operating costs.

4. International Marketing Mix: Place

The Place element of the marketing mix is about distributing a product or service to the

customer, at the right place and at the right time. Distribution in national markets such as the

United Kingdom will probably involve goods being moved in a chain from the manufacturer to

wholesalers and onto retailers for consumers to buy from. In an overseas market there will be

more parties involved because the goods need to be moved around a foreign market where

business practices will be different to national markets. For example in Japan there are

approximately five different types of wholesaler involved in the distribution chain. Businesses

will need to investigate distribution chains for each country they would like to operate in. They

will also need to investigate who they would like to sell their products and services to businesses,

retailers, and wholesaler or directly to consumers. The distribution strategy for each country a

business operates in could be different due to profit margins and transportation costs.

Finally, prior to designing an international marketing mix a business should carry out

a PEST analysis for every country they would like to operate in. This will help them determine

what elements of the marketing mix can be standardized and which elements will need

adjustments to suit local needs. It may well be that a business is able to use a standard marketing

mix in the majority of cases and only need to adjust it on the rare occasion. Or every country

may need its own marketing mix.

Q. 2 What is the significance of "economic" factor in global marketing? Also elucidate the

composition and nature of main world regional economic blocs with special reference to

developing countries?

Answer: If the economy is going through a recession it is obvious that businesses generally will

not be doing well due to low aggregate demand in the economy. On the other hand, a boom

period will lead to higher business profits and revenue for most of the businesses in the

economy.

1. Inflation rate

High rate of inflation leads to lower purchasing power for consumers resulting in lower demand

for goods and services. Moreover, a higher inflation rate will make business uncompetitive in the

international market leading to lower sales for the business.

2. Prevailing interest rates

Higher Interest rates will lead to a fall in the aggregate demand in the economy thus leading to

difficulty for business to find customers willing to buy its product. Lower interest rates will lead

to an increase in demand in the economy.

3. Unemployment level

High level of unemployment in the country can also adversely affect a business. People will not

have enough money to purchase a firm’s product.

4. Labor costs

High labor cost will result higher production costs. This will make a firm’s product more

expensive as compared to other firms affecting its sales and profit margin.

5. Levels of disposable income and income distribution

High level of disposable income is good for business producing luxury goods. A large disparity

in income distribution will promote businesses dealing in luxury goods as well as inferior goods.

6. Taxes

High level of taxes will lead to low disposable income and contraction of demand in the

economy. Business will find it difficult to attract consumers.

7. Tariffs

Tariffs are taxes and imposed on imported goods. If the tariffs are low the domestic market may

be flooded with cheap imported goods and the local businesses will have tough time selling their

products.

As international business has attained a new paradigm over the years, it is quite important to

know that the economic factors play a formidable role in taking it forward. When a marketer is

working on an international basis, it is imperative to craft strategies which are long term,

meaningful and prospective in every way. It is also essential to have a fine understanding of the

economic factors which have a crucial role to play in the formation of marketing strategies. The

way trade is conducted on the modern market scenario is quite different from what happened

before.

Today, the entire world is like a trading capital where most of the nations are involved

commercially with each other. Trading has a multi-dimensional approach nowadays as it being

done on several platforms like international, national and local. The development of

organizations like World Trade Organizations has played a significant role in carrying forward

the aspect of international trade.

When an organization wants to excel in the format of international business, it needs to have an

insight on the economic factors. Before proceeding with the idea of doing business in a country,

it needs to gauge the economic condition which exists in the market. A good analytical approach

needs to be taken and every detail of the market economy existing in that nation needs to be

previewed. When a business plan is made by an organization that too in an alien country a

significant amount of investment is necessary. It is imperative to have a prior idea about the

return for investment which can be expected in this regard. 

If a complete overview of the global economic condition is made, it is seen that different sets of

statistics emerge from the 194 nations. Each of the countries are different from each other

economically. The level of economic development varies from one to the other. The estimate of

the Gross National Income provides a more concise idea about the existing situation. As per the

collection of recent data, the GNI in the world stands at 62 trillion US dollars. One of the most

common problems which is faced by the world economy is the unequal distribution of wealth. As

per a recent survey which has been conducted by the United Nations, 75 percent with respect to

global population have been singled out as poor.

The percentage group which has been termed as poor as per the survey does not earn more than

3470 US Dollars (PPP) But the survey also states that 11 percent of population belongs to the

wealthy class. This group earns more than 8000 US dollars (PPP). Recently a claim has been

made by the United Nations that 50 million individuals are rich globally. But around 3000

million citizens have been termed as poor. When a company wants to do its business in the

international market, the level of disparity related to income needs to be closely monitored by it.

Before taking the plunge, it is important to analyze the financial capability and the resources

needed for the purpose

Q.3 Generally culture refers to the customary, beliefs, social forms and material traits of a

racial, religious and social groups. It is the set of shared attitudes, values, goals and

practices that characterizes institution or organization. In your opinion, how culture of

society affects global marketing planning and why it is important for a marketing manager

to understand the culture or nation before going global.

Answer: There are a number of key cultural elements that international marketers need to take

into consideration when designing products, developing promotions and implementing

distribution systems in foreign markets. These elements include values, beliefs, thought

processes, symbols, traditions, religion and language.

It is generally assumed that people are not born with a culture, but are born into a society in

which they develop certain cultural traits and beliefs. Culture has an impact on people right from

when they are born all the way into adulthood, which gives it a highly persuasive quality. In

many countries, cultural traits will prevent a person from doing something that is common in

another culture or encourage behavior that is uncommon elsewhere.

It is important that international marketers pay particularly close attention to the persuasive

nature of culture. No one can't simply assume that people will disregard their culture just because

a product you have introduced will make their life easier. Many aspects of culture have survived

thousands of years and are likely to continue so long as they are being taught to children from a

young age. Many countries are reluctant to let go of their culture and actively try to preserve it

against foreign influence.

Language is a particularly important factor to consider when developing international marketing

campaigns. It might not seem like a problem at first; all you need is a good interpreter. However,

language is extremely complex with significant differences occurring not just between countries,

but across different regions. The best way to deal with language issues is to deal with people who

grew up in your target market. They are far more adept at recognizing potential issues than

translators who learnt a second language later in life.

Religion, tradition and local customs are also important considerations. You need to make

yourself aware of the local culture to ensure that you don't accidently or carelessly offend people.

It is important that you remain sensitive and tolerant to different points of view and ensure that

your brand doesn't contain any symbolism that could be offensive in the local culture.

Q.4 Discuss the importance and implication of global information system. How it can help

in different phases of global marketing and how it can reduce uncertainty in decision

making?

Answer: Information is one of the most basic ingredients of a successful marketing strategy.

Information or useful data is the raw material for executive action. For achieving success in

International Markets, information about buyer behavior and the overall business environment is

vital to effective managerial decision making. In order to research markets, marketers must be

aware about information sources, areas of interest, methods of data acquisition and analysis.

Market research is done to identify problems and to discover opportunities existing/likely to

surface in near or imminent future.

Research provides value accretions to business which provides both sustainability of business

and viable returns based on accurate decision making mix. Marketing research provides both

conceptual and practical viewpoints. The marketers in international marketing are faced with a

dilemma of both information abundance and scarcity. The global marketer must scan the world

for information about opportunities and threats and make information available via a

management information system in order to reduce the uncertainty around marketing decision

making.

Information is one of the most basic ingredients of a successful marketing strategy. Information

or useful data is the raw material for executive action. For achieving success in International

Markets, information about buyer behavior and the overall business environment is vital to

effective managerial decision making. In order to research markets, marketers must be aware

about information sources, areas of interest, methods of data acquisition and analysis. Market

research is done to identify problems and to discover opportunities existing / likely to surface in

near or imminent future. Research provides value accretions to business which provides both

sustainability of business and viable returns based on accurate decision making mix. Marketing

research provides both conceptual and practical viewpoints. The marketers in international

marketing are faced with a dilemma of both information abundance and scarcity. The global

marketer must scan the world for information about opportunities and threats and make

information available via a management information system in order to reduce the uncertainty

around marketing decision making.

Q.5 Explain the following in details.

a) Competitive advantage.

b) Exporting processing zone.

c) Standardization.

Answer: a) Competitive Advantage

An advantage that a firm has over its competitors, allowing it to generate greater sales or margins

and/or retains more customers than its competition. There can be many types of competitive

advantages including the firm's cost structure, product offerings, distribution network and

customer support.

Competitive advantages give a company an edge over its rivals and an ability to generate greater

value for the firm and its shareholders. The more sustainable the competitive advantage, the

more difficult it is for competitors to neutralize the advantage.

There are two main types of competitive advantages

1. Comparative advantage

2. Differential advantage.

Comparative advantage, or cost advantage, is a firm's ability to produce a good or service at a

lower cost than its competitors, which gives the firm the ability sell its goods or services at a

lower price than its competition or to generate a larger margin on sales. A differential advantage

is created when a firm's products or services differ from its competitors and are seen as better

than a competitor's products by customers.

b) Exporting processing zone

Export processing zones (EPZs) are areas within developing countries that offer incentives and a

barrier-free environment to promote economic growth by attracting foreign investment for

export-oriented production. The number of zones internationally, countries hosting EPZs, and

firms operating in them, and the business volume they handle, are all growing rapidly,

suggesting their importance.

Many firms, called export processing firms, now benefit from the incentives offered in the zones

without being physically fenced in. In addition, countries have liberalized domestic sales.

Mexico, for example, allows 20–40 percent of its zones’ output to be sold domestically. 

Export processing zones have three main goals:

To provide a country with foreign exchange earnings by promoting nontraditional

exports.

To create jobs and generate income.

To attract foreign direct investment, technology transfer, knowledge spillover,

demonstration effects, and backward linkages.

c) Standardization

A framework of agreements to which all relevant parties in an industry or organization must

adhere to ensure that all processes associated with the creation of a good or performance of a

service are performed within set guidelines. This is done to ensure the end product has consistent

quality, and that any conclusions made are comparable with all other equivalent items in the

same class.

An example of standardization would be the Generally Accepted Accounting Principles to which

all companies listed on U.S. stock exchanges much adhere. GAAP is a standardized set of

guidelines created by the Financial Accounting Standards Board (FASB) to ensure that all

financial statements undergo the same processes so that the disclosed information is relevant,

reliable, comparable and consistent.

Standardization can be found in business processes when companies require that a consistent

level of quality be achieved. For example, many fast food franchises have detailed processes

documented to make sure that a burger is prepared in the same manner regardless of which chain

in its franchise a consumer visits.

References

1. http://www.learnmarketing.net/internationalmarketingmix.htm

2. http://www.dineshbakshi.com/igcse-business-studies/external-environment/revision-

notes/64-economic-environment-factors

3. http://www.international-emba.com/2011/03/challenges-of-doing-international.html

4. http://toolkit.smallbiz.nsw.gov.au/part/21/104/477

5. http://www.investopedia.com/terms/c/competitive_advantage.asp

6. http://www.investopedia.com/terms/s/standardization.asp