International Marketing Intelligence

IES MMSIIISyllabus 3

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Objectives

Marketing Research Objectives Limitations Scopes

Phases of marketing research and its types Data collection and its methods Information requirement Sources of information Research agencies

Drawbacks Selection

Problems of international research

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Introduction

Intelligence can be gathered using the following methods and in the below mentioned areas –

Need Gathering Selecting your market Market entry Marketing mix Organization

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Marketing Research (MR)

MR Objectives Identify the deficiencies – the 4 P’s Identify existing and emerging marketing opportunities Identify the relative weaknesses and strength of the company Monitor the environmental changes

MR Limitations Non-Dependable research findings are not always dependable Expensive and Prolonged In underdeveloped countries, marketing research has its own

limitations arising from non-availability of adequate and reliable data

MR Scope 5P’s research Marketing environment research Market trend research Marketing efficiency research Back to objectives

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Types of MR

Exploratory Research It seeks to discover now relationships It is investigative in nature It may be conducted by

Study of secondary data Survey of knowledgeable person Analysis of selected cases i.e. intensive study of a relatively small

number of situations.

Conclusive Research Descriptive research may be conducted by

Case Study Statistical study

Experimental research Simulation / Live

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Definition of the problem Conducting a situational analysis Conducting an informal study Formulation of the research design Collection of information Analysis and interpretation of data Presentation of research findings

Phases of MR

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Secondary data Gathered by someone else May be readily available in published or unpublished manner

Examples?

Primary data First-hand data collected by the researcher. It is his perception and hence many times can be unreliable

Examples?

Secondary and Primary Data

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This is the method of collecting data by observing the behavior of people in a given situation

Natural or Simulated Usually discreet Helps you to get information which consumers will be unwilling to

give – example? Chances of bias are limited

Observational

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Personal Interviewing – (Individual interviewing and Group interviewing)

The Good – Direct way of eliciting information from the respondents Enables the researcher to take the respondent into confidence so

as to get his full cooperation Enables clarification of points Enables the cross-checking of the information provided Provides flexibility needed for data collection Enables the investigator to observe the environment of the

respondent.

The Bad – Expensive and time consuming Respondents may hesitate to reveal certain information Need trained investigators

What products can this be used for ?

Survey ResearchPersonal / Telephonic Interviews, Mailers

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Telephonic Interviewing Fast and cheap Enables taking the respondent into confidence, clarification of

points, crosschecking of information As it avoids face-to-face situation, it is better for very personal or

sensitive informationWhat products can this be used for ?

Mailers Preferable when you have a wide span of respondents Cheap Respondents can fill in the questionnaire at their leisure and hence

they may be in a position to do justice to the requirements It avoids embarrassment of talking in person about certain

sensitive matters

Lets talk about some limitations of the mailer methodWhat products can this be used for ?

Survey ResearchPersonal / Telephonic Interviews, Mailers

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What is ? – A survey of a few hundred consumers selected in such a way as to

possess the representative character of the relevant population will serve the purpose of marketing research

Reasons for Sampling – When the population size is very large, it is not possible to collect

information about all the units within a limited time. When the population is very large, collection of information from all

the units would be prohibitively expensive Besides the two problems, there could be other practical difficulties

like getting sufficient number of qualified investigators, locating all the units etc.

A representative sample would provide reasonably adequate and accurate information and accuracy of information is not going to be justifiably enhance by studying the entire population

In certain situations, sampling is the only justifiable method.

Sampling

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It should be representative of the population so that the information collected from the sample will be dependable

The sample should be of adequate size to ensure reasonable accuracy of information

Sampling is justifiable in terms of time and other resources.

Assignment – Types of Sampling

Sampling Characteristics

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International marketing related information Market selection related information Product related information Price related information Promotion related information Distribution related information Competition related information

Information Requirement

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Organizations inside India – They are important sources of information pertaining to foreign

markets They have brought out publication intended to provide general

guidance and education to exports They carry out market potential studies and other relevant studies The consulates of foreign governments provide a lot of information

about the countries.

Organizations outside India – The international trade center, Geneva, is a very important source

of information and assistance to exporters Offices of the Indian embassies of the foreign government may be

approached for certain type of information There are certain international organizations related to specific

products.

Information Sources

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Publications – Information can be obtained from publications like journals and

research publication – national, foreign and international General and specialized publications carrying useful information for

the exporters Foreign and international publication, general and product specific

Information Sources

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Advantages – Experts Objective SME’s Easy on pocket

Selection – Collection of information about the research agencies A small number should be selected by a preliminary screening From that two or three are selected and a detailed discussion about

the research proposal is held The one selected should sign the contractor letter of agreement

which states the proper terms and conditions

Research Agencies

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Issues – The cultural differences make foreign market research a difficult

task It is often very expensive The research methodology suitable for one market may not be

suitable for another market.

Research Agencies

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Marketing research forms a part of marketing information Information gathering is very important for International Business –

Market selection related, 5 P’s and a C Exploratory and conclusive research are the two types of research Observation and survey are the two methods of primary data

collection Expertise, objectivity, knowledge and familiarity and cost

effectiveness are the advantages of a good research firm.

RECAP

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Product Planning and Development

IES MMSIIISyllabus 3.c

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Objectives

Important product decisions in IM management Definition of product and what are the components of product Product mix Stages constitute the life cycle of a product Types of new products their opportunities Branding Functions and importance of packaging and labeling Business environment Product strategies What are product-communication strategies What is the difference between globalization and localization

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Introduction

Product strategy involves the managerial decisions about the product mix and the positioning and communication

Product planning is used in a broad sense, involves not only the product strategy described above but also the product development measures

Product management refers to the managerial decisions pertaining to product development and the product strategies through the different stages of the product life cycle

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Product as anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need, includes physical objects, services, persons, places, organizations and ideas. - Kotler

Product Decisions – Market segment decision Product mix decision Product specifications Positioning and communications decisions

Product Components – Core Product Tangible Product Augmented Product

Product

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Core product refers to the core benefit the consumer derives from the product.

In some cases the basic physical product remains the same, the core product differs between markets because the purpose for which product is used is different in these different markets.

This is called modification of product design, positioning and communication strategies.

Core Product

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Tangible product is the actual form with all its attributes, in which the product is offered to the consumer

It has certain characteristics like a quality level, features, styling, a brand name and packaging

Tangible Product

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Augmented product refers to certain additional services or benefits offered with the product such as installation, delivery and credit facilities, after sales service and warranty

Product augmentation may not be very important in a seller’s market but they are very important in the competitive markets which are buyer’s markets.

Augmented Product

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The product mix is the full list of all the products offered for sale by a company.

The product mix has certain width, depth and consistency. The width refers to the number of different product lines in the

product mix. The depth refers to the average no. of items offered by the

company within each product line. The consistency refers to the extent to which the various product

lines are closely related in end use, production requirements, distribution channels, or in some other ways.

Product Mix

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Introduction Growth Maturity Decline

PLC

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Low sales because it generally takes some time for a new product to get wide acceptance by consumers and it also takes time to expand the marketing of the product

High costs per unit because of the low sales and high promotional expenditure

Absence of or low competition if the product is entirely new. Loss or negligible profits because of low sales and high costs.

Introduction

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Fast growth in sales because of increasing consumer acceptance and expansion of marketing

Growing profits because of growing sales and fall in the incidence of fixed production cost and marketing cost per unit

Increasing competition Market segmentation and the introduction of different versions of

the product.

Growth

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Saturation of sales Intense competition Falling profits because of high promotional expenditure and falling

margins.

Maturity

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Entry of new products which compete with the product Decline in sales Decline in profits: profits may even become negative Exit of some of the firms

Decline

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International marketing may enable a firm to alter the shape of the PLC

It is also a fact that in several cases technologies/products are introduced in developing countries when they have become obsolete in the advanced countries

There is often a time leg between countries in the adoption and diffusion of technologies.

PLC and International Marketing

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Innovative product Significantly modified product Copy of the existing product

Steps in NPD Idea generation Evaluation and selection Concept testing Business analysis Product development Market testing Commercialization

NPD

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A brand is a name, term, sign, symbol, or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of others

The part of the brand which can be vocalized the utterable-is known as the brand name

The part of the brand that is given legal protection for exclusive use by a seller is known as the trade mark.

Branding

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To brand or not to brand Manufacturer’s brand or private brand Same brands or different brands

Branding Decisions

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It makes market entry easy- for example, Pepsi is well known in India even before it came to India

It reduces the promotional expenditure as the brand is well known It helps to generate good sales since the very beginning.

Global Brands

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It is very difficult for a small firm to promote its brand in foreign markets because of the heavy cost of brand promotion

Established foreign importers and distributors discourage use of exporter brand because they prefer to sell the products under their own brand name

The cultural and other factors make branding decision complicated in IM

One problem faced by some multinational companies when they wanted to market their products in some countries is that they found that their world renowned brands had been registered in these countries by somebody else with the result that these firms had to pay fee to the registered holders of these brands in these countries for permission to use these brands

In some countries, there are restrictions on use of foreign brands

Branding Problems

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Indian brand names may be used when niche marketing strategy is employed.

Indian brand names may be used when the export is made to foreign firms who do not have their own brands or when goods are sold by distributors who do not have their own brand names

After gaining credibility and gaining experience in export business by being suppliers to foreign firms, the Indian exporter may start selling under its own brand name

An Indian firm may buy a foreign brand or take over a foreign firm with established brand name

The Indian firms having reputation in foreign countries may promote their brands in the foreign markets

Indian companies may also use mixed brands. Several firms may jointly promote a common brand-consortium

approach. Promotion of a logo by export promotion agencies and permission

to use this logo along with the brands of firms who will strictly adhere to the quality and other norms.

Scope for Indian Brands

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This terms are distinct in the marketing parlance. In export marketing, packaging, including packing, is a factor which

demands very careful attention Packaging in IM is a much more serious problem than in domestic

marketing because of the varying physical conditions and situations the cargo is exposed to and subjected to; difference in the tastes, preferences and practices; differences and peculiarities in packaging requirements and regulations.

Packaging and Labelling

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Functions Protection Preservation Presentation

Importance Self service Consumer affluence Integrated marketing concept

Functions and Importance of Packaging

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Physical characteristics Physio-chemical characteristics Economy Convenience Miscellaneous factors

Factors influencing Packaging decisions

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Regulations in the foreign countries Buyer’s specification Socio-cultural factors Retailing characteristics Environmental factors Disposability

Special considerations in IM

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It should be capable of withstanding the hazards of handling and transport.

It should be easy to handle. It should be amenable to quick examination of contents. It should be easy to identify It should be adequately marked Unless it is necessary, contents shall not be disclosed It should be easy to dispose off Packaging must conform to the buyer’s specifications.

Importance and Requirement of Export Packaging

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Business environment is a very important factor which influences the marketing mix strategy

Some times a company may find the introduction of a better material a problem because of certain peculiar convictions of the consumers

There are many instances of national regulations prohibiting the marketing of certain products.

Business Environment

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In IM product and communication strategies are usually considered together because the need satisfaction, purpose of product use or usage occasion and the product communication are rather inseparable

Straight extension Product extension, communications adaptation strategy Product adaptation, communications extension strategy Dual adaptation Product invention

Product Communication Strategies

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Technological advance Travel and communication Product image International standards

Factors favoring Globalization

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Product decisions in IM management includes; market segment decision, product specifications and positioning and communication decisions

All the categories of products enjoy the opportunities of copying, product modification and innovation

The term product decision include product strategy, product planning and product management.

Recap

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Distribution Channels, Foreign Market Channels

andGlobal Logistics IES MMSIII

Syllabus 3.d

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What is international distribution system What is indirect exporting What is direct export What are the types of foreign intermediaries Why the distribution system in the market is influenced by the

business environment What is international logistics

Objectives

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Place, i.e., placing the product, is one of the four P’s of marketing and it refers to the distribution of the product covering channels of distribution and physical distribution

The path traced in the direct or indirect transfer of title to a product as it moves from a producer to ultimate consumers or industrial users.

Introduction

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The international distribution system consists of two subsystems, namely, the domestic system and the foreign system

There are broadly two ways of exporting, namely, direct exporting and indirect exporting.

International Channel System

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The indirect method is more popular with firms which are just beginning their exporting activities and with those whose export business is not considerable. Two alternative channels for indirect exporting. International marketing middlemen

Export merchants Export/trading houses Trading companies Export drop shipper Agents/brokers

Co-operative organizations The co-operative exporting organizations, which represents a cross

between indirect and direct export, carries on exporting activities on behalf of several producers, and is partly under the administrative control of the manufacturers.

Piggyback marketing Exporting combinations

Indirect Exporting

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As the name indicates, direct export refers to the sale in the foreign market directly by the manufacturer

Firms with considerable export business usually resort to direct exporting

Direct Exporting

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Importers Distributors Wholesalers Retailers Multiple channels Government departments State buying organizations Joint-ventures and licensees/franchisees

Types of Foreign Intermediaries

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The nature of the distribution system in a market is generally influenced by the relevant business environment

A particular distribution channel best suited for a product in one market may be inappropriate in another market

Within-country channels of distribution very considerably from country to country for consumer goods.

Marketing Environment and Internal Distribution

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Product characteristics Market and customer characteristics Middlemen characteristic Company characteristic and objectives Competitors characteristics Environmental characteristics

Factors influencing Channel Selection

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International logistics defined as ‘the designing and managing of a system that contracts the flow of materials into, through, and out of the international corporation. It encompasses the total movement concept by covering the entire range of operations concerned with product movement.

Components – Fixed facilities location Transportation Inventory management Order processing Materials handling and warehousing

International Logistics

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The international channel is affected by the method of exporting Direct exporting and indirect exporting are the two ways of

exporting Some important foreign intermediaries are; importers, distributors,

wholesalers, retailers, multiple channels, government departments, state buying organizations, joint ventures and licenses

Logistics is a factor which affects the competitiveness of a firm.

Recap

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Why is it beneficial for the well-endowed, resource- rich United States to trade with other nations?

Should the distribution channels of Volkswagen and Porsche be the same?

Case Study

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Should the distribution channels of Volkswagen and Porsche be the same?

Case Study

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Export PricingIES MMSIII

Syllabus 3.h

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Objectives

What determines export prices What are the objectives of pricing What factors affect pricing What are the approaches in export pricing What is transfer pricing What is dumping What are the steps involved in pricing What are the steps in retrograde pricing What are export price quotation and incoterms What are the information requirements of export pricing

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Introduction

Right price is one of the important determinants of business success.

The uniqueness of price in the marketing mix is that it is the only element that generates revenue.

At the outset one may think that price must cover at least the full cost of production and marketing.

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Production costs Fixed and Variable

Selling and delivery costs

Types of costs

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Market penetration Market share Market skimming Fighting competition Preventing new entry Shorten pay-back period Early cash recovery Meeting export obligation Disposal of surplus Optimum capacity utilization Return on investment Profit maximization

Pricing Objective

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International marketing objective Costs Competition Product differentiation Exchange rate Market characteristics Image Government factor

Factors affecting Pricing

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Cost based pricing, also known as cost plus pricing, is a common method of pricing.

Under this method the price includes a certain percentage of profit margin on the sum total of the full cost of production, marketing costs and an allocation of the overheads.

That is, price=(fixed costs + variable costs + overheads + marketing costs) + specified percentage of the total costs

Cost based Pricing

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This is a very flexible policy in the sense that it allows the prices to be changed in

accordance with the changes in market conditions The product may be priced high when demand conditions are very

good and the price may be lowered when the market is sluggish if that helps increasing sales.

This method is sometimes referred to as what the traffic will bear method.

Market oriented Pricing

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Break-even price is the price for a given level of output at which there is neither any loss nor profit

Break-even analysis helps to understand the minimum sales required to avoid any loss and also the profit or loss at various levels of sales

The break-even point(BEP) is the point of sales at which there is neither any loss nor any profit.

Break even Price

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BEP = FC/SP-VC α FC/CWhere FC = fixed cost VC = variable cost SP = selling price C = contribution per unit ( C=SP-VC )

Calculation of BEP in terms of physical units

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Marginal cost pricing approach is common in evaluating the profitability of new orders in case of firms with excess capacity

Under the marginal cost pricing, the relevant cost considered for pricing is the variable cost, the fixed cost is excluded from the calculation of the cost of the product

Marginal cost Pricing

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Marginal costing may give scope for creative pricing Creative pricing means taking advantage of the flexibility between

the lower limit of break-even price and the upper limit of the competitor’s price for similar product.

Creative Pricing

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Transfer pricing or intra company pricing refers to the pricing of goods transferred from operations or sales units in one country to the company’ s unit elsewhere

The appropriate basis for intra-company transfers often depends on the nature of the subsidiaries, the market conditions and government policies and regulations.

Transfer Pricing

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Defining pricing objectives Analyzing market characteristics Calculating costs Calculating value of incentives Determining export price

Pricing Steps

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EXW – EX WORKS FCA – Free carrier FAS – Free Alongside Ship FOB – Free On Board CFR – Cost And Freight CIF – Cost, Insurance and Freight CPT – Carriage Paid To CIP – Carriage and Insurance Paid To DAF – Delivered At Frontier DES – Delivered Ex Ship DEQ – Delivered Ex Quay DDU – Delivered Duty Unpaid DDP - Delivered Duty Paid

Export Price Quotations and Incoterms

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EXW – Ex Works FCA – Free Carrier FAS- Free Alongside Ship FOB – Free on Board CFR – Cost and Freight CIF – Cost, Insurance and Freight CPT – Carriage Paid to CIP – Carriage and Insurance Paid to DAF – Delivered at Frontier DES – Delivered Ex Ship DEQ – Delivered Ex Quary DDU – Delivered Duty Unpaid DDP – Delivered Duty Paid

Documents needed under various terms

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Information on the total market Information on competition Information on prices Information on Government policies Information on production and costs Information on revenue and profits

Information required for Export Pricing

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There are two types of cost in export marketing; production costs and selling and delivery costs.

The factors which affect pricing policies are; international marketing objective, costs, competition, product differentiation, exchange rate, market characteristics, image and government factors.

Cost is one of the most important factor in export pricing besides supply conditions and demand and competitive conditions

Recap

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