International marketing management

Content:

PART A: International marketing research process.................................................2

Introduction.............................................................................................................2

International marketing research process................................................................2

Difficulties of identifying the research problem.....................................................4

Shortcomings of secondary data.............................................................................5

Problems of gathering primary data........................................................................7

Conclusion...............................................................................................................8

PART B: Counter trading..........................................................................................10

Introduction...........................................................................................................10

Definition of countertrade.....................................................................................10

Forms of countertrad and their advantages...........................................................11

Barter..............................................................................................................11

Compensation deals........................................................................................11

Counterpurchase (offset trade).......................................................................12

Product buy-back agreement..........................................................................12

Countertrade as a pricing tool...............................................................................13

Conclusion.............................................................................................................14

Reference...............................................................................................................15

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International marketing management

PART A: International marketing research process

Introduction

During the past two decades, the world has become more and more global, as

domestic markets have become saturated. With by world become smaller and smaller,

economy growth is faster than before, companies have become more international. In

fact, a firm initially considers marketing to the world, knowledge of world markets is

the first need, including different languages, currencies, culture and customs.

Marketing decisions were made by knowing the environment. Firms need do

marketing research before getting into international marketing. They must follow

process of marketing research step by step to get feasible and intelligent decision in

the international marketing. However, international marketing may meet difficulties

that are rare in domestic marketing research. As the Koteler et al, (2002) said

‘statement of the problem a research objectives guides the entire research process. The

manager and researcher should put the statement in writing to be certain that they

agree on the purpose and expected results of the research.’ The purpose of this essay

is to explain the international marketing research process, and find out the problems in

international marketing research process with difference examples.

International marketing research process

Marketing research is the function linking the consumer, customer and public to the

marketer through information-in formation used to identify and define marketing

opportunities and problems; to generate, refine and evaluate marketing actions; to

monitor marketing performance; and to improve understanding of the marketing

process. (Koteler et al, 2002) As companies contemplate the global marketplace, they

must consider how domestic market research differs when conducted in

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international markets. (Terpstra and Sarathy 2001)

Marketing research process is the sequence of activities and events involved in

undertaking a marketing research project. (Wilson 2003). The process of international

marketing research shares many commonalities with its domestic counterpart, namely

the familiar steps of problem definition, methodology design, fieldwork, and final

report and recommendations. The major differences between the two involve

disparities that spring from political, legal, economic, social, and cultural differences

across countries, and the problem of comparability of research results (Kumar, 2000).

Ghauri and Kotler (2006) point out the marketing research process should follow five

steps. A flow diagram of the international marketing research process is shown as

below:

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International marketing management

The process The International dimension

Identifying the research problem is the first step in the research process. It consists of

two main steps: formulating the problem and establishing research objectives. The

major difficulty here is converting a series of business problems in to tightly drawn

and achievable research objectives. Other difficulties in foreign research stem from a

failure to establish problem limits broad enough to include all relevant variables.

(Ghauri and Cateora 2006)

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Ensure comparability of conceptsDetermine scopeCheck the influence of culture

Identify comparability differencesSelect methodology with minimum comparability problemsCheck practical issues – budget, time, etc.

Attach weight to eliminate cultural differencesIdentify local biasesCheck reliability of dataCheck understanding of scales for comparability

Think of international readers and communicate accordinglyWatch for language and terminologyAvoid culturally offensive conclusionsCheck implications for different markets

Watch for comparability issuesEnsure that unexpected findings are not due to local biasesAdjust interpretation level to different countries/ cultures/ markets

1. Topic and research problem

3. Data collection and measurement

2. Research design and plan

4. Data analysis and interpretation

5. Presentation of the findings and report

International marketing management

As a good international marketing researcher, should correctly define the problems

with knowledge of local culture, consumption patterns and attitudes. A Unilever

concentrated detergent did not get Japan wash market, because of the product was not

designed to work in a popular low- agitation washing machine. Japanese hang their

washing outside to dry under the sun and fresh air, the ‘fresh smell ’positioning of the

detergent is unnecessary. In the complicated international business environment, the

international marketing researcher must have new ideas to define the problem

correctly and establish research objectives rightly without his or her self-reference

criterion.

Shortcomings of secondary data

Secondary data is information that already exists somewhere, having been collected

for another purpose. (Kotler et al, 2002) It is often used as a supplement to primary

data, so its usefulness should be considered early during the research objectives stage.

Secondary data are not gathered for the specific project at hand. It involves scanning

available information sources to see what has already been published .These

information get from personal files, libraries, internet, and government records and so

on. McDonald and Christopher (2003) point out secondary data is often out of date,

insufficiently detailed or not analyzed from a perspective relevant to the research

concerned, it should never be used in isolation. Appraise a valuable secondary date

need through three characteristic: availability, reliability and comparability.

Availability of data is the first shortcoming faced by international marketers.

Researchers can get secondary date easily in America, even more than they need. But

in some developed countries, people can not get detailed data on the number of

wholesalers, retailers, manufacturing industry and its products introduction. Marketer

want to get this information must do the research or rely on private sources of data.

Many countries lack specialized firms that develop industry data for specific

industries such as automobiles or air conditioners.

Reliability of data is the second problem for international researchers. Some date

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International marketing management

maybe not reliable for many reasons. Data of official statistics are too optimistic to

lost reality. In some countries, secondary date may have been heavily influenced by

political forces. For example, some companies want to match the sales report that

from tax authorities, hence cut their data of production statistics. Marketers must be

careful about those fake reporting before they do rely on secondary data for

forecasting market and making decision.

Comparability of data is the third trouble for international marketers. In developing

countries, data can be many years out of date as well as having been collected on an

infrequent schedule, result in have no historic data be compared by the current

information. The manner in which data are collected and reported also is problem.

Some data are too broad to get specific value.

Validating secondary data is quite important segment. Researcher should consider

following questions when they use any source of information.

1. Who collected the data? Would there be any reason for purposely misrepresenting

the facts?

2. For what purpose was the data collected?

3. How was the data collected?

4. Are the data internally consistent and logical in light of known data sources or

market factors?

These questions can judge the reliability of data sources effectively. For example,

check the validity of the sale of baby products with the member of women of

childbearing age and with birth rates. Such correlations can also be useful in

estimating demand and forecasting sales. (Cateora and Graham 2005)

Difficulties of identifying the research problem

Problems of gathering primary data

Primary data was collected by market researcher when secondary data sources can not

adequately answered the research questions. In the international marketing research,

the problems of collecting primary data in foreign countries are different in degree

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International marketing management

from those encountered at home. Those problems appear on process of gathering

primary data: ability to communicate opinions, willingness to respond, sampling in

field surveys and language and comprehension.

An international marketing researcher has to face many challenges. The ability to

express attitudes and opinions about a product or concept depends on the respondent’s

ability to recognize the usefulness and value of such a product or concept (Ghauri and

Kotler 2006) For example, it may be impossible for someone who has never had the

benefits of computer to express accurate feelings about purchase intentions, or likes

and dislikes concerning computer. Different country has various consumer habits;

rabbit meat and air-dry sardine are popular in Holland, even so both of them vary find

from America supermarket.

Willingness to respond is important for researchers. Main problems are from different

cultural that offer the best explanation for the unwillingness researching surveys. In

some countries, husband not only gets money for family, but also decided what are

purchased by need. In Saudi Arabia, door to door interviewing is illegal; women

would never consent to be interviewed by a male or a stranger. In some societies, it is

rude to ask a man about habit of shave beard or favorite brand of clothes. In Europe

country, no lady would like to answer the question about age and salary. Although

such more problems exist, researcher still can conduct their marketing research with

helps from local people.

The greatest problem of sampling stems from the lack of adequate demographic data

available lists from which to draw meaningful samples. If current reliable lists are not

available, sampling becomes more complex and generally less reliable (Ghauri and

Kotler 2006). In some South American, Mexican cities, street maps are not available

and in some Asian city, no houses number.

Doing surveys is limited by communication. For instance, in some city, there are no

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International marketing management

letter box or street name, no job for post man, citizens collect letter from post office

straight away. It is difficult to do mail surveys. In many undeveloped counties, most

of local people don’t have telephone at home, or fewer than 5 percent of residents

have computer with internet. Hence, researcher should know local situation before do

sampling stems.

In the international marketing research, have more problems from language barrier.

Differences in idiom create problems and interpreting the respondents’ answers. The

same advertising of slogan will get different understanding in vary country. In

London, ‘Cheers’ not only appear when they drink wine, but also means thank you in

oral language. In addition, literacy poses yet another problem; written questionnaires

are completely useless in some illiterate countries. In this case, respondent can design

some special picture, disc, and pattern to avoid and reduce translation errors. But will

spend more cost for this kind of research.

Conclusion

As the business world becomes more global, marketing research is certain to become

a more important part of every researcher’s role. International marketing researchers

follow the same steps as domestic researches. However, international researchers

often face more and different problems when they deal with differing markets in many

different countries. Companies need pay attention to the problems that are mentioned

as above, to avoid unnecessary failing in the intense competitive international

marketing that are often vary in their economic development level, cultures and

customs level, and buying patterns level.

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International marketing management

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International marketing management

PART B: Counter trading

Introduction

This essay will explain that in the international marketer’s portfolio of price

negotiation techniques, why counter trade is becoming important ‘tool’. Also use

vividly example to expound difference counterdrade type. Countertrade was popular

used in interneation trade; there are some main reasons for developing countries to do

countertrade, such as Shortage of foreign currency, lack of convertibility of

currencies, needing to keep foreign currency for other purposes. However

countertrade has barriers in developed countries, it is difficult to sell their productions

for currency and it is hard to penetrate new markets for emerging countries.

Definition of countertrade

In international marketing, countertrade is particularly common in relationships with

developing countries. (Lambroza 1993) Dictionary of marketing point out that in

global sales, countertrade means the sale of goods or services that are paid for in

whole or in part by the transfer of goods or services from a foreign country; in

international sales, it means an export sale that is contingent on a reciprocal purchase

or undertaking by the exporter. Countertrade is an umbrella term for a range of

commercial mechanisms covering reciprocal trade. These are designed to deliver

economic benefits to the importing country, such as the export of goods and services,

technology transfer and inward investment. It includes four foams: barter,

compensation deals, counterpunches and buy-back.

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International marketing management

Forms of countertrad and their advantages

Barter

Barter is the exchange of goods or services without transfers of money in a short

timeframe, generally one year or less, formalized in one contract. (Muhlbacher and

Lehs 2006) In a trade, barter exchange goods directly between two parties without

cash. For instance, one Japanese company wishes to buy apples, at the world price of

$1.6 per kilogram in exchange apples market. This company is willing to offer

potatoes at $0.16 per kilogram. The exchange ratio would be 1 kilogram apples for 10

kilogram potatoes. One Polish company interests in this business, so sign one year

contract to agree the volume of exchange and delivery dates between this two

companies. After both companies fulfill their respective responsibility; the barter deal

is completed. Barter deal is very helpful for developing countries, it become popular

because of confusion international currency systems. Barter deals run between the

developing countries and the communist bloc. Barter usually accomplished through a

single and periods to complete often have provisions for adjusting.

Compensation deals

Another frequently used form of countertrade is the compensation deals.

Compensation deals involve payment in goods and in cash. M&D, an American

airplane company has compensation deal with Thailand. M&D accept pay $578

million cash, and pay $9.3 million goods of Thai rubber, cereal, furniture and cans.

Compensation deal is the immediate cash settlement of a portion of the bill; the rest of

the payment will received by goods in stead of cash. Seller can get the money after

successful sale of the goods. If seller has to rely on the third party to find a buyer,

must care about extra spend to keep net proceeds equal to the market price.

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International marketing management

Counterpurchase (offset trade)

Counterpuchase have two contracts are negotiated, one is seller receives full payment

in cash, second contract rely on first contract, agree original seller to buy goods from

the buyer for a set percentage of that amount within a stated time period. In one word

Seller receives payment in cash but also signs a second contract to purchase a certain

amount of goods from the buyer also in cash. Counterpurchase trade is probably the

most frequently used type of countertrade, especially used when trading with

economically weak countries. Its range is so broad from restaurant to candy firms. For

example, Boeing agreed to buy 130 percent of the value of the transaction in British

goods after it sold AWACs to the British defense department. In counterpurchase

trade, seller agrees to buy output are not related to the plant. Also it can be used at

aerospace/defense industry.

Product buy-back agreement

Product buy-back agreement is the seller sells a plant, equipment or technology to

another country and agrees to take payment in the resulting products. (Kotler et al

2002) There two situations in buy-back, one is the seller agrees to accept certain

payment and certain portion of the output, for example: U.K. toy manufacturer,

Dunbee-Combex-Marx has product buy-back agreements with Chain. In the trade,

U.K firm would offer toy-making machinery and molds to China. China should return

50% cash and 50% of the toys made in the Chinese factory. Another situation is the

seller agrees to buy back a certain portion of the amount produced after buyer pays

the full price of the products. General Motors built a motor vehicle manufacturer in

Brazil and got full payment, also agreed to purchase some new facilities. Buy-back

can provide new source to the world somewhere, over there demand is over supply or

no available supply.

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International marketing management

Countertrade as a pricing tool

Countertrade is a pricing tool that every international marketer must be ready to

employ, and the willingness to accept a countertrade will often give the company a

competitive advantage. The challenges of countertrade must be viewed from the same

perspective as all other variations in international trade (Cateora and Graham 2007)

There is some consistency between various surveys in relation to the main benefits in

terms of increased sales, increased competitiveness and accessing new or difficult

markets. (Neale and Shipley 1989) Other benefits are to overcome currency or export

credit problems, disguise price-cutting, ensure needed inputs, or access inputs and

capital goods that would not otherwise be available. The benefits of using

countertrade can go beyond short-run sales promotion, as multinationals build

contacts and political capital. (Yoofie 1984)

The causes of countertrade have little to do with politics and much to do with

economics; namely, gaining access to new or closed markets and making the offer

more competitive, and disposal of declining products, tying up long-term sources of

supply, overcoming trade barriers and creating goodwill with foreign governments

and, addressing financial impediments and foreign exchange problems and, and

overcoming currency controls. Countertrade advantages include the improvement of

trade imbalances, protection of export prices, increased economic development,

imployment, technology, market expansion and velocity of marketing expertise

development. Also countertrade can help company get more benefit; spend less cost

and less time in the international trade. Countertrade force reinvestment of proceeds

from weapons deals to local business. Many Arab countries require that use profit of

weapons business reinvest in facilities designated, such as pipelines, hotels and sugar

mills.

In Eastern Europe, the newly independent states, China, Latin American and African

nations, countertrades are an important part of trade. It constitutes between 20% and

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International marketing management

40% of all transaction in the economies of the former soviet loc. Some countries

always get problems of hard currency shortage, that why they resort to countertrades

when possible. For example, Russian economy is shortage of hard currency; they can

offer plenty of products in countertrad. Russia can offer space technology to

Malaysian to get palm oil and rubber; and military equipment is offered for Indonesia

crude palm oil or rice. Poland purchases 48 F -16 falcons from Lockheed martin was

pegged at $3.5 billion. The financial package included soft loans and a massive offset

program. All above example explain that countertrade is an important pricing ‘tool’ in

the international trade. An international company must understand importance of

countertrade.

Conclusion

From above analysis of countertrade, it is clearly that counertrade is a very important

as pricing tool in the international marketing. It was resorted not only by developing

counties, but also by some industrialized Western countries like Australia, Austr:a,

Canada, New Zealand. International marketing managers need to be aware of recent

trends in countertrade and developments in company reciprocal trade policy. This

knowledge will help them to identify and take advantage of emerging opportunities in

the international marketing

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International marketing management

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