MODEL ANSWER INTERNATIONAL MARKETING (AR 7616) B. COM-VI SEM.

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1 MODEL ANSWER INTERNATIONAL MARKETING (AR 7616) B. COM-VI SEM. Ans.1 (i) International Marketing is the performance of Business Activities designed to Plan, Prize, Promote and direct the flow of a company s goods and services to consumers or users in more than one nation for a profit. The only difference between the definitions of domestic marketing and international marketing is that in latter case marketing activities take place in more than one country. - Cateora and Graham Ans.1 (ii) Marketing environment refers to those factors and forces which influence a company. International marketing companies operate in number of country s and every country has its own marketing environment. By international marketing environment we mean market conditions under which an exporters has to operate. Ans.1 (iii) When the price of product is fixed below the prize of its competitive product it is know as below competitive price Policy. Such a policy is adopted when a product faces stiff competition in the market. Ans.1 (iv) There are more risk in International Marketing because exporters have to face competition at there levels :- (a) Exporters of its own country.

2 (b) Exporters of other countries. (c) Producers of home country. Moreover there are others type of risks also which are associated with international marketing like political risks, risks of changes in tastes of preferences of consumers risk of fluctuations in economic cycle etc. Ans.1 (v) In International Marketing differential Pricing is adopted because an exporter deal with number of countries and the economy level of one country is quite different from another country. Some countries may enjoy sound economic conditions while other countries may face the problems of economic slump. Therefore in order to get success in international marketing higher prices may be fixed for the countries which enjoys Sound economic Situations and lower Prices may be fixed for the countries which are facing the Problems of depression or secession. Ans.1 (vi) Two forms of International Marketing are as under :- (a) Merchandise Exports ;- Merchandise exports are related to exports and imports of physical goods like, rice, tea, cotton, diamonds etc. (b) Services Exporter :- Services exports are related to exports and imports of professional, Technical or general Services like computer software, entertainment, Banking insurance etc. Ans.1 (vii) Consumer Products are meant for direct consumption of consumers for example, shrits, watches, furnitures, cars etc. Where as industrial Products are those Products which are used in and industry for providing a Product. Industrial Product are not meant for example speaker of T.V., horns of scooters, iron, steel, lead etc.

3 Ans.1 (viii) The way through which goods and services are distributed from manufacturers to consumers are known as channels of distribution. The various channels of distribution are wholesalers, retailers, distributions etc. Ans.1 (ix) Ans.1 (x) Ans.2 A brand is a name, term, symbol or design or as combination of then which is inducted to identify the goods or services of one seller and to differentiate then from those of giving of specified name to a product from one seller. The specified name creates individuality in the product and hence it can be easily distinguished in the market from the rival product. The purpose of shipping contains is to product the physical Product to ensure that the product will search the market intact. The Shipping contains should be strong, it should be able to withstand all the handling during shipment. The various internal factors affecting International Marketing are as under :- (i) Financial Resources :- As compared to domestic Marketing, Financial resources needed for international marketing are much larger because the export orders are generally of big amounts and they take a lot of time to get payment for the goods sold. A firm with limited financial resources can t think of entering international markets. (ii) Human Resources :- Specially qualified and experienced manager only can manage international business. Either the firm must have such persons or should be able to hire them. In addition to qualified people the firm must have professional managers. who can accept challenges that may occurs while entering for the firm in international business. (iii) Leadership and Company Objectives :- Top manger s should be able to guide and lead managers to accept challenges of international marketing. If the top management does not give

4 support to people managing international marketing the whole plan will fail. It has to be seen that the company has the objective and the will power of entering international markets. (iv) Research and Development :- There is intense competition in international markets, new and better products beep on entering the market daily. A company wishing to either international business should have research facilities to develop and produce latest and better products. Firm following old, outdated and obsolete technology cannot survives in international markets. In advance countries 3 to 4 % of GDP of the nation is spent on research and development, Microsoft company of America has spent more than 600 million dollars on the development of its software products. (v) Image of the Company :- A company with good reputation and a favorable image in the domestic market will find as easier to enter international markets. A company whose product do not find, find market locally may not succeed in international markets also. The competition is more intense in international markets than that of domestic market. (vi) Production Capacity and Growth Potential :- Firms, with large production capacity can only succeed in international markets, foreign markets grow at fast pace, the exporting firms must the referee, have sufficient growth potentials. Sometimes the firm have to find foreign markets to reach optimum production capacities. Ans.3 The various steps involved in Preliminary or general analysis I selecting the foreign Market as under :- (i) Geographical Location :- An exporter has to know the geographical location of the country where he is going to export his goods. Geographical location means, in which part of the globe is that county located, with which countries it shares its boundaries what is the position of the river, mountains, plains

5 etc? climate whether it is cold or hot or humid. Some countries may be difficult to reach expert by air transport because of extensive location of deserts etc. (ii) Ports and Transport Facilities :- An exporters will be interested in knowing as to how many ports are there in the importing country? What are the facilities of unloading, what is the capacity of the port? In some cases shipping cost may be too high. Are ship repairing facilities available there? What is the position of internal transport, what is their speed, how much is the cost etc. (iii) Communication Facilities :- An exporter should enquire about goods any and efficient communication facilities available in a country. These facilities includes post and telegraph, Telephone, facilities etc. (iv) Population and Cultural Environment :-The population of a county should be estimated before selecting the foreign market. Higher the population bigger will be the market. The analysis of urban and rural population should also be done. The religion, habits customs and traditions of people should also be examined before selecting the foreign market. (v) Education :- The literacy rate of the country should also be taken into account before selecting the foreign markets, because educated classes of customers demand different kind of products than uneducated people. Educated customers are more aware about the recent changes in technology and therefore they demand a better quality product and technologically advanced products. (vi) Standard of Living and GNP :- The GNP and its rate of growth the per capita income and also the standard of living of that countries population play and an important role in determining the consumption capacity and patterns and also sale possibilities in that country. It the people are wealthy they, will be able to offered costlier imported products.

6 (vii) Business Traditions and Regulations :- It has to be seen as to what kind of ethcal standers of business dealings are there in a country. what type of channels of distributions are available there? Are the channels of distribution efficient? An exporter has to study regulations about a business such as industrial tax laws, import restrictions, etc. (viii) Political Factors :- Political stability is a very important determinant of market selection. It influences monetary stability and international trade polices. It is easy to export to a friendly country, Specially if there is any trade agreement with that country. (ix) Exchange Rate and Currency Stability :- It has to be seen as to what is the rate of exchange of currency of the importing country and the home country, Is the currency of that country stable in relation to the us dollar or there are violent fluctuations in the exchange rate. A cute shortage of foreign exchange in the country of import may rate problems. Ans.4 A product is a bundle of physical services and symbolic particular expected to yield satisfactions or benefits to the buyer. - Philip Kotler Product planning embraces all activities which enable the produces and middleman to determine what should constitute a companies line of product - W.J. Stanton. The importance of export product planning are as under :- (i) To Meet Competition :- There is a very extensive competition in international marketing. An emprises has to face there tier competition in international marketing. To with stand this competition the product has to be superior in all respects.

7 (ii) (iii) (iv) To Meet Requirements of Foreign Buyers :- The product should be so designed That it should meet the needs and expectations of foreign buyers which can differ in different countries. To Avoid Legal Entangles :- Consumer protection laws are very strict in developed countries of Europe and America. It the goods are defective or do not fulfils the quality requirements, the consumer can drag the manufactures in courts and claim heavy compensation. To avoid all this products should be so planned that they meet the quality standards. To Give Something Extra to Consumers :- Consumers will be attracted to a product it if offers something extra, over and above what competitions are offering to them. That extra can be in the farm of better quality better design, more utility etc. Now a days consumer want full value for their money. Ans.5 Seven objectives of pricing are as follows :- (i) Proper Return on Investment :- Main object of every business and industrial enterprise is to earn a proper return on its capital. The referee an important object to be considered while determining the price of a product is that it may yield proper return on the investment of enterprise. (ii) (iii) Maximum Profit Through Maximum Sales :- A main object of every enterprises is to earn maximum possible profits by making maximum possible sales. There for the prize of a product must be determined in the manner that it may increase the demand of the product so that maximum sales may be made and maximum profits may be earned. Price Stability :- Though the price of a product is never stable, It has to be changed keeping in view the changing marketing conditionals still the price of a product should be determined in the manner that minimum fluctuations should take place in it

8 stable price win the faith of consumers and get good share in the market. (iv) (v) (vi) Competition :- Competition is perhaps the most important object to be considered while determining the price of a product. Every enterprise wants to determine a price which may get success in the market and which may complete similar products of competitors. According to Paying Capacity of Consumer :- Every Product is sold to the consumer. Every consumer has a certain purchasing Power. If the Purchasing power of consumers it not Considered at the time of determining price of a product it would mean an invitation to the failure of the product and the enter price itself. Long-term Success of the Enterprise :- Every business and industrial enterprises has to maintain its standing in the marketing for a long period pricing decisions of the enterprises play an important role in determining such standing of the enterprises. The price of determined in the manner that the may contribute in capturing more and more share in the market. If for any reason, it is not possible for the enterprises to increase its share in the market, the prices should contribute in maintaining the present share. (vii) Uneconomical Objectives :- Pricing decisions of an enterprises have some, some uneconomic objectives also such as :- (a) Social Welfare. (b) To bring industrial stability. (c) To contribute in the industrial development. (d) To increase GNP and NNP.

9 Ans.6 Whole sales are marketing middlemen who occupy a position midway between retiles and the producer for manufacturing. - Morris E. Hurley The various functions performed by a wholesalers are as follows :- (i) (ii) (iii) Assembling of Goods :- The whole sellers collect different varieties of a product from different manufacturers. They store the products and sell to the retailers. Storage :- One of the important functions of whole sales is to store the goods in goods conditions till they are sold to the retailers. The whole sellers have to arrange for proper storage of goods. Transportation :- Transportation is also an important activity to be performed by whole sellers. wholesalers have to transport the goods from the place of production to their godowns or warehouse and them from their godowns or warehouse to the place of retailers, for transporting goods, the wholesalers may use the facility of transportations agencies or they may maintain their own vans for this purpose. (iv) Financing :- Wholesalers are the vital link between manufacturers and retailers. they finance the manufacture and retailers. They finance the manufacturer as well as retailers. They Purchase the goods from manufacturers on cash payment and sell these goods to the retailers on credit payment. (v) Helpful in Price Determination :- Wholesalers help the manufacturing in determining the price of their products. Wholesalers, being in close touch with retailers understand the situation and conditions of the market and other basis of such understanding, they help the manufacturer in determining the price for their products.

10 (vi) Risk Bearing :- Wholesaler bear the risk of both the manufacturing and retailers. They Purchase goods in large quantities from manufacturers on cash basis and thus minimize the risk of manufacturers. They store these goods till these the risk of changes in demand needs and wants of consumer. Also in addition to this,they sell those goods to retailers on credit and bear the risk of getting the payment also. Ans.7 Factors related to product which affect the selection of channels of distribution are as follows :- (i) Perishability of Product :- If the product is of perishable nature, it must be distributed within shortest possible time and therefore, shortest channel of distributions must be selected for sometime longer channel of distribution must be selected. If the product can be stored for sometime, longer channel of distributions may also serve the purpose. (ii) (iii) (iv) (v) Ordered Product :- If a manufacturer manufacturers goods according to orders only. He usually decides to distributes these products direct to his consumers. If a manufacturer produces goods according to standard, he may decide for distributing these goods through long channel. Price Per Unit :- It has been the experience that the channel of distribution for distribution of goods of low price unit it generally long and that for the goods of high price unit is generally short. Weight :- It also has been the experience that the goods of high weight are generally distributed directly by the manufacturer. On the other hand, the goods of light weight are distributed through a long channel of distribution. Technical Nature of Product :- If the product is of technical nature it becomes necessary for the manufacturer to provide after sales services to the consumers. In case of such products it

11 becomes necessary that these products must be supplied directly by the manufacturer or through shortest possible channel of distribution. Factors related to market which affect the selection of channels of distribution are as follows :- (i) Number of Consumers :- If the number of consumer of a product is very large it must be distributed through a long channel if distributed so that it may be made available in all segments of the market at all the times. If on the other hand number of consumers of a product is limited it must be distributed through short channel of distribution. (ii) Regional Concentration :- If the consumer of the product are scattered all over the country. It will not be possible for the manufacturer to distribute such product directly. Therefore, it becomes necessary that such a product must be distributed through a long channel of distributed. If on the other hand the consumers of a product are scattered over a particular region, it can be supplied by the manufacturer himself or it can be distributed through a short channel of distribution. (iii) (iv) Size of Orders :- If a product is bought by the consumers in large quantity the manufacturer may decide to distribute it direct to the consumers. It a product is bought by the consumers in small quantity the manufacturer will have to arrange to supply the product at all the places and at all the times thus, such a product is distributed through a long channel of distribution. Nature of Market :- If the product is industrial, it can be distributed directly by the manufacturer to the industrial

12 users. On the other hand consumer goods are generally supplied to the consumers through middlemen. (v) Policies of Competitions:- If most of the competitors are distributing their products through middlemen the enterprises should also decide to do so If the competitors are supplying theirs goods directly to the consumers, the enterprises may also decide to do so. Ans.8 In Direct Exports the responsibility of Performing international selling activities rests on the manufacturer or the exporters. The exporters may have his own separate department for exporting the goods. When the exports are direct the manufacturer makes direct sale to any one or more of foreign consumers. follows :- (i) The various inter mediates of direct channels are as Commission Agents/ Brokers :- Agents or Brokers are located in foreign markets and do not deal in their own account, they represent the exporters in a foreign country and do business on his behalf and act as link between the buyers and the exports. Since these agents are based in foreign countries they, therefore, are in constant touch with buyers. (ii) Manufacturers Export Agent or Sales Representatives :- They are individual middlemen who frequently travel in foreign markets to find buyers for exporters product and charge commissar for their services. These agents specialize in one or a few markets. They act on behalf of the exporters as and do not deal in their own account. Such export agents are generally engaged by small manufactures who cannot afford their own distribution network in foreign markets.

13 (iii) Export Management Companies :- In some countries there are export management companies (EMCS) who manage the entire export activities of a manufacturer for a commission basis. They provide all services like promotions, shipping arrangements and documentation etc, to the exporters.