International marketing management

Content:

PART A: International marketing research process.................................................1

Introduction.................................................................................................................................1
International marketing research process....................................................................................2
Difficulties of identifying the research problem .......................................................................6
Problems of gathering primary data............................................................................................6
Conclusion...................................................................................................................................8
PART B: Counter trading............................................................................................9
Introduction ................................................................................................................................9
Definition of countertrade ........................................................................................................10
Forms of countertrad and their advantages...............................................................................10
Barter ................................................................................................................................10
Compensation deals ..........................................................................................................11
Counterpurchase (offset trade)..........................................................................................11
Product buy-back agreement ............................................................................................12
Countertrade as a pricing tool ..................................................................................................12
Conclusion.................................................................................................................................14
Reference...................................................................................................................................14

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

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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
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).

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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:

1. Topic and research problem

Ensure comparability of concepts
Determine scope
Check the influence of culture

2. Research design and plan

Identify comparability differences

Select methodology with minimum comparability problems
Check practical issues – budget, time, etc.

3. Data collection and

measurement
Attach weight to eliminate cultural differences
The process TheIdentify
International dimension
local biases
Check reliability of data
Check understanding of scales for comparability

4. Data analysis and interpretation

Watch for comparability issues

Ensure that unexpected findings are not due to local biases
Adjust interpretation level to different countries/ cultures/
markets

5. Presentation of the findings and

report

Think of international readers and communicate accordingly3

Watch for language and terminology
Avoid culturally offensive conclusions
Check implications for different markets
 International marketing management

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)
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

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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
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

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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
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

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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
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.

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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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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

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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.

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

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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.

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

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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.

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

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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
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.

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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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