Professional Documents
Culture Documents
SMU MBA Assignment IV Sem 2010
SMU MBA Assignment IV Sem 2010
INTERNAL ASSIGNMENT
MBA (Revised)
SEMESTER-4
SL.
SUBJECTS CODE PAGE N0
NO.
5. E-Marketing MK0008 81 – 97
(MB-0036)
ASSIGNMENT-1
Q.1 What do you understand by the term Strategy in the context of Business
Management and Policy? And what are the stages in the formulation of a
Strategy?
Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission.
Strategies do not attempt to outline exactly how the enterprise is to accomplish its
objectives. A company may view downsizing as a strategy in a competitive market to
render cost-effective services. Thus, strategy provides a framework to guide thinking
and action. Strategies are very much useful in organisations for guiding, planning and
control.
Strategy is a way of life both at the macro as well as micro levels for everyone, whether
it is a nation or a company. To win over in a given complex situation, the organisations,
even trans-nationals adopt strategies. They make changes, if necessary, even to their
global strategies. An individual company may formulate its own strategy to bring out the
desired results. The eventual success of the organisation depends upon strategy
formulation and implementation.
The recently initiated moves such as globalisation, privatisation and liberalisation are
strategies to attain a globally competitive economy. Business management must focus
on following issues
It is the crux of the strategic management process. Strategy refers to the course of
action desired to achieve the objectives of the enterprise. Formulation, together with its
implementation, constitutes an integral part of the management activity. Managers use
strategies for different purposes such as to overcome competition, to increase sales, to
increase production, to motivate the employees to provide their best, and so on.
Implementation of a strategy is a crucial task as the formulation of it. There may be a lot
of resistance during the implementation process. It is necessary for the manager to be
very tactful to involve the members of his group in the formulation of strategy to facilitate
the implementation process.
b. Environment scanning
d. Strategy variations
e. Strategic choice
Q.2 What, in brief, are the types of Strategic Alliances and the purpose of each?
Supplement your answer with one real life example of each.
1. Product and/or service alliance: Two or more companies may get together to
synergise their operations, seeking alliance for their products and/or services. A
manufacturing company may grant license to another company to produce its
products. The necessary market and product support, including technical know-how,
is provided as part of the alliance. Example :- Coca-cola initially provided such
support to Thums Up.
Two companies may jointly market their products which are complementary in
nature. Example :- 1) Chocolate companies more often tie up with toy companies. 2)
TV Channels tie-up with Cricket boards to telecast entire series of cricket matches
live.
Two companies, who come together in such an alliance, may produce a new product
altogether. Example :- Sony Music created a retail corner for itself in the ice-cream
parlours of Baskin-Robbins.
2. Promotional alliance: Two or more companies may come together to promote their
products and services. A company may agree to carry out a promotion campaign
during a given period for the products and/or services of another company.
Example :- The Cricket Board may permit Coke’s products to be displayed during
the cricket matches for a period of one year.
A solid business plan describes who you are, what you do, how you will do it, your
capacity to do it, what financial resources are necessary to carry it out, and how you
intend to secure those resources. A well-written plan will serve as a guide through the
start-up phase of the business. It can also establish benchmarks to measure the
performance of your business venture in comparison with expectations and industry
standards. And most important, a good business plan will help to attract necessary
financing by demonstrating the feasibility of your venture and the level of thought and
professionalism you bring to the task.
A well-written plan will serve as a guide through the start-up phase of the business. It
can also establish benchmarks to measure the performance of your business venture in
comparison with expectations and industry standards. And most important, a good
business plan will help to attract necessary financing by demonstrating the feasibility of
your venture and the level of thought and professionalism you bring to the task. A good
business plan will help attract necessary financing by demonstrating the feasibility of
your venture and the level of thought and professionalism you bring to the task. A good
business plan serves the following purposes:
1. Revenue Generation – Your organization may hope to create a business that will
generate sufficient net income or profit to finance other programs, activities or
services provided by your organization.
2. Employment Creation – A new business venture may create job opportunities for
community residents or the constituency served by your organization.
4. Establish Goals: Once you have identified goals for a new business venture, the
next step in the business planning process is to identify and select the right
business. Many organizations may find themselves starting at this point in the
process. Business opportunities may have been dropped at your doorstep.
Depending on the goals you have set, you might take several approaches to identify
Q.4 What is the chief purpose of a Business Continuity Plan and what are its
components for effective implementation. Explain in a sentence or two as to how
it is different from a Business Plan.
Ans. The Business Continuity Plan is a tool to allow organizations to consider the factors and
steps necessary to prepare for a crisis (disaster or emergency) so that it can manage
and survive the crisis and take all appropriate actions to help ensure the organization’s
continued viability. The advisory portion of the plan is divided into two parts:
Implementation and maintenance: It gives the details of tasks required for the
Business Continuity Plan to be maintained as a living document, changing and
growing with the organization and remaining relevant and executable.
The purpose of the business continuity plan is to prepare to face the unthinkable
situations that may threaten an organization’s future. This new challenge goes beyond
the mere emergency response plan or disaster management activities that we
previously employed. Organizations now must engage in a comprehensive process best
described generically as Business Continuity. It is no longer enough to draft a response
plan that anticipates naturally, accidentally, or intentionally caused disaster or
emergency scenarios.
Today’s threats require the creation of an on-going, interactive process that serves to
assure the continuation of an organization’s core activities before, during, and most
importantly, after a major crisis event.
In the simplest of terms, it is good business for a company to secure its assets. CEOs
and shareholders must be prepared to budget for and secure the necessary resources
to make this happen. It is necessary that an appropriate administrative structure be put
in place to effectively deal with crisis management.
Following steps are required to fulfilled for effective implementation of the business
continuity plan:
1. Educate and Train: The BCP is only as valuable as the knowledge that others
have of it. Education and training are necessary components of the BCP process.
They require a time commitment from the Crisis Management Team, the Response
Teams, and the general employee population.
2. Educate and Train Teams: The Crisis Management and Response Teams should
be educated about their responsibilities and duties. Check lists of critical actions
and information to be gathered are valuable tools in the education and response
processes.
3. Educate and Train All Personnel: All personnel should be trained to perform their
individual responsibilities in case of a crisis. Such training could include procedures
for evacuation, shelter-in-place, check-in processes to account for employees,
arrangements at alternate worksites, and the handling of media inquiries by the
company.
Risk Assessment
Sector/Industry Trends
Regulatory Requirements
Event Experience
Test/Exercise Results
5. Maintenance of BCP: Regular maintenance of the BCP cannot be
overemphasized. Clear responsibility for BCP maintenance should be assigned.
Maintenance can be either planned or unplanned and should reflect changes in the
operation of the organization that will affect the BCP.
Q.5 Take any three examples of the components of a Decision Support System and
explain how they help decision making
3. The Daily Ratios Report: This is the most important part of the decision support
system. It enables the Manager to instantly analyse dozens of important aspects of
the functioning of his company. It allows him to compare the behaviour of these
parameters to historical data and to simulate the future functioning of his company
under different scenarios. It also allows him to compare the performance of his
company to the performance of his competitors, other firms in his branch and to the
overall performance of the industry that he is operating in.
The Manager can review these financial and production ratios. Where there is a
strong deviation from historical patterns, or where the ratios warn about problems in
the future – management intervention may be required.
a. The management knows exactly how much credit it could take, for how long (for
which maturities) and in which interest rate. It has been proven that without proper
feedback, managers tend to take too much credit and burden the cash flow of their
companies.
b. A decision system allows for careful financial planning and tax planning. Profits go
up, non cash outlays are controlled, tax liabilities are minimized and cash flows are
maintained positive throughout.
So, the establishment of a decision system does not hinder the functioning of the
company in any way and does not interfere with the authority and functioning of the
financial department, but infact helps the manager to take quick decisions and make
profit to the company.
Q.6 Name and explain any three ways in which a Company’s CSR can be expressed
Ans. CSR is “a concept whereby companies integrate social and environmental concerns in
their business operations and in their interaction with their stakeholders on a voluntary
basis” as they are increasingly aware that responsible behaviour leads to sustainable
business success.
CSR is also about managing change at company level in a socially responsible manner.
This happens when a company seeks to set the trade-offs between the requirements
and the needs of the various stakeholders into a balance, which is acceptable to all
parties. If companies succeed in managing change in a socially responsible manner,
this will have a positive impact at the macro-economic level.
Following are the different ways in which company's CSR can be expressed.
Employment and social policy integrates the principles of CSR, in particular, through the
European Employment Strategy, an initiative on socially responsible restructuring, the
European Social Inclusion Strategy, initiatives to promote equality and diversity in the
workplace, the EU Disability Strategy and the Health and Safety Strategy.
In its document "Anticipating and managing change: a dynamic approach to the social
aspects of corporate restructuring", the Commission has stressed that properly taking
into account and addressing the social impact of restructuring contributes to its
acceptance and to enhance its positive potential. The Commission has called upon the
social partners to give their opinion in relation to the usefulness of establishing at
Community level a number of principles for action, which would support business good
practice in restructuring situations.
Deeply rooted societal changes such as increasing participation of women in the labour
market should be reflected in CSR, adapting structural changes and changing the work
environment in order to create more balanced conditions for both genders
acknowledging the valuable contribution of women as strategies which will benefit the
society as well as the enterprise itself.
2. Enterprise policy
Only competitive and profitable enterprises are able to make a long-term contribution to
sustainable development by generating wealth and jobs without compromising the
social and environmental needs of society. In fact, only profitable firms are sustainable
and have better chances to adopt/develop responsible practices.
The role of enterprise policy is to help create a business environment, which supports
the Lisbon objective of becoming the world’s most dynamic knowledge-driven economy,
supports entrepreneurship and a sustainable economic growth. Its objective is to ensure
a balanced approach to sustainable development, which maximises synergies between
its economic, social and environmental dimensions.
3. Consumer Policy
Consumers and their representative organisations have an important role to play in the
evolution of CSR. If CSR is therefore to continue to serve its purpose, strong lines of
communication between enterprises and consumers need to be created.
(MB-0036)
ASSIGNMENT-2
Q.1 Having formulated a Business Strategy, what are the steps in its implementation?
Explain each in a sentence or two.
Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission.
Strategies do not attempt to outline exactly how the enterprise is to accomplish its
objectives. A company may view downsizing as a strategy in a competitive market to
render cost-effective services. Thus, strategy provides a framework to guide thinking
and action. Strategies are very much useful in organizations for guiding, planning and
control.
Strategy is a way of life both at the macro as well as micro levels for everyone, whether
it is a nation or a company. To win over in a given complex situation, the organizations,
even trans-nationals adopt strategies. They make changes, if necessary, even to their
global strategies. An individual company may formulate its own strategy to bring out the
desired results. The eventual success of the organization depends upon strategy
formulation and implementation.
Strategy refers to the course of action desired to achieve the objectives of the
enterprise. Formulation, together with its implementation, constitutes an integral part of
the management activity. Managers use strategies for different purposes such as to
overcome competition, to increase sales, to increase production, to motivate the
employees to provide their best, and so on. Implementation of a strategy is a crucial
task as the formulation of it. There may be a lot of resistance during the implementation
process. It is necessary for the manager to be very tactful to involve the members of his
group in the formulation of strategy to facilitate the implementation process.
To assign and reassign leaders the tasks and decisions to support the
chosen strategy.
The implementation of plans and policies is designed in accordance with the strategy
chosen. The firm creates plans and policies to guide managerial performance, and
these make the chosen strategies work. The corporate success lies ultimately in the
ability to convert corporate strategy into plans and policies that are compatible and
workable.
4. Evaluation And Control Of Strategy: Evaluation is the last phase of the strategic
management process. It is at this stage that the success of the programmes can be
assessed. There should be a built-in mechanism to examine the deviations and
initiate corrections as and when required. This assures that the chosen strategies
will be implemented properly.
The control process requires identifying a set of parameters for evaluating and
measuring the performance at the individual level and also at the department level.
The performance has to be evaluated to identify deviations and take corrective
action. The control and evaluation take place not only at the SBU level but also at the
corporate level. This process may involve the participation of all the executives at all
levels. Corrective actions are required wherever the evaluation reveals deviations
between the actual performance and the projected one, over a given period of time.
Q.2 How do we cope with crises and how do we use the Business Continuity Plan to
manage and recover from crisis?
Ans. The Business Continuity Guideline is a tool to allow organizations to consider the
factors and steps necessary to prepare for a crisis (disaster or emergency) so that it can
manage and survive the crisis and take all appropriate actions to help ensure the
organization’s continued viability.
The advisory portion of the guideline which helps us to cope with the crisis and to
manage and recover from the crisis is divided into two parts:
i. Assign Accountability
ii. Perform Risk Assessment
iii. Conduct Business Impact Analysis (BIA)
iv. Agree on Strategic Plans
v. Crisis Management and Response Team Development
Accountability:
1. Have methods to mitigate the risks identified in the Business Impact Analysis and
Risk Assessment been identified?
3. Have strategies that address short and long term business interruptions been
selected?
1. Have compliance audits been conducted to enforce BCP policy and procedures?
2. Have the systems and resources that will contribute to the mitigation process been
identified, including personnel, facilities, technology, and equipment?
3. Have the systems and resources been monitored to ensure they will be available
when needed?
2. Have facility security programs to support avoidance and deterrence and detection
been established?
3. Have operational policy and procedures to protect the facilities been developed?
4. Is it ensured that sufficient physical security systems and planning are in place to
protect the facility?
1. Will the response program recognize when a crisis occurs and provide some level
of response?
2. Have the danger signals been identified that indicate a crisis is imminent?
1. Has an assessment process to address the severity and impact of the crisis been
developed?
2. Has the responsibility for declaring a crisis, with first and second alternates, been
assigned?
Declare a Crisis
1. Have the criteria been established for when a crisis should be declared?
2. Has the responsibility for declaring a crisis been clearly defined and assigned?
3. Has an alert network for BCP Team members and employees been established?
4. Is it ensured that there is an alternate means of warning if the alert network fails?
5. Have the activities that will be implemented in event of a crisis been identified,
including notification, evacuation, relocation, alternate site activation, team
deployment, operational changes, etc?
2. Has the BCP been prioritized to save lives, protect assets, restore critical business
processes and systems, reduce the length of the interruption, protect reputation,
control media coverage, and maintain customer relations?
3. Have the severity of the crisis and the appropriate response been determined?
Communications
3. Are communications with all employees occurring at approximately the same time?
4. Are regular updates provided, including notification of when the next update will be
issued?
1. Has a designated Crisis Management Center been identified, and does it have
necessary life support functions, including uninterruptible power supply and
communications equipment?
2. Have alternate worksites for business resumption and recovery been identified?
3. Have critical and vital records been stored at an offsite storage facility?
4. How long can each business function operate effectively without normal data input
storage processes?
5. What must be done to restore data to the same previous point in time within the
recovery time objective?
6. Can any alternate data storage processes be used, after the initial data recovery,
to speed the forward recovery to the present time?
6. If so, are they legally sound, properly documented, and understood by all parties?
4. Has business process recovery been prioritized to recover the most critical
business processes first?
The preparation and readiness of the resources as per the above checklists on the
basis of the Business Continuity Plan helps us to manage and recover from the crisis in
a successful manner.
Q.3 What are the main components of Business Plan, explaining the role of each in
the Plan?
A good business plan will help attract necessary financing by demonstrating the
feasibility of your venture and the level of thought and professionalism you bring to the
task.
A history of the company (if you're already in business) or a history of the idea
development.
2. Company and Product Description: In this component one should provide type of
business, reason of creating business unit, referencing the goal and attach
references of business plan.
Price-Provide realistic price estimate and discuss the rationale behind that price.
Describe where this price positions you in the market place: at the high end, low
end or in the middle of the existing range for a similar product or service.
Place-Describe the location and its advantages where you will produce or
distribute your product or provide your service.
Competition-Explain the reason for entering in the new venture and what
Staffing:-Describe the type of staff, their qualification, skill, salaries, other benefit
and how they will be recruited.
4. Equipment and Material: In this component one must describe the special type of
machines and materials required to purchase, their cost and source.
• Sole proprietor.
• Partnership.
• Limited Liability Company
• Corporation.
• Sub-Chapter S Corporation
Startup budget-Describe the initial expenses which may incur to get your
business up and running.
Seed Capital
Working Capital
describe any asset that will be allocated to the start-up of the business.
8. Risks and their mitigation: Although it is impossible to know exactly what will go
wrong in staring and running your business plan, thinking upon different challenges
will strengthen plan.
Q.4 Explain the concept, need for and importance of a Decision Support System.
Typical information that a decision support application might gather and present are:
Need: Many companies in developing countries have a very detailed reporting system
going down to the level of a single product, a single supplier, a single day. However,
these reports – which are normally provided to the General Manager – should not be
used by them at all. They are too detailed and, thus, tend to obscure the true picture. A
General Manager must have a bird’s eye view of his company. He must be alerted to
unusual happenings, disturbing financial data and other irregularities.
• That the management will highly leverage the company by assuming excessive
debts burdening the cash flow of the company.
• That a false Profit and Loss (PNL) picture will emerge – both on the single product
level – and generally. This could lead to wrong decision-making, based on wrong
data.
• That the inventory will not be fully controlled and appraised centrally.
• That the wrong cash flow picture will distort the decisions of the management and
lead to wrong (even to dangerous) decisions.
Importance: A decision system has great impact on the profits of the company. It
forces the management to rationalize the depreciation, inventory and inflation policies. It
warns the management against impending crises and problems in the company. It
The management knows exactly how much credit it could take, for how long (for
which maturities) and in which interest rate. It has been proven that without proper
feedback, managers tend to take too much credit and burden the cash flow of their
companies.
A decision system allows for careful financial planning and tax planning. Profits go
up, non cash outlays are controlled, tax liabilities are minimized and cash flows are
maintained positive throughout.
So, the establishment of a decision system does not hinder the functioning of the
company in any way and does not interfere with the authority and functioning of the
financial department.
Q.5 Explain the importance of any five aspects of a Licensing Agreement that you will
look for when negotiating the right to use an Intellectual Property
Ans. A licence is a grant of permission made by the patent owner to another to exercise any
specified rights as agreed. Licensing is a good way for an owner to benefit from their
work as they retain ownership of the patented invention while granting permission to
others to use it and gaining benefits, such as financial royalties, from that use. However,
it normally requires the owner of the invention to invest time and resources in monitoring
the licensed use, and in maintaining and enforcing the underlying IP right.
A licence is merely the grant of permission to undertake some of the actions covered by
intellectual property rights, and the patent holder retains ownership and control of the
basic patent.
Licences are often limited to specific rights, territories and time periods. If an inventor
owns patents on the same invention in five different countries, they could assign (or sell)
these patents to five different owners in each of those countries. Portions of a patent
right can also be assigned – so that in order to finance your invention, you might choose
to sell a half-share to a commercial partner.
A lot of aspects are to be taken care of very carefully while negotiating or making a
licensing agreement to give right to use an intellectual property.
Some of the important aspects of a Licensing Agreement that we will look for when
1. The Parties To The Licence: The ‘parties’ to the licence are the entities (individual
people, companies or institutions) that are bound by the licence as a legal contract.
They normally sign (or ‘execute’) the licence to confirm in a legally clear-cut way that
they agree to comply with its terms. The parties can be individual persons, but they
are normally legal entities such as a research institution, a university or a company.
It is important to ensure that the licence is signed in a way that is legally binding, and
by a person authorized to sign for their institution.
In some cases, the licence is not directly signed (think of the ‘I Agree’ block which
you are often asked to click when installing a software package on a computer), and
in the national law of many countries, contractual obligations can arise even without
a formal signed document.
2. Licensor And Licensee: The person granting the licence – the ‘licensor’ – typically
holds rights to technology, biological material, IP rights, know-how, or other
information. The person receiving the licence – the ‘licensee’ – is the party which is
seeking to use or exploit that material.
The basic idea of the licence is that the person granting the licence (the ‘licensor’) is
giving another person (the ‘licensee’) the right to do something that they could
otherwise prevent them from doing, in exchange for some kind of benefit (this may
be financial, but may be other forms of benefit). So the licensor might permit the
licensee to use a technology that is covered by a patent – and if there was no
license, the licensor could take legal action under the patent to prevent this use of
the technology.
An exclusive licence means that the licensor agrees not to grant another
licence to any other party, and agrees not to use the licensed rights (in other
words, the licensor cannot become a competing user of the licensed
technology).
A sole licence means that the licensor grants a licence to only one licensee,
the sole licensee, but the licensor retains the right to use the technology itself.
Under a non-exclusive licence, the licensor grants the licensee a right to use
the technology, but the licensor can still give the same rights to other
The kind of license granted will depend on several factors, and will do much to
influence the pattern of use, and the scale of royalties or other payments, made by
the licensee.
5. Diligence And Milestones: The licensee may be relying on the license as the
principal mechanism for recovering its investment in research and for deriving
benefits from the patent or other IP. So it may be important to the licensor to ensure
that the licensee does everything they can to develop and commercialize the
licensed IP. If a licensee gains an exclusive licence, subject to a royalty payment on
profits, and then decides to shelve the technology for several years because its
immediate interests lie elsewhere, then the whole value of the IP is lost to the
licensor. So licenses will frequently include obligations on the licensee to develop
and apply the licensed technology diligently and to meet specific deadlines. Where
possible, certain defined points or milestones should be identified – possibly based
on the business plan originally proposed by the licensee. The license could require
the licensee to bring the product to the market as soon as practicable, and to
continue to make the product available to the public on reasonable terms. These
obligations may also be built into sub-licenses granted under the licence.
The practice of CSR is subject to much debate and criticism. Proponents argue that
there is a strong business case for CSR, in that corporations benefit in multiple ways by
operating with a perspective broader and longer than their own immediate, short-term
profits. Critics argue that CSR distracts from the fundamental economic role of
businesses; others argue that it is nothing more than superficial window-dressing;
others yet argue that it is an attempt to pre-empt the role of governments as a watchdog
over powerful multinational corporations. Corporate Social Responsibility has been
redefined throughout the years. However, it essentially is titled to aid to an
organization's mission as well as a guide to what the company stands for and will
uphold to its consumers.
Business ethics is one of the forms of applied ethics that examines ethical principles
and moral or ethical problems that can arise in a business environment.
The term CSR came in to common use in the early 1970s, after many multinational
corporations formed, although it was seldom abbreviated. The term stakeholder,
meaning those impacted by an organization's activities, was used to describe corporate
owners beyond shareholders as a result of an influential book by R Freeman in 1984.
Whilst there is no recognized standard for CSR, public sector organizations (the United
Nations for example) adhere to the Triple Bottom Line (TBL). It is widely accepted that
CSR adheres to similar principles but with no formal act of legislation. The UN has
developed the Principles for Responsible Investment as guidelines for investing entities
The scale and nature of the benefits of CSR for an organization can vary depending on
the nature of the enterprise, and are difficult to quantify, though there is a large body of
literature exhorting business to adopt measures beyond financial ones. However,
businesses may not be looking at short-run financial returns when developing their CSR
strategy.
The definition of CSR used within an organization can vary from the strict "stakeholder
impacts" definition used by many CSR advocates and will often include charitable
efforts and volunteering. CSR may be based within the human resources, business
development or public relations departments of an organisation, or may be given a
separate unit reporting to the CEO or in some cases directly to the board. Some
companies may implement CSR-type values without a clearly defined team or
programme.
(MB-0037)
ASSIGNMENT-1
Ans. The term "globalization" has acquired considerable emotive force. Some view it as a
process that is beneficial – a key to future world economic development – and also
inevitable and irreversible. Others regard it with hostility, even fear, believing that it
increases inequality within and between nations, threatens employment and living
standards and thwarts social progress. This brief offers an overview of some aspects of
globalization and aims to identify ways in which countries can tap the gains of this
process, while remaining realistic about its potential and its risks.
Globalization offers extensive opportunities for truly worldwide development but it is not
progressing evenly. Some countries are becoming integrated into the global economy
more quickly than others. Countries that have been able to integrate are seeing faster
growth and reduced poverty.
At its most basic, there is nothing mysterious about globalization. The term has come
into common usage since the 1980s, reflecting technological advances that have made
it easier and quicker to complete international transactions – both trade and financial
Globalization is not just a recent phenomenon. Some analysts have argued that the
world economy was just as globalized 100 years ago as it is today. But today commerce
and financial services are far more developed and deeply integrated than they were at
that time. The most striking aspect of this has been the integration of financial markets
made possible by modern electronic communication.
1. Trade: Developing countries as a whole have increased their share of world trade –
from 19 percent in 1971 to 29 percent in 1999. For instance, the newly industrialized
economies (NIEs) of Asia have done well, while Africa as a whole has fared poorly.
The composition of what countries export is also important. The strongest rise by far
has been in the export of manufactured goods. The share of primary commodities in
world exports – such as food and raw materials – that are often produced by the
poorest countries, has declined.
3. Movement of people: Workers move from one country to another partly to find
better employment opportunities. The numbers involved are still quite small, but in
the period 1965-90, the proportion of labor forces round the world that was foreign
born increased by about one-half. Most migration occurs between developing
countries. But the flow of migrants to advanced economies is likely to provide a
means through which global wages converge. There is also the potential for skills to
be transferred back to the developing countries and for wages in those countries to
rise.
Ans. Policies that make an economy open to trade and investment with the rest of the world
are needed for sustained economic growth. The evidence on this is clear. No country in
recent decades has achieved economic success, in terms of substantial increases in
living standards for its people, without being open to the rest of the world. In contrast,
trade opening (along with opening to foreign direct investment) has been an important
element in the economic success of East Asia.
Opening up their economies to the global economy has been essential in enabling
many developing countries to develop competitive advantages in the manufacture of
certain products. In these countries, defined by the World Bank as the "new
globalizers," the number of people in absolute poverty declined by over 120 million (14
percent) between 1993 and 1998.
Freeing trade frequently benefits the poor especially. Developing countries can ill-afford
the large implicit subsidies, often channeled to narrow privileged interests that trade
protection provides. Moreover, the increased growth that results from free trade itself
tends to increase the incomes of the poor in roughly the same proportion as those of
the population as a whole. New jobs are created for unskilled workers, raising them into
the middle class. Overall, inequality among countries has been on the decline since
1990, reflecting more rapid economic growth in developing countries, in part the result
of trade liberalization.
Although there are benefits from improved access to other countries’ markets, countries
benefit most from liberalizing their own markets. The main benefits for industrial
countries would come from the liberalization of their agricultural markets. Developing
Enhanced market access for the poorest developing countries would provide them with
the means to harness trade for development and poverty reduction. Offering the poorest
countries duty – and quota – free access to world markets would greatly benefit these
countries at little cost to the rest of the world. The recent market-opening initiatives of
the EU and some other countries are important steps in this regard. To be completely
effective, such access should be made permanent, extended to all goods, and
accompanied by simple, transparent rules of origin. This would give the poorest
countries the confidence to persist with difficult domestic reforms and ensure effective
use of debt relief and aid flows.
Q.3 Write a short note on GATT and WTO, highlighting the difference between the
two.
The GATT, was established on a provisional basis after the Second World War in the
wake of other new multilateral institutions dedicated to international economic
cooperation – notably the "Britton Woods" institutions now known as the World Bank
and the International Monetary Fund.
The original 23 GATT countries were among over 50 which agreed a draft Charter for
an International Trade Organization (ITO) – a new specialized agency of the United
Nations. The Charter was intended to provide not only world trade disciplines but also
contained rules relating to employment, commodity agreements, restrictive business
practices, international investment and services.
In an effort to give an early boost to trade liberalization after the Second World War and
Although the ITO Charter was finally agreed at a UN Conference on Trade and
Employment in Havana in March 1948, ratification in national legislatures proved
impossible in some cases. When the United States’ government announced, in 1950,
that it would not seek Congressional ratification of the Havana Charter, the ITO was
effectively dead. Despite its provisional nature, the GATT remained the only multilateral
instrument governing international trade from 1948 until the establishment of the WTO.
Although, in its 47 years, the basic legal text of the GATT remained much as it was in
1948, there were additions in the form of "plural-lateral” voluntary membership
agreements and continual efforts to reduce tariffs. Much of this was achieved through a
series of "trade rounds".
The biggest leaps forward in international trade liberalization have come through
multilateral trade negotiations, or "trade rounds", under the auspices of GATT – the
Uruguay Round was the latest and most extensive.
The limited achievement of the Tokyo Round, outside the tariff reduction results, was a
sign of difficult times to come. GATT’s success in reducing tariffs to such a low level,
combined with a series of economic recessions in the 1970s and early 1980s, drove
governments to devise other forms of protection for sectors facing increased overseas
competition. High rates of unemployment and constant factory closures led
governments in Europe and North America to seek bilateral market-sharing
arrangements with competitors and to embark on a subsidies race to maintain their
holds on agricultural trade. Both these changes undermined the credibility and
effectiveness of GATT.
WTO
World Trade Organization came into existence in 1995 after the desolation of General
Agreement on Tariff and Trade (GATT).
The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and
predictably. It does this by:
The WTO’s top level decision-making body is the Ministerial Conference which meets
at least once every two years. Below this is the General Council which meets several
times a year in the Geneva headquarters. The General Council also meets as the Trade
Policy Review Body and the Dispute Settlement Body. At the next level, the Goods
Council, Services Council and Intellectual Property (TRIPS) Council report to the
General Council.
Numerous specialized committees, working groups and working parties deal with
the individual agreements and other areas such as the environment, development,
membership applications and regional trade agreements.
The WTO Secretariat, based in Geneva, has around 600 staff and is headed by a
director-general. Its annual budget is roughly 160 million Swiss francs. It does not have
branch offices outside Geneva. Since decisions are taken by the members themselves,
the Secretariat does not have the decision-making role that other international
bureaucracies are given with.
The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers (who meet at least once every two years) or
by their ambassadors or delegates (who meet regularly in Geneva). Decisions are
normally taken by consensus.
The World Trade Organization is not a simple extension of GATT; on the contrary, it
completely replaces its predecessor and has a very different character. Among the
b. The GATT was applied on a "provisional basis" even if, after more than forty years,
governments chose to treat it as a permanent commitment. The WTO
commitments are full and permanent.
c. The GATT rules applied to trade in merchandise goods. In addition to goods, the
WTO covers trade in services and trade-related aspects of intellectual property.
d. While GATT was a multilateral instrument, by the 1980s many new agreements
had been added of a plural-lateral, and therefore selective, nature. The agreements
which constitute the WTO are almost all multilateral and, thus, involve
commitments for the entire membership.
e. The WTO dispute settlement system is faster, more automatic, and thus much less
susceptible to blockages, than the old GATT system. The implementation of WTO
dispute findings will also be more easily assured.
Q.4 Think of any MNC and analyze its business strategy orientation.
Ans. Multinational companies (MNC) may pursue business strategies that are home country
– oriented or host country – oriented or world – oriented.
1. Export stage
There is a limit to foreign sales (tariffs, NTBs).Once the firm chooses foreign
production as a method of delivering goods to foreign markets, it must decide
whether to establish a foreign production subsidiary or license the technology to a
foreign firm.
Secondly, the licensee may transfer industrial secrets to another independent firm,
thereby creating a rival.
Q.5 What does FDI stand for? Why do MNCs opt for FDI to enter international market?
The main reasons for MNCs to opt for FDI to enter international market is stated as
follows:
3. High Transportation Costs : Transportation costs are like tariffs in that they are
barriers which raise consumer prices. When transportation costs are high,
multinational firms want to build production plants close to the market in order to
save transportation costs. Multinational firms that invested and built production
plants in the United States are better off than the exporting firms that utilized New
Orleans port to ship and distribute products through New Orleans, provided that they
built plants in a safe area.
Ans. There are two kinds of approach construct of culture. One is a multi-level approach,
viewing culture as a multi-level construct that consists of various levels nested within
each other from the most macro-level of a global culture, through national cultures,
organizational cultures, group cultures, and cultural values that are represented in the
self at the individual level.
The second is based on Schein’s (1992) model viewing culture as a multi – layer
construct consisting of the most external layer of observed artifacts and behaviours,
the deeper level of values, which is testable by social consensus, and the deepest level
of basic assumption, which is invisible and taken for granted.
The present model proposes that culture as a multi – layer construct exists at all levels
– from the global to the individual – and that at each level change first occurs at the
most external layer of behaviour, and then, when shared by individuals who belong to
the same cultural context, it becomes a shared value that characterizes the aggregated
unit (group, organizations, or nations).
In the model, the most macro-level is that of a global culture being created by global
networks and global institutions that cross national and cultural borders.
Given the dominance of Western MNCs, the values that dominate the global context are
often based on a free market economy, democracy, acceptance and tolerance of
diversity, respect of freedom of choice, individual rights, and openness to change.
Below the global level are nested organizations and networks at the national level with
their local cultures varying from one nation or network to another. Further down are
Both top-down and bottom-up processes reflect the dynamic nature of culture, and
explain how culture at different levels is being shaped and reshaped by changes that
occur at other levels, either above it through top-down processes or below it through
bottom-up processes. Similarly, changes at each level affect lower levels through a top-
down process, and upper levels through a bottom-up process of aggregation.
Global organizations and networks are being formed by having local-level organizations
join the global arena. That means that there is a continuous reciprocal process of
shaping and reshaping organizations at both levels. For example, multinational
companies that operate in the global market develop common rules and cultural values
that enable them to create a synergy between the various regions, and different parts of
the multinational company. These global rules and values filter down to the local
organizations that constitute the global company, and, over time, they shape the local
organizations. Reciprocally, having local organizations join a global company may
introduce changes into the global company because of its need to function effectively
across different cultural boarders.
(MB-0037)
ASSIGNMENT-2
Ans. A Bill of Lading is a type of document that is used to acknowledge the receipt of a
shipment of goods and is an essential document in transporting goods overland to the
exporter’s international carrier. A through Bill of Lading involves the use of at least two
different modes of transport from road, rail, air and sea. The term derives from the noun
"bill", a schedule of costs for services supplied or to be supplied, and from the verb "to
lade" which means to load a cargo onto a ship or other form of transport.
Q.2 In terms of product design, most products fall in between the spectrum of two
extremes. What are these two extremes? Describe on these extremes in brief.
Ans. Most products decisions lie between two extremes. One of the extreme is to sell
globally standardized products and the other extreme is to sell adapted products.
Changes in design are largely dictated by whether they would improve the prospects of
greater sales, and this, over the accompanying costs. Changes in design are also
subject to cultural pressures. The more culture-bound the product is, for example food,
the more adaptation is necessary. Most products fall in between the spectrum of
"standardization" to "adaptation" extremes. The application the product is put to also
affect the design. In the UK, railway engines were designed from the outset to be
sophisticated because of the degree of competition, but in the US this was not the case.
a. Differing usage conditions – These may be due to climate, skills, level of literacy,
culture or physical conditions. Maize, for example, would never sell in Europe rolled
and milled as in Africa. It is only eaten whole, on or off the cob. In Zimbabwe,
kapenta fish can be used as a relish, but wilt always be eaten as a "starter" to a
meal in the developed countries.
b. General market factors – incomes, tastes etc. Canned asparagus may be very
affordable in the developed world, but may not sell well in the developing world.
f. Pressure. Sometimes, as in the case of the EU, suppliers are forced to adapt to the
rules and regulations imposed on them if they wish to enter into the market.
Q.3 A Europe based MNC wants to introduce its fruit juice drink in India. What
product strategy of international marketing do you think will be suitable for its
product?
The choice of strategy will depend on the most appropriate product/market analysis and
is a function of the product itself defined in terms of the function or need it serves, the
market defined in terms of the conditions under which the product is used, the
preferences of the potential customers and the ability to buy the product in question,
and the costs of adaptation and manufacture to the company considering these product
– communications approaches.
In this case the Euopean MNC should undertake the Product adaptation –
communications adaptation strategy. This is because the fruit drink is entering a
totally a new market, India, whose preferences are quite dissimilar from Europe. At the
same time as culturally India is different from Europe there is need for adaptation in
communications also as the product will get exposed to a whole new market segment.
Ans. "Hard" data refers to relatively quantifiable measures such as a country’s GDP, number
of telephones per thousand residents, and birth rates (although even these supposedly
"objective" factors may be subject to some controversy due to differing definitions and
measurement approaches across countries).
In contrast, "soft" data refers to more subjective issues such as country history or
culture. It should be noted that while the "hard" data is often more convenient and
seemingly objective, the "soft" data is frequently as important, if not more so, in
understanding a market.
a. Tariff barriers: A duty, or tax or fee, is put on products imported. This is usually a
b. Quotas: A country can export only a certain number of goods to the importing
country. For example, Mexico can export only a certain quantity of tomatoes to the
United States, and Asian countries can send only a certain quota of textiles here.
c. "Voluntary" export restraints: These are not official quotas, but involve
agreements made by countries to limit the amount of goods they export to an
importing country. Such restraints are typically motivated by the desire to avoid
more stringent restrictions if the exporters do not agree to limit themselves. For
example, Japanese car manufacturers have agreed to limit the number of
automobiles they export to the United States.
Several justifications have been made for the practice of protectionism. Some appear to
hold more merit than others:
a. Protection of an "infant" industry: Costs are often higher, and quality lower, when
an industry first gets started in a country, and it thus be very difficult for that country
to compete. However, as the industry in the country matures, it may be better able
to compute. Thus, for example, some countries have attempted to protect their
domestic computer markets while they gained strength. The U.S. attempted to
protect its market for small autos. American manufacturers were caught
unprepared for the switch in demand away from the larger cars. This is generally
an accepted reason in trade agreements, but the duration of this protection must
be limited (e.g., a maximum of five to ten years).
b. Resistance to unfair foreign competition: The U.S. sugar industry contends that
most foreign manufacturers subsidize their sugar production, so the U.S. must
follow to remain competitive. This argument will hold little merit with the dispute
resolution mechanism available through the World Trade Organization.
c. Preservation of a vital domestic industry: The U.S. wants to be able to produce its
d. Intervention into a temporary trade balance: A country may want to try to reverse a
temporary decline in trade balances by limiting imports. In practice, this does not
work since such moves are typically met by retaliation.
f. Retaliation: The proper way to address trade disputes is now through the World
Trade Organization. In the past, where enforcement was less available, this might
have been a reasonable argument.
Note that while protectionism generally hurts a country overall, it may be beneficial to
specific industries or other interest groups. Thus, while sugar price supports are bad for
consumers in general, producers are an organized group that can exert a great deal of
influence. In contrast, the individual consumer does not have much of an incentive to
take action to save.
Q.6 Describe various entry strategies available to a firm when it wants to enter a
foreign market.
Ans. The various strategies available to a firm when it enters a foreign market are as
follows:-
In other words, if there is excess capacity, why not utilize that and export outputs to
other countries? There is no point in creating another plant overseas when domestic
capacity is not fully utilized. If the foreign demand exceeds the minimum efficient
Large capital costs – costs are too large for a single company
The new business is able to enter the market that neither parent could have
entered singly.
3. Tax Policy towards MNCs: Operating in many countries, MNCs are subject to
multiple tax jurisdictions, i.e., they must pay taxes to several countries. National tax
systems are exceedingly complex and differ between countries. Differences among
national income tax systems affect the decisions of managers of MNCs, regarding
the location of subsidiaries, financing, and the transfer prices (the prices of products
and assets transferred between various units of MNCs).
Multiple Tax Jurisdictions creates two problems, overlapping and under lapping
jurisdictions. When overlapping occurs, two or more governments claim tax
jurisdictions over the same income of an MNC. The overlapping may result in double
taxation.
Conversely, when under lapping occurs, an MNC falls between tax jurisdictions and
escape taxation. Under lapping encourages tax avoidance. National governments
may choose a territorial jurisdiction or national tax jurisdiction or both.
4. Transfer Pricing : MNCs try to reduce their overall tax burden. An MNC reports
most of its profits in a low – tax country, even though the actual profits are earned in
a high tax country.
tp = tax rate in the parent country ; th = tax rate in the host country
If tp > th, then under price its exports to the subsidiary in the host country, and
overprice its imports from the subsidiary in order to lower tax.
Thus, a multinational company’s overall tax could be paid at the minimum of all tax
rates of the countries in which it operates.
5. Taxation and Gains from Factor Mobility : It is seen that US firms invest overseas
because the returns are higher there. Assume both countries have the same
corporate tax rates = 40%
US Canada
Tax 4% 4.8%
Total Gains from foreign investment = 7.2% (because US government gets nothing).
The tax revenue which could have been used to build US highways would be used
by Canadian government to build their highways.
A firm has to evaluate all such kinds of complex factors to fix up any strategy before
choosing to enter a foreign market
(MK-0006)
ASSIGNMENT-1
Ans. A service is an activity which has some element of intangibility associated with it, which
involves some interaction with customers or with property in their possession, and does
not result in a transfer of ownership. A change in condition may occur and production of
the service may or may not be closely associated with a physical product. Goods are
simply the objects and services are simply the provision of such information of goods by
the seller and the buyers. The goods are visible and shall be purchased by the buyers
and sold by the sellers, whereas the services are the ones received by the guests and
provided by the goods sellers.
b. A managerial mind set evident in many service argues that the marketing of a
service industry has nothing in common with the marketing of another service
industry. For example, the marketing of an airline service has nothing in common
with marketing of a banking service or a financial service.
a. Type of services,
c. Type of purchaser,
d. Demand characteristics,
f. Degree of intangibility,
g. Buying motives,
a. Housing,
c. Recreation,
f. Private education,
i. Transportation and
j. Communication.
a. Nature of the Service Act : In this scheme, the nature of the service act, i.e
intangibility etc., and the recipients of the services are considered. It has wide
d. Nature of Demand and Supply for Services: This classification contrasts the
nature of demand fluctuations over time and the extent to which the supply is
constrained. The business may be lost to another service provider if the demand
exceeds the supply of any particular service. This classification is useful to
contrast different supply demand situations which affect all service marketers. It
emphasizes in establishing demand patterns overtime, and to understand their
existence. Then development of strategies is considered to help change pattern
of demand so as to make them more favourable to the service provider.
These classification systems of Lovelock provide frame work for service marketers to
consider both the nature of their business and to what extent they share common
characteristics with other seemingly unrelated service businesses.
Thomas classified the services on the basis of type of equipment or people rendering
the services
a. Equipment based : In this case, the equipment’s or the machines being utilized
for service position are important while people play a secondary role. Some of the
examples are automatic vending machines, automatic car washes and movies. In
such services, the equipment’s may be operated automatically or by unskilled or
skilled labour.
b. Labour based : Here, the human element is primary in the production and
delivery of services. The equipments or machines, if any, are secondary. This
type of services includes counselling, legal advisory service, catering and hair
dressing service. There are services in which both the equipments and labour
have equal importance as in the case of hospitals.
c. Specialty services: Here the customer puts in special purchasing efforts. The
customers will be ready to travel distances and pay a premium for the services.
Specialty services include medical specialist and legal advisors. As the customer
is willing to take social purchasing efforts the marketing strategy will be focused
on service product and building customer satisfaction.
Services have a number of distinguishing features which have special implications for
the positioning and attributes to emphasize. Three key characteristics for service
positioning are the intangibility, the degree of variability or heterogeneity in quality of a
given service, and inseparability. Positioning can be considered at several levels such
as:
Products or service are typically plotted on a two dimensional positioning map. The
positioning map can be used to identify the position of competitor’s service in
relation to the selected attributes. The analysis can be further developed by drawing
separate positioning maps for each market segment. Customers in each market
segment may perceive the service and its benefit differently, and different maps will
show these different positions.
Ans. The marketing mix concept is a well established tool used as a structure by markets. It
consists of the various elements of a marketing programme which need to be
considered in order to successfully implement the marketing strategy and positioning in
the company’s markets. Essentially the marketing mix represents the factors which
need to be considered when determining a service firm’s marketing strategy. The
marketing strategy for a service company depends on seven Ps which are - product,
price, place, promotion, people, processes and physical evidence. The underlying
concept in developing each of these elements is to use them to support each other to
reinforce the positioning of the service product and to deliver appropriate service quality
to achieve competitive advantage.
1. Product:
In planning the offer of products and services, good marketing manager devices a
strategy whereby the offers are viewed at various levels to achieve unmatched product
differentiation and superlative customer service. Generally, four levels of service
products are identified which are as follows:
a. The Core or Generic Product It is the basic service product. Although the term
‘generics’ is the most usual descriptive term, the generic products have also been
described as brand free, no names and unbranded products. A typical example
would be a bed in a hotel room for a night.
c. The Augmented Product : They are the offerings what the customers expect
besides the benefit expected by them. The augmented product is described as the
complete bundle of attributes perceived by or offered to an individual buyer
A service product is a complex set of value satisfactions. People buy services to solve
problems and they attach value to them in proportion to the perceived ability of the
service to do this. Value is assessed by the buyers in relation to the receivers. But it has
to be recognized that customers differ and that their requirements for different attributes
vary by market segment.
2. Pricing
Until recently, two board strategic approaches to prices were in vogue. They are (i)
Skimming and (ii) Penetration. Skimming strategy is based on the perceived need of
the users which tend to affect their sensitivity to the prices. When they are insensitive to
the prices it could be exploited by setting a very high price to skim the cream off
market. Whereas, a penetration strategy assumes that by producing a product similar
to that of a competitor and then under pricing it and thereby some or all its market
share can be taken away. The recent trend is an alternative value-based strategy
based on the belief that the appropriate concept is the perceived value held by the
customer.
Pricing Objectives: The pricing methods being adopted should consider the pricing
objective of the service firm. The most typical pricing objectives that a company could
have are as follows:
a. Corporate objective
b. Positioning of the service
c. The nature of competition
c. Competitive Parity Pricing: Pricing is done on the basis of those that are followed
by the competitor or market leader.
e. Rate of Return Pricing: It is also referred to as target return pricing. The prices
are set to achieve a given rate of return on investments and assets.
f. Value Based Pricing: It is market driven and reinforces the positioning of the
service and the benefit the customer receives from the service. In value based
pricing, prices are based on the services perceived value to a given consumer
segment.
g. Relationship Pricing: The future potential profit streams over the lifetime of
customers, forms the basis for relationship pricing. It is considered that the
relationship pricing is the appropriate form of pricing where there is an ongoing
contact between the customer and the service provider. It is said that the
relationship pricing follows closely the market oriented approach of value based
h. Prestige Pricing: The pricing above the given market price on the basis that many
buyers regard price as an indicator of quality and so will perceive enhanced quality
to products with higher than usual prices. In such cases sellers will be able to ask
prestige prices for products which have distinctive brand names and reputation.
The location and channels used to supply services to target customers are two key
decision areas. Location and channel decisions are essential to consider how and at
which place the services can be delivered to the customer. They become more relevant
to service as they cannot be stored and mostly are produced and consumed at the
same point. The environment in which the delivery of service takes place and the
manner of its delivery is important attributes of the service when its value is perceived.
In the second type of interaction, where the service provider can go to the customers,
site location becomes much less important, provided it is sufficiently close to the
customers for good quality service to be received. In some circumstances, the service
provider at the customers promises. This is the case with a wide range of maintenance
services such as lift repair, pest control and cleaning services. In other cases, service
providers have discretion in whether they decide to offer their services at the customer’s
home or office, as do hairdressers and TV repair firms. Some dry cleaning and laundry
firms have built up profitable businesses by dispensing with the need for expensive
multiple high street locations and locating their operations in a low cost area and
providing a pick-up and delivery service.
However, when the customer and service organization transact at arm’s length, location
a. Advertising
b. Personal selling
c. Sales promotion
d. Public relationship
f. Direct mail.
The use of promotional tools in service sector is a comparatively recent aspect. Now,
the fiercely competitive environment has made the service marketers use promotional
tools actively. But promotional exercise as it is done in consumer goods companies is
not the same for service industry.
The choice of the communications mix for service involves decisions on such issues as
whether to advertise, use personal selling or generate publicity through greater public
awareness by such means as through editorials, publications and press activity. The
choice of medium is determined by decisions on how to create the most favourable
awareness amongst the target audience.
Selection of appropriate media and determining the balance between them is essential
to obtain the most effective return on advertising expenditure. A consideration of the
specific advertising goals to be accomplished will facilitate this process.
4. People
The success of marketing a service is tied closely to the selection, training, motivation
and management of people. There are many examples of services failing or succeeding
as a consequence of the ineffective or effective management of people.
All the people participating in the delivery of service provide cues to the customer
regarding the nature of the service itself. How these people are dressed up, their
personal appearance and their attitudes and behaviours influence the customer’s
perceptions of the service.
Kotler says that, “if the service personal are cold or rude, they can undermine all the
marketing work done to attract customer. If they are friendly and warm, they increase
customer satisfaction and loyalty”. Hence, the importance of people within the
marketing of services has gained much interest in internal marketing.
In turn, the company made employees feel wanted and cared for, building on the
principle that those who are looked after will pass on this caring attitude. The success of
this new direction for the airline brought increased profits matched by greater customer
and employee satisfaction.
5. Process
The process by which the service is created and delivered to the customer is critical to
Process means all work activities. Process involve the procedures, tasks schedules,
mechanisms, activities and routines by which a product or service is delivered to the
customer. It involves policy decisions about customer involvement and employee
discretion. The customer not only thinks about the service product alone but also
attaches importance to the manner in which it is delivered. Under these circumstances,
a poorly designed service process leads to poor service quality. Banks provide a good
example of this. By reconfiguring the way they deliver service through the introduction
of automatic teller machines (ATMs) banks have been able to free staff to handle more
complex customer needs by diverting cash only customers to the ATMs.
Processes are seen as structural elements that can be engineered to help deliver a
desired strategic positioning. They can be analyzed according to the complexity and
divergence. Processes can be changed to reinforce the positioning. A clear
understanding of the configuration processes in terms of this complexity and
divergence, on a balance of marketing and operations activities are important factors for
improving service systems. Processes are thus a marketing mix element which can
have a substantial role in reinforcing positioning and in product development.
7. Physical Evidence
The environment in which the service is delivered and where the firm and customer
interact, and any tangible components that facilitate performance or communication of
the service is known as physical evidence in service.
The physical evidence of service includes all of the tangible representations of the
service such as brochures, letterhead, business cards, report formats, signage, and
equipment. In some cases, it includes the physical facility. Physical evidence cues
provide excellent opportunities for the firm to send consistent and strong messages
regarding the organization’s purpose, the intended market segments and the nature of
the service.
(MK-0006)
ASSIGNMENT-2
Tourism marketing is an integral effort to satisfy tourist and more so, it is a device to
transform the potential tourists into the actual tourists. Tourism marketing is the safest
way to generate demand, expand market and increase the market share. The concept
of tourism marketing comprises of:
a. Identifying and anticipating consumer demand and desire for tourism products and
services.
The marketing mix refers to the blend of ideas, concepts and features which marketing
management put together to best appeal to their target market. Segments, each target
segment will have a separate marketing mix, tailored to meet to specific needs of
consumers in the individual segment.
1. Product Mix :
The tourism product is a non material intangible thing. The following services are
included in the product mix for the tourism industry.
a. Attraction
Branding plays a very important role in tourism marketing. Car rental firms, hotel chains
and airlines, in particular employ tremendous efforts to ensure that their name is widely
recognized and synonymous with quality, value or some other characteristic. Travel
agents and tour operators depend on reputation to a large extent, and so it is
imperative that they have a strong, recognizable identity. The main reason to build
brand loyalty is to encourage repeat business.
2. Price Mix
In the tourism industry, the pricing decisions are found critical and challenging since it
is a multi segment industry. When a tourist proposes to visit a particular place, the total
cost on his / her traveling includes the expenses incurred on transportation,
accommodation, communication or so.
In the pricing decisions, the product or the service mix of the tourist organizations is
found important. This makes it essential that the tourist organizations set prices in line
with the quality of services to be made available to the customers.
The tourist professionals while making the pricing decisions are required to think in
favor of discounting price. The different forms of discount, such as discounting for cash
payment, price reduction for quality, trade discounts, trade allowances, seasonal
discount, distressed stock and similar discount tactics are the options.
3. Place Mix
Some tourist organizations deal directly with the consumers; some other organizations
utilize more than one method distribution. The middlemen are the tour operators and
the transport operators who buy services like hotel rooms, seats in the aircrafts,
railways, arrange chartered flights and sell the same either to the travel agents or even
directly to the tourists. Airlines, for example, sell tickets through travel agents, and sell
seats on flights to tour operators, whilst also operating direct marketing by offering
4. Promotion Mix
The advertisement helps in providing important information to the actual and potential
tourists. Its coverage is so wide. It essentially follows the AIDA principle of attracting
the attention, arouse internet, create desire, and stimulate action. Advertising is aimed
to create the awareness of the travel offers available on a resort and its attraction to
influence their business decisions.
Sales promotion through brochures, point of sale displays and even video cassettes
plays a very important role as advertising. In a tourism industry a travel company offers
to their client’s compliments such as flight bags, wallets for tickets and foreign
exchange and covers of passport. The hotels offer a number of facilities like shoe shine
clothes, first aid sewing kits and shampoo, further, the clients also get fruits and flowers
in their rooms. There is no double that almost all the promotional measures generates
goodwill and add value to the product.
5. Personal selling:
The travel and hotel business depend considerably on the personal selling. The
developing of travel and tourism has been possible due to well educated and trained
sales personnel.
6. People:
Here are key imperatives for organisations seeking to build a true e-CRM
b. Design the total customer experience, not just the interface. Devote specialize
resources – ergonomic engineers, psychologists, focus groups and testers – to
design the total customer experience.
d. Embed business logic into your infrastructure. Business logic is the system of
procedures and rules that underlie how the CRM system operates its technology
and the people with the customers.
e. Opportunistically outsource. Get to market with CRM capabilities faster and without
huge capital commitments and old-style systems development efforts. Implement
disposable infrastructure applications that can be added cheaply and then thrown
away.
CRM has gained importance in the recent days. Developing appropriate strategy is
critical decision of a company. CRM uses the electronic media to operate and simplify
customer related business processes, reducing the cost of customer facing operations.
Ans. CRM applications, often used in combination with data warehousing, E-commerce
applications, and call centres, allow companies to gather and access information about
customers’ buying histories, preferences, complaints, and other data so they can better
anticipate what customers are looking for. The other business objectives include:
The ongoing consolidations and mergers across the ERP, CRM and other technology
vendors further highlight this point. (Vantive has been taken over by PeopleSoft and
Clarify has merged with Nortel).
ERM, which takes CRM to the next level, is the current hot topic of the industry. CRM
automates certain functions in certain departments within the organization.
ERM attempts to align the entire enterprise to provide a single view to the customer.
The ERM technology framework will generate a universal business application covering
everything from CRM to ERP, and SCM applications as well as Data Warehousing and
OLAP. It will present a cohesive set of analytical models that will take into the account
the cross departmental functions and interdependencies.
Most companies truly believe they are customer-focused, but in fact they are still very
product centred – they still develop products and services and then search for
customers. The challenge, then, is to shift their thinking to a more customer-focused
world – where they create new products and services that follow the customer’s lead.
To make that shift, however, companies will have to change their core-operating
model. The biggest challenge about implementing a CRM application is that to ensure
you have a system, which is able to reach to the existing as well as potential customers
and cater to their individual needs.
(MK-0007)
ASSIGNMENT-1
Q. 1 Describe an ad that you have seen recently. Analyze the ad in terms of its
effectiveness in generating Attention, Interest, Desire and Action as per the AIDA
model.
Ans. AIDA is an acronym used in marketing that describes a common list of events that are
very often undergone when a person is selling a product or service:
D - Desire: convince
customers that they want and
desire the product or service
and that it will satisfy their
needs.
Marketing today allows a diversty of products. Using a system like this, allows a
general understanding of how to target a market effectively. A.I.D.A however is a
acronym that is necessary to learn in marketing.
Recently I have seen the ad of film “PAA”. The analysis of this ad as per AIDA model is
as below:
Big B’s decision to visit schools to bring about awareness regarding the disease is the
ace up his sleeve. This will contribute heavily in the promotion of the film.
With so much new coming up by ways of innovation, how could the titles lag behind.
Well for the first time in the history of Bollywood, the cast and the credits of the film will
be introduced by Jaya Bacchhan, cutting out the usual trends of titles.
And last but not the least, it is for the first time that Aishwarya Bacchhan is involved in
the marketing and promotion of a film.
With discussions on end with the marketing and creative heads of the film, she is
exploring every possible strategy, for maximum interaction with the people
A highly interactive website was just another step that has paid high dividends.
Paathefilm.com has received innumerable responses from the time it was created.
Not to mention his blogs which have become a very powerful platform for Amitabh
Bacchhan, which he has been using very effectively for the promotion of “Paa”.
It is these experiments with innovations which have made Paa the talk of the country.
Paa is a 'rare' story about a father-son, son-father relationship.
I – Interest: Raised the movie goers interest by iintroducing the hoardings all around
the city created an interest in the movie goers Also the tagline Paa is a 'rare' story
about a father-son, son-father relationship. Abhishek Bachchan playing the role of
father to Amitabh Bachchan , the biggest actor India has ever produced. A new getup,
He suffers from a progeria like syndrome. Mentally he is 13, very normal, but physically
he looks 5 times older. In spite of his condition, Auro is a very happy boy. He lives with
his mother Vidya (Vidya Balan), who is a gynaecologist.
Amol Arte (Abhishek Bachchan), is young, progressive and a full of ideals, politician.
He is out to prove to the world that 'politics' is not a bad word. He is a man with a
mission. Auro is Amol's son. The promotion of Amitabh Bachchan in a extremely
different role and the hoardings all around the city created an interest in the movie
goers . The details about the disease which people have not heard created a feeling of
insecurity and public tried to find it out from internet asked doctors
D-Desire : A fresh movie with a different theme. an extremely rare genetic defect that
causes accelerated ageing.He suffers from a progeria like syndrome. Mentally he is 13,
very normal, but physically he looks 5 times older.A new story line and it created ripples
in the movie Box Office.
A-Action: A new story line and it created ripples in the movie Box Office. The people
liked the movie. The producer and director of the film were able to pull the people out of
the homes to go and see the movie, Got 3– and 4–star ratings and publicized that in
promos.
Q. 2 Select an ad of your choice and describe its creative execution. What is the
advertising strategy behind the ad in terms of a) Objective b)Target audience c)
Key consumer benefit d) Reason to believe e) Proof and f) Tone and manner?
Ans. I select ad of Vodafone mobile services for the discussion. 'Zoozoos', a new innovative
concept from mobile service provider Vodafone Essar is on its way to capture hearts of
millions of viewers similar to that of 'Hutch dog'.
Zoozoos -- stick-like figures with an egg-like heads -- feature in the latest Vodafone
Essar commercials that are aired during the Indian Premier League Twenty20 cricket
series to promote different offerings and services provided by Vodafone to its
customers.
Thes characters are named Zoozoos, and are created by O&M. These ads were
directed by Prakash Varma and were launched during the ongoing IPL 2 series.
The Zoozoo characters that appear in the Vodafone ads are not animated characters
but are real actors from Mumbai and Capetown theaters. The actors wore special
costumes to portray Zoozoos to create an illusion of animation. The costume is divided
into two parts, the head and the body. The body part of the costume is stuffed with
foam to create rounded shapes.
To create large heads they used a material called Perspex, which was again stuffed
with foam. Also, they casted only women and children to play the Zoozoos so that the
thin hands and legs made the heads look even bigger.
These ads were shot at a very slow frame rate to make the movements look funny.
Animation requires so much detailing and here we had to do the exact opposite. We
had to make real characters look like animated characters. It was quite challenging as
none of them could see as they were covered from head to feet.
It is not for nothing that Indian advertising is seen as coming into its own. And
Vodafone advertising campaigns have been at the forefront of it all.
First there was that dog in Hutch campaigns, which captured the imagination of
millions. It survived a $19-billion buyout and reached such levels of popularity that it
even led to kidnappings of that breed of dogs, called pugs.
And now come those nutty and entirely endearing little men in white, called Zoozoos
created by the agency O&M for Vodafone, one of the main broadcast sponsors of the
Indian Premier League. They are wowing audiences, and ZooZoo merchandise, bags,
keychains, T-shirts will be available soon.
In about 10 days, O&M completed the campaign shooting two-three films a day, each
selling a product or a service offered by Vodafone. A dozen more films are expected as
the league progresses.
The strategy is generating a buzz that lives up to the brand’s image of great creative
and clever marketing. The company spends about Rs 250 crore on advertising across
mediums according to industry sources.
2. Target Audience: To target the Indian customer during IPL Season-2. The Indian
middle class is obsessed to mobile phones and cricket. The Vodafone company
could not have asked for better time to launch an advertisement.
3. Key consumer benefits :The each selling a product or a service offered by Vodafone.
was shown each day during the match. Creating an image in the mind of audience.
The advertisement also showed the benefits in hilarious animated type form making
it more interesting Reason to believe:.
4. Reason to believe :The Zoozoo characters that appear in the Vodafone ads are not
animated characters but are real actors from Mumbai and Capetown theaters. The
actors wore special costumes to portray Zoozoos to create an illusion of animation.
The costume is divided into two parts, the head and the body. The body part of the
costume is stuffed with foam to create rounded shapes. Animation requires so much
detailing and here we had to do the exact opposite. We had to make real characters
look like animated characters. It was quite challenging as none of them could see as
they were covered from head to feet.
5. Proof: The characters, which look like distant cousins of the Pillsbury dough boy,
were enacted by professional ballet artists in white body suits. What makes them so
endearing is that they are innocent people living in a simple world unlike ours, who
laugh loud when they laugh. And who seem to be in an in-between world of
animation and reality,
6. Tone and Manner : The tone was soft and manner in which it was presented is really
fantastic. It showed a new face of Indian Advertising.
Q.3 Prepare an outline of a media plan for a newly launched soft drink. Include
a)Media objective(s) b)Media mix c) Allocation of budget among media mix and
Ans. In order to develop a media plan for launching a new soft drink one has to:
2. Media Mix : Media planning is the process of choosing a course of action. Media
planners develop yearly plans that list each media outlet--print or broadcast.
Planning then gives way to buying, as each separate contract is negotiated, then
finalized. Penetration is related to circulation. Penetration describes how much of the
total market available you are reaching. If you are in a town with a demographic
count of 200,000 households, and you buy an ad in a coupon book that states a
circulation of 140,000, you're reaching 70 percent of the possible market--high
penetration. If, instead, you bought an ad in the city magazine, which goes to only
17,000 subscribers (households), your penetration would be much less--8.5 percent.
What degree of penetration is necessary for you depends on whether your strategy
is to dominate the market or to reach a certain niche within that market.
3. Allocation of Budget among media mix: The largest category in your advertising
budget is likely to be your media costs--the dollars you spend for air time on radio or
for ad space in newspapers, magazines, and more. Because of this, it makes sense
4. Media Scheduling: Reach and frequency are key media terms used more in
broadcast than in print. Reach is the total number of people exposed to a message
at least once in a set time period, usually four weeks. (Reach is the broadcast
equivalent of circulation, for print advertising.) Frequency is the average number of
times those people are exposed during that time period. To make reach go up, you
buy a wider market area. To make frequency go up, you buy more ads during the
time period. Usually, when reach goes up, you have to compromise and let
frequency go down. You could spend a lot of money trying to achieve a high reach
and a high frequency. The creative part of media planning comes in balancing reach,
frequency, and budget constraints to find the best combination in view of your
marketing goals.
(MK-0007)
ASSIGNMENT-2
Ans. LUX ad is one which I don’t like as it is a illogical. The ad depicts one male model
running after a female(wife) who baths with LUX soap. Due to its and softness due to
use of the soap and fragrance the male tries to hug her and in the next scene it is
shown that the girl slips after he catches her. Next clipping shows that the male lead
model hugs some other fat lady who does not uses LUX soap.
I consider the depiction in poor sense as this is against out moral values of Indian
society. It gives a poor taste of the thinking of director of the ad film.
The visual content must show the true realities rather than fantasy. Instead of other
lady it could have been some dirty male. The creativity is missing in the ad and may be
it is a copy of some advertisement of western country.
1. Visual content of the advertisement must depict only the product being advertised
and not the prohibited or restricted product in any form or manner.
2. The advertisement must not make any direct or indirect reference to the prohibited or
restricted products.
3. The advertisement must not create any nuances or phrases promoting prohibited
4. To stabilize sales – Advertising is another tool that can stabilize sales. A stable
sales pattern has several advantages: it evens out the production cycle, reduces
some management and production costs, and makes it easier to do financial,
purchasing and market planning.
2. Persuasive advertising – Used in the growth and maturity stages of the product life
cycle to improve the competitive status of a product, institution or concept.
The following are some of the most popular forms of advertising media:
1. Newspapers – Can be costly so you want to reach the exact audience that will buy
your product or service. Avoid using small print if possible. You may be able to place
an ad in the more affordable weekly papers where you can run your ad by zip code.
2. Television and radio – Are typically expensive. The most popular stations are
typically expensive. Be sure to know your target audience and study the media kits
to determine if the station reaches that audience.
3. Direct mail – Can be either generated by you individually or can be a part of a co-op
program such as Val-Pak.
6. Yellow pages – This is possibly the first type of advertising you should purchase. A
large ad is not necessary; a listing is sufficient to let your potential customer know
you are a valid company, not a fly-by-night. The downfall with Yellow page
advertising is that it takes the customer directly to your competition! Have a listing
but be careful while promoting it.
Q. 3 What are the differences and similarities between social awareness advertising
and advertising of products and servives, based on what is mentioned in the
case.
Ans. Social Awareness is consciousness shared within a society. It can also be defined as
social awareness; to be aware of the problems that different societies and communities
face on a day-to-day basis; to be conscious of the difficulties and hardships of society.
There is debate as to exactly what the term means. Some people define social
There are three levels of social consciousness - acquired, awakened, and expanded. A
subject with an acquired social consciousness derives his or her viewpoint from the
mainstream culture. The person with an acquired social consciousness does not
question mainstream viewpoints, and acts accordingly, without confrontation. A subject
with an awakened social consciousness explores alternatives to the dominant cultural
viewpoint. This person might identify with a marginalized group, but the mainstream
culture is central to his or her questioning or exploration. The subject recognizes and
challenges social injustice. The person actively resists power and authority. The focus
of discontent and action is often over the right to be visible, to have choice, or to be
self-determining subject with an expanded social consciousness strongly identifies with
their marginalized group. This person views status as a continuously changing social
construct, thus viewing responses as a lifelong process. This individual has an
understanding of the complexity of the social hierarchy, and acts carefully after
weighing both sides.
Social consciousness brings moral implications. Often, people with an awakened social
consciousness become socially active. A socially conscious person tends to be
empathetic towards others regardless of race, gender, ethnicity, disability, class, or
sexual identity.
Organizations that spend money on advertising promoting items other than a consumer
product or service include political parties, interest groups, religious organizations and
governmental agencies. Non-profit organizations may rely on free modes of
persuasion, such as a public service announcement.
(MK0008)
ASSIGNMENT-1
E-Business is a very broad entity dealing with the entire complex system that
comprises a business that uses electronic medium to perform or assist its overall or
specialized business activities.
E-business involves business processes spanning the entire value chain: electronic
purchasing and supply chain management, processing orders electronically, handling
customer service, and cooperating with business partners. Special technical standards
for e-business facilitate the exchange of data between companies. E-business software
solutions allow the integration of intra and inter firm business processes. E-business
can be conducted using the Web, the Internet, intranets, extranets, or some
combination of these.
1. Reach: The nature of the internet means businesses now have a truly global reach.
While traditional media costs limit this kind of reach to huge multinationals,
eMarketing opens up new avenues for smaller businesses, on a much smaller
2. Scope: Internet marketing allows the marketer to reach consumers in a wide range
of ways and enables them to offer a wide range of products and services. E-
Marketing includes, among other things, information management, public relations,
customer service and sales. With the range of new technologies becoming available
all the time, this scope can only grow.
4. Immediacy: Internet marketing is able to, in ways never before imagined, provide an
immediate impact. Imagine you’re reading your favourite magazine. You see a
double-page advert for some new product or service, maybe Samsung’s latest
plasma TV or Apple’s latest iPod offering. With this kind of traditional media, it’s not
that easy for you, the consumer, to take the step from hearing about a product to
actual acquisition.
With e-Marketing, it’s easy to make that step as simple as possible, meaning that
within a few short clicks you could have booked a TV or ordered the iPod. And all of
this can happen regardless of normal office hours. Effectively, Internet marketing
makes business hours 24 hours per day, 7 days per week for every week of the
year.
Buying power is not all though. The nature of the Internet is such that its users will
tend to organise themselves into far more focussed groupings. Savvy marketers who
know where to look can quite easily find access to the niche markets they wish to
target. Marketing messages are most effective when they are presented directly to
the audience most likely to be interested. The Internet creates the perfect
environment for niche marketing to targeted groups.
6. Adapting and closed loop marketing: Closed Loop Marketing requires the
constant measurement and analysis of the results of marketing initiatives. By
continuously tracking the response and effectiveness of a campaign, the marketer
The combination of all these factors results in an improved ROI and ultimately, more
customers, happier customers and an improved bottom line.
Ans. The Internet is a growing and a continually evolving creature that will live on in
perpetuity. As such, it would be wise to ponder the e business legal and Internet
marketing ethical issues of B2B & B2C. Whatever is written and published online will be
there forever. Imagine the billions upon billions of text information pages that are and
will be stored for a long time. There is even a site where you can go Way Back to
check out archives of other websites and view pages that were created at the
beginning of their infancy. Additionally, video, films, movies, and audio in various
applications formats are also viewable.
Now, with the new wireless web mail from cell phones and other pda communication
devices, the Internet will be affecting more lives than ever before. Security and privacy
concerns along with e-business regulatory issues will become more prevalent. It will
become more difficult to figure out who you can trust online; with all the unethical,
illegal, and Internet marketing and online advertising frauds and E business email
scams.
1. Intellectual Property
When dealing with ethics in a B2B company and B2C clients there is a major degree of
trust and responsibility that is imparted to a person or group that maintains the Web
site. It is very important from both an ethical values based e business and legal B2B
and B2C perspective to make sure that the written words and what is portrayed about a
company are factual. Because issues arise involving marketing ethics and the
importance of understanding a business for Internet marketing issues and advertising
purposes, there are potential areas for revealing trade secrets or intellectual property if
proper B2B ethical behavior is not followed.
Copyright gives authors, artists and others the right to exclude others from using their
works. Federal rights arise automatically when a protected work has been fixed in a
tangible medium such as a floppy disk or hard drive. There are however certain limits
to Copyright as under:
a. Copyright is the right to exclude, not to publish: Copyright does not give its
owners the right to sell or distribute, for example, libelous email messages.
b. Basic limits to copyright: Although email messages and web pages may enjoy
copyright protection, rights are subject to several fundamental limits. For example,
only expression is protected, not facts or ideas.
c. Fair use: Fair use is one of the most important and least clear cut, limits to
copyright. It permits some use of others’ works even without approval. But when?
Words like "fair" or "reasonable" cannot be precisely defined, but here are a few
benchmarks.
e. Licenses implied in fact: Fair use allows limited uses of another’s work without
approval, but other uses may be approved by implication. For example, when a
message is posted to a public email list, both forwarding and archiving seem to be
implicitly allowed. It is reasonable to assume that such liberties are okay if not
explicitly forbidden. However, when forwarding, archiving or, say, using part of a
prior message to respond to an earlier message, be careful not to change the
original meaning. No one implicitly authorizes another to attribute to them an
embarrassing (or worse) message they did not write!
There are a number of laws already enacted by developed countries & many more are
1. Email Marketing
2. Consumers Survey Scams and Hoaxes
3. Website Issues
4. Advertising and Keywords Scams
5. Cyber squatting
6. Web Scraping & Web Spidering
7. E mail Spoofing.
8. Meta elements or Meta tags and Key words
9. Click Fraud
10. Click Wrap Agreement
11. Spamming
12. Concept of Open Data
(MK0008)
ASSIGNMENT-2
Ans. Marketers can base their segmentation of consumer markets in various methods like
Geographic Segments, Demographic Segments, Psychographic Segments & Behavior
Segments. They also create segments by under mentioned methods:
b. Using any combination of variables that makes sense for their industry.
c. Utilising variables that can be used to identify and reach the right people at the
right time.
d. Using any of these four bases alone or in combination plus many other variables.
e. Knowing which variables broadly identify the target segment & which simply further
describe it because marketers use identification variables to enumerate and
access the target.
1. Geographic Segments
b. Firms offering services online will only sell to geographic areas where they can
provide customer service.
c. Companies examine the proportion of Net users in its selected geographic targets
before deciding to serve the Web community.
Another important factor is the language used on the internet web pages. English is no
longer the language of most Web pages and online bulletin boards; a major change from
just two years ago. The top Internet languages at present are:
English (42%),
Japanese (9%),
Chinese (9%),
Spanish (7%),
German (7%).
This has huge implications for e-marketers desiring to reach global markets via the
Internet. Until online text appears in local languages, users in those countries will not
able to participate in e-commerce or other online activities.
2. Demographic Segments
In the Internet’s early years, the typical user was a young male, college educated, with a
high income who was basically an innovator. Now, this is true in countries with low levels
of Internet adoption. The e-marketers study about the age, income, population of a
geographical area who have knowledge of internet. Occupation of the customers also
give an idea of internet uses. This has huge implications for e-commerce and
advertising, and big changes are still taking place. The blue-collar workers of any country
are the fastest growing online occupational group that are engaged in internet surfing
and they provide a good e-marketing segment.
3. Psychographic Segments
f. Opinions:
Attitudes are internal evaluations about people, products, and other objects which can be
either positive or negative & the evaluation process occurs inside a person’s head.
Attitude segmentation can be implemented by studying the general ways that consumers
spend time. This helps e-marketers define and describe market segments so they can
better meet consumer needs & this is very important for Web page design.
4. Behavior Segments
Behavior refers to what a person physically does (calling a toll free number to order,
shopping, or purchasing a product). Product behaviors are such a vital segment
descriptor that they form an entirely separate category. Two behavioral segmentation
variables are:
Some of the segments which are important while doing this exercise are as follows:
Home Access: 80% of home users have slow connection speeds, making large
Work Access: A large number of users access the Internet from work. People spend
nearly twice as much overall time online than those who access only from home. The
audiences in all countries are much more heavily male.
E-marketing strategists can use such information to target their Web site offerings.
Strategies might include special products, the language in sites, and the amount of
interactivity and multimedia possible for work users.
Industry Specific Usage Segments: Segmenting by usage vary from one business
type to the other. For example, visitors to car sites behave differently than visitors to
other e-commerce sites. Even serious car buyers tend to visit car sites only a few times.
Ans. Differentiation is the process of adding meaningful and valued differences to distinguish
the product from the competition. The keys to differentiating online businesses are the
creation of a distinctive and superior customer experience & the development of one-to-
one relationships with consumers. The real value added by the Internet is its ability to
differentiate according to customer relationships & provide a unique experience for each
customer. Many examples of differentiated online offerings are based on the lower costs
in acquiring and retaining online customers which are then passed onto customers.
More value offer more products or services for the same price.
Freebies accessories, companion products, free upgrades, and coupons for
future purchases.
Free shipping, etc. convenience sells, especially when it is free!
Discounts includes offering regular sales, coupons, etc.
2. Focus Differentiation: This is the most important method of differentiation, and in
many ways, the easiest. Once we have done that, we have an automatic advantage
over other companies because we can become more of an expert in that one field
and we can build close relationships with key customers that will be hard to duplicate.
For example, we might differentiate ourselves through:
The key to successful differentiation in this category, again, is to know the customers,
really, really well. For example, the product or service could stand out in one of these
ways:
The firm should build the reputation on making customers feel really good about
doing business with them. This concept works great with referral marketing, too.
Some examples are:
8. Customer Relationship: The Internet has made pricing information widely available
to suppliers, customers, and competitors. This reduces price differences between
suppliers, reduces the importance of price competition and increases the importance
of differentiation. Hence it is important to create brand loyalty and use the Internet to
build one-to-one relationships with customers.
Ans. Customer relationship management (CRM) is a broad term that covers concepts used by
companies to manage their relationships with customers, including the capture, storage
and analysis of customer, vendor, partner, and internal process information. A firm using
relationship marketing focuses more on wallet share than on market share.
e-CRM is the electronically delivered or managed subset of CRM. The user of an e-CRM
solution uses the resources of the internet or other digital media to deliver elements of a
marketing relationship with the customer. At its most sophisticated, eCRM can be
defined as an enterprise-wide technology driven approach to the management of all data
relating directly or indirectly to customers, in turn helping to define overall product
1. E-CRM Vision: To be successful, the CRM vision must start at the top and filter
throughout the company to keep the firm customer focused. One key aspect of CRM
vision is how to guard customer privacy. The benefits of using customer data must be
balanced by the need to satisfy customers and not anger them. TRUSTe provides its
seal and logo to any Web site meeting its privacy philosophies.
2. E-CRM Strategy: E-marketers must determine their objectives and strategies before
buying CRM technology. Many CRM goals refer to customer loyalty. An important
CRM strategy is to move customers up the relationship intensity pyramid.
5. E-CRM Processes: Firms use specific processes to move customers through the
customer care life cycle. E-CRM processes are used to:
Identify customers.
Differentiate customers.
Customize the marketing mix.
Interact with customers.
Firms can identify high value customers by mining customer databases and profiling
customers in terms of:
Recency of purchases.
d. Data mining: Data mining involves the extraction of hidden predictive information
in large databases through statistical analysis.
e. Web log analysis: Every time a user accesses a Web site, the visit is recorded
in the Web server’s log file. This file keeps track of which pages the user visits,
how long he stays, and whether he purchases or not.
f. Cookies: Cookies are small files written to the user’s hard drive after visiting a
Web site. When the user returns to the site, the company’s server looks for the
cookie file and uses it to personalize the site.
ROI
Cost savings
Revenues
Customer satisfaction
One research study named customer retention, ROI and customer lift (increased
response or transaction rates) as the most important metrics. One very important
CRM metric is customer lifetime value (LTV).
The LTV calculation demonstrates the benefits of retaining customers over time
and the need for building wallet share.
LTV also illustrates that no matter how good customer retention is, the firm must
still focus on customer acquisition activities.
(MK-0009)
ASSIGNMENT-1
Ans If we talk in general, both the terms Global and International marketing are used
interchangeably nowadays. But if we are talking in terms of marketing theories,
International Marketing was a stage in the evolution of Global Marketing. Let us see how,
Stage 4 : Multinational Marketing : Now, in this stage, the number of countries in which
the company is doing business gets bigger than that in earlier stage. And so, instead of
producing different goods for different countries, company tries to identify different regions
for which it can deliver same product. So, same product for countries lying in one region
but different from product offered in countries of another region. e.g. a company may
decide to offer same product to India, Sri lanka and Pakistan if it thinks the taste of people
of these countries is same but at the same time offering different product for American
countries. This approach is called ‘Regiocentric approach’.
Stage 5 : Global Marketing : This is the final stage of evolution. In this stage company
really operates in a very large number of countries and for the purpose of achieving cost
efficiencies it analyses the requirement and taste of customers of all the countries and
come out with a single product which can satisfy the needs of all. This approach is called
‘Geocentric approach’.
So, one main difference between International and the Global marketing is the approach of
marketer. A truly global company instead of offering different products to different countries
(as in International Marketing), develops and offers a single product to the world.
We should note one more very interesting fact that in the early stage of Export marketing
also, the company was offering a single product to each of the countries as in the final
stage of Global marketing. But it was entirely different because in export marketing you
produce according to taste of your country and force that on other countries but in Global
approach, you take care of entire countries and develop a product which can satisfy the
need of all.
(MK-0009)
ASSIGNMENT-2
Ans A product can be defined as a collection of physical, service and symbolic attributes which
. yield satisfaction or benefits to a user or buyer. A product is a combination of physical
attributes say, size and shape; and subjective attributes say image or "quality". A customer
purchases on both dimensions.
A product’s physical properties are characterized the same the world over. They can be
convenience or shopping goods or durables and non-durables; however, one can classify
products according to their degree of potential for global marketing:
Changes in design are largely dictated by whether they would improve the prospects of
greater sales, and this, over the accompanying costs. Changes in design are also subject
to cultural pressures. The more culture-bound the product is, for example food, the more
adaptation is necessary. Most products fall in between the spectrum of "standardization" to
"adaptation" extremes.
On the down side, there may also be significant differences in desires between cultures
and physical environments – e.g., software sold in the U.S. and Europe will often utter a
“beep” to alert the user when a mistake has been made; however, in Asia, where office
workers are often seated closely together, this could cause embarrassment.
a. Differing usage conditions – These may be due to climate, skills, level of literacy,
culture or physical conditions. Maize, for example, would never sell in Europe rolled and
milled as in Africa. It is only eaten whole, on or off the cob. In Zimbabwe, kapenta fish
can be used as a relish, but will always be eaten as a "starter" to a meal in the
developed countries.
b. General market factors – incomes, tastes etc. Canned asparagus may be very
affordable in the developed world, but may not sell well in the developing world.
f. Pressure – Sometimes, as in the case of the EU, suppliers are forced to adapt to the
rules and regulations imposed on them if they wish to enter into the market.
b. Discretionary changes: These changes are changes that do not have to be made
before a product can be introduced (e.g., there is nothing to prevent an American firm
from introducing an overly sweet soft drink into the Japanese market), although
products may face poor sales if such changes are not made. Discretionary changes
may also involve cultural adaptations – e.g., in Sesame Street, the Big Bird became the
Big Camel in Saudi Arabia.
d. Lack of equivalent at home: Finally, a market may exist abroad for a product which
has no analogue at home – e.g., hand-powered washing machines.
There are ten basic criteria for adaptation that all who wish to deal with individuals, firms,
1. open tolerance,
2. flexibility,
3. humility,
4. justice/fairness,
5. ability to adjust to varying tempos,
6. curiosity/interest,
7. knowledge of the country,
8. liking for others,
9. ability to command respect, and
10. ability to integrate oneself into the environment.
Q. 2 What is direct marketing? Give example of any MNC practicing direct marketing in
India. What are the advantages of direct marketing?
Ans Direct marketing is a sub-discipline and type of marketing. There are two main definitional
. characteristics which distinguish it from other types of marketing.
The first is that it attempts to send its messages directly to consumers, without the use
of intervening media. This involves commercial communication (direct mail, e-mail,
telemarketing) with consumers or businesses, usually unsolicited.
Direct marketing is a system of marketing that integrates ordinarily separate marketing mix
elements to sell directly to both consumers and other businesses, bypassing retail stores
and personal sales calls. It is used by virtually every consumer and business to-business
category, from banks to airlines to nonprofit organizations. Because the customer
responds directly to the company making the offer, international considerations that apply
to communications, distribution, and sales have to be considered. Direct marketing uses a
wide spectrum of media, including direct mail; telephone; broadcast, including television
and radio; and print, including newspapers and magazines.
Successful direct marketing also involves compiling and maintaining a large database
of personal information about potential customers and clients. These databases are
often sold or shared with other direct marketing companies.
Direct Mail: The most common form of direct marketing is direct mail sometimes called
junk mail, used by advertisers who send paper mail to all postal customers in an area
or to all customers on a list.
Email Marketing: Email Marketing may have passed telemarketing in frequency at this
point and is a third type of direct marketing. A major concern is spam, which actually
predates legitimate email marketing.
Door To Door Leaflet Marketing: Leaflet Distribution services are used extensively by
the fast food industries, and many other business focusing on a local catchment
Business to consumer business model, similar to direct mail marketing.
Broadcast Faxing : A fourth type of direct marketing, broadcast faxing, is now less
common than the other forms. This is partly due to laws in the United States and
elsewhere which make it illegal.
Voicemail Marketing: A fifth type of direct marketing has emerged out of the market
prevalence of personal voice mailboxes, and business voicemail systems.
Direct Selling : Direct selling is the sale of products by face-to-face contact with the
customer, either by having salespeople approach potential customers in person, or
through indirect means such as Tupperware parties.
1. For many companies or service providers with a specific market, the traditional forms of
3. Direct marketing firms may also keep email addresses of those who match a certain
age group or income level or special interest. Manufacturers of a new dog shampoo
might benefit from having the phone numbers and mailing addresses of pet store
owners or dog show participants. Direct marketing works best when the recipients
accept the fact that their personal information might be used for this purpose. Some
customers prefer to receive targeted catalogs which offer more variety than a general
mailing.
4. There are certain circumstances when direct marketing may be more useful – e.g.,
when absolute margins are very large (e.g., computers) or when a large inventory may
be needed (e.g., computer CDs) or when the customer base is widely dispersed (e.g.,
bee keepers).
There are a number of reasons why the multinational companies are coming down to India.
For quite a long time, India had a restrictive policy in terms of foreign direct investment. As
a result, there was lesser number of companies that showed interest in investing in Indian
market. However, the scenario changed during the financial liberalization of the country,
especially after 1991. Government, nowadays, makes continuous efforts to attract foreign
investments by relaxing many of its policies. As a result, a number of multinational
companies have shown interest in Indian market.
a. British Petroleum
b. Vodafone
c. Ford Motors
d. LG
e. Samsung
f. Hyundai
g. Accenture
h. Reebok
i. Skoda Motors
j. ABN Amro Bank
k. Pepsi
l. Coco- Cola
A majority of multinational corporations operating in India have rated the country as a
better investment destination on various parameters than China, Brazil, the UK, France,
Australia and Singapore.
India scores over China on skilled labour force and its market growth prospects are
brighter than the UK and Singapore, according to a perception survey conducted by
Federation of Indian Chambers of Commerce & Industry (Ficci) among 135 MNCs in India.
These include
Various challenges that marketer faces while doing international advertising are:
1. The advertising paradigm : These mitigating factors can be called "noise" and have
an effect on the decision to "extend", "adapt" or "create" new messages. Language
differences may mean that straight translation is not enough when it comes to message
design. Advertising may also play different roles within developed, between developed
and underdeveloped and within underdeveloped countries. In developing countries
"education" and "information" may be paramount objectives. In developed countries,
the objectives may be more persuasive.
Cultural differences may account for the greatest challenge. However, many experts
challenge the need to adapt messages and images, as they argue that consumer
differences between countries are diminishing. Changes may be needed only in
translation. However, this is only one point of view, as there is no doubt that cultural
differences do exist across the world. For example, it would be quite unacceptable to
• The message may not get through to the intended recipient, due to lack of media
knowledge;
• The message may get through but not be understood, due to lack of audience
understanding and:
• The message may get through, be understood but not provoke action. This may be
due to lack of cultural understanding.
2. Campaign design: Before embarking on a promotion campaign, the following
questions, among many others, must be answered.
4. Budgets: Budgets can be set in a variety of ways. Many budgets use a percentage of
past or future sales, objective and task methods, or rule of thumb. "Scientific" methods
include sales response methods and linear programming.
5. Agency: Agencies can be used or not, depending on the organizations’ own abilities,
confidence in the market and market coverage. Many organizations, like Lintas and
Interpublic, are worldwide and offer a wide range of expertise.
6. Message selection: Message selection is probably where the most care has to be
taken. Decisions hinge on the standardization or adaptation of message decision,
language nuances and the development of global segments and customers. Message
design has three elements, illustration, layout and copy.
Advertising appeals should be consistent with tastes, wants and attitudes in the market.
In illustrations and artwork, some forms are universally understood. Coke, again, with
its "life" theme is applicable anywhere. Cheese and beer advertisements would go well
together in Germany, but it would have to be cheese and wine in France.
Copy, or text, has been the subject of much debate. Effective translation requires good
technical knowledge of the original and translated language, the product and the
objectives of the original copy. Care has to be taken that the meaning does not get lost
in translation.
7. Media selection : There is a great difference in variety and availability of media across
the world. The choice of media depends on its cost, coverage, availability, character
(national or local or international) and its "atmosphere".
In advertising the choice is television, radio, press, magazines, cinema, posters, direct
mail, transport and video promotion. In promotion the choice is wide between money-off
offers, discounts, extra quantities, and so on. Other forms of promotion include
exhibitions, trade missions, public relations, selling, packaging, branding and sponsored
events. Governments can be a very powerful promotion source, both by providing
organizations like Horticultural Promotion Councils and by giving information and
finance.
9. Evaluation : Advertising campaign evaluation is not very easy at the best of times.
Whilst it would be nice to say that "X" sales had resulted from "Y" advertising inputs, too
many intervening factors make the simple tie-up difficult. Evaluation takes place at two
levels – the effectiveness of the message and the effectiveness of the media. Few
African developing countries, except Kenya, have any sophisticated methods for
campaign evaluation. Measures include message recall tests, diary completion, and
brand recall.
10. Organization and control : Whilst companies like Nestle may have centrally
organized and controlled advertising campaigns, many are devolved to local