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International Marketing

Asia eUniversity Executive Bachelor in Business Management Instructor: Dr Vijay Name: Yong Wai Choy Student ID: EB/KUPJ/T1/11/004

12 May 2011

Word Count: 2600

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1. Compare and contrast standardized, concentrated, and differentiated global

marketing.

[10 marks]

An effective and right global marketing strategy is critical for taking the business or organization towards the international market. There are 3 common categories of marketing strategies namely standardized marketing, concentrated marketing and differentiated marketing.

Standardized marketing strategy is an undifferentiated marketing strategy to mass market in a single country. It uses the same marketing strategy for all potential buyers in a broad international market. By using this strategy, product adaptation is minimized with lower production cost. This strategy is often used to strive for greater sales volume with lower production cost and ultimately greater profitability.

Concentrated marketing on the other hand, this strategy performs a niche marketing strategy to reach a specific segment of the global market. This is the strategy employed by the companies that most people have never heard of and have that have adopted strategies of concentrated marketing on a global scale. These companies define the markets narrowly and targeting for global depth rather than national breadth.

In contrast to standardized and concentrated marketing strategy, differentiated marketing is targeting multiple segments of the global market with different marketing mix offerings. This strategy allows a company to achieve wider market coverage. That strategy works best if there are significant major differences across markets and when few segments are present in market after market.

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2. Identify the five basic segmentation strategies. Give an example of a company that has used each one. [20 marks]

Market segmentation is a process to identify the market and deciding a best marketing mix to reach the target audience. A successful market segmentation study can increase company revenue and raise the return of investment. Market segmentation is carried out to gain an understanding of the target customers, maximizing the product potential, improving distribution network and ultimately to gain new clients. The five basic segment strategies commonly used by organisations are: Demographic segmentation, Geographic segmentation, Behavioural segmentation, Lifestyle segmentation, and lastly Attitudes, Tastes or Predispositions segmentation.

Demographic segmentation divides the target market into smaller segments with similarity on such variables as age group, gender, race, marital status, or occupation. It is the most common approach for segmenting customer groups as their needs are often closely interrelated with demographic variable. Even when an organisation uses other segmentation strategy such as Geographic segmentation, demographic factor of the target market must be known in order to reach the maximum effectiveness of a marketing campaign. An example of company who has successfully market their product base on demographic segmentation is Maybelline, who introduced Shades Of You, a complete shade range, with a colour palette developed specially for black women.

Geographic segmentation on the other hand, uses geographical unit for its market segmentation such as countries, states, regions, cities, or neighbourhood. Geographic segmentation allows organizations to develop marketing mix based on the needs of

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customers in the particular geographical area. The variables in Geographic segmentation include regional climate, population or economic block. For example, GAP who runs international clothing business, may divide the market according to the climate of the area. Geographical segmentation of the market, enable GAP to sell winter clothes in a counter with cold weather, but at the same time, promoting other categories of clothing in other countries.

Behavioural segmentation involves understanding the target market and categorizes them into groups according to their preferences and profiles. In oppose to mass marketing, behavioural segmentation aims to understand why customer buy and use a product or services, as well as how often they are using it. For example, Behavioural segmentation may segregate it market to: Frequent customer, Average customer, odd customer and non customer. It may also be segmented into: ex-customer, new customer, regular customer or non customer. An example of company who uses behavioural segmentation successfully is Nestle. Nestle is marketing its bottle water to Pakistan, where bottled water may considered as a luxury products in some market. Despite of the low income level in Pakistan, the people are willing to pay 18 rupees for a bottle of clean water due to the widespread pollution of water.

The usage of lifestyle segmentation data can be helpful identifying the business core customers or composition of their business area. Lifestyle segmentation provides an alternative ways to understand the characteristic of a target market. Typically, lifestyle segmentation consists of variables of demographics to define a unique group of customers. For example, lifestyle segmentation may classify customers as young, well educated, living in city or others lifestyle characteristic. By using lifestyle

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segmentation, a business could recognise its target customer preferences and buying habits. For example, Coca-cola has introduced Coca-Cola diet targeting adults age 3050, who are health conscious, and Coca-Cola Zero targeting teens that looking for less calories carbonate drinks.

Attitudes, Tastes or Predispositions segmentation are the most complex segmentation an organization could adopt. Attitude, Tastes or Predispositions segmentation involves grouping people according to their attitude towards a product or services. These data can be obtained through primary research or secondary research indicating the extent they agree or disagree with a statement. For example, a car buyer may buy a luxury car and expected to be noticed while others may not share the same view. Hence, the organization needs to develop different marketing mix tailor made for every customer of different categories. An example of organization who utilizing the approach is Porches, a well-known car manufacturer, who has tailor made different marketing campaign for its customers improving the revenue.

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3. Channels of distribution tend to vary according to the level of economic development of a market. The more developed the economy, the shorter the channels tend to be. Why? [20 marks] Economic development is essential for a firm to tailor their distribution channel . Channels of distribution tend to vary according to the level of economic development of a market. The more developed the economy, the shorter the channels tend to be. In the sense of it's because people in the developed countries have more net-worth Purchasing Power Parity (PPP) rather than people in developing countries. Therefore, purchasing-power is greater and government tend to increase the commodity prices in order to limit it consumer spending.

Consumer behaviour is influenced by economic development. Consumers in highly developed countries tend to have extra performance attributes in their products. Contrary to Levitt, consumers in the most developed countries are often unwilling to sacrifice preferred attributes for lower prices. The quality and services of products are more important due to their outstanding living cultural and income distribution. Thus, product distributions in developed countries are well done by their technologies and systematic networks. For instant, Apple technology like iphone absorbed world-wide by using a strong and valid network distribution channel. By channel to those developed countries, contribution of intermediaries can therefore be used to gained quick, feasible, and relatively lower-cost entry to targeted market. Basically, there are highly and impede network in retail system in developed countries. Firm can deal directly with retailers to achieve cost saving via joint venture with the local brand.

Whereas consumers in less developed countries tend not to demand this extra performance attributes. Product reliability is main concerning to their people. For

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example, a car with no extra accessories, air-conditioning, power steering, radio and DVD players can be reached to their satisfactory levels. Furthermore, developing country tend to have more constraint in their distribution channel due to government intervention, the more conservative strategy in developing country make it hard for firm to penetrate market into it. It normally imposes higher taxes, labours supplier, and cost for distribution.

In business to business marketing, the adoptions on e-commerce in those developed countries provide new opportunities for international marketer. New market can be accessed by expanding network and customer based easy by its advance technology advertisements. High network and integrated domestic systems can lower the cost of distribution due to its competitive environment. In addition, advance communication in developed country generally higher than those developing countries,

communication level is an important consideration in channel design. It can properly utilise to assist the international marketer in conveying the firms goal to the distributors.

Besides, wide ranges in sources of finding intermediaries are available in developing country. Marketer found easier on the lookout for product representative that can be profitable and status enhancing. The exporter can more approach to understand of market conditions in order to define what is expected of an intermediary and what the exporter can offer in the relationship. The advantages can be grab by exporter were they does not have to do all of this independently; both governmental and private sector agencies can assist the marketer in locating intermediary candidates due to the ease of restriction in foreign investment conducted in developed countries policy.

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4. Banks have come up with ways of using the Internet for functions beyond the initiation of a transaction. Imperial Bank has introduced a new program called SWIFTrade that allows for on-line issuance and status reporting on letters of credit. What are the benefits for the exporter using this service? [25 marks] SWIFT stands for Society for Worldwide Interbank Financial Telecommunication which provides a communication platform allowing traders to connect and exchange financial information safely and secure. It automates the financial transactions thereby lowering operational cost, minimizing operational risk and eliminating inefficiency in operational areas.

By using the services, the exporters could have a better cash and liquidity management of their company. The transaction information and cash position of a company can be shared between the importer, exporter as well as the banks over a single platform, while leveraging global financial industry standards. As only one platform is utilized, it has resulted in a straight through processing and streamlines banks into the trading communication.

By using the highly secure services, the exporter could facilitate centralised processing and transmission of the trading payment or transactions. This has allow the exporters to centralise all trading or exporting payments collection activities for either domestic or international markets.

On top of that, SWIFTrade also providing services such as confirmations of foreign exchange spot, forward and swap deals, foreign exchange options, money market, forward rate agreements and currency interest rate swaps to the exporter to better manage their financial risk. The centralised services, enables the exporters handle the trading exceptions in real time to further reduce their operational risk.
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On top of that, the services provided by SWIFTrade also enable the exporters to monitor the exceptions in the transactions and perform investigation when necessary. SWIFTrade service has been automated to track the progress of an investigation of a payment to reduce the resolution time. An example of the exceptional case would be where payment is not received even the goods are exported. It is designed for the needs of trading environment where faster payment reconciliation and more secure payables and receivable are critical.

With the standardized trade finance communication, the eporter could exchange the trade data such as letter of credit between the bank and the importer in electronic format. It is meant to create a single channel communication when different banks are often involved in facilitating payments in goods exporting.

By using the SWIFTrade environment, exporter do not need to be aware of his buyer physical location or technical configuration. There is no dependence on another partys setup. In the event of a switchover from a prime to a backup site, the change will be transparent to users and can be achieved in a matter of minutes

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5. How has the information technology revolution affected international marketing research? [25 marks] In the past decade, more and more companies began to venture into the international market. It is important to consider how international marketing research has evolved to collect information and identify the market opportunities in other countries. It is critical to determine which market to enter, company positioning and what are the combination of marketing mix which suit the needs to the international market condition.

As the information technology evolves, it has dramatically changed the way on how international marketing is conducted with unlimited potential. It has made easy for researcher to access to secondary data, and also providing new approach of collecting primary data for international market. Instead of conducting a traditional research in the library physically, the organisation could opt to obtain the virtual access to the data needed from libraries, journals or articles which are available online. There are also sources of information which are only available on the internet.

With the advancement of information technology, even a primary data could be collected via the internet. For example, one organization could track the receptiveness of their online marketing campaign by tracking visitor behaviour in the website, or conducting a electronic survey over the internet. As the web content can be access by international users, data sample of the international market could be obtain easily without incurring high cost with the traditional research approaches. Marketing companies has utilised the behavioural tracking in the website to identify the interest and preference relating to a product or service, as well as the responsiveness of customers toward a promotional offer.
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On top of that, the internet has also enabled the researchers to collect data in a more systematic approach. With the correct target sampling group, surveys can be conducted directly over the internet. For example, the organization could send the questionnaires to the respondent via email, vice versa, the responses could be returned via email as well. The automated process of conducting surveys over the internet, has allow the international market researchers to conduct survey over a wide scope of target markets. The results of the surveys are often available for analysis or checking in real time as the information received by the organisation. The other benefits of conducting survey over the internet, is that product details, picture of the products and virtual shopping environment could be simulated with graphics and sound integration if needed.

With more and more population of international market becoming technology literate due to the rapid growth and invention of products such as computers, new software, surveys over the internet has become more common and suitable to the current population lifestyle. Instead of a face to face or phone survey, survey over the web or email has begun to replace the traditional international research approach. This trend will progress more rapidly in the developed nations and slower in nations with the limited infrastructure.

However, there are limitations of internet survey that all of us should be taken note of. The respondent population over a website survey, may be varies from the targeted sampling frames that the marketing organization is interested in. On top of that, due to the difference in the level of information technology development in different country or even district, the software used to conduct the internet survey may not be

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compatible to all. The technical issue may leads to a bias answer by the respondents. Hence, the responsive rate and non responsive items will continue to be the important factors to look at which utilizing the new technology while conducting international research.

With the advancement of information technology, it has lowered the cost of international marketing research greatly. The researchers now could send out a large number of surveys to obtain enough sample data for their analysis. Due to the rapid nature of internet survey, additional sampling could be obtained easily with enhanced survey research incentive.

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References Books 1. Michael R. Czinkota, Ilkka A. Ronkainen (2007) International Marketing, Thomson Learning Inc. 2. Warren J. Keegan, Mark C. Green (1997) Principle of Global Marketing, Prentice Hall. Article 1. Richard Alan Kustin (2004) Marketing mix standardization: a cross cultural study of four countries, Southern Connecticut State University, New Haven, CT 06515, USA. Web 1. BNET[Online], available http://findarticles.com/p/articles/mi_m3374/is_n17_v13/ai_11330456/ [8 May 2011] 2. Swift[Online], available http://www.swift.com/ [8 May 2011] 3. David Gikandi, International Marketing Research on the Web[Online], available http://www.4hb.com/0111intlmarkresrce.html [8 May 2011]

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