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International Marketing
Semester II

Whether an organization markets its goods and services domestically or internationally, the definition of marketing still applies.

Course Contents:
Module I: Global Marketing: An Overview Introduction to Global Marketing Reasons / Objectives Environment of International Marketing Transnational Marketing Domestic to global Various terms EPRG framework Driving & Restraining Forces Module II: Social & Cultural Environment Basic aspects of culture Cultural Knowledge Culture and its elements Analytical Approaches to Cultural Factors Maslows hierarchy of needs Hofstedes Cultural Typology The SRC Enviromental Sensitivity Module III: Global Advertising Global Advertising and Branding .Selecting an advertising agency Creating Advertising Module IV: Global Marketing Channels and Physical Distribution Channel objectives and Constraints Distribution Channels: Terminology and Structure Physical Distribution and Logistics Module V: Global Marketing Information Systems Overview of GMIS Sources of Market Information Formal marketing Research Module VI: Global segmentation Targeting & Positioning Global Market Segmentation Geographic Psychographic Behaviour Benefit Vertical Vs Horizontal Global Targeting Criteria for Global targeting Selecting a GTMS Global Positioning Marketing in a Developing Country Module VII: Global e-marketing

The Death of Distance Relationship marketing Living in an Age of Technological Discontinuities Components of the Electronic value chain

Course Contents: .......................................................................................................................................... 2 Introduction to Global Marketing ................................................................................................................ 8 Stages of domestic to global evolution ..................................................................................................13 DOMESTIC MARKETING .........................................................................................................................14 EXPORT MARKETING ..............................................................................................................................14 INTERNATIONAL MARKETING ................................................................................................................15 MULTINATIONAL MARKETING ...............................................................................................................16 GLOBAL MARKETING ..............................................................................................................................16 Transnational Marketing ........................................................................................................................17 EPRG .......................................................................................................................................................18 REASONS FOR ENTERING INTERNATIONAL MARKETS. ..........................................................................20 Elements of the global marketing mix ...................................................................................................23 Product ...............................................................................................................................................23 Price....................................................................................................................................................23 Placement...........................................................................................................................................23 Promotion ..........................................................................................................................................23 DRIVING FORCES/ PUSH FACTORS .........................................................................................................24 Restraining Forces/PULL FACTORS .........................................................................................................26 Extra Reading material ...........................................................................................................................28 Case 1.5 Kenya Off Season Vegetables ..................................................................................................31 Environment of International Marketing. ..............................................................................................33 Macro environment ...............................................................................................................................34 SWOT analysis ........................................................................................................................................36 Case Studies ...........................................................................................................................................38 Can Mac Fight Back? ..............................................................................................................................40 LEAD STORY-DATELINE: Marketing, 17 October 2002. ..........................................................................40 CULTURE .....................................................................................................................................................42 Elements of culture: ...............................................................................................................................44 Analytical Approaches to Cultural Factors .............................................................................................47 The Case Of Maize Meat In Africa ..........................................................................................................51 SELF REFERENCE CRITERION ..................................................................................................................58 Case Studies ...........................................................................................................................................60 Global Brands .............................................................................................................................................70

Branding and advertising in recession ...................................................................................................77 Global advertising and brand management ..........................................................................................78 Branding strategies and challenges googles strategy in china..............................................................80 Top 7 Factors When Choosing An Advertising Agency ..........................................................................82 Global Marketing Channels and Physical Distribution ...............................................................................87 STANDARDIZATION VERSUS ADAPTATION DEBATE ...............................................................................88 STANDARDIZATION ................................................................................................................................91 Design of the Marketing Channel ..........................................................................................................93 Managing the Marketing Channel..........................................................................................................94 KEEGANS INTERNATIONAL PRODUCT ...................................................................................................94 ADAPTING KEEGANS FRAMEWORK ......................................................................................................96 Distribution - introduction ...................................................................................................................101 Numbers of Distribution Channel Levels..........................................................................................102 Distribution - channel strategy.............................................................................................................103 Types of distribution intermediary ..........................................................................................................105 Global Marketing Information Systems ...................................................................................................108 Marketing Information Systems (GMIS) ..............................................................................................111 Elements of the information system....................................................................................................113 Scanning modes: Surveillance and Search ..........................................................................................115 Sources of market information ............................................................................................................117 FORMAL MARKETING RESEARCH .........................................................................................................122 Case 5.1 Tanzanian Sisal .......................................................................................................................129 MARKET SEGMENTATION ........................................................................................................................132 GEOGRAPHIC SEGMENTATION ............................................................................................................133 DEMOGRAPHIC SEGMENTATION .........................................................................................................133 PSYCHOGRAPHIC SEGMENTATION ......................................................................................................134 BEHAVIOUR SEGMENTATION...............................................................................................................138 BENEFIT SEGMENTATION .....................................................................................................................138 GLOBAL TARGETING .............................................................................................................................139 GLOBAL PRODUCT POSITIONING .........................................................................................................143 Brand Launching and Sustainingin a developing country : ..................................................................146 Emerging Markets : ..............................................................................................................................150 Global eMarketing....................................................................................................................................153 Internet Marketing Solutions ...............................................................................................................155

What is an Effective Internet Marketing Strategy?..............................................................................157 Relationship Marketing ........................................................................................................................160 What is Relationship Marketing? .............................................................................................................163 Description ...............................................................................................................................................163 Case Study: IBM Electronics Value Chain Management ......................................................................165 Further reading ........................................................................................................................................168 References................................................................................................................................................172 Emerging Markets : a Case Study on Foreign Market Entry in Laos; MBA-thesis in marketing ..................................................................................................................................................................173 Brand Launching and Sustainingin a developing country : The case study of Honda on Vietnam Motorcycle Market .................................................................................................................................173

Module 1

Introduction to Global Marketing

Whether an organization markets its goods and services domestically or internationally, the definition of marketing still applies. However, the scope of marketing is broadened when the organization decides to sell across international boundaries, this being primarily due to the numerous other dimensions which the organization has to account for. When a company becomes a global marketer, it views the world as one market and creates products that will only require weeks to fit into any regional marketplace. Marketing decisions are made by consulting with marketers in all the countries that will be affected. The goal is to sell the same thing the same way everywhere. Whether an organisation markets its goods and services domestically or internationally, the definition of marketing still applies. However, the scope of marketing is broadened when the organisation decides to sell across international boundaries, this being primarily due to the numerous other dimensions which the organisation has to account for. For example, the organisation's language of business may be "English", but it may have to do business in the "French language". This not only requires a translation facility, but the French cultural conditions have to be accounted for as well. Doing business "the French way" may be different from doing it "the English way". This is particularly true when doing business with the Japanese.

Let us, firstly define "Marketing" and then see how, by doing marketing across multinational boundaries, differences, where existing, have to be accounted for. S. Carter defines marketing as: "The process of building lasting relationships through planning, executing and controlling the conception, pricing, promotion and distribution of ideas, goods and services to create mutual exchange that satisfy individual and organisational needs and objectives".

The long held tenants of marketing are "customer value", "competitive advantage" and "focus". This means that organisations have to study the market, develop products or services that satisfy customer needs and wants, develop the "correct" marketing mix and satisfy its own objectives as well as giving customer satisfaction on a continuing basis. However, it became clear in the 1980s that this definition of marketing was too narrow. Preoccupation with the tactical workings of the marketing mix led to neglect of long term product development, so "Strategic Marketing" was born. The focus was shifted from knowing everything about the customer, to knowing the customer in a context which includes the competition, government policy and regulations, and the broader economic, social and political macro forces that shape the evolution of markets. In global marketing terms this means forging alliances (relationships) or developing networks, working closely with home country government officials and industry competitors to gain access to a target market. Also the marketing objective has changed from one of satisfying organisational objectives to one of "stakeholder" benefits - including employees, society, government and so on. Profit is still essential but not an end in itself.

Strategic marketing according to Wensley (1982) has been defined as: "Initiating, negotiating and managing acceptable exchange relationships with key interest groups or constituencies, in the pursuit of sustainable competitive advantage within specific markets, on the basis of long run consumer, channel and other stakeholder franchise". Whether one takes the definition of "marketing" or "strategic marketing", "marketing" must still be regarded as both a philosophy and a set of functional activities. As a philosophy embracing customer value (or satisfaction), planning and organising activities to meet individual and organisational objectives, marketing must be internalised by all members of an organisation, because without satisfied customers the organisation will eventually die. As a set of operational activities, marketing embraces selling, advertising, transporting, market research and product development activities to name but a few. It is important to note that marketing is not just a philosophy or one or some of the operational activities. It is both. In planning for marketing, the organisation has to

basically decide what it is going to sell, to which target market and with what marketing mix (product, place, promotion, price and people). Although these tenents of marketing planning must apply anywhere, when marketing across national boundaries, the difference between domestic and international marketing lies almost entirely in the differences in national environments within which the global programme is conducted and the differences in the organisation and programmes of a firm operating simultaneously in different national markets.

It is recognised that in the "postmodern" era of marketing, even the assumptions and long standing tenents of marketing like the concepts of "consumer needs", "consumer sovereignty", "target markets" and "product/market processes" are being challenged. The emphasis is towards the emergence of the "customising consumer", that is, the customer who takes elements of the market offerings and moulds a customised consumption experience out of these. Even further, post modernisim, posts that the consumer who is the consumed, the ultimate marketable image, is also becoming liberated from the sole role of a consumer and is becoming a producer. This reveals itself in the desire for the consumer to become part of the marketing process and to experience immersion into "thematic settings" rather than merely to encounter products. So in consuming food products for example, it becomes not just a case of satisfying hunger needs, but also can be rendered as an image - producing act. In the post modern market place the product does not project images, it fills images. This is true in some foodstuffs. The consumption of "designer water" or "slimming foods" is a statement of a self image, not just a product consuming act. Acceptance of postmodern marketing affects discussions of products, pricing, advertising, distribution and planning. However, given the fact that this textbook is primarily written with developing economies in mind, where the environmental conditions, consumer sophistication and systems are not such that allow a quantum leap to postmodernism, it is intended to mention the concept in passing. Further discussion on the topic is available in the accompanying list of readings.

When organisations develop into global marketing organisations, they usually evolve into this from a relatively small export base. Some firms never get any further than the exporting stage. Marketing overseas can, therefore, be anywhere on a continuum of "foreign" to "global". It is well to note at this stage that the words "international", "multinational" or "global" are now rather outdated descriptions. In fact "global" has replaced the other terms to all intents and purposes. "Foreign" marketing means marketing in an environment different from the home base, it's basic form being "exporting". Over time, this may evolve into an operating market rather than a foreign market. One such example is the Preferential Trade Area (PTA) in Eastern and Southern Africa where involved countries can trade inter-regionally under certain common modalities. Another example is the Cold Storage Company of Zimbabwe. Case 1.1 Cold Storage Company Of Zimbabwe The Cold Storage Company (CSC) of Zimbabwe, evolved in 1995, out of the Cold Storage Commission. The latter, for many years, had been the parastatal (or nationalised company) with the mandate to market meat in Zimbabwe. However, the CSC lost its monopoly under the Zimbabwean Economic Reform Programme of 1990-95, which saw the introduction of many private abattoirs. During its monopoly years the CSC had built five modern abattoirs, a number of which were up to European Union rating. In addition, and as a driving force to the building of EU rated abattoirs, the CSC had obtained a 9000 tonnes beef quota in the EU. Most of the meat went out under the auspices of the Botswana Meat Commission. For many years, the quota had been a source of volume and revenue, a source which is still continuing. In this way, the CSC's exporting of beef to the EU is such that the EU can no longer be considered as " Foreign" but an "Operating" market. Organisations begin to develop and run operations in the targeted country or countries outside of the domestic one. In practice, organisations evolve and Table 1.1 outlines a typology of terms which describes the characteristics of companies at different stages in the process of evolving from domestic to global enterprises. The four stages are as follows:

1. Stage one: domestic in focus, with all activity concentrated in the home market. Whilst many organisations can survive like this, for example raw milk marketing, solely domestically oriented organisations are probably doomed to long term failure. 2. Stage two: home focus, but with exports (ethnocentric). Probably believes only in home values, but creates an export division. Usually ripe for the taking by stage four organisations. 3. Stage three: stage two organisations which realise that they must adapt their marketing mixes to overseas operations. The focus switches to multinational (polycentric) and adaption becomes paramount. 4. Stage four: global organisations which create value by extending products and programmes and focus on serving emerging global markets (geocentric). This involves recognising that markets around the world consist of similarities and differences and that it is possible to develop a global strategy based on similarities to obtain scale economies, but also recognises and responds to cost effective differences. Its strategies are a combination of extension, adaptation and creation. It is unpredictable in behaviour and always alert to opportunities. There is no time limit on the evolution process. In some industries, like horticulture, the process can be very quick.

Stages of domestic to global evolution Management Stage one Stage two emphasis Domestic International Focus Domestic Ethnocentric Marketing Domestic Extension strategy Structure Domestic International Stage three Stage four Multinational Global Polycentric Geocentric Adaption Extension

Management style Manufacturing stance Investment policy Performance evaluation

Domestic Mainly domestic Domestic Domestic market share

Worldwide area Adaption creation matrix/mixed Centralised top Decentralised Integrated down bottom up Mainly domestic Host country Lowest cost worldwide Domestic used Mainly in each Cross worldwide host country subsidization Against home Each host Worldwide country market country market share share


Global marketing a gradual process occurring in stages. The evolution of marketing across national boundaries has identifiable stages, which are discussed in the following: DOMESTIC MARKETING In the initial stages, most companies focus solely on their domestic markets. A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A company marketing only within its national boundaries only has to consider domestic competition. The marketing mix decisions are invariably based on the needs and wants of the domestic customers. These decisions are taken so as to respond competitively and effectively to the domestic environmental factors. Market Focus Orientation Marketing Mix Decisions EXPORT MARKETING The stage models suggest that generally a firm focused on domestic markets begin to export unintentionally by receiving unsolicited orders from overseas markets. The firm tries to fulfill such orders reluctantly with little strategic orientation. Thus, the initial entry of a firm in international markets may be characterized as a consequence of responding to unsolicited export enquiries. However, the positive experience in fulfilling such overseas market requirements serves as a stimulus to look for repeat orders. Marketing Focus Orientation Marketing Mix Decisions Overseas(Targeting and entering foreign markets) Ethnocentric Focussed mainly on domestic customers. Overseas marketing-generally an extension of domestic marketing. Decisions made at Domestic Ethnocentric Focused on domestic customers

headquarters. The major marketing decision areas at this stage include market identification and selection, timing and sequencing of entry and selection of an appropriate entry mode. The marketing mix decisions are primarily made at the headquarters. INTERNATIONAL MARKETING International marketing is defined as the marketing activities carried out across national boundaries. International marketing involves: 1) Identifying needs and wants of customers in international markets 2) Taking marketing mix decisions related to product, pricing, distribution and communication keeping in view the diverse consumer and market behaviour across different countries on one hand and firms goals towards globalization on the other hand 3)penetrating into international markets using various mode of entry and taking decisions in view of dynamic international marketing environment.

Marketing Focus Orientation Marketing Mix Decisions

Differentiation in country markets by way of developing or acquiring new brands Polycentric Developing local products depending upon country needs. Decision by individual subsidiaries.

The extreme form of international marketing is multi-domestic marketing, where a company establishes an independent foreign subsidiary in each and every foreign market. The foreign subsidiaries operate independently without any measureable control from the headquarters.

MULTINATIONAL MARKETING Once a company establishes its manufacturing and marketing operations in multiple markets, it begins to consolidate its operations on regional basis so as to take advantage of economies of scale in manufacturing and marketing mix decisions. Various markets are divided into regional sub-segments on the basis of their similarity to respond to marketing mix decisions. It is known as multinational marketing. Marketing Focus Consolidation of operations on regional basis. Gains from economies of scale. Regiocentric Product standardization within regions but not across them on regional basis

Orientation Marketing Mix Decisions

GLOBAL MARKETING The extreme view of global marketing refers to the use of a single marketing method across the international markets with little adaptation. Marketing Focus Orientation Marketing Mix Decisions Consolidating firms operations on global basis Geocentric Globalization of marketing mix decisions with local variations. Joint decision making across firms global operations. The globalization of markets leads to: Reduction of cost in efficiencies and duplication of efforts among national and regional subsidiaries, Opportunities for the transfer of products, brands and other ideas across subsidiaries Emergence of global customers Improved linkage among national marketing infrastructures leading to the development of a global marketing infrastructure.

In practice, global marketing hardly means complete standardization of the marketing mix decisions, but it increasingly means a strategic approach to have a global perspective to have economies of scale. Transnational Marketing Transnational marketing involves entering foreign markets with a solid marketing plan that helps a company create a positive brand presence and resonates with residents of the foreign country Transnational marketing requires extensive market research, a solid understanding of a country's cultures and consumer behavior trends and the identification of socio/cultural influences on consumer spending habits for particular products and services. Capitalizing on offshore opportunities is only possible with an accurate assessment of a country's overall spending habits, needs and desires; this requires ongoing research and analysis of

EPRG E: - Ethnocentric orientation P: - Polycentric orientation R: - Egocentric orientation G: - Geocentric orientation

The key assumption of EPRG is the degree of internationalization to which the management is committed or willing to move affects the specific international strategies and decision rule of the firm

Ethnocentric Orientation
Domestic strategies, techniques, and personnel are perceived as superior International customers are considered as secondary Guided by domestic market extension concept: International markets are regarded primarily as outlets for surplus domestic production International marketing plans are developed in-house by the international division try to market those product in other countries which have demand equal to domestic market

Polycentric Orientation
Guided by the multidomestic market concept: Focuses on the importance and uniqueness of each international market Likely to establish businesses in each target country

Fully decentralized, minimal coordination with headquarters Marketing strategies are specific to each country in the effort to satisfy local customer needs and wants, full product modification is implemented or separate product lines are developed Result: No economies of scale, duplicated functions, higher final product costs

Regiocentric Orientation
Guided by the global marketing concept: World regions that share economic, political, and/or cultural traits are perceived as distinct markets Divisions are organized based on location Regional offices coordinate marketing activities

Geocentric Orientation
Guided by the global marketing concept: The world is perceived as a total market with identifiable, homogenous segments Targeted marketing strategies aimed at market segments, rather than geographic locations Achieve position as low-cost manufacturer and marketer of product line Provides standardized product or service throughout the world analyze and manage the marketing strategies with integrated global marketing program The objective of a geocentric company is to achieve a position as a lowcost manufacturer and marketer of its product line. Such firms achieve competitive advantage by developing manufacturing processes that add more value per unit cost to the final product than do their rivals.

REASONS FOR ENTERING INTERNATIONAL MARKETS. The reasons for entering international markets vary from firm to firm and country to country depending upon the market characteristics. However, firms often decide to enter into international market due to the following reasons:

Achieving economies of scale

Profitability Risk spread

Spreading R&D cost

Why should a firm enter international market?

Access to imported inputs

Marketing opportunities due GROWTH to life cycle


Uniqueness of product or services

Firms enter international market when the domestic market potential saturates and they are forced to explore alternative marketing opportunities overseas. It may be observed that countries with smaller market size such as Singapore, Hong Kong etc. had no other option but to internationalize.

The price differential among markets also serves as an important incentive to internationalize. Exporters benefit from the higher profit margins in the foreign markets. Sometimes, strong competition in domestic market limits a firms profitability in that market. Price differentials and enhanced profits in the international markets are some of the fundamentals motives of exporting.


Large scale production capacities necessitate domestic firms dispose of their goods in international markets once the domestic market become saturated.

A company operating in domestic markets is highly vulnerable to economic upheavals in the home market. Overseas markets provide an opportunity to reduce their dependence on one market and spread the market risks.


The national trade policies provide for import of inputs used for export production, which are otherwise restricted. Besides, there are a number of incentive schemes which provide duty exemption or remission on import of inputs for export production. It helps the companies in accessing imported inputs and technical know-how to upgrade their operations and increase their competitiveness.


The product with unique attributes is unlikely to meet any competition in the overseas markets and enjoy enormous opportunities in international markets. E.g. herbal and medicinal plants, handicrafts, value added BPO services and software development at competitive prices provide Indian firms an edge over other countries and smoothen their entry into international market.


Each market shows a different stage of life cycle for different products, which varies widely across country markets. When product or service get saturated in the domestic or an international market, a firm may make use of such challenges and convert them into marketing opportunities by operating into international markets.


By way of spreading the potential market size, a firm recovers quickly the cost incurred on research and development. It is especially true for products involving higher cost of R&D. International markets facilitate speedy recovery of such costs because of the large market size and also due to larger coverage of the right market segments in international markets. There have been many underlying forces, concepts and theories which have emerged as giving political explanation to the development of international trade. Remarkably, despite the trend to world interdependency, some countries have been less involved than others. The USA, for example, has a remarkably poor export record. About 2000 US companies only account for more than 70% of US manufacturer's exports. This has been mainly due to its huge statewide domestic market, which is almost tantamount to "international trade", for example, Californian fruit being sold three thousand kilometres away in New Jersey. Japan has risen fast to dominate the export rankings, with countries of Africa struggling to make a significant mark, mainly because of their emphasis on exporting primary products. This section will briefly examine the forces which have been instrumental in the development of world trade.

Elements of the global marketing mix Product A global company is one that can create a single product and only have to tweak elements for different markets. Price Price will always vary from market to market. Price is affected by many variables: cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and much more. Additionally, the products position in relation to the competition influences the ultimate profit margin. Placement How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market. Using Coca-Cola as an example again, not all cultures use vending machines. Promotion After product research, development and creation, promotion (specifically advertising) is generally the largest line item in a global companys marketing budget. At this stage of a companys development, integrated marketing is the goal. The global corporation seeks to reduce costs, minimize redundancies in personnel and work, maximize speed of implementation, and to speak with one voice. The goal of a global company is to send the same message worldwide.

DRIVING FORCES/ PUSH FACTORS Driving Forces: - Driving forces are the forces that help in achieving greater globalization. They are also known as the push factors. The main driving forces can be explained under the following headings.

Technology. Saturated Markets. Improvement of Communication/Transport. Removal of trade Barriers. Profitability Growth/Expansion Cost Consideration Image of the Company

The driving forces or the push forces are described briefly below:-

1. Technology: - Perhaps the single most important innovation has been the development of the micro processors, yet enabled the explosive growth of high power, low cost computing, vastly increasing the amount of information that can be processed by individuals and firms. The cost of micro processors continues to fall, while their power continues to increase. The rapid growth of the internet and the associated World Wide Web is the latest expression of this development. In 1990 fewer than 1 million users were connected to the internet. By the year 2005 about 1.12 billion or 18% of the worlds population were found to be using internet. The increasing use of better technology is resulting in better trade and business between different countries thus leading to globalization. 2. Saturated Markets: - When the companies face the problem of saturated markets in the home country they have to go to foreign markets in search of better markets. They find markets where there is demand for the products that they produce and thus help in making the world a global market.

3. Improvement of Communication/Transport: - As the technology improved the global communication have been revolutionized by the developments in satellite, optical fiber, and wireless technologies. Thus between 1930 and 2000 the cost of a three minute phone call between New York and London fell from $244.65 to 36 cents. Better and cheaper communication leads to better trade which eventually leads to globalization. In addition to developments in communication technology, several major innovations in transportation technology have occurred since World War II. In economic terms the most important are probably the development of commercial jet aircrafts and super freighters and the introduction of containerization, which simplifies transshipment from one mode of transport to another. The advent of commercial jet travel, by reducing the time needed to get from one location to another, has efficiently shrunk the globe. In terms of travel time, New York is now closer to Tokyo then it was to Philadelphia in the colonial days. Better transport led to doing better business by reducing the distances between two countries by great margins thus leading to globalization. 4. Removal of trade Barriers: - With the establishment of World Trade Organization whose main objective was to remove the trade barriers that existed between two countries, doing trade has been much easier. WTO as it is known is one of the main factors why the average tariff rates of countries like France, Germany and United States have fallen from about 45% in 1920s to about 3.9% in 2000. Lower tariff allows the system of free trade in the global market thus helping in greater globalization. 5. Profitability: - All the business firms have one common objective which is to earn profits. When the profit margin in the home country diminishes gradually the firms starts looking for other partners who are often from other countries thus leading to globalization. 6. Growth/ Expansion: - The firms also want to expand and grow with time. Therefore they spread their business to other parts of the world. They trade with different partners all over the world which leads to globalization.

7. Cost Consideration: - The firms often to minimize the cost of production start their operations in different parts of the world. For example a country from Europe may start its production operation in a country in Asia for reducing its cost of production since the cost of labor is cheaper in Asia then in Europe. By spreading their operations the firms are eventually helping in globalization. 8. Image of the company: - The Company often to enhance its image in the eyes of the customers starts its global operations. They join foreign partners for this reason thus leading to globalization. Restraining Forces/PULL FACTORS Restraining forces are the forces that act as obstacle in the process of globalization. They are also known as the pull factors of globalization. The main restraining forces can be explained under the following headings.

Cultural Myopia Concentration of Power The restraining forces or the pull forces are described briefly below:-

1. Cultural Myopia Culture is one of the major obstacles in the process of globalization. Since the culture of different countries all over the world is different sometimes this acts as an obstacle in the globalization process. Different beliefs, rituals, customs and traditions which together are known as the culture of a particular region or a country often become a problem. A country which wants to start its global operation in a foreign country must first analyze the culture of that country which may be quite difficult in some cases.

2. Concentration of Power Critics of globalization argue that despite the supposed benefits associated with free trade and investment, over the last hundred years or so the gap between the rich and the poor nations of the world has gotten wider. In 1870 the average income per capita in the worlds 17 richest nations was 2.4 times that of all other countries. In 1990 the same group was 4.5 times as rich as the rest. This proves that the globalization process is helping the rich grow richer and eventually making the poor poorer. The reasons behind this are the concentration of power in the hands of few countries.

Extra Reading material

Market forces and development

Over the last few decades internationalism has grown because of a number of market factors which have been driving development forward, over and above those factors which have been attempting to restrain it. These include market and marketing related variables. Many global opportunities have arisen because of the clustering of market opportunities worldwide. Organisations have found that similar basic segments exist worldwide and, therefore, can be met with a global orientation. Cotton, as an ingredient in shirtings, suitings, and curtain material can be globally marketed as natural and fashionable. One can see in the streets of New York, London, Kuala Lumpar or Harare, youth with the same style and brand of basketball shirts or American Football shorts. Coca Cola can be universally advertised as "Adds Life" or appeal to a basic instinct " You can't beat the Feeling" or "Come alive" as with the case of Pepsi. One can question "what feeling?", but that is not the point. The more culturally unbounded the product is, the more a global clustering can take place and the more a standardised approach can be made in the design of marketing programmes. This standardised approach can be aided and abetted with technology. Technology has been one of the single most powerful driving forces to internationalism. Rarely is technology culturally bound. A new pesticide is available almost globally to any agricultural organisation as long as it has the means to buy it. Computers in agriculture and other applications are used universally with IBM and Macintosh becoming household names. The need to recoup large costs of research and development in new products may force organisations to look at global markets to recoup their investment. This is certainly true of many veterinary products. Global volumes allow continuing investment in R & D, thus helping firms to improve quality. Farm machinery, for example, requires volume to generate profits for the development of new products.

Communications and transport are shrinking the global market place. Value added manufacturers like Cadbury, Nestl, Kelloggs, Beyer, Norsk Hydro, Massey Ferguson and ICI find themselves "under pressure" from the market place and distributors alike to position their brands globally. In many cases this may mean an adaption in advertising appeals or messages as well as packaging and instructions. Nestle will not be in a hurry to repeat its disastrous experience of the "Infant formula" saga, whereby it failed to realise that the ability to find, boiled water for its preparations, coupled with the literacy level to read the instructions properly, were not universal phenomenon. Marketing globally also provides the marketer with five types of "leverage" or "advantages", those of experience, scale, resource utilisation and global strategy. A multi-product global giant like Nestle', with over 10 billion turnover annually, operates in so many markets, buys so much raw material from a variety of outgrowers of different sizes, that its international leverage is huge. If it consumes a third of the world's cocoa output annually, then it is in a position to dominate terms. This also has its dangers. The greatest lift to producers of raw agricultural products has been the almost universal necessity to consume their produce. If one considers the whole range of materials from their raw to value added state there is hardly a market segment which cannot be tapped globally. Take, for example, oranges. Not only are Brazilian, Israeli, South African and Spanish oranges in demand in their raw state worldwide, but their downstream developments are equally in demand. Orange juice, concentrates, segments and orange pigments are globally demanded. In addition the ancillary products and services required to make the orange industry work, find themselves equally in global demand. So insecticides, chemicals, machinery, transport services, financial institutions, warehousing, packaging and a whole range of other production and marketing services are in demand, many provided by global organisations like Beyer, British Airways and Barclays Bank. Of course, many raw materials are at the mercy of world prices, and so many developing countries find themselves at the mercy of supply and demand fluctuations. But this highlights one important global lesson - the need to study markets carefully. Tobacco producing countries of the world are finding this out. With a growing trend away from tobacco products in the west, new markets or increasing volumes into consuming markets have to be prospected and

developed. Many agricultural commodities take time to mature. An orange grove will mature after five years. By that time another country may plant or have its trees mature. Unless these developments are picked up by global intelligence the plans for a big profit may be not realised as the extra volume supplied depresses prices. This happened in 1993/94 with the Malawian and Zimbabwean tobacco companies. The unexpected release of Chinese tobacco depressed the tobacco price well below expectations, leaving farms with stock and large interest carrying production loans. A number of suppliers of agricultural produce can take advantage of "off season" in other countries, or the fact that they produce speciality products. This is the way by which many East African and South American producers established themselves in Europe and the USA respectively. In fact the case of Kenya vegetables to Europe is a classic, covering many of the factors which have just been discussed-improved technology, emerging global segments, shrinking communications gaps and the drive to diversify product ranges.

Case 1.5 Kenya Off Season Vegetables Kenya's export of off season and specialty vegetables has been such that from 1957 to the early 1990s exports have grown to 26 000 tones per annum. Kenya took advantage of: a) Increased health consciousness, increased affluence and foreign travel of West European consumers; b) Improved technologies and distribution arrangements for fresh products in Western Europe; c) The emergence of large immigrant populations in several European countries: d) programmes of diversification by agricultural export countries and e) Increased uplift facilities and cold store technologies between Europe and Kenya. Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the European "off season" trade by sending small consignments of green beans, sweet peppers, chilies and other commodities to a London based broker who sold them to up market hotels, restaurants and department stores. From these beginnings Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the colonialists, production remained small, under the misguided reasoning that Kenya was too far from major markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya itself. The 1970s saw an increased trade as private investment in irrigation expanded, and air freight space increased, the introduction of wide bodied aircraft, and trading relationships grew with European distributors. Kenya emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra, chillies etc.) to the UK growing immigrant population. Kenya was favored because of its ability to supply all year round - a competitive edge over other suppliers. Whilst the UK dominated, Kenya began supplying to other European markets.

Kenya's comparative advantage was based on its low labor costs, the country's location and its diverse agro-ecological conditions. These facilitated the development of a diversified product range, all year round supply and better qualities due to labor intensity at harvest time. Kenya's airfreight costs were kept low due to government intervention, but lower costs of production were not its strength. This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European immigrant population. Kenya's rapidly growing tourist trade also accelerated its canning industry and was able to take surplus production. In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables (courgettes etc.) to lower cost Mediterranean countries, it increased its share in French beans and other specialty vegetables significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major success. With the development and organization or many small "out growers", channeled into the export market and thus widening the export base, the industry now provides an important source of income and employment. It also has a highly developed information system, coordinated though the Kenya Horticultural Crops Development Authority. Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers and vegetables, particularly the former.

Environment of International Marketing. The marketing environment consists of all factors that can affect the organizations marketing activities. These factors are largely uncontrollable. The global marketing environment comprises the intermediate and the macro environment.

Intermediate environment: This is also known as Micro environment.

The intermediate environment contains those factors which are semicontrollable through contracts. This environment influences the organization directly. Micro tends to suggest small, but this can be misleading they will be categorized as: Employees: Labor of the company Hire good people Empower them keep them happy otherwise how can they keep your customers happy ?

Stockholders Mergers and acquisitions require support Institutional investors can buy and sell huge volumes Shareholder value Suppliers: The suppliers of a company are an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship. Crucial when there are lots of parts Car industry JIT Few suppliers only (following Japanese) Customers: There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business

markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and includes customers from the previous categories. Consumer Movement Thus, the importance of relationship marketing particularly, when times are hard Competitors: is also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors. Macro environment The macro environment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture. Demography Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is a very important factor to study for marketers and helps to divide the population into market segments and target markets. This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment. Demography covers many aspects that are important to marketers including family dynamics, geographic shifts, work force changes, and levels of diversity in any given area. Economic environment Another aspect of the macro environment is the economic environment. This refers to the purchasing power of potential customers and the ways in which people spend their money. Within this area are two different economies,

subsistence and industrialized. Subsistence economies are based more in agriculture and consume their own industrial output. Industrial economies have markets that are diverse and carry many different types of goods. Each is important to the marketer because each has a highly different spending pattern as well as different distribution of wealth. Natural environment The natural environment is another important factor of the macro environment. This includes the natural resources that a company uses as inputs and affects their marketing activities. The concern in this area is the increased pollution, shortages of raw materials and increased governmental intervention. As raw materials become increasingly scarcer, the ability to create a companys product gets much harder. Also, pollution can go as far as negatively affecting a companys reputation if they are known for damaging the environment. The last concern, government intervention can make it increasingly harder for a company to fulfill their goals as requirements get more stringent. Technological environment The technological environment is perhaps one of the fastest changing factors in the macro environment. This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. They must stay informed of trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially. Political environment The political environment includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex. Some products are regulated by both state and federal laws. There are even restrictions for some products as to who the target market may be, for example, cigarettes should not be marketed to younger children. There are also many restrictions on subliminal messages and monopolies. As laws and regulations change often, this is a very important aspect for a marketer to monitor.

Cultural environment The final aspect of the macro environment is the cultural environment, which consists of institutions and basic values and beliefs of a group of people. The values can also be further categorized into core beliefs, which passed on from generation to generation and very difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it is important to know the difference between the two and to focus your marketing campaign to reflect the values of a target audience.

Globalization has generated increased demands on multinational enterprises (MNEs) to formulate and implement international strategies that respond to pressures for both external flexibility and internal efficiency. Which international strategy is pursued will depend upon the characteristics (e.g., opportunities, constraints) of the external environment, the firm's internal capabilities, and the tradeoffs associated with responding to the pressures for external flexibility. SWOT analysis It is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

Strength are:
Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.

Weaknesses are:
Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation.

Opportunity are:
A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor.

Threats are:
A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.

Case Studies
ARIZONA SUNRAY, INC. Buy American or Look Abroad? JEFFREY A. FADIMAN San Jose State University Arizona Sunray is one of the pioneering companies in solar energy within that state. Its founding generation consisted of third-generation Arizonans, descendants of the state's earliest pioneers. The founders took great pride in that pioneering heritage, often boasting that the family's rise to relative prosperity was a result of "thinking Arizona." To them, the phrase meant a ceaseless search for business opportunities within the state. In the late I 950s, one member of this generation emerged as a new type of pioneerone of a cluster of scientists and businessmen who hoped to develop the first practical applications of solar energy on a scale available to home owners. In the early 1960s, he pioneered the use of solar energy in offices and homes, incorporating, with other members of his family, into what proved to be a surprisingly successful firm, eventually named Arizona Sunray. After some experimentation, the firm chose the slogan "Follow the Sun: It's Arizona's Way." Reasoning that the way to acquire new business was to follow the sun, the firm expanded into every area of Arizona, and then into Nevada and New Mexico. The next generation took control of the business in 1965. As a result, a decision was made to redirect expansion away from the relatively unpopulated states of the Southwest and move due, west into the larger urban population centers of coastal California. The Los Angeles/Orange County area was considered particularly favorable for potential expansion, with relatively affluent target populations that might show considerable interest in the use of solar energy within their homes. Several aspects of the marketing program were reshaped to appeal more directly to coastal Californians, including a change in the firm's slogan, which became "Catch the Rays: It's California's Way." The concept proved quite successful, and the firm continued to expand. By 1995 members of the next generation were just beginning to reach positions of influence and authority within the firm. Their relative affluence, however, had permitted them to acquire both travel experience and education abroad. As a consequence, they proposed a further expansion, seeking to "follow the sun" on a scale undreamed of by their elders. They argued that Arizona Sunray should spread around the entire Pacific Rim, taking appropriate advantage of new techniques in miniaturization to fulfill an entire range of solar-powered needs-from solar-powered calculators to rural solar cookers-permitting Arizona Sunray (to be renamed Pacific Sunray) to take maximum advantage of both current opportunity and longrange planning for expansion. Surviving members of the founding generation instantly rejected the proposal, refusing to contemplate such radical ideas. "Why even bother?" the firm's first president asked. "We're doing fine right in America. We know our product, we know our clientele, and we know the West. This market's huge! We're making steady profits. Every member of this family and every

worker in this firm is doing fine. Why would we want to dissipate our capital in marketing to places we know next to nothing about? The money's in America; why look abroad?" Members of all three generations met to thrash out the issue. The oldest, though now retired held considerable influence. The youngest, though lacking power, felt they held a wider and more flexible perspective. The middle generation, though holding formal decision-making powers, felt pulled both ways and wondered if there might be ways to satisfy both sides. Questions 1. As a member of the youngest generation, present your case. What advantages could Arizona Sunray derive from an attempt to expand its goods and services abroad? 2. As a member of the oldest generation, present your case. Why should the firm remain within America? What hard questions could you ask of members of the youngest generation that' might suggest weaknesses in their proposal? 3. As a member of the middle generation, what compromise can you propose that might prove acceptable to both sides?

Can Mac Fight Back? LEAD STORY-DATELINE: Marketing, 17 October 2002.

McDonald's is the world's biggest restaurant chain, and according to Interbrand, the 8th most valuable brand. It seems everyone recognizes the golden arches. The company is extremely successful despite being a symbol of American imperialism, and being hated by animal rights activists, groups promoting healthy diets, and anti-capitalists. There are signs that McDonald's is having difficulty keeping up with the trends in the restaurant industry, maintaining its positive brand image, and getting the message out about its products. The company's share price stands at a seven-year low, and in September 2002; Salomon Smith Barney forecasted McDonald's stock would under perform. McDonald's is experimenting with new restaurant designs, diversifying its menu offerings to include healthier choices or touches of cuisines favored in the local area, and lowering prices on various items to try to appeal to more people, keep its image fresh, and increase sales. Yet Mark Kalinowski of Salomon Smith Barney says those things do not make up for rude McDonald's workers, order mistakes, or sluggish service. And Kalinowski is not the only one to have noticed. Many people around the world are questioning McDonald's ability to meet its commitment of quality and service in its restaurants. Even the role of Ronald McDonald in the company's communications may be faltering. Leaked internal memos suggest company executives are questioning his relevance for today's children. The company's commercials in the UK have taken a turn for the worse lately, lacking a cohesive message. The company has been beleaguered by bad press - vegetarians suing over eating its beef-based cooking oil, teenagers accusing the restaurant of making them fat, popular books criticizing the fast food industry, and fears of mad cow disease. The company seems to be responding by supporting more community programs and increasing its sponsorship of charitable causes, such as funding Unicef's World Children's Day. Whether McDonald's strategy to stay ahead of the competition will be effective remains to be seen. Questions 1. In general, where do you think McDonald's stands on the range from standardization to adaptation in terms of its global marketing? 2. What are some of the issues in having a mascot like Ronald McDonald in another culture besides the U.S.? How can it be effective in other national settings? 3. The text discussion refers primarily to manufactured products. However, do you think that it applies to the problems that McDonald's has in the restaurant business?

Module II

CULTURE is a pattern of shared basic assumptions that the group learned as

it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. Culture is the way that we do things around here. Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture). It is widely accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artifacts. Organizational culture is an idea in the field of Organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. Organizational Culture refers to the values, beliefs and customs of an organization. Whereas Organizational structure is relatively easy to draw and describe, organizational culture is less tangible. CROSS CULTURAL MARKETING: culture is collective programming of the mind which distinguishes the members of one group or category from the others. The oxford encyclopedia English dictionary defines culture as the art and other manifestation of human intellectual achievement regarded collectively as the customs, civilization and achievements of a particular time or people: the way of life of a particular society or group. The consumer behavior is greatly influenced by culture, which varies widely among countries. Most Indians find difficult to understand how people in the west eat cow which gives milk and is other East Asian countries love for food such as blood worm soup, snake soup and dog meat is not easy to rationalize for the people of other cultures. Such unintentional reference to context, known as self reference criteria (src), often interferes in analyzing and interpreting the marketing problems in its true sense. A social group acquires culture through learning and experience. Culture is shared among the members of a group, organization, or society and passed from one generation to the other. In-Culture Marketing is a methodology applied to Marketing that recognizes the existence of cultural programming and that there

are consumer groups that have life experiences in a different cultural setting than ours, and therefore their tastes, values, expectations, beliefs, ways of interaction, ways of entertainment, music, dressing preferences, food, etc. they tend to be different than ours, because their cultural programming is different. What is culture? Much has been written on the subject of culture and its consequences. Whilst on the surface most countries of the world demonstrate cultural similarities, there are many differences, hidden below the surface. One can talk about "the West", but Italians and English, both belonging to the so called "West", are very different in outlook when one looks below the surface. The task of the global marketer is to find the similarities and differences in culture and account for these in designing and developing marketing plans. Failure to do so can be disastrous. Terpstran9 (1987) has defined culture as follows: "The integrated sum total of learned behavioral traits that are manifest and shared by members of society" Culture, therefore, according to this definition, is not transmitted genealogically. It is not, also innate, but learned. Facets of culture are interrelated and it is shared by members of a group who define the boundaries. Often different cultures exist side by side within countries, especially in Africa. It is not uncommon to have a European culture, alongside an indigenous culture, say, for example, Shona, in Zimbabwe. Culture also reveals itself in many ways and in preferences for colours, styles, religion, family ties and so on. The color red is very popular in the west, but not popular in Islamic countries, where sober colors like black are preferred. Much argument in the study of culture has revolved around the "standardization" versus "adaption" question. In the search for standardization certain "universals" can be identified. Murdock7 (1954) suggested a list, including age grading, religious rituals and athletic sport. Levitt5 (1982) suggested that traditional differences in task and doing business were breaking down and this meant that standardization rather than adaption is becoming increasingly prevalent.

Culture, alongside economic factors, is probably one of the most important environmental variables to consider in global marketing. Culture is very often hidden from view and can be easily overlooked. Similarly, the need to overcome cultural myopia is paramount. Elements of culture:

1. Religion: Generally the consumption patterns are considerably influenced by religious beliefs. As most of the Indian do not eat beef and India has the second largest Muslim (who do not eat pork) population in the world, McDonalds serves neither beef nor pork in India. Besides Indian vegetarianism is too difficult for foreign to understand, where even changing of cooking utensils between two groups is frowned upon. As a result and in an effort to respect the sensibilities of the two large consumer groups. India is perhaps the only country where McDonalds has separate kitchens for vegetarian and for non vegetarians food. In Islamic countries, the meat of animals slaughtered through the Halal process can alone be consumed. There fore all meat and Meta products exported to Muslim countries have to be certified by a recognized agency to this effect. Religion can affect marketing in a number of ways: Religious holidays - Ramadan cannot get access to consumers as shops are closed. consumption patterns - fish for Catholics on Friday economic role of women - Islam caste systems - difficulty in getting to different costs for segmentation/niche marketing joint and extended families - Hinduism and organizational structures; institution of the church - Iran and its effect on advertising, "Western" images market segments - Maylasia - Malay, Chinese and Indian cultures making market segmentation sensitivity is needed to be alert to religious differences.

2. Value system: Values are the shared assumption of a group about how things ought to be or abstract ideas about what a group believes to be good or

desirable or right. The consumer behavior in international market is considerably affected by their value system. 3. Norms: Norms are the guidelines or special rules that prescribe appropriate behavior in a given situation. For instance, aggressive selling in Japan is not taken in positive spirit. Many companies including Dell computers, instead of aggressive selling emphasize the benefits in terms of lower price by direct selling. Cultural norms affect the consumption patterns and habits too. Indians and other south Asian generally use spoons of different sizes while eating. Chinese and Japanese people use chopsticks as the meat is cut into small pieces, but European and Americans use knives and forks to cut the meat on the dining table. Norms are sub divided into a) Mores: Norms that carry a strong social sanction if violated because the members of a culture consider adherence to them essential to the well-being of the society e.g. The prohibition against destroying other people's property b) Folkways: Norms that carry only a weak social sanction if violated because the members of the society do not consider adherence to them essential to the well-being of the society e.g. washing one's clothes, eating with your mouth closed c) Laws: Norms that the governing body of a society officially adopts to regulate behavior e.g. Speed limits d) Taboos: Norms so strongly held by the members of a society that to violate them is virtually inconceivable e.g. the prohibition against incest, the prohibition against cannibalism. 4. Aesthetics: Ideas and perceptions that a cultural group in terms of beauty and good taste is referred to as aesthetics. It includes music, dance, painting, drama etc. Colors have different manifestations across cultures. For African consumers, bright colors are favorite colors, while in Japan pastel colors are considered to express softness and harmony and are preferred over bright colors. Americas corporate color blue is associated with the evil and the sinister in many African countries. In China, red color is lucky, while it is associated with death and witchcraft in a number of African countries. An international marketer has to address these issues especially in communication and product decisions.

5. Language: Language is a systematic means of communicating ideas or feelings by the use of conventionalized signs, gestures, marks, or especially articulate vocal sounds. Language differs widely among the nations and even regions. Language reflects the nature and value system of culture. Despite of linguistic difference, English has become the lingua-franca to communicate with people around the world. Conducting cross country market research in English often fails to provide non- verbal cues to the respondents. Besides the issue related to translation of questionnaire or by use of interpretation needs to be addressed so as to ensure data compatibility. Therefore, use of initiative and communicating in local languages are of extreme importance in international market research across regions with linguistic diversity.

6 Ideologies: Ideologies are integrated and connected systems of beliefs. Sets of beliefs and assumptions connected by a common theme or focus. They are often are associated with specific social institutions or systems and serve to legitimize those systems. 1. Some prominent American ideologies. a. Capitalism. b. Christianity (Protestantism). c. Individualism d. Sexism. e. Racism . 7

Statuses and Roles: Status, although related, is not a measure of a persons wealth, power, and prestige. To speak of "high" or "low" status is somewhat misleading. A status is a slot or position within a group or society. They tell us who people are and how they "fit" into the group. Roles are norms specifying the rights and responsibilities associated with a particular status. The term role is often used to mean both a position in society and role expectations associated with it. Roles define what a person in a given status can and should do, as well as what they can and should expect from others. Roles provide a degree of stability and predictability, telling how we should respond to others and giving us an idea of how others should respond to us.

Analytical Approaches to Cultural Factors Maslow's Hierarchy of Needs: If motivation is driven by the existence of unsatisfied needs, then it is worthwhile for a manager to understand which needs are the more important for individual employees. In this regard, Abraham Maslow developed a model in which basic, low-level needs such as physiological requirements and safety must be satisfied before higher-level needs such as selffulfillment are pursued. Maslows hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation. Maslow subsequently extended the idea to include his observations of humans' innate curiosity.

Maslow's Hierarchy of Needs

Physiological Needs Physiological needs are those required to sustain life, such as: air water nourishment sleep According to Maslow's theory, if such needs are not satisfied then one's motivation will arise from the quest to satisfy them. Higher needs such as social needs and esteem are not felt until one has met the needs basic to one's bodily functioning. Safety Once physiological needs are met, one's attention turns to safety and security in order to be free from the threat of physical and emotional harm. Such needs might be fulfilled by: Living in a safe area Medical insurance Job security Financial reserves According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs will not receive much attention. Social Needs Once a person has met the lower level physiological and safety needs, higher level needs become important, the first of which are social needs. Social needs are those related to interaction with other people and may include: Need for friends Need for belonging Need to give and receive love Esteem Once a person feels a sense of "belonging", the need to feel important arises. Esteem needs may be classified as internal or external. Internal esteem needs are

those related to self-esteem such as self respect and achievement. External esteem needs are those such as social status and recognition. Some esteem needs are: Self-respect Achievement Attention Recognition Reputation Maslow later refined his model to include a level between esteem needs and selfactualization: the need for knowledge and aesthetics. Self-Actualization Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of reaching one's full potential as a person. Unlike lower level needs, this need is never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow. Self-actualized people tend to have needs such as: Truth Justice Wisdom Meaning Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of self-actualization. Physiological needs are at the bottom of the hierarchy. These are basic needs to be satisfied like food, water, air, comfort. The next need is safety - a feeling of well being. Social needs are those related to developing love and relationships. Once these lower needs are fulfilled "higher" needs emerge like esteem - self respect - and the need for status improving goods. The highest order is self actualisation where one can now afford to express oneself as all other needs have been met. Whilst the hypothesis is simplistic it does give an insight into universal truisms. In Africa, for example, in food marketing, emphasis may be laid on the three lower

level needs, whereas in the developed countries, whilst still applicable, food may be bought to meet higher needs. For example, the purchase of champagne or caviar may relate to esteem needs.

The Case Of Maize Meat In Africa

Introduced by the white settler, maize meat is the staple diet of the population of countries in Eastern and Southern Africa, Zambia, for example is capable of producing over 30 million x 90Kgs bags with a marketable surplus of 20 million x 90Kg bags, most of which goes to feed the urban population. For a lot of people, unable to improve their lot, this remains as the staple diet throughout their lives. However, many Africans who are able to improve their lot, progress on to other forms of nourishment -fish. potatoes, good meat cuts and even fast foods, some of this brought about by social interaction. Interestingly enough, maize is still often eaten despite the social and economic progression that an individual may make.

Hofstedes Classification
The most widely used tool to study the cross-cultural behavior is Hofstedes classification. It identifies cross cultural differences by collecting data on employee attitudes and values for 1, 16,000 respondents from 70 countries working in IBM subsidiaries. Hofstede isolated four dimensions that he claimed summarized different cultures are defined as: 1) Power Distance: The degree of inequality among the people that are viewed equitably is known as power distance. It focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities. Power Distance in Malaysia is highest while it is lowest in the case of Austria. In UK, Scandinavia and the Dutch countries managers expect their decision making to be challenged, while the French consider the authority to take decision as their right. Germans feel more comfortable in formal hierarchies while Dutch have a more relaxed approach towards their higher authorities. In countries with high power distances, hierarchical organizational structures are based on inequality among the superiors and subordinates, and juniors blindly follow the orders of their superiors. Generally, high social inequalities are tolerated in culture with wide differentiation in power and income distribution. Small power distance is characterized by egalitarian societies, where superiors and subordinates consider each other as equal. Organizations in such societies are flat and decision making is decentralized. Power Distance greatly affects the customers decision making process. In view of power distance, researches have to find out the key persons involved in buying decisions and formulate their field surveys accordingly. 2) Individualism vs. Collectivism Individualism 1 The tendency of people to look after themselves and their immediate familys interest alone is termed as Individualism 2 Such societies have strong ethics, Collectivism The tendency of people to belong to groups and to look after each other in exchange of loyalty is termed as collectivism. Such societies do not have such

promotions are based on merits and involvement of the employee in the organizations is primarily calculative. 3 Ability to be independent considered to be a key criterion for success in such societies. 4 Examples of such countries are USA, France.



interest of group have precedence over individual interest Examples of such countries are Pakistan, Singapore, and Malaysia.

International Marketing decisions are greatly influenced by individualism vs. collectivism appeal a product to be successful in collective societies should have a acceptability by a group while in individualistic societies there be no need of a product t be accepted by a group of people to be successful. 3) Masculinity vs. Femininity Masculinity 1 In masculine societies, the dominant values emphasize work goals such as earnings, advancement, and success and material belongings. In masculine societies, people live to work Examples of such countries are Japan, Austria, Italy and US. Sex roles are highly distinguished Femininity In feminine societies ,the dominant values are achievement of personal goals such as quality of life, care for others and friendly atmosphere In feminine societies, people work to live Examples of such countries are Sweden, Norway, Netherlands and Denmark. Sex roles were less sharply distinguished and there is little differentiation between men and women in the same job

2 3

4) Uncertainty Avoidance Uncertainty Avoidance refers to the lack of tolerance for ambiguity and the need for formal rules. It measures the extent to which people feel threatened by

ambiguous situations. Greece, Poland and Japan are the most uncertainty avoidance societies and thus lifetime employment is common while Singapore, Denmark and India are the least uncertainty avoidance societies and thus the job mobility is common in these countries.

Culture context
The context of a culture has crucial implications in communicating and interpreting verbal and non verbal messages .Different cultures interpret verbal and non verbal cues differently . 1 High-context Culture Implicit communications such as nonverbal and subtle situational cues are extremely important, Relationship is long-lasting Low-context Culture Communication is more explicit and relies heavily on words to convey the meaning Relationship is temporary

2 3

Verbal communication are given greater Commitments are written. sanctity Knowledge is situational, relational. Knowledge is more often transferable

4 5

Decisions and activities focus around Task-centered. Decisions and activities personal face-to-face relationships, often focus around what needs to be done, around a central person who has division of responsibilities. authority. EXAMPLES:-Large US airports, a chain EXAMPLES:Small religious supermarket, a cafeteria, a convenience congregations, a party with friends, store, sports where rules are clearly laid family gatherings, expensive gourmet out, a motel. restaurants and neighborhood restaurants with a regular clientele, undergraduate on-campus friendships,

regular pick-up games, hosting a friend in your home overnight.

Low context culture are common in U.S., High context cultures are more common Western Europe. in the eastern cultures than in western, and in countries with low racial diversity. For example:-INDIA. New Zealand and the Native Americans

Difference in marketing decisions due to culture context Marketing decisions in Lowcontext culture Market promotion and advertising focus on explicit display of information and facts 2 In this building relationship with Marketing firms rotate sales team clients is extremely important, more frequently therefore sales team tend to have longer duration of operation in the assigned territory. 3 Market researchers focus on Market researchers focus on subtle and non-verbal expressions factual information of the respondents. Factors/Dimensions High context Low context Lawyers Less important Very important A persons word Is his or her bond Is not to be relied on, get it in writing Responsibility for Taken at highest level Pushed to lowest level organization error Space People breathe on each People maintain a bubble of other private space and resent intrusions Time Polychromic - everything Monochromic - time is money. in life must be dealt with Linear-one thing at a time. Marketing decisions in Highcontext culture 1 Market promotion and advertising is subtle

in its own time Negotiations Are lengthy a major Proceed quickly purpose is to allow the parties to get o know each other. Competitive bidding Infrequent Common Country /Regional Japan , Middle East United States, e.g. Europe


Cultural Homogeneity
Cultural homogeneity is defined as the number of shared facts across all possible pairs of agents divided by the total possible number of shared facts across all agents in a population. Cultural homogeneity is equal to one only if all agents know precisely the same facts. A society that achieves a cultural homogeneity of one is "perfectly stable." Perfect stability means that the society is in a steady state and no further connections can change any agent's knowledge On the basis of homogeneity, culture may be divided into following subsets: Homophilous Culture: In countries where people share same beliefs, speak the same language. And practices the same religions are known to have a Homophilous Culture. Japan, Korea and Scandinavian countries have homophilous culture. It takes less time for new product diffusion in homophilous culture and relatively uniform marketing mix decisions can be taken. Heterophilus Cultures: In countries with Heterophilus Cultures there is a fair amount of differentiation in language, beliefs and religion followed .India and China fall under this category wherein he variations in culture within a single province is quite significant .The marketing communication strategies, in such cases, will have to incorporate new changes and adapt to given sets of cultural norms from region to region.

Environmental sensitivity is the extent to which products must be adapted to the culture specific needs of different national markets. A useful approach is to view products on a continuum of environmental sensitivity. At one end of the continuum are environmentally insensitive products that do not require significant adaptation to the environments of various world markets. At the other end of the continuum are products that are highly sensitive to different environmental factors. A company with environmentally insensitive products will spend relatively less time determining the specific and unique conditions of local markets because the product is basically universal. The greater the products environmental sensitivity, the greater the need for managers to address countryspecific economic, regulatory, technological, social and cultural environment conditions. The sensitivity of products can be represented on a two-dimensional scale as shown below: High Product Adaptation Low
Integrated Circuits Computers Food

Low Environmental sensitivity



Any product exhibiting low levels of environmental sensitivity e.g. highly technical products like microprocessors belongs in the lower left of the figure. Moving to the right on the horizontal axis, the level of sensitivity increases, as does the amount of adaptation. Computers are characterized by low level of environmental sensitivity but variations in country voltage requirements require some adaptation.

At the upper right are the products with high environmental sensitivity. Food , especially food consumed in the home, falls into this category because it is sensitive to climate and culture. Particular food items such as chocolate, however must be modified for various differences in taste and climate. The consumers in some countries prefer a milk chocolate; others prefer a darker chocolate while other countries in the Tropics have to adjust the formula for their chocolate products to withstand the high temperature.

SELF REFERENCE CRITERION When a company starts its international business, the most important thing is its marketing strategies .The key for successful international marketing is adaptation to the environmental differences from one market to another. The primary obstacles to success in international marketing are persons Self Reference Criterion. It is an unconscious reference to ones own cultural values, experience, and knowledge as a basis for decisions. Definition: Having sold a product successfully in the domestic market a firm may assume that the product will, without adaptation, also be successful in foreign markets. Frequently this assumption leads to failure. The SRC refers to the assumption that what is suitable for the home market will be suitable for the foreign market and therefore there is no need to test whether or not the product should be altered. When faced with a problem of another culture, the tendency is to react instinctively. The reaction is based on meanings, values, symbols, and behavior relevant to ones culture a usually different from those of the foreign culture. Such decisions are not correct ones. The self reference criterion can prevent from being aware that there are cultural differences or from recognizing the importance of those difference. Thus one might fail to recognize the need to take action, or might discount the cultural differences that exist among countries. One might also react to a situation in a way offensive to the host. SRC can evaluate the appropriateness of a domestically designed marketing mix for a foreign market. Example, In U.S a

polite refusal to food or drink is acceptable but, but in Asia or Middle East a host is offended if one refuses hospitality. When marketers take the time to look beyond their own self-reference criteria the results are more positive. Example, British manufacture ignoring its SRC could sell in Japan, McVities chocolate biscuits are wrapped individually, packed in presentation cardboard boxes, and priced about three times higher than in U.K. another best example is of Mc Donalds which shifted to Big Mac in India where it is known as Maharaja Mac. This burger features two mutton patties because most Indians consider cow sacred and dont eat beef. The most effective way to control the influence of SRC is to recognize the effect on ones behavior. To avoid errors in business decisions, it is necessary to conduct a cross culture analysis that isolates the SRC influences and to maintain a vigilance regarding ethnocentrism. The following steps are Define the business problem or goal in home-country cultural traits, habits or norms. Define the business problem or goal in foreign-country cultural traits, habits or norms through consultation with natives of the target country. Make no value judgments. Isolate SRC influence in the problem and examine it carefully to see how it complicates the problem. Redefine the problem without SRC influence and solve for the optimum business goal situation. The cross culture analysis approach requires an understanding of the culture of the foreign market as well as ones own culture. It is accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artifacts.

Case Studies
CULTURE SHAPES FOREIGN MARKETING International marketers all have stories to tell of their adventures-and misadventures-in foreign market cultures. These cultural constraints can affect all aspects of the marketing program. A couple of examples: 1. Cosmetics- Maybelline and Max Factor add brighter colors to their lipstick and makeup for Latin America. Vidal Sassiin adds more conditioner and a pine aroma to some shampoos in the Far East. Amways skin care line in Japan has less lather and Amway removes the pork proteins found in some of its products for Muslim markets, such as Malaysia. 2. Promotion- Hollywood has found the best way to promote its movies in Asia is to use popular local musicians. When Warner Bros released Lethal Weapon 4 in Hong Kong, its major promotion was a music video with a very popular heavy-metal band. Though music didnt relate to the film, scenes from the film were interspersed on the video. The song became the movies Asian theme song. In Taiwan, a leading female singer made a music video based on The English Patient. The studios usually dont even have to pay the local artists because both parties benefit.

ITS NOT THE GIFT THAT COUNTS, BUT HOW YOU PRESENT IT Giving a gift in another country requires careful attention if it to be done properly. Here are a few suggestions: Japan Do not open gift in front of a Japanese counterpart unless asked and do not expect the Japanese to open your gift. Avoid ribbons and bows as part of gift-wrapping. Bows as we know them are considered unattractive and ribbon colors can have different meanings. Do not offer a gift depicting a fox or badger. The fox is the symbol of fertility, the badger, and cunning. Europe Avoid red roses and white flowers, even numbers, and the number 13. Do not wrap flowers in paper. Do not risk the impression of bribery by spending too much on a gift. Arab World Do not give a gift when you first meet someone. It may be interpreted as a bribe. Do not let it appear that you contrived to present the gift when the recipient is alone. It looks bad unless you know the person well. Give the gift in front of others in less personal relationships. Latin America Do not give a gift until after a somewhat personal relationship has developed unless it is given to express appreciation for hospitality. Gifts should be given during social encounters, not in

the course of business. Avoid the colors black and purple; both are associated with the Catholic Lenten season. China Never make an issue of a gift presentation-publicly or privately. Gifts should be presented privately, with the exception of collective ceremonial gifts at banquets.


Jokes Don't Travel Well Cross-cultural humor has its pitfalls. What is funny to you may not be funny to others. Humor is culturally specific and thus rooted in people's shared experiences. Here are examples: President Jimmy Carter was in Mexico to build bridges and mend fences. On live television President Carter and President Jose Lopez Portillo were giving speeches. In response to a comment by President Portillo, Carter said, "We both have beautiful and interesting wives, and we both run several kilometers every day. In fact, I first acquired my habit of running here in Mexico City. My first running course was from the Palace of Fine Arts to the Majestic Hotel where my family and I were staying. In the midst of the Folklorico performance) I discovered that I was afflicted with Montezuma's Revenge; Among Americans this may have been an amusing comment but it was not funny to the Mexican. Editorials in Mexico and U.S. newspapers commented on the in appropriateness of the remark. 'Most jokes; even though well intended, don't translate well. Sometimes a translator can help you out. One speaker, in describing his experience, said,"1 began my speech with a joke that took me about, two minutes to tell. Then my interpreter translated my story. About thirty second later the Japanese, audience laughed loudly. I continued with my talk which seemed' well received," he said, "but at the end, just to make sure, I asked the, interpreter, 'How did you translate my joke so quickly?' The interpreter replied, 'Oh I did not translate your story at all. I did not understand it. I simply said our foreign speaker has just told a joke so would you all please laugh. Who can say with certainty that anything is funny? Laughter, more often than not, symbolizes embarrassment, nervousness, or even scorn. Hold your humor until you are comfortable with the culture.

CROSSING BORDERS 2 Meishi- Presenting Business Card in Japan In Japan the business card, or Meishi, is the executive's trademark. It is both a mini resume and a friendly deity that draws people together. No matter how many times you have talked with a businessperson by phone before you actually meet, business cannot really begin until you formally exchange cards. The value of a Meishi cannot be overemphasized; up to 12 million are exchanged daily and a staggering'4. 4 billion annually. For a businessperson to make a call or receive a visitor without and is like a Samurai going off to battle without his sword. There are a variety of ways to present a card, depending on the giver's personality and style: Crab style -held out between the index and middle fingers. Pincerclamped between the thumb and index finger. Pointer - offered with the index finger pressed along the edge. Upside down - the name is facing away from the recipient Platter fashion - served in the palm of the hand. The card should be presented during the earliest stages of introduction, so the Japanese recipient will be able to determine your position and rank and know how to respond to you. The normal procedure is for the Japanese to hand you their name card and accept yours at the same time. They read your card and then formally greet you either by bowing of shaking hands or both. Not only is there a way to present a card, there is also a way of received a car. It makes a good impression to receive a card in both hands, especially when the other party is senior in age or status. Do not put the card away before reading or your will insult the other person, and write on a persons card in their presence as this may cause offenses. As businesses grow and professional management develops, there is a shift toward decentralized management decision-making. Decentralized decision-making allows executives at different levels of management authority over their own functions. This is typical of large-scale businesses with highly developed management systems such as those found in the United States. A trader in the United States is likely to be dealing with middle management, and title or position generally takes precedence over the individual holding the job. Committee decision-making is by group or consensus. Committees may operate on a centralized or decentralized basis, but the concept of committee management implies something quite different from the individualized functioning of the top management and decentralized decision-making arrangements just discussed. Because Asian cultures and religions tend to emphasize harmony and collectivism, it is not surprising that group decisionmaking predominates there. Despite the emphasis on rank and hierarchy in Japanese social structure, business emphasizes group participation, group harmony, and group decision making-but at top management level.

The demands of these three types of authority systems on a marketer's ingenuity and adaptability are evident. In the case of the authoritative and delegated societies, the chief problem would be to identify the individual with authority. In the committee decision setup, it is necessary that every committee member be convinced of the merits of the proposition or product in question. The marketing approach to each of these situations differs.

CROSSING BORDERS 3 The Engle: An Exclusive in Mexico According to legend, the site of the Aztec city of tenochtitlan, now Mexico City, was revealed to its founders by an eagle bearing a snake in its claws and alighting on a cactus. This image is now the official seal of the country and appears on its flag. Thus, Mexican authorities were furious to discover their beloved eagle splattered with catsup by an interloper from north of the border: McDonalds. To commemorate Mexicos Flag Day, two golden Arches outlets in Mexico City papered their trays with placemats embossed with a representation of the national emblem. Eagle eyed government agents swooped down and confiscated the disrespectful placemats. A senior partner in McDonalds of Mexico explained, Our intention was never to give offense. It was to help Mexicans learn about their culture. It is not always clear what symbols or what behavior patterns in a country are reserved exclusively for locals. In McDonaldss case there is no question that the use of the eagle was considered among. Mexicans as an exclusive for Mexicans only.

Management Objectives and Aspirations The training and background (i.e., cultural environment) of managers significantly affect their personal and business outlooks. Society as a whole establishes the social rank or status of management, and cultural background dictates patterns of aspirations and objectives among businesspeople. These cultural influences affect the attitude of managers toward innovation,

new products, and conducting business with foreigners. To fully understand another's management style, one must appreciate an individual's objectives and aspirations that are usually reflected in the goals of the business organization and in the practices that prevail within the company. In dealing with foreign business, a marketer must be particularly aware of the varying objectives and aspirations of management. 1. Personal Goals. In the United States, we emphasize profit or high wages while in other countries security, good personal life, acceptance, status, advancement, or power may be emphasized. Individual goals are highly personal in any country, so it is hard to generalize to the extent of saying that managers in anyone country always have a specific orientation. For example, studies have shown that Kuwaiti managers are more likely than American managers to make business decisions consistent with their own personal goals. Swedish managers were found to express little reluctance in bypassing the hierarchical line, while Italian managers believed that bypassing the hierarchical line was a serious offense. 2. Security and Mobility Personal security and job mobility relate directly to basic human motivation and therefore have widespread economic and social implications. The word security is somewhat ambiguous and this very ambiguity provides some clues to managerial variation. To some, security means good wages and the training and ability required for moving from company to company within the business hierarchy; for others, it means the security of lifetime positions with their companies; to still others, it means adequate retirement plans and other welfare benefits. In European companies, particularly in the countries late in industrializing such as France and Italy, there is a strong paternalistic orientation, and it is assumed that individuals will work for one company for the majority of their lives. For example, in Britain managers place great importance on individual achievement and autonomy, whereas French managers place great importance on competent supervision, sound company policies, fringe benefits, security, and comfortable working conditions. There is much less mobility among French managers than British. 3. Personal Life. For many individuals, a good personal life takes priority over profit, security, or any other goal. In his worldwide study of individual aspirations, David McClelland discovered that the culture of some countries stressed the virtue of a good personal life as being far more important than profit or achievement. The hedonistic outlook of ancient Greece explicitly included work as an undesirable factor that got in the way of the search for pleasure or a good personal life. Perhaps at least part of the standard of living that we enjoy in the United States today can be attributed to the hardworking Protestant ethic from which we derive much of our business heritage. To the Japanese, personal life is company life. Many Japanese workers regard their work as the most important part of their overall lives. Metaphorically speaking, such workers may even find themselves "working in a dream." The Japanese work ethic maintenance of a sense of purpose-derives from company loyalty and frequently results in the Japanese employee maintaining identity with the corporation. 4. Social Acceptance. In some countries, acceptance by neighbors and fellow workers appears to be a predominant goal within business. The Asian outlook is reflected in the group decision-making so important in Japan, and the Japanese place high importance on fitting in with their group. Group identification is so strong in Japan that when a worker is asked what he does for a living, he generally answers by telling you he works for Sumitomo or Mitsubishi or Matsushita, rather than that he is a chauffeur, an engineer, or a chemist.

5. Power. Although there is some power seeking by business managers throughout the world, power-seems to be a more important motivating force in South American countries. In these countries, many business leaders are not only profit-oriented but also use their business positions to become social and political leaders.

CROSSING BORDERS 4 Business: Protocol in a Unified Europe Now that 1992 has come and gone and the European community is now a single market, does it mean that all differences have been wiped away? For some of the legal differences, yes! For cultural differences, not! There is always the issue of language and meaning even when you both speak English. English and American English are often miles apart. If you tell someone his presentation was quite good. An American will beam with pleasure. A brat will ask you what was working with it your have just told him politely that he barely scraped by. Then there is the matter of humor. The anecdote you open a meeting with may fly well with your American audience; however, the French will smile the Belgians will laugh, the Dutch will be Puzzled, and the Germans will take you literally. Humor doesnt travel well. And then there are the French, Who are very attentive to hierarchy and ceremony. When first meeting with a French speaking businessperson. Stick with monsieur, Madame, or mademoiselle; the use of first names is disrespectful to the French. If you dont speak French fluently, apologize. Such apology shows general respect for the language and dismisses any stigma of American arrogance. The formality of dress can vary with each county also. The Brit and the Dutchman will take off their jackets and literally roll up their sleeves; they mean to get down to business. The Spaniard will loosen his tie. While the German disapproves - he thinks they look sloppy and unbusiness like and he keeps his coat on throughout the meeting. So does the Italian, but that was because he dressed especially for the look of the meeting. With all that, did the meeting decide anything? It was, after all a first meeting. The Brits were just exploring the terrain, checking out the broad perimeters and all that. The French were assessing the other payers strength and weaknesses and deciding what position to take at the next meting. The Italian also wont have taken it too seriously. For them it was a meeting to arrange the meeting agenda for the real meeting. Only the Germans will have assumed it was what it seemed and be surprised when the next meeting starts open ended.


YOU DONT HAVE TO BE A HOLLYWOOD STAR TO WEAR DARK GLASSES Arabs may watch the pupils of your eyes to judge your responses to different topics. A psychologist at the university of Chicago discovered that the pupil is a very sensitive indicator of how people respond to a situation. When you are interested in some thing, your pupils dilate; if your hear something your dont like, your eyes tend to contract, the Arabs have known about the pupil response for hundreds if not thousand s of years, and because people cant controls the response of their eyes, many Arabs wear dark glasses, even indoors. These are people reading the personal interaction on a second to second basis. By watching the pupils, they can respond rapidly to mood changes, that one of the reasons why they use a close conversations distance than Americans do. At about five feet, the normal distance between two Americans who are talking, we have a hard time following, eye movement. But if your use an Arab distance, about two feet, you can watch the pupil of the eye. Direct eye contact for an American is difficult to achieve because we are taught in the United States not to star, not to look at the eyes that carefully. If you stare at some one, it is too intense, too sexy, or too hostile. It also may mean that we are not totally tuned in to the situation. May be we should all wear dark glasses.

CROSSING BORDERS 6 When yes means no, or maybe or I dont know, or? Once my youngest child asked if we could go to the circus and my reply was, may be. My older child asked the younger sibling, What did he say? The prompt reply, he said NO! All cultures have ways to avoid saying no when they really mean a. After all, arguments can be avoided. Hurt feelings postponed, and so on. In some cultures, saying no is to be avoided at all costs - to say no is rude, offensive, and disrupts harmony. When the maintenance of long lasting stable personal relationships is of utmost importance, as in Japan to say no is to be avoided because of the possible damage to a relationship. As a result the Japanese have developed numerous euphemisms and paralinguistic behavior to express negation. To the unknowing American, who has been taught not to take no for an answer, the unwillingness to say no is often misinterpreted to mean that there is hope - the right argument or more forceful persuasions is all that is needed to get a yes. But dont be misled - the Japanese listen politely and, when the American if finished, respond with hai. Literally it means yes, but usually it only means, I hear you. When a Japanese avoids saying yes of no clearly, it most likely means that

he or she wishes to say no. one example at the highest levels of government occurred in negotiations between the Prime Minister of Japan and the President of the United States. The prime minister responded with, well deal with it, to a request by the president. It was only later that the U.S. side discovered that such a response generally means no - to the frustration of all concerned. Other euphemistic, decorative nos sometimes used by Japanese: its very difficult. We will think about it. Im not sure. Well give this some more thought. Or they leave the room with an apology. Americans generally respond directly with a yes or no and then give their reasons why. The Japanese tend to embark on long explanation first, and then leave the conclusion extremely ambiguous, Etiquette dictates that Japanese may tell you what you want to hear, may not respond at all, or are evasive. This ambiguity often leads to misunderstanding and cultural friction. Negotiations Emphasis All the just-discussed differences in business customs and culture come into play more frequently and are more obvious in the negotiating process than any other aspect of business. The basic elements of business negotiations are the same in any country; they relate to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers. But it is important to remember that the negotiating process is complicated and the risk of misunderstanding increases when negotiating with someone from another culture. This is especially true if the cultures score differently on Hofstede's PDI and IDV value dimensions. Attitudes brought to the negotiating table by each individual are affected by many cultural factors and customs often unknown to the other individuals and perhaps unrecognized by the individuals themselves. Each negotiator's understanding and interpretation of what transpires in negotiating sessions is conditioned by his or her cultural background the possibility of offending one another or misinterpreting each other's motives is especially high when one's SRC is the basis for assessing a situation. One standard rule in negotiating is "know thyself' first, and second, "know your opponent." The SRCs of both parties can come into play here if care is not taken. Gender Bias in International Business The gender bias toward women managers that exists in many countries creates hesitancy among U.S. multinational companies to offer women international assignments. Questions such as, Are there opportunities for women in international business? And should women represent U.S. firms abroad? Frequently arise as U.S. companies become more international. As women move up in domestic management ranks and seek career-related international assignments, companies need to examine their positions on women managers in international business. In many cultures-Asian, Arab, Latin American, and even some European women are not typically found in upper levels of management. Traditional roles in male-dominated societies often are translated into minimal business opportunities for women. This cultural bias raises questions about the effectiveness of women in establishing successful relationships with host country associates. An often-asked question is whether it is appropriate to send women to

conduct business with foreign customers. To some it appears logical that if women are not accepted in managerial roles within their own cultures, a foreign woman will not be any more acceptable. This is but one of the myths used to support decisions to exclude women from foreign assignments. It is a fact that men and women are treated very differently in some cultures. In Saudi Arabia, for example, women are segregated, expected to wear veils, and forbidden even to drive. Evidence suggests, however, that prejudice toward foreign women executives may be exaggerated and that the treatment local women receive in their own cultures is not necessarily an indicator of how a foreign businesswoman is treated. When a company gives management responsibility and authority to someone, a large measure of the respect initially shown that person is the result of respect for the firm. When a woman manager receives training and the strong backing of her firm, she usually receives the respect commensurate with the position she holds and the firm she represents. Thus, resistance to her as a female either does not materialize or is less severe than anticipated. Even in those cultures where a female would not ordinarily be a manager, foreign female executives benefit, at least initially, from the status, respect, and importance attributed to the firms they represent. In Japan, where Japanese women rarely achieve even lower-level management positions, representatives of U.S. firms are seen first as Americans, second as representatives of firms, and then as males or females. Similarly, women in China are seen as foreigners first and women second. Being foreign is such a major difference that being a woman is relatively minor. As one researcher notes, in China "businesswomen from the West are almost like 'honorary men once business negotiations begin, the willingness of a business host to engage in business transactions and the respect shown to a foreign businessperson grow or diminish depending on the business skills he or she demonstrates, regardless of gender. As world markets become more international and as international competition intensifies, U.S. companies need to be represented by the most capable personnel available; it seems shortsighted to limit the talent pool simply because of gender.

Module III

Marketing has entered an exciting new age. New social networking technologies make marketing truly interactive and allow for the development of relationships. Consumers control what they watch and when, but marketers have the ability to tailor their messages very precisely and can leverage these technologies to build communities. Amid the rush to use these new technologies, marketers must not forget that the key to marketing remains people; specifically, understanding their lives and needs and being able to connect with them emotionally. Today's new tools and technologies are simply a means to build a relationship and convey a brand's consistent emotional message.

Global Brands
Advertisers who want to reach the Bublitz family of Montgomery, Ohio, have to leap a lot of hurdles. Telemarketing? Forget it -- the family of five has Caller ID. The Internet? No way -- they long ago installed spam and pop-up ad blockers on their three home computers. Radio? Rudy Bublitz, 47, has noncommercial satellite radio in his car and in the home. Television? Not likely -- the family records its favorite shows on TiVo and skips most ads. "The real beauty is that if we choose to shut advertising out, we can," Rudy says. "We call the shots with advertisers today." The Bublitzes and other ad-zapping consumers like them pose an enormous challenge these days to marketers trying to build new brands and nurture old ones. To get a reading on which brands are succeeding -- and which aren't -- take a look at the fifth annual BusinessWeek/Interbrand ranking of the 100 most valuable global brands. The names that gained the most in value focus ruthlessly on every detail of their brands, honing simple, cohesive identities that are consistent in every product, in every market around the world, and in every contact with consumers. (In the ranking, which is compiled in partnership with brand consultancy Interbrand Corp., a dollar value is calculated for each brand using publicly available data, projected profits, and variables such as market leadership.)

The best brand builders are also intensely creative in getting their message out. Many of the biggest and most established brands, from Coke to Marlboro, achieved their global heft decades ago by helping to pioneer the 30-second TV commercial. But it's a different world now. The monolithic TV networks have splintered into scores of cable channels, and mass-market publications have given way to special-interest magazines aimed at smaller groups. Given that fragmentation, it's not surprising that there's a new generation of brands, including, eBay, and Starbucks, that have amassed huge global value with little traditional advertising. They've discovered new ways to captivate and intrigue consumers. Now the more mature brands are going to school on the achievements of the upstarts and adapting the new techniques for themselves. So how do you build a brand in a world in which consumers are increasingly in control of the media? The brands that rose to the top of our ranking all had widely varied marketing arsenals and were able to unleash different campaigns for different consumers in varied media almost simultaneously. They wove messages over multiple media channels and blurred the lines between ads and entertainment. As a result, these brands can be found in a host of new venues: the Web, live events, cell phones, and handheld computers. An intrepid few have even infiltrated digital videorecorders, devices that are feared throughout the marketing world as the ultimate tool for enabling consumers to block unwanted TV ads. Some marketers have worked to make their brand messages so enjoyable that consumers might see them as entertainment instead of an intrusion. When leading brands are seen on TV they're apt to have their own co-starring roles -- as No. 9 Toyota Motor Corp. did in reality show The Contender -- rather than just lending support during the commercial breaks. All are trying to create a stronger bond with the consumer. Take No. 41 Apple Computer Corp., which last fall launched a special iPod MP3 player in partnership with band U2. Not only did the "U2 iPod" say "U2" on the front and have band signatures etched into the back, but the band starred in a TV ad and buyers got $50 off a download of 400 U2

songs. No. 8 McDonald's Corp.'s sponsorship of a tour by R&B group Destiny's Child means that fans who want access to exclusive video and news content about the band have to click first on the company's Web site. "It's hard here to tell where the brand message ends and where the entertainment and content begins," says Ryan Barker, director of brand strategy at consultancy The Knowledge Group. It's no accident that most of the companies with the biggest increases in brand value in the 2005 ranking operate as single brands everywhere in the world. Global marketing used to mean crafting a new name and identity for each local market. America's No. 1 laundry detergent, Tide, is called Ariel in Europe, for example. The goal today for many, though, is to create consistency and impact, both of which are a lot easier to manage with a single worldwide identity. It's also a more efficient approach, since the same strategy can be used everywhere. An eBay shopper in Paris, France, sees the same screen as someone logging in from Paris, Texas. Only the language is different. Global banks HSBC, No. 29, which posted a 20% increase in brand value, and No. 44 UBS, up 16%, use the same advertising pitches around the world. "Given how hard the consumer is to reach today, a strong and unified brand message is increasingly becoming the only way to break through," says Jan Lindemann, Interbrand's managing director, who directed the Top 100 Brands ranking. Possibly no brand has done a better job of mining the potential of these new brand-building principles than Korean consumer electronics manufacturer Samsung Electronics Co. Less than a decade ago, it was a maker of lower-end consumer electronics under a handful of brand names including Wiseview, Tantus, and Yepp, none of which meant much to consumers. Figuring that its only shot at moving up the value chain was to build a stronger identity, the company ditched its other brands to put all its resources behind the Samsung name. Then it focused on building a more upscale image through better quality, design, and innovation. Beginning in 2001, the newly defined Samsung came out with a line of top-notch

mobile phones and digital TVs, products that showed off the company's technical prowess. By vaulting the quality of its offerings above the competition in those areas, Samsung figured it could boost the overall perception of the brand. Besides, consumers form especially strong bonds with cell phones and TVs. Most people carry their mobile phones with them everywhere, while their TV is the center of the family room. "We wanted the brand in users' presence 24/7," says Peter Weedfald, head of Samsung's North American marketing and consumer electronics unit. Now that strategy is paying off. Over the past five years, No. 20 Samsung has posted the biggest gain in value of any Global 100 brand, with a 186% surge. Even sweeter, last year Samsung surpassed No. 28 Sony, a far more entrenched rival that once owned the electronics category, in overall brand value. Now, in a nod to Samsung, Korean electronics concern LG Electronics Inc. has followed its rival's playbook. Cracking this year's global list for the first time at No. 97, LG has also sought to elevate its product under a single brand led by phones and TVs. Some of the older brands in our ranking are clearly struggling to remake their marketing and product mix for a more complex world. This year's biggest losers in brand value include Sony (down 16%), Volkswagen (down 12%), and Levi's (down 11%). VW acknowledges its brand value slippage. "Volkswagen is well aware of the current deficiencies," says VW brand chief Wolfgang Bernhard. Sony, which disputes that it is losing brand value, has suffered from an innovation drought. The electronics giant pioneered the Walkman, but left Apple to revolutionize portable MP3 players, as well as digital downloading and organizing of music. Meanwhile, Sony's moves into films and music put it into areas where its brand adds no value. Worse, those acquisitions made Sony a competitor with other content providers. That, notes Samsung's Weedfald, gives his company an advantage in linking to the hottest music and movies. Samsung, for example, is lead sponsor of this summer's much-hyped movie, The Fantastic Four, in which a variety of Samsung gadgets play a part. VW faces different problems. It has attempted to move upmarket with the luxury Touareg sport-utility vehicle and Phaeton sedan models; but that has left car buyers, who associate VW with zippy,

affordable cars, confused. Similarly, Levi's introduction of its less pricey Levi's Signature line in discount stores means it now competes on price at the low end, while trying to fend off rivals like Diesel at the upper end with its core "red tab" brand. Of course, defining the essence of a brand is only part of the battle. Communicating it to the consumer is the other. On this front, there has clearly been a divide between newer brands that use traditional advertising as just one tool in an overall marketing plan and older ones that grew up with it. Sony, for example, far outspends Samsung on traditional advertising in the U.S. on electronics products. (Samsung advertises on TV only during the last six months of the year, its peak sales period.) Many young brands that scored big gains in value, like Google, Yahoo!, and eBay, depend on their own interactive Web sites to shout about their brands. Now some older brands, like Coke, ranked No. 1 in overall brand value, and McDonald's are decreasing traditional ad spending. In the past four years, McDonald's has cut TV advertising from 80% of its ad budget to 50%. Most of the shift has gone to online advertising. What's evolving, then, is a model in which most brand builders use a variety of marketing channels. HSBC has branded taxis to carry customers for free. And although eBay spends most of its marketing budget on Internet advertising, it also relies on TV to some extent to boost simple brand awareness. "With fragmentation and ad evasion, you can't count on one medium," says Tom Cotton, president of Conductor, a branding strategy firm. Marketers who do turn to TV are trying to make brand messages as engrossing as the programming. Last year Toyota, whose brand value rose 10%, paid $16 million to have its vehicles be part of the storyline on NBC reality show The Contender, about small-time boxers competing for a nationally televised bout. The grand prize: a million dollars and a Toyota truck. Rival Nissan, up 13%, has been parking its Titan pickups on Wisteria Lane in hit ABC show Desperate Housewives. The trucks will also ride into the new Dukes of Hazzard movie this month.

Nor are TV and movies the only target. No. 1 Coke, McDonald's, No. 88 Smirnoff, No. 16 BMW, No. 23 Pepsi, and No. 61 KFC are among brands striking deals to plant their brands in video games and even song lyrics. Deborah Wahl-Meyer, who headed Toyota marketing until recently moving to the company's Lexus division, says both divisions attempt to seed magazine and newspaper articles with vehicle references and pictures. "We have to be more a part of what people are watching and reading instead of being in between what people are watching and reading," Meyer says. In an echo of Procter & Gamble Co.'s creation of the soap opera on radio and then TV, some brand builders are taking control of the programming themselves and creating content that tries to draw in ad-allergic consumers. BMW, whose brand value rose 8% over the past year, turned out a series of popular short films on the Internet starting in 2001. The seven-to-ten minute films starred BMW cars and were produced by A-list Hollywood directors like John Woo. The German auto maker has moved onto comic books based on the films aimed at Bimmer-aspiring teens and adults alike. "It's imperative to create media destinations that don't look like advertising," says James McDowell, who headed marketing for the BMW brand before recently taking over as chief of the parent company's MINI USA business. BMW has also embraced the enemy, TiVo, the television-top gadget that consumers use to skip ads altogether. Since last year, BMW has produced short films and long-form ads accessible through TiVo's main menu page. BMW fans are alerted to the films in the on-demand video menu when a BMW ad runs. Such old-line brands as No. 14 American Express Co. are heading down the entertainment path, too. Tipping its hat to BMW, AmEx ran long-form Internet ads/films starring Jerry Seinfeld last year that succeeded in drawing consumers to its Web site and Webcasted concerts. AmEx Chief Marketing Officer John Hayes says flatly: "Brands are not being built on [traditional] advertising." Still, none of these marketing ploys are sure bets in a world where old-school advertising means less. That's why more marketers are investing in design as a fundamental way to distinguish their brands and to stay on the leading edge of

technology. "Design isn't just the promise of a brand, like TV advertising -- it's the reality of it," says Marc Gobe, chief executive of design consultancy Desgrippes Gobe. Samsung has tripled its global design staff to 400 over the past five years. No. 73 Motorola, whose brand value rose 11%, and No. 53 Philips Electronics have boosted design spending. The move sparked the launch of Motorola's hotselling Razr phone, the thinnest flip phone ever made. No. 85 Nissan gained 13% last year on a wave of bold designs, like its curvy Murano SUV and Altima sedan, as the Japanese company differentiates itself from Toyota and Honda through design rather than quality. Good design implies more than just good looks. It's also about ease of use. Apple demonstrated this with its iPod. Users can pick songs or download music from the iTunes music bank with the swipe of a finger. That's blunted sales of Sony's Walkman MP3 player, which has been criticized as too cumbersome. Design can also mean sound. Samsung insists that all its products make the same reassuring tone when turned on. The Samsung tone is even being used in some advertising. "We want to have the same sound, look, and feel throughout our products so it all works toward one Samsung brand," says Gregory Lee, Samsung's global marketing chief. The era of building brands namely through mass media advertising is over. The predominant thinking of the world's most successful brand builders these days is not so much the old game of reach (how many consumers see my ad) and frequency (how often do they see it), but rather finding ways to get consumers to invite brands into their lives. The mass media won't disappear as a tool. But smart companies see the game today as making bold statements in design and wooing consumers by integrating messages so closely into entertainment that the two are all but indistinguishable. Sansung is the world's largest ship producer. It has been steadily gaining market share on ship building from Japanees companies. That is the sole reason for their brand value. So SONY and Apple are top in the consumer electronics still. Wait till Chineese eat into Samsung's Ship building. They will come down to where they

belong then. The new era is totally about integrating entertainment into the theme. I read other people stating Interbrand was not a reliable source. However this is absurd. Interbrand understands the future of how consumers' minds will work. Everyone is changing day to day. The best brands are the ones that know their products are excellent. They do not need to try and educate you or inform. Branding and advertising in recession What do brands do when faced with falling sales and declining profitability? In a word, they change. While that may not be the most comprehensive answer, it is in part true that brands do not have a comprehensive answer to an economic recession yet. Companies indulge in brand building exercises in better times, with advertising and promotions tailored to make them fit into the brand image that they try to project. In rough weathers, though, companies would not be able to change course at the stroke of a button. Thats why companies review vital variables to suit the changed scenario. Vodafone announced earlier that it was reviewing its global advertising strategy as part of its restructuring efforts the idea was to bring all its advertising projects under one umbrella so that Vodafone could give out a uniform message to the market. And Vodafone is not the only company to rethink its advertising strategy. Volkswagen announced similar intentions as it sought to review its current advertising and promotional programme. Its Das Auto tag line was learnt to be under scrutiny and its advertising was pruned to give out a more contemporary message. The latest to join the bandwagon of companies attempting to recast their advertising platforms to give a twist to their messages and fuel their brand images is the electronics retailer from UK, Comet. Comet lost on its sales year on year marginally, but more profoundly hit was its profit margin, which fell from 44 million pounds to 10 million. Comet has been fighting it out on price and has been doing business with Saatchi & Saatchi. Now, Comet has called for fresh proposals and ideas from advertising agencies, including a change in its message from its existing account with Saatchi & Saatchi. Comet wants to have a message that would be more competitive and give it an edge over competitors.

Sales declines bring about new necessities and churn out new ideas to focus campaigns on; the whole process of change, however, seems to be focused on advertising messages and on advertising agencies, across industries. Naturally, deep impacts are felt on the consumers perceptions on the brand and that is one area that companies wouldnt want to lose out on. Hopefully, these are part of a larger strategy and not just knee-jerk reactions to a tough business environment and falling sales. Global advertising and brand management Good ideas cannot happen in the abstract. They are born out of specificity. Only individuals can have ideas. Groups can't. It may seem counterintuitive, therefore, but in the case of global brand ideas the only good ones will come from creative people working to real life briefs with real life consequences in real life geographies and in real life markets. And they need real life clients with real life pressures. Local specificity is the agar in the petrie dish of the imagination. The pressurised air of a business class cabin is not a workable substitute. But that doesn't mean you have to rely on luck. It is quite possible to manage great global ideas into existence. It's just a question of knowing when and where to apply the pressure. There is a simple solution, but it demands a deep understanding of the creative process, which in turn demands the kind of patience marketing and advertising people seldom have space for in their diaries. During his international tenure in the advertising industry, Gordon Torr worked with an extraordinary variety of creative people on many of the world's largest multinational brands. From teas to telephones he created campaigns for a challenging variety of clients including Unilever, Ford, Nestle, Kelloggs, Kraft, Kodak, Philips, Shell, Vodafone, ABN AMRO, De Beers and the Diamond Trading Company as well as Smirnoff, Baileys, J&B, Malibu and Tanqueray for Diageo. Gordon believes that his book, Managing Creative People, could not have been written without the extensive experience he gained working as Global Creative Director on these brands. All of these clients wanted global advertising ideas. The most liberal of them were happy with local brands working within global

strategic templates. Others wanted single global executions. There is no simple answer to which approach works most effectively for which type of category, but there's a rule of thumb that suggests that if your brand isn't in Duty Free you're better off looking at meta-ideas, that is, generalised concepts that can be reworked strategically and creatively at the local level. The problem with looking at things globally is that you start seeing the world from the window of a 747, and you forget that geography still matters. Most people on the planet the vast majority of the consumers of these goods and services live in particular places and cultures, so they view brand communications and brand experiences through the prism of their language and locality. There's an obvious wisdom in "think globally, act locally", but it clearly hasn't helped the majority of clients or their advertising agencies to solve the problem or where these big brand ideas should come from. Centralist agendas favoured by marketing or advertising people with global hats on are unlikely to succeed as long as budgets are held anywhere outside the centre. The collaborative approach, which has local marketers nodding to the global PowerPoint presentation in a basement conference room in Florida, only exacerbates the divide. Local ideas get patronised; global ideas get ignored. The default way to solve the issue is to appoint a network agency, or a network creative director, to police the planet on behalf of the global marketer, a practical enough idea on paper but a recipe for inevitable political disaster. Centralized creative resource makes the problem worse, not better. Global creative gangbangs are an enormous amount of fun but rarely produce anything other than great Facebook photos. So sooner or later someone - or everyone - gets fired and the whole process starts over again.

Branding strategies and challenges googles strategy in china Businesses generally like to give out consistent messages to their target markets as to what they are and what they stand for. Consumers would like to identify the product and the company with specific images and ideas and hence, the importance of branding in strategy. Branding strategies are carefully crafted around ideas that give business the identity that marks it apart from its competitors. And brands talk about values that the company vouches for and would stand by. This makes branding and consistent branding an essential aspect of business. In the long run, consumers go for the companys products because of the brands that they have created in the consumers minds. However, there are business decisions that test the character of the business, where the opportunities in the market may be so tempting that to ignore them and go past them would go against the grain of the business objective. The most astute businesses wouldnt want to let opportunities go. Such was the case with Google, as it tried to gain market share in China. Google was pulled up by China for being too transparent in its search results the conservative regime in China was for information censorship and Google had to abide by the Governments restrictions if it had to operate. Compliance led to search results being modified or not being shown, which required programs resulting in search results taking time to appear. Further, Google faced a contradiction that went against its brand image. Google has built its brand around the proposition of transparency where it always maintained information was free for all. However, what China offered was a growing market and a huge one in that which required Google to compromise on its brand equity and go with the tide in the domestic search industry, if it were to stay in it for the long term. Google faces the prospect of choosing between whether to go in line with its brand positioning and abandon China altogether or to compromise on the quality of its search results and give in to the Chinese Administrations demands. Googles choice to stay with its branding and values would mean loss of market share and revenues, but it would make sure Google as a brand stays intact in the wider global arena. On the other hand, if Google compromises in China, Googles

brand may lose its standing and lose much on what it has built over the years. Business choices are tricky; but business decisions must be made in line with the overall corporate branding agenda and values, even if it means loss of short term gains.

Top 7 Factors When Choosing An Advertising Agency Your business has been done well the last couple of years, and youve every reason to be proud. Your small but sharp sales force has stretched every limb and sinew to cover the local market ask them to work harder, and theyll drop dead! The brands a household name in your town, and your customers are your best ambassadors. Now what? If you dare to dream big, you need to act that way too. While personalized selling and word of mouth works wonders, it does limit the number of potential customers you can reach out to. When you think its time to widen your customer base, and quickly, its only mass media that can do the trick. And for that to happen, you have to find the right advertising agency. Ahhh we hear the alarm bells in your head already. Advertising and us? That costs big bucks, and we dont know the first thing about it! Chill. You may know nothing about the world of media and communications, but loads of advertising agencies do. That being said, choosing an advertising agency is not something you can do with your eyes closed. Before you zero in on the one, make a checklist of the parameters you must include in your evaluation. There are lots of points to be considered in order to narrow down your search while selecting an advertising agency. Some of them are below: 1. Size does not matter. Big is not necessarily better and small advertising agencies have proved that time and again. In fact, choosing an advertising agency thats aiming to be among the Fortune 500 could work against your business, especially if you want to start small. Heavyweight agencies are likely to put larger clients on priority, at the expense of smaller firms, and sooner or later it will tell on their work. Instead, sign on an agency that is interested in the creative challenge that your business offers, or one that is really keen to work with you for the long term. 2. Let their work speak for itself. Every advertising agency will talk about how creativity is its life blood, but as with most things, one mans food might be anothers poison. Look at some of their prior work to decide whether their

particular brand of ideas is what your business needs. A lot of agencies will brag about the awards that theyve won forget them. Listen to the one that talks about how their work has helped build their clients businesses. 3. Look for all round capability. Choosing an advertising agency is time consuming, so you dont want to have to do that every time you opt for a different medium of advertising. Make sure the agency can provide 360 support that includes not only advertising in print, audiovisual media and the internet, but also direct marketing and public relations. At the same time, enquire about their infrastructure do they own a design studio or do they outsource; what contacts do they have with printing companies and above all, are they proficient in media buying activities? However, if your business is highly internet-oriented, and youd like your advertising to follow suit, specialized agencies might make sense. 4. Talk deliverables. Everyone loves advertising. Its glamorous, exciting, creative and expensive as hell! But talk about measurable results, and the rosy hues fade away faster than you can blink. Measuring the ROI on an advertising campaign is well nigh impossible, or at best, a difficult task. Sales might go up, but that could be due to any number of reasons. And what happens once the campaign is over? Its not like sales will drop down to pre-campaign levels, so how do you measure the benefits over the long term? There are no clear answers and youll have to learn to live with this fact. However, while choosing an advertising agency, keep your discussions as specific as possible. Ask whether they can guarantee a certain impact it need not be a rise in sales alone. Increased brand recall and customer enquiries are equally important fallouts of a campaign. 5. Work the numbers. Weve said it before, advertising doesnt come cheap. Assess what the agencies charge and when. Some might work for a success fee; others stick to a traditional commission or flat remuneration. Whatever be the case, make sure its spelt out clearly in the contract.

6. Look for chemistry. Advertising is first and last, a people driven business. Make sure you know who is going to work on your account, and put it in writing! Access to the top dog in the agency is usually restricted once your account is in the bag, but that should make no difference, as long as the guys on the ground know what they are doing. 7. Look for reliability. Your advertising agency is going to be privy to a lot of your plans, so you need to ensure they can keep confidential information to themselves. Most advertising agencies will tell you that they do not handle competing accounts - but don't let it rest there - check if the agency has a smaller division or another group company that's serving your competitor! Finally, insist on a confidentiality clause that protects your interest in the contract. 8. Full service agency or part- time agency. The full-service agency is involved completely in the advertising functions. It has a large number of expert employees. The organization is typically useful for performing advertising agencies. It looks upon customers as key clients. It communicates with the prospective purchasers. The distinguishing characteristics of the various agencies lie in the creative skills of the personnel of each organization and in the philosophy of advertising. Larger agencies offer better services. The part-time agency offers service on free of cost or project basis. These agencies perform various outside activities and co-ordinate the activities of the advertiser and media men. Clients have greater control over advertising campaigns. Advertisers research agencies generally perform job of partagencies. The selection of a particular agency depends on its size, its services, knowledge and growth 9. Compatibility. The selection of an advertising agency depends on the compatibility of the agency. The needs of the company determine the fitness of the agency. The advertiser visits several agencies and chooses the best agency on the basis of its merits, demerits, accreditation, its methods of handling the accounts and using the available opportunities.

10.Agency Team. This includes management specialists, market researchers, copywriters, media experts, production managers and art directors. The attitude, thinking, experience and personalities of the team members have positive effects on the selection process. 11.Agency Stability. An agency, which has been long in existence generally, performs efficiently and effectively. The greater the investment in the agency, the more vital the contribution of the agency to the advertising activities. The personnel, finance, management and credit are examined before selecting a suitable advertising agency. 12.Services. The services rendered by the agency are evaluated with a view to choosing the best advertising agency. Cost accounting, general agreements, project estimates, selling attitudes and other services performed by the advertising agencies are considered to evaluate their efficiency and credibility in performing advertising jobs. The greater the range of an agencys services, the more fully it can serve the clients needs. The agency can serve the clients by its potential capacity for advertising, sales promotion, media placement, public relations, market research, sales training and distribution channels. 13.Creativity. Creativity is the main element in advertising. If the advertising agency is capable of great creative efforts, it is selected for the purpose. Style, clarity, impact, memorability and action- these are taken into account while evaluating creativity. 14.Problem-solving approach. The agency which has a problem solving approach is considered to be superior and useful. The importance of choosing the right agency cannot be ignored. Caliber, compatibility, balanced services, responsiveness, talent an equitable compensation-these are important factors in selecting an advertising agency.

Module IV

Global Marketing Channels and Physical Distribution

Since the early l960s, standardization has often been viewed as an efficient strategy for global marketers while others have argued for the relative merits of adaptation. A review of the literature reveals two important points: First, relative to other areas of marketing, channels of distribution are given short shrift in the standardization versus adaptation debate; Second, of the existing literature on the standardization of global marketing channels, academicians and practitioners generally concur that marketing channels cannot be standardized. This conclusion may be premature. Thus, this chapter offers a conceptual framework for the possible standardization of global marketing channels. A schematic model of the domestic marketing channel development process is extended to the global arena and a framework for the evaluation of the standardization alternatives in the international marketing channels development context is presented. The globalization of business over the past ten years has increasingly attracted the attention of those interested in international marketing. In fact, a Delphi study of respondents from upper-level positions in business, government, and academia from the US., Japan and Europe found globalization to be one of the top three trends affecting international marketing in the 1990s (Czinkota and Ronkainen 1991). Given the importance of this trend, more scholars and practitioners have become interested in determining the appropriate strategic responses to the changing global marketplace. Global standardization is one such strategic response that has attracted renewed attention. Since the early 1960s, global standardization has often been viewed as a efficient strategy for international marketers. However, others have argued for the relative merits of adaptation, the tailoring of marketing efforts to meet local preferences. An extensive literature on the debate exists (see for instance, Aggarwal 1995; Buzzell 1968; Jam 1989; Keegan 1969, 1993; Levitt 1983; Porter 1986; Wind and Douglas 1986). This debate has continued on for decades without a clear resolution. The recent resurgence of interest in the topic indicates that the potential of global standardization is still of considerable import to marketers.

A review of the global standardization literature reveals two key points. First, relative to other areas of marketing, channels of distribution arc given short shift in the standardization versus adaptation debate. Second, of the existing literature on the standardization of global marketing channels that does exist, academicians and practitioners generally concur that marketing channels cannot be standardized. Specifically, a schematic model of the domestic channel development process is extended to the global arena. STANDARDIZATION VERSUS ADAPTATION DEBATE The standardization debate has centered on the question of whether or not organizations should customize their domestic marketing strategies for foreign markets. Generally, standardization is a more attractive strategy if markets are viewed as relatively homogeneous, while adaptation becomes necessary if markets arc viewed as heterogeneous (Peebles, Ryan and Vernon 1977, 197K). Given advances in technology. Communication and travel which provide more global influences on consumers and organ izations around the world, it has been argued that a global strategic orientation is now necessary, and that standardization of the basic marketing elements is fundamental to such a global strategy (Levitt l93). Others have argued that across-the-board standardization is infeasible (Killough 1978), and that the underlying basis of a global strategy is to make local adjustments to global strategies, depending upon a variety of internal and external forces (Simmonds 1985; Wind and Douglas 1986). Perhaps, unintentionally, the standardization versus adaptation debate may have been miscast as a dichotomous decision (Quelch and Hoff 1986). The practice of global marketing standardization may be more realistically placed on a continuum indicating the relative extent to which the degree of standardization is desirable (Hue and Fraser 1988; Link 1988; Sorenson and Weichmann 1975). However, total standardization of marketing strategy is not feasible (Killough 1978) because there are a plethora of factors that influence ii. Product and industry characteristics, exchange rates and a host of other market differences influence the extent of standardization (Wind and Douglas 1986). But, according to Peebles, Ryans and Vernon (1978), standardization, in general. Is feasible in global markets especially where the host countrys marketing infrastructure is well developed and economically similar to the home market (Jam 1989).

Two aspects of standardization which have been widely recognized in the international marketing literature are process and program standardization (e.g.. Miracle 3968: Sorenson and Weichmann 1975). Process standardization refers to the development of uniform marketing management practices, including the sequencing of tasks, problem solving processes, decision making processes, and performance evaluation procedures (Shruptine and Toync 1981; Jam 1989; Kreutzer 1988). In particular Rafec and Krcutzer (1989) posit that by building a common company language, creating a corporate culture in the parent company and global subsidiaries through job rotation, and standardized training and education (which arc different representations of process standardization) the firm can contribute to the successful development of a global marketing strategy. The general theme of most studies in this area is that it is often more important and possible to standardize global marketing planning and decision making than it is to standardize the content of the entire marketing mix (c.g, Miracle 1968; Sorenson and Weichmann 1975; Dunn 1976; Peebles, Ryan and Vernon 1978). Additionally, the proponents of process standardization are, in general, skeptical of the viability of complete pro- grain standardization. Program standardization which refers to the development of a uniform marketing mix for global markets has been the focus of most standardization literature, especially the earlier studies (Walters 1986). In its purest form, program standardization can be defined as the offering of identical products at identical prices using identical means of promotion through the use of identical distribution systems for each country being targeted (Huzzell 1968; Krcutzcr 1988). Different aspects of the marketing pro- grain that need to be considered for standardization would include product design, product branding, packaging, pricing, advertising, sales promotion campaigns, media budget allocation, types and number of intermediaries, and logistics, among others (Qucich and Hoff 1986; Wind and Douglas l986. The extent to which the marketing program can be standardized depends on factors such as market composition, nature of the product, nature of the target market and the host country market environment (Jam 1989). The implementation of marketing program standardization may further be influenced by an organizations international philosophical orientation (Cateora 1995). Not all of these elements of the marketing mix have received equal attention from researchers. The vast majority of research has focused on the standardization of promotion (primarily advertising). According to Jam (1989), almost half of all major standardization studies over the past quarter of a century have been concerned with promotion. The standardization of product design has

also been considered much more other than the other two elements of the marketing mix. When channels of distribution are discussed in the standardization literature it is usually to acknowledge that the availability and quality of marketing channels may be heavily influenced by culture and tradition, so standardization of distribution channels may be particularly difficult to achieve (lluszagh, Fox and Day 1986; Douglas and Wind 1987; Jam 1993; Stern and ElAnsary 1992). Thus, the generally accepted approach for developing global marketing channels is to adapt channels to the host country environment. As previously mentioned, academicians and practitioners generally concur that a strategy of standardizing marketing channels in global markets is usually not feasible. Even Levitt (1983) did not advocate the systematic disregard of local differences in the formulation of distribution strategy Other authors have made a distinction between prototype and pattern standardization especially in context to global advertising strategy (Peebles, Ryans. And Vernon 1977; Walters and Toyne 1989). Prototype standardization of global advertising allows the same advertisement or campaign to be employed in multiple markets while still allowing thc advertising copy to he adapted for translation. Pattern standardization of global advertising, however, refers to a standardized basic advertising concept or theme, with adaptations to the execution elements made when necessary. For example, Levi Strauss uses the concepts of quality and American heritage around the world. Broad outlines of campaigns arc developed, but specific details of a campaign are allowed to be decided upon locally (For Levis,... 1990).



Marketing strategy in a channels context refers to a firms broad prin iples for the achievement of its distribution objectives for its given target market(s) (Rosenbloom 1990), Six strategic distribution decisions need to he addressed by the firm to achieve its distribution objectives. Channel strategies therefore need to be formulated for all six decision areas. These decisions are: (I) determining the role of distribution in overall objectives and strategies, (2) determining the role of distribution in the marketing mix, (3) designing marketing channels, (4) selecting channel members, (5) managing the channel, and (6) evaluating channel member performance (see Figure I). The process of marketing channel strategy parallels the process for the development implementation, and control of other types of marketing strategies. As stated earlier, the general theme of most of the literature on marketing process standardization is that it is often more important and possible to use standardized practices for global marketing planning and decision making than it is to standardize the content of the marketing mix. This view was endorsed by Sorenson and Wcichmann (1975) who asserted that the method used for approaching and analyzing a marketing problem. And for synthesizing the information in order to arrive at a decision can be absolutely standardized on a global basis. They found that executives in many of the companies surveyed emphasized that it was their skills in developing and implementing systems for international market planning that culminated in their competitive edge. That is, standardization of the processes used in devising marketing strategies was perceived as the key to success. This view has received considerable support (Dunn 1976; Peebles, Ryans. And Vernon 1978; Shruptine and Toyne l981). The process of developing global distribution channels strategies can be viewed similarly. Regardless of the target market, the six basic distribution decisions identified in Figure 1 have to be made in the domestic market as well as in all foreign environments, and they should be made in the order presented. So, despite the many claims that the standardization of marketing channels is not feasible, at the process standardization level, the standardization of marketing channel strategy is a viable and feasible alternative.

STANDA RDIZING GLOBAL MARKETING CHANNELS The marketing channel consists of the external organization which the firm uses to achieve its distribution objectives (Rosenbloom 1995). It includes the route, path or conduit through which goods, products or things of value flow as they move from the manufacturer to the ultimate user of the product. Distribution in global markets, as in domestic markets, involves all activities related to providing place, and possession utilities for industrial users and final consumers.

Design of the Marketing Channel Marketing channel design refers to the development of new channels or the modification of existing channel structures Rosenbloom 1995). Key channel design decisions consist of the following three dimensions: 1. The number of levels in the channel. This refers to the number of intermediary levels between the manufacturer and ultimate users. As the number of intermediary levels increases, the channel increases in length. The number of levels may range from two (e.g., manufacturer-direct users or direct channel) to five levels or more (e.g., manufacturer agent wholesaler retailer -consumer). 2. The intensive at the various levels. This refers to the number of intermediaries at each level which could be intensive (many), selective (few) or exclusive (one). 3. The npes of intermediaries. This refers to the particular type of intermediary to be used at the different levels of the channel (e.g., agents, distributors, dealers, wholesalers and retailers). This would lead to the development of a number of possible channel structure alternatives, which the manufacturer must evaluate in light of variables such as markets served, product types, the environment, and behavioral factors that affect its channel structure. The manufacturer would then implement the channel structure from the set of alternatives which would be most efficient in performing the distribution tasks. Thus, the goal of the channel decision maker is to develop a design mix, consisting of these three channel structure dimensions, which optimizes returns for all channel members. Researchers who conclude that marketing channels cannot be standardized globally are basically referring to the difficulty of standardizing these three channel structure dimensions across all markets due to differing government regulations, marketing infrastructure, the character of mark ets, industry conditions, and other factors. For a company to develop identical channel structures for each of its international markets is indeed an unrealistic undertaking, but, as noted earlier, standardization may take different forms, such as prototype and pattern standardization discussed earlier. It may, for example, be feasible for a company to develop a core standardized channel structure across some of its international markets. This standardized structure may then be altered as deemed necessary. This would be analogous to pattern standardization of advertising in selected foreign target markets. The task then is to determine what would lead a firm toward pattern standardization of global marketing channels rather than adaptation.

Managing the Marketing Channel Once the marketing channel has been designed, it has to be managed. Channel management involves the administration of marketing channels to secure the cooperation of channel members to achieve the firms distribution objectives. Fundamental in the administration of channels is the motivation of channel members (Rosenbloom 1978; 1990). Motivation refers to actions taken by the manufacturer to foster channel member Cooperation in implementing the firms distribution objectives. Moreover, the product, price, promotion and logistical elements of the marketing mix also have to he managed and used as resources in fostering channel member cooperation. Due to cultural differences, management attitudes and behavior dither from country to country in terms of contact level, tempo, formality, ethical standards and negotiation emphasis (Cateora 1993). Furthermore, motivation is shaped by culture (Terpslra and David 1985). Preferred leadership styles differ, and the way that these leadership styles are interpreted and responded to are influenced by culture (Hofstede 1980, 1984). Because managements effectiveness in motivating and securing cooperation may vary across different cultures, the task for the global marketer is to determine when various channel management styles and strategies used in motivating channel members can be standardized rather than adapted. To attain a fuller understanding of how global marketing channels can be standardized, the design and management of marketing channels is addressed by adapting Keegans classic Multinational Product Planning Framework (Keegan 1969). KEEGANS INTERNATIONAL PRODUCT PLANNING FRAME WORK Keegan originally offered five alternatives for product and communication strategy for firms entering foreign markets, as shown in Table 1. These strategic alternatives were addition of three factors: (I) the products function (2) conditions of product use and (3) consumers ability to buy the product. When both product function and conditions of use are the same, the recommended strategy is to standardize both product and promotion strategy. When the products function is different and the conditions of product use are the same, the product itself may remain standardized, but the communications regarding how

the product meets the target markets needs should be adapted. Alternatively, when the function across markets is the same and the conditions of use differ, the communications relating the function of the product may be standardized while the product itself should be adapted to adjust to the different environmental conditions. These four alternatives assume an ability to buy the product. The fifth and final alternative considers entry into developing markets where consumers do not have the ability to buy products, for which the recommended strategy is to innovate backwards (i.e., develop a new but simpler, less costly product), and develop new communications. The framework is particularly useful for practitioners in global markets because it addresses timeless, key issues in a direct, parsimonious fashion. It forces companies to identify the basic needs of the target market and suggests strategies for implementation to best satisfy those needs in terms of product design, promotion, and pricing. The original framework was extended to include pricing strategic alter- natives (Keegan 1993). Currently, the only primary marketing mix element not addressed in Keegans framework is distribution channels.

ADAPTING KEEGANS FRAMEWORK TO GLOBAL CHANNELS STRATEGY Keegans framework for Multinational Product Planning is adapted to address the two key decision areas of global distribution strategy development discussed earlier: (1) the design of the marketing channel and (2) the management of the marketing channel. Towards this end, the two criteria for decision making will be adapted. Rather than considering product function and conditions of product use, marketing channel functions to be performed in a given target market and the target market business culture arc used as the key factors for determining the marketing channel strategic alternatives. In a marketing channels context, these factors are analogous to the original factors of product function and conditions of product use. Moreover, even though Keagan advocated adaptation or standardization as a dichotomous proposition, in this paper it is treated as existing on a continuum. This follows because there may be various forms of standardization, such as prototype and pattern standardization, discussed earlier, in this paper, standardization refers to pattern standardization, which allows for specific details of the channel strategy to be altered locally, rather than requiring complete programmatic standardization. In Keegans original framework (1969) the first criterion, product function, focused on the basic product function for the final customer. While marketing channels arc also designed to ultimately meet a customers needs, there are a variety of channel functions that may be performed to meet those needs. These may be different from target market to target market. Thus, in a marketing channel design context, the focus is on the array of channel functions that may be performed within the channel in a given target market. The functional app roach to marketing channel design has a long history in the marketing literature (Maynard et a). 1932; Converse and Huegy 1946; Duddy and Revzan 1947; Alderson 1949; Alderson 1957). The marketing channel structure uscd is a reflection of the functions the channel needs to perform to enter and operate in chosen markets. That is, the manufacturer identifies the required set of marketing channel functions to be performed and then proceeds to develop the appropriate channel structure (Rosenbloom 1987). The functional approach is comprehensive because it can deal with the full range of possible marketing channel structure choices.

Consider the case of variations in intermediaries across different distribution cultures. In some cultures, intermediaries are accustomed to providing extensive levels of functional performance for the manufacturers whom they represent. They are prepared and accustomed to implementing virtually all of the channel functions necessary to consummate transactions across distant international boundaries. Thus, the foreign manufacturer can confidently rely upon intermediaries to find a way to make its products conveniently available to the target market regardless of the difficulties or complexities involved. The FisherPrice toy company prov ides a good illustration of a manufacturer that has relied heavily on a standardized pattern of channel strategy to enter diverse foreign markets across Western Europe. This strategy consists of developing a channel structure that relies heavily on intermediaries during the initial stages of market development before moving to less reliance as the level of sales volume moves above a critical mass (Buzzell et al. 199$). Such a channel strategy could only be possible in distribution cultures such as those in Western Europe where intermediaries are capable and willing to provide this level of functional performance. On the other hand, in some cultures intermediaries are much less capable or inclined to provide such extensive performance of channel functions for suppliers. They sec their role as essentially that of limited function facilitators whose primary role is simply to break-bulk from large quantities of imported products and provide for transportation of products to final customers. Any level of functional performance beyond this very basic logistical function (such as promotion, order-taking, market information, or technical advice) is viewed as outside of the scope of their normal business practices. Such culturally based limitations of intermediaries have, for example, caused Proctor & Gamble, a company often thought of as the consummate mass-marketer, to significantly alter its standard channel strategy. While usually relying heavily on wholesalers and retailers to communicate with and service final customers, in developing countries, Proctor & Gamble has at times eschewed its traditional marketing channel structure and implemented a direct channel system of selling its products door-to-door because intermediaries simply could not, or would not, provide the range of marketing functions necessary to achieve P & Gs strategic distribution objectives (Czinkota and Ronkainen 1988). The second criterion for product and communication strategy design used in Keegans original framework, conditions of product use, focused on the

environmental conditions which affect the consumption of the product. In a marketing channel management context the foreign environment also has an impact, but its impact is on the management of the distribution structure. Rather than focus on the conditions in which the Customer consumes the product, the focus is on the conditions in which the product moves through the marketing channel structure. This process may be viewed as a series of flows. These flows include the product flow, the negotiation flow, the ownership flow, the information flow and the promotion flow (Vaile, (irether and Cox 1952). Global marketing channel management must effectively manage and coordinate these flows to achieve the firms distribution objectives. 01 all of these flows, communication is perhaps the most fundamental to the management of global marketing channels. The formulation and implementation of channel strategies, and the motivation as well as the evaluation of channel members are totally dependent on the information flow. The information flow in global marketing channels is dependent upon verbal and nonverbal communication; consequently the effectiveness of communication is heavily affected by the cultural environment. For instance, cultures differ in the extent to which the message contained in a communication is explicit or implicit (Hall 1959; 1976). According to hall, countries may be divided into high-context and low-context countries. Information flows in low-context cultures depend more on explicit messages, directly contained in the words of a communication. Information flows in high-context countries, however, depend much more heavily on the nonverbal, contextual aspects of the communication message. These differences make effective communication between high- and low-context cultures more difficult than between two low-context or two high-context cultures; For example, consider a situation in which a marketing channel member inquires of a manufacturer if a particular shipment will arrive in two weeks. A manager from a low context countrys yes answer would essentially be a commitment that the shipment will indeed arrive within that time frame. A manager from a high context countrys yes answer may mean that the shipment will arrive within two weeks. However, it may also mean that there is only a possibility, or that there is no way, that the shipment will arrive within two weeks. In the latter case, the context in which the question is asked and answered is very important. The high context manager may be answering yes to save face for himself and his organization, for the channel member, or for both. Thus, communication across high and low context cultures may be greatly complicated.

The adapted version of Keegans framework for Multinational Product Planning, incorporating the above, is presented in Table 2. Essentially, when the functions of the marketing channel to be performed by channel members arc the same across target markets, the elements of channel design may be considered for pattern standardization. The basic design of the channel may be standardized, with adaptations as deemed appropriate to comply with local government rules and regulations. When the market business culture matches or is the same across two target markets ((hat is, there are two low-context or two high-context countries) the management of the marketing channel may he standardized (akin to pattern standardization). This would result in four alternative strategies: (1) dual standardization. (2) Design standardization and management adaptation, (3) design adaptation and management standardization, and (4) dual adaptation. SUMMARY and CONCLUSION Standardization has long been discussed in the international marketing literature and has often been advanced as a desirable global marketing strategy. However, the vast majority of research in the area has focused on product and promotion standardization and has neglected the area of marketing channels standardization. This article addresses the question of standardization as it applies to global marketing channel

Existing literature on (he standardization of global marketing channels generally avers that marketing channels cannot be standardized. However, as discussed in the paper, the process of marketing channel strategic decision making can he standardized. While complete standardization of the marketing channels program is not feasible due to deterrent government regulations, marketing infrastructure, the character of marketing, industry conditions, and other factors across international markets, the general channel design and management may be standardized across diverse foreign markets, while still allowing mothsi modification. Keegans Multinational Product Planning Framework was adapted to a marketing channels context. Four alternative strategies were developed based on the channel functions (0 are performed in a market and the compatibility of communication flows across cultures. Firms are presented with four alternatives for foreign marketing channels strategy. Thus, rather than simply pointing out the many differences in distribution that exist across markets and lamenting the difficulty of standardizing channels across those different markets, the framework provides firms operating in global markets with a basic starting point for developing and managing their global distribution channels.

Distribution - introduction
Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are Product, Price and Promotion. The Nature of Distribution Channels Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "all the organisations through which a product must pass between its point of production and consumption" Why does a business give the job of selling its products to intermediaries? After all, using intermediarys means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Functions of a Distribution Channel The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions: Information Promotion Contact Matching Negotiation Physical distribution Gathering and distributing market research and intelligence important for marketing planning Developing and spreading communications about offers Finding and communicating with prospective buyers Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Reaching agreement on price and other terms of the offer Transporting and storing goods

Financing Risk taking

Acquiring and using funds to cover the costs of the distribution channel Assuming some commercial risks by operating the channel (e.g. holding stock)

All of the above functions need to be undertaken in any market. The question is who performs them and how many levels there need to be in the distribution channel in order to make it cost effective.
Numbers of Distribution Channel Levels

Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure below shows some examples of channel levels for consumer marketing channels:

In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent. The remaining channels are "indirect-marketing channels".

Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to large retailers such as Comet, Dixons and Currys which then sell the goods to the final consumers. Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented - i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. A good example of this channel arrangement in the UK is the distribution of drugs.

Distribution - channel strategy

The following table describes the factors that influence the choice of distribution channel by a business: Influence Market factors Comments An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.

Producer factors

A key question is whether the producer have the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors. Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers. Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.

Product factors

Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.

Distribution Intensity There are three broad options - intensive, selective and exclusive distribution: Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply. Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

Types of distribution intermediary Introduction There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below: Retailers Retailers operate outlets that trade directly with household customers. Retailers can be classified in several ways: Type of goods being sold( e.g. clothes, grocery, furniture) Type of service (e.g. self-service, counter-service) Size (e.g. corner shop; superstore) Ownership (e.g. privately-owned independent; public-quoted retail group Location (e.g. rural, city-centre, out-of-town) Brand (e.g. nationwide retail brands; local one-shop name) Wholesalers Wholesalers stock a range of products from several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialise in particular products. Distributors and dealers Distributors or dealers have a similar role to wholesalers that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service. Franchises Franchises are independent businesses that operate a branded product (usually a service) in exchange for a licence fee and a share of sales. Agents

Agents sell the products and services of producers in return for a commission (a percentage of the sales revenues)

Module V



Information Systems

"To survive in this new globally competitive world, we had to modernize. Information technology is the glue for everything we do. " JAMES WOGSLAND Vice Caterpiller "Nothing changes more constantly than the past; for the past that influences our lives does not consist of what happened, but of what men believe happened. GERALD JOHNSONSTON W. Chairman,

The objective of the chapter is to make the student understand the importance of market research in international marketing. After the lesson the student would be able to appreciate the following: 1. 2. 3. 4. 5. Overview of Global Marketing Information Systems Sources of Market Information Formal Marketing Research Current Issues in Global Marketing Research An Integrated Approach to Information Collection

Information, or useful data, is the material of executive action the global marketer is faced with a dual problem in acquiring the information needed for decision-making. In high-income countries, the an10unt of information available far exceeds the absorptive capacity of an individual or an organization. The in formation problem is superabundance, not scarcity. Although advanced countries all over the world are in the middle of an information explosion, there is a lack of information available on the market characteristics of less developed countries.

Thus, the global marketer is faced with the problem of information abundance an information scarcity. The global marketer must know where to go to obtain information the subject areas that should be covered and the different ways that information can bi acquired acquired information must be processed in an

efficient and useful way. The technical term for the process of information acquisition is scanning. This chapter presents an information acquisition model for global marketing as well as an outline 0 the global n1arketing research process. Once acquired, information must be processed in an efficient and effective way. The chapter concludes with a discussion of how to manage the marketing information collection system and the marketing research effort. For example, K.M.S. "Titoo" Ahuwalia is the president of ORG-MARG, the largest marketing research company in India. His client list reads like a "Who's Who" of global companies: Avon Products, Gillette, Coca-Cola, and Unilever. And, as Titoo is fond of telling them, they are finding that "India is different." India is the second most populous nation on earth, with a middle class comprised of more than 200 million people. Despite increasing affluence, however, centuries-old cultural traditions and customs still prevail. As a result, consumer behavior sometimes confounds Western expectations. Despite the fact that summer temperatures frequently reach triple digits; only 2 percent of urban dwellers use deodorant. Instead, Indians bathe twice daily. Only l' percent of households have air conditioners, and a recent Gallup survey revealed that only 1 percent intended to buy an air conditioner in the near future. The virtues of frugality once preached by Gandhi remain uppermost in the minds of many; smokers refill disposable lighters, and women recycle old sheets instead of spending money on sanitary napkins. Likewise, in a country where food is believed to shape personality and mood and hot breakfasts are thought to be a source of energy, Kellogg has had little luckwinning converts to cold cereal. For marketers hoping to achieve success in India and other emerging n1arkets, information about buyer behavior and the overall business environment is vital to ef1ective managerial decision-making. When researching any market, marketers n1ust know where to go to obtain information, what subject areas to investigate and information to look for, the different ways information can be acquired, and the various analytical approaches that will yield important insights and understanding. Obviously, India's 16 languages, 200 dialects, and low level of

urbanization create special research challenges. However, similar challenges are likely to present themselves wherever the marketer goes. It is the marketer's good fortune that, since the n1id-1990s, a veritable cornucopia of market information has become available on the Internet. A few keystrokes can yield literally hundreds of articles, research findings, and Web sites that offer a wealth of information about particular country markets. Even so, marketers need to study several important topics in order to make the most of modern information technology. First they need to understand the importance of information technology and marketing information systems as strategic assets. Second, they need a framework for information scanning and opportunity identification. Third, they should have a general understanding of the formal market research process. Finally, they should know how to manage the marketing information collection system and the marketing research effort. Overview of Global

Marketing Information Systems (GMIS)

The purpose of a marketing information system (MIS) is to provide managers and others decision makers with a continuous flow of information about markets, customers, competitors, and company operations. A MIS provide a means for gathering, analyzing, classifying, storing, retrieving, and reporting relevant data about customers, markets, channels, sales and competitors. A companies MIS should also cover important aspects of a companies external environment. For eg: companies in any industry need to pay close attention to government, regulation, mergers, acquisition, and alliances.The internet has also dramatically expanded our ability to access up to date information. Poor operating results can often be traced to insufficient data and information about events both inside and outside the company. For eg: when a new management team was installed at the American unit of Adidas AG, the German headquartered athletics shoe marketer, data were not even available on normal inventory turnover rates. A new reporting system revealed that revolves Reebok and Nike turned inventories five times per year, compared with twice a year at Adidas. This information was used to tighten the marketing focus on the best selling Adidas products. It is no easy task to organize, implement, and monitor global marketing information and research strategies and programs. Increased global economic integration between countries, the demise of communism, volatile currency exchange rates, and other factors of driving the demand for access to credible worldwide business and political information. Todays economic and political environments require worldwide news information on a daily basis. Geocentric global companies generally have intelligence systems that meet the challenges.

Information subject agenda

Starting point for a global MIS is a list of subjects about which information is desired. The resulting subject agenda should be tailored to the specific needs and objectives of the company. The general framework is suggested in table, consisting of six broad information areas.

CATEGORY 1. Markets

COVERAGE Demand estimates, consumers behavior, products, channels, communication media availability and cost, and market responsiveness. Corporate, business and functional strategies and plans. Balance of payment , interest rates, attractiveness of country currency, expectation of analysts. Laws, regulations, ruling concerning taxes, earnings, dividend in both host and home country. Availability of human, financial, information and physical resources. Overview of socio cultural, political, technological environments.

2. Competition

3. Foreign exchange

4. Prescriptive information

5. Resource information

6. General conditions

Elements of the information system

The following constitute the elements of the global information system. Data may be specific or general or both and used for decisions on whether to enter markets or not, in what degree and what emphasis in terms of the marketing mix. General information includes data on the following:

Economic - rate of growth of GNP, level of inflation, incomes Social - people, demographics, culture, subculture Political - risk, instability, attitudes to "foreigners" Technology - current, rate of change, infrastructure Resources - money, manpower, materials, acquisitions, joint ventures Fiscal - taxes, exchange rates Institutions - money markets Managerial - funds

Table 5.2

Categories for a global intelligence system 1. Market information

Market statistics and potential Physical features - infrastructure, communications, money markets, banks etc.

Consumer attitudes and behaviour, spending power, per capita income Channels of distribution - type, availability, effectiveness

Media - availability, effectiveness and cost Information sources - quality, availability and cost Resources - money, human, materials (availability, cost, quality, development) 2. Environmental factors

Economic factors Economic - rate of growth, structure, conduct, capital, economic blocs, (SADC), GNP, GDP, Nl Political/Legal - laws, regulations, investment, "climate", government ideology, stability. Competition - type, structure, operations, strategy plans, programmes, acquisitions, mergers Management capability Social - customs, culture, attitudes, preferences Technology - state, trends development Trading partner(s)

Foreign embassies, NGOs and other developmental thrust 3. Financial/Exchange Balance of payments

Terms of access - quotas, tariffs, duties etc Inflation rates Monetary and fiscal policy Commodity exchanges International competitors Expectations - economists, bankers, business people Currency alterations and movements, controls and regulations Taxes - inflation, incentives, dividends tax rules, earnings, repatriation of profits Intervention by outside bodies e.g. IMF or World Bank and their effect on policy

Spot, forward market

Scanning modes: Surveillance and Search

Once the subject agenda has been determined, the next step is the actual collection of information. This can be accomplished using surveillance and search. In the surveillance mode, the marketer engages in informal information gathering. - Globally oriented marketers are constantly on the look out for information about potential opportunities and threats in various parts of the world. They want to know everything about the industry, the business, the market place, and consumers. This passion shows up in the way they keep there ears and eyes tuned for clues, rumors, nuggets of information and insights from other peoples experiences. Browsing through newspapers and magazines and surfing the internet are ways to ensure exposure to information on a regular basis.

-Global marketers may also develop a habit of watching news programs and commercials from around the world by a satellite. This type of general exposure to information is known as viewing. If a particular news story has special relevance for a company, for eg; entry of a new player into a global industry ,say, Samsung into automobiles- marketers in the automobile and related industries and all competitors of Samsung will pay special attention, tracking the story as it develops, this is known as monitoring.

The search mode is characterized by more formal activity. -Search is characterized by deliberate seeking out of specific information. -Search often involves investigation, a relatively limited and informal type of search.

Investigation often involves seeking out books or articles in trade publications or searching the internet on a particular topic or issue. Search may also consist of research, a formally organized effort to acquire specific information for a specific purpose.

One study found that nearly 75% of the information acquired by headquarters executives at U.S. global companies from surveillance as apposed to search. However the viewing more generated only 13% of important external information, where as monitoring generated 60%. Person can absorb only a minute fraction of the data available to him or her. Exposure to and retention of information stimuli must be selective. Nevertheless, it is vital that the organization as a whole be receptive to information not explicitly recognized as important. Some organizations suffer from a variation of the NIH (not invented here) syndrome. If the information they are viewing has not been generated by the company, it is summarily missed. Over all, the global organization is faced with the following needs: An efficient, effective system that will scan and digest published source and technical journals in the headquarters country as well as all countries in which the company has operations or customers. Daily scanning, translating, digesting, abstracting, and electronic input of information into a market intelligence system. Despite the advances in global information, its translation and electronic input are mostly manual. This will continue for the next few years, particularly in developing countries. Expanding information coverage to other regions of the world.

Sources of market information

Human source- Although scanning is a vital source of information, research has shown that headquarters executives of global companies obtain as much as 2/3 of the information they need from personal sources. -A great deal of external information comes from executives based abroad in company subsidiaries, affiliates and braches. These executives are likely to have established communication with distributors, consumers, customers, suppliers, and government officials. Other important sources are friends acquaintances, professional colleagues , consultants and prospective new employees. The latter are particularly important if they have worked for competitors. - The most secure way of transmitting information is face to face rather than in writing. People are reluctant to commit themselves in writing to highly iffy things. They are not cowards or overly cautious; they simply know that you are bound to be wrong in trying to predict the future and they prefer to not have there names associated with documents that will someday look foolish. These include executives based abroad, specific "look see" missions which are very important, and sales people, customers, suppliers, distributors, and government officials. This information is "internal" to the firm as opposed to documentary sources which are generally external. Most of the information is gathered on a face to face basis.

Documentary sources- One of the most important developments in global marketing research is the extraordinary expansion in the quantity and quality of documentary sources of information. The information explosion is an

explosion in the availability of documentary information not only in print but increasingly on-line and on the internet and the intranet for companyrestricted information. The two broad categories of documentary information are published public information and unpublished private documents. The former is available on the internet, and the latter is available on the intranet or company password- restricted access networks created by organizations for there own employees.

Internet sources- The range and depth of information available on the internet are vast and growing every day. Companies, governments, nongovernmental organizations, market research companies, data assemblers and packagers, security analysts, news gathering organizations, universities and university faculty to mentioned just a few are all sources that can be accessed online. The internet is a unique information source: it combines the three basic information source types: human documentary (published and private) and direct perception. A number of electronic resources have been developed in recent years. These include the national trade data base, which is available on CD-ROM, from the department of commerce. The Gate ways company in Manchester, Massachusetts, has developed pc software called the world trader to help small firms find opportunities in export markets. Similarly the port authority of New York developed a program called export to win to help small business owners learn about exporting, in addition, the internet and other interactive information services feature bulletin boards where a great deal of information about various worlds markets is exchanged. Another online source is the EIU economist intelligence unit , which is maintained by the economists.

Direct perception- direct sensory perception provides a vital background for the information that comes from human and documentary sources. Direct perception gets all the sense involved. Seeing, feeling, hearing, smelling, or tasting for oneself to find out what is going on?, in a particular country rather

than getting second hand information by hearing or reading about a particular issue. Some information is easily available from the other sources but requires sensory experience to sink in. These are "sensory" sources of information, for example, if one heard of the construction of a new cold store at an airport, it could mean that the industry which produces products for airport store is planning to export in quantity. This could give rise to a market opportunity for another potential exporter of the same produce. Direct perception could be achieved by in country visits, where it would be possible to exercise all the sensory receptors sight, taste, touch, intuition, hearing and smell. Often there is no substitute to "feeling out" a situation. Participation in exhibitions, discussions with importing organisations and participation in Government working parties can all be useful sources of data.

Documented sources
In recent years there has been an information explosion, especially in the documented, or "secondary" source area. (Primary data collection will be dealt with later). Various sources of documented data are available including: i) Governments Central office of information (UK) Central Statistical Office (Zimbabwe) EU documentation centres Boards of trade, or Ministry of Commerce ii) International bodies the UN Statistical Yearbook World Bank - general statistics OECD - general statistics ITC - Geneva (information service) iii) Business, trade, professional

Chambers of Commerce Institute of Marketing American Management Association The Market Research Society iv) Foreign embassies, trade missions Commercial newspapers Financial agencies - Price Waterhouse Kompass Register of companies Economist Intelligence Unit (UK) v) Other Libraries, universities, colleges. There are excellent sources of overseas data, in the horticultural industry, giving information on markets, prices and produce required for those wishing to sell into Europe. An example of these are given below: International Trade Centre (ITC) Geneva COLEACP, Paris Natural Resource Institute (NRI) UK GTZ, Germany CBI, Netherlands IMPOD, Sweden Chambers of commerce Food and Agriculture Organization of the United Nations Secondary data from such sources are relatively cheap to obtain and readily available. However the disadvantages are legion. The data may have been collected and manipulated for a specific use, therefore it may be incomplete, ambiguous or out of context.

Data may be compiled in different ways in different countries making comparability difficult., For example, in Germany consumer expenditures are estimated largely on the basis of turnover tax receipts, in the UK they are measured on tax receipts plus household surveys and production sources. Similarly with GNP measures, it only reflects average health per head of population and not how it is dispersed. As seen earlier, bimodalities are normal, thus introducing bias. GNP may be understated for political reasons and may not reflect education (i.e. wealth based on minerals). Also infrastructure may reflect channelled funds, say for tourism, rather than society as a whole - typical of many African countries. Data may be corrupted by methodological and interpretive problems, for example, definitional error, sampling error, section error, non response error, language, social organisations, trained workers, etc. Data may be nonexistent, unreliable or incomplete thus making inter country comparisons very difficult Data may be inflated or deflated for political purposes


Marketing research is the project specific, systematic gathering of the data in search scanning mode. There are two ways to conduct marketing research 1. One to design and implement a study with in house staff. 2. Other is to use an outside firm specializing in marketing research. The process of collecting data and converting it into useful information can be divided into five basic steps:


Research is often undertaken after a problem or opportunity has presented itself. It is a truism of market research that a problem well defined is a problem half solved. Thus, regardless of what institution sets the research effort in motion, the first two questions a marketer should ask are ,What information do I need? and Why do I need this information? The research problem often involves assessing the nature of the market opportunity, a phase that is also known as presearch. This , in turn depends in part on whether the market that is the focus of the research effort can be classified as existing or potential. Existing markets are those in which client needs for secondary information are already being served. In many countries , data about size of existing market in terms of dollar volume and unit sales are readily available. Potential markets can be further sub-divided into latent and incipient market. A latent market is in essence an undiscovered segment. It is a market in which demand would materialize if an appropriate product were made available. In a latent market, demand is zero before the product is offered.

Incipient demand is demand that will emerge if a particular economy, technological, political, or sociocultural trend continues. If a company offers a product to meet incipient demand before the trends have taken root, it will have little market response.


After defining the problem to be studied or the question to be answered, the marketer must address a new set of questions. -What is the information worth to me in dollars(or yen etc.)? -What will we gain by collecting this data? -What would be the cost of not getting the data that could be converted into useful information? Research requires the investment of both money and managerial time, and it is necessary to perform a cost-benefit analysis before proceeding further.


Are data available in company files, a library, industry or state journals or on-line? When is the information needed? Marketers must address these issues as they proceed to the data collection step of the research.

Secondary Data

A low cost approach to marketing research and data collection begins with desk research. Personal files, company or public libraries, on-line databases, government records, and trade associations are just a few of the data sources that can be tapped with minimal effort and often at no cost. Data from these sources already exist. Such data are known as secondary data because they were not gathered for the specific project at hand. Syndicated studies published by research companies are another source of secondary data and information.

Primary Data Survey Research When data are not available through published statistics or studies, direct collection is necessary. Survey research, interviews, and focus groups are some of the tools used to collect primary market data. Personal interview-with individuals or groups-allow researchers to ask why and then explore answers. A focus group is a group interview led by a trained moderator who facilitates discussion of a product concept, advertisement, social trend or other topic. Survey research often involves obtaining data from customers or some other designated group by means of a questionnaire. Survey can be designed to generate quantitative data(How often would you buy?), qualitative data(Why would you buy?), or both. Survey research generally involves administering a questionnaire by mail, by telephone , or in person. A good questionnaire has three main characteristics: 1. It is simple. 2. It is easy for respondents to answer and for the interviewer to record. 3. It keeps the interview to the point and obtains desired information.


Demand Pattern Analysis Industrial growth patterns provide an insight into market demand. Because they generally reveal consumption patterns, production patterns are helpful in assessing market opportunities. Additionally, trends in manufacturing production indicate potential market for companies that supply manufacturing inputs . Income Elasticity Measurements Income elasticity describes the relationship between demand for a good and changes in income. According to the Engels law which states that as income rises, smaller proportion of income are spent on food. Demand for durable consumer goods such as furniture and appliances tends to be income elastic, increasing relatively faster than the increases in income. Market Estimation by Analogy Estimating market size with available data presents challenging analytic tasks. When data are unavailable, as in frequently the case in both less developed countries and industrialized countries, resourceful techniques are required. One resourceful technique is estimation by analogy. There are two ways to use this technique: 1) Cross-sectional comparisons: amounts simply to positing the assumption that there is an analogy between the relationship of a factor and demand for particular product or commodity in two countries. 2) Displace a time series in time: it is based on the assumption that an analogy between market exists in different time periods or in other words markets in question are going through the same stages of market development. This method is useful when data are available for two markets at different level of development. Cluster Analysis

The objective of cluster analysis is to group variables into clusters that maximize within group similarities and between group differences.


The report based on the marketing research must be useful to managers as input to the decision making process. The report should clearly relate to the problem or opportunity identified and it should be clearly stated and provide basis for the managerial action. As the data is available on a worldwide basis it becomes possible to analyze marketing expenditure effectiveness across national boundaries. Therefore, manager can decide where they are achieving the greatest marginal effectiveness for their marketing expenditure and can adjust expenditure accordingly.

Attention has to be paid to: The research design: The design can be descriptive, experimental, observational or simulation. international research is of a descriptive nature or observational. The ability to conduct simulations or experiments depends on the sophistication of the market and the research facilities available. Questionnaire design: Whilst in domestic research, questionnaires can be "closed" or "open ended". Unless trained staff can be found, and the nuances of translation can be mastered, "closed" questionnaires are mainly the norm in international research. The form of data gathered by "closed" questionnaire is mainly of a behavioural or quantitative nature. The form of data gatherered by "open ended" research is qualitative. Attention has to be paid to length, translation, ease of response and method of questionnaire return. The rate of return in international research is often as low as 6% as it is very difficult to give incentives to the respondent. Covering letters should be succinct and written in the language and idiom of the country of destination. Marketers can often use clever devices to increase the response

rates, for example in France, a red dot on the envelope denotes an "official" letter. Questionnaires may contain ranking and rating questions (scaled questionnaires) and these can only be used if the respondent is fully aware of what is being asked. Often, in translation, the nuances and differences of interpretation may make scaling techniques difficult to utilise. Data collection method: Data collection can be done in a variety of ways including personal interview, mail, telephone and observation (either mechanical or human.) Each method has its own merits and demerits. Personal interview allows the building of a relationship between interviewer and interviewee, and allows the "explanation" and "showing". This is particularly important when conducting group discussions or carrying out in depth-research rather than one to one personal interviews. The gathering of "motivational" or "qualitative" data by group discussions will depend to a large extent on the availability of trained interviewees in the researched country. Mail methods allow a longer questionnaire with considered response, but suffers from non response and interpretive problems. The telephone is quick but expensive and in many countries getting to the respondent may be difficult due to lack of a telephone infrastructure. Observation may not be always possible due to cultural blockages. In the end, time and cost elements often dictate the method, but generally mail and personal methods are the most widely used. Sample size and selection: Samples can either be probabilistic or non probabilistic (random and non-random). Random samples can either be simple non-random or multi-random (stratified). Non random samples include quotas, selective or judgemental methods. With probabilistic samples it is possible to be more sophisticated in the analysis by using parametric methods of analysis or project results with greater statistical reliability. With non random sampling techniques, descriptive statistics are more appropriate. In agricultural marketing, rapid rural surveys are a well used method, which are basically a mix of the two sampling techniques. In international research random sampling can be very expensive. Another important decision is the size of sample. Again, the larger the sample size and more difficult it is to obtain (if randomly chosen) the higher the cost will be. Whilst quota sampling may be cheaper there is the possibility that bias may exist

in the sample because of inaccurate prior assumptions concerning population or because the field workers select the respondents, unwittingly, in a biased way.

Location of research facility

It is always a burning question as to where to locate the research, in-country or "at home". In general the more "distant" the country, the better it is to locate the research in-country. Surveillance techniques could, on the other hand, be mainly conducted at home. The following case shows what happened to the Tanzanian sisal industry due, in part, to the lack of a global intelligence facility.

Case 5.1 Tanzanian Sisal

The once world leading Tanzanian Sisal Industry is a classic example of failure due to its inability to monitor market trends, through lack of an adequate intelligence system, as well as many, in-country problems. Basically, it failed to take account of the shrink in demand for sisal fibre in Western Europe. Many sisal mills were being dosed because of the fact that they were old and labour intensive (hence uneconomic), and the: disintegration of markets for sisal fibre in Eastern Europe due to that region's political crises. Sisal was brought into Tanzania by a German Agronomist, Dr. Richard Hingdorf in 1892 and the first estates were established in Tanga and Morogoro regions. After World War I, most estates were sold to Greeks, Swiss, Dutch. British and Asians, although a number of Germans re-acquired their estates from 1926 onwards. From that time, up to and after World War I, Tanzania remained the world's leader in both production and exports.

In the early 60's sisal was Tanzania's largest export, accounting for over a quarter of foreign exchange. Production was around 200 000 - 230 000 tonnes per annum. However, during the 70's and 8Q's production dropped dramatically. In 1970's production was at 202 000 tonnes, in 1979 it was 81000 tonnes, by 1985 production was at 32 000 tonnes, a drop of 87% from the peak of 230 000 tonnes in 1964. Since then production has stagnated at around 30 000 - 33 000 tonnes per annum. Needless to say Tanzania has long since ceased to be the number one world producer and its export earnings fallen well behind that of coffee, cotton tea, tobacco and cashewnuts. Since 1985 Tanzania has been producing 7 - 9% of the world's sisal fibre exports and is in fourth place behind Brazil, Morocco and

Kenya. The decline in sisal production came in two stages, an initial stage up to 1987 and then 1990 onwards. Both internal and external factors account for the decline. In the initial stage, the internal factors included the nationalisation of some of the sisal estates in the late 1960's, an overvalued exchange rate, high export taxes and a controlled single channel marketing system. In the second stage liquidity problems affected production. However, the external factors in the two periods had the most significant effect and show clearly the consequences of an ill prepared intelligence system. In the initial stage up to 1987 Tanzania experienced declining world prices of sisal fibre and the introduction of a substitute, cheap synthetic fibre -polypropylene twines. These factors led to low investment in replanting, leaf transport facilities and factory machines at the estate level. In the second stage of the 1990's onwards, the collapse of the former USSR, one of the major markets for Tanzania sisal fibre and changing world demand were the major factors. An inability to pick up these changes in demand by the intelligence system was a major player in the industry collapse. However, there is a ray of hope with a new swing worldwide to more "greener" and more environmentally friendly products. Tanzania sisal could make a comeback.

Module VI

Cigarettes are one of the most widely distributed and profitable global consumer products. However, as the number of smokers in high-income countries declines due to heightened antismoking sentiment and health concerns, tobacco industry giants such as Britain's B.A.T. Industries PLC and America's Philip Morris Company have set their sights on new market opportunities. In particular, tobacco companies are targeting smokers in developing countries such as China; Thailand, India, and Russia. These are nations in which a combination of forces-rising incomes in some countries and challenging economic conditions in others, smoking is fashionableness, and the status assigned to Western cigarette brandsinteracts to expand the smoking market and brand share of the leading global brands. Moreover, because many women in these countries view smoking as a symbol of their improving status in society, the tobacco companies are aggressively targeting women. The actions taken by managers at Philip Morris, B.A.T., and other tobacco companies are examples of market segmentation and targeting. Market segmentation represents an effort to identify and categorize groups of customers and countries according to various characteristics. Targeting is the process of evaluating the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond. Such targeting reflects the reality that a company should identify those consumers it can reach most effectively and efficiently. Segmentation, targeting, and positioning are all examined in this chapter.

MARKET SEGMENTATION is the process of subdividing a market into

distinct subsets of customers that behave in the same way or have similar needs. Each subset may conceivably be chosen as a market target to be reached with a distinctive marketing strategy. The process begins with the basis of segmentationa product specific factor that reflects differences in customers requirements or responsiveness to marketing variables. Global market segmentation is a process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs, or, as one author put it, it is the process of identifying specific segmentswhether they be country groups or individual consumer groups- of potential customers with homogeneous attributes who are likely to exhibit similar buying behaviour.

Geographic segmentation is dividing the world into geographic subsets. The advantage of geography is proximity: markets in geographic segments are closer to each other and easier to visit on same trip or to call on during the same time window. LIMITATIONS The mere fact that markets are in the same world geographic does not meant that they are similar. Japan and Vietnam are both in East Asia, but one is high income, post industrial society and the other is an emerging less developed, pre industrial society.

Demographic segmentation is based on measureable characteristics of population such as age, gender, income, education and occupation. A number of demographic trends-aging population, fewer children, more women working outside the home and higher income and living standardssuggest the emergence of global segment. For most consumer and industrial products, national income is the single most important segmentation variable and indicator of market potential. Annual per capita income varies widely in world markets, from a low of $81 in the Congo to the high of $38,587 in Luxembourg. The U.S. market, with per capita income of $29,953, more than $8.3 trillion in 2000 national income and a population of more than 275 million people is enormous. Thus, Americans are the favourite target market. Many global companies also realize that for products with a low enough price-e.g. cigarettes, soft drinks and some packaged goods-population is a more important segmentation variable than income. Thus, China and India with respective population of about 1.3billion and 1.0 billion might represent attractive target markets.

To know the standard of living of people in a country, it is necessary to determine the purchasing power of the local currency. In low income countries the actual purchasing power of the local currency is much higher than the implied by exchange values. Age is another useful demographic variable. One global segment based on demographics is global teenagers-young people between the ages of 12 and 19. Teens, by virtue of their interest in fashion, music and a youthful life style, exhibit consumption behaviour that is remarkably consistent across borders. Another global segment is so called elite: older, more affluent consumers who are well travelled and have the money to spend on prestigious products with an image of exclusivity. This segments needs and wants are spread over various product categories: Durable goods e.g. luxury automobiles Non durables e.g. upscale beverages such as rare wines and champagne Financial services e.g. American express gold and platinum cards

PSYCHOGRAPHIC SEGMENTATION Psychographic segmentation involves grouping people in terms of their attitudes, values and lifestyles. Data are obtained from questionnaires that requires respondents to indicate the extent to which they agree or disagree with series of statements. Backers Spielvogel & Batess Global Scan Global scan is a study that encompasses 18 countries, mostly located in the Triad. To identity attitudes that could help explain and predict purchase behaviour for different product categories, the researchers studied consumer. Combining all the

country data yielded a segmentation study known as Target Scan, a description of five global psychographic segments that BSB claims represent 95% of the adult populations in the 18 countries surveyed. BSB has labelled the segments as follows: Strivers(26%). This segment consists of young people with a median age of 31 who live hectic, on the go lives. Driven to achieve success, they are materialistic pleasure seekers for whom time and money are in short supply. Achievers (22%). Older than Strivers, the affluent, assertive Achievers are upwardly mobile and already have attained a good measure of success. Achievers are status conscious consumers for whom quality is important. Pressured(13%). The Pressured segment, largely comprised of women, cut across age groups and is characterized by constant financial and family pressures. Lifes problems overwhelm the members of this segment. Adapters(18%). This segment is composed of older people who are content with their lives and who manage to maintain their values while keeping open minds when faced to change. Traditional(16%). This segment is rooted to the past and clings to the countrys heritage and cultural values. Global scan is helpful tool for identifying consumer similarities across national boundaries as well as highlighting differences between segments in different countries. E.g. in United States, the 75 million baby boomers help swell the ranks of Strivers and Achievers to nearly half the population. Global scan also revealed the marked differences between the circumstances in which Strivers find themselves in different countries. In the United States, Strivers are chronically short of both time and money, whereas Japanese Strivers have ample monetary resources. Darcy Massius Benton & Bowlers Euroconsumer Study

DMBBs research team focused on Europe and produced a 15-country study titled The Euroconsumer: Marketing Myth or Cultural Certainty? The researches identified four lifestyle groups: Successful Idealists. Comprising from 5 to 20 % of the population, this segment consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals. Affluent Materials. These status conscious up-and-comers many of whom are business professionals, use conspicuous consumption to communicate their success to others. Comfortable Belongers. Comprising one quarter to one half of a countrys population, this group, like Global Scans Adapters and Traditionals, is conservative and most comfortable with the familiar. Belongers are content with the comfort of home, family, friends and community. Disaffected Survivors. Lacking power and affluence, this segment harbours little hope for upward mobility and tends to be either resentful or resigned. This segment is concentrated in high-crime, urban inner city neighborhoods. Despite Disaffected Survivors lack of societal status, their attitudes nevertheless tend to affect the rest of society. The first two groups represent the elite, the latter two, mainstream European consumers. Young & Rubicams Cross Cultural Consumer Characterizations (4Cs) Young & Rubicams 4Cs is a 20-country psychographic segmentation study focusing on goals, motivations, and values that help to determine consumer choice. The research is based on the assumption that there are underlying psychological processes involved in human behaviour that are culture free and so basic that they can be found all over the globe. There are three groups which are further subdivided into seven segments: Constrained (Resigned Poor and Struggling Poor)

Middle Majority(Mainstreamers, Aspirers and Succeeders) Innovators (Transitional and Reformers) ATTITUDES WORK LIFESTYLE PURCHASE BEHAVIOUR

Resigned Poor Unhappy Distrustful Struggling Poor Unhappy Dissatisfied Mainstreamers Happy Belong Aspirers Unhappy Ambitious Sales White collar Trendy Sports Fashion magazines Conspicuous consumption Credit Craftsmen Teaching Family Gardening Habit Brand loyal Labor Craftsmen Sports Television Price Discount stores Labor Unskilled Shut-in Television Staples Price

Succeeders Happy Industrious Transitional Managerial Professional Travel Dining out Luxury Quality

Rebellious Liberal

Student Health field

Arts/crafts Special interest magazines

Impulse Unique products

Reformers Inner growth Improve world Professional Entrepreneur Reading Cultural events Ecology Homemade/grown

Behaviour segmentation focuses on whether people buy and use a product, as well as how often and how much they use it. Consumers can be categorized in terms of usage rates e.g. heavy, medium, light and nonuser. Consumers can also be segmented according to user status: potential users, non users, ex users, regulars, first-timers and users of competitors, products. Nestle is marketing bottled water in Pakistan where there is a huge market of nonusers who, despite their low income, are willing to pay 18 rupees a bottle for clean water because of the widespread presence of arsenic poisoning in well water and the pollution of surface water. Tobacco companies are targeting China because the Chinese are heavy smokers.

BENEFIT SEGMENTATION Global benefit segmentation focuses on the numerator of the value equation-the B in V=B/P. This approach can achieve excellent results by virtue of markerters superior understanding of the problem a product solves or the benefit it offers, regardless of geography. e.g. nestle discovers that cat owners attitude toward feeding heir are same everywhere.

VERTICAL VERSUS HORIZONTAL SEGMENTATION Vertical segmentation is based on product category or modality and price points. E.g. ,in medical imaging there is X-ray, computed axial tomography(CAT) scan, magnetic resonance imaging(MRI) and so on. Each modality has its own price points.

Targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospect(s) with the highest potential. CRITERIA FOR TARGETING The three basic criteria for assessing opportunity in global target markets are the same as in single country targeting: Current Segment Size and Growth Potential Is the market segment currently large enough that it presents a company with the opportunity to make a profit? If it is not large enough or profitable enough today does it have high growth potential so that it is attractive in terms of a companys long term strategy? Indeed, one of the advantages of targeting a market segment globally is that, whereas a segment in a single country market might be too small, even a narrow segment can be served profitably with a standardized product if the segment exists in several countries. The billion plus members of the global MTV Generation constitute a huge market that, by virtue of its size, is extremely attractive to many companies. Potential Competition A market or market segment characterized by strong competition may be segment to avoid or one in which to utilize a different strategy.

Often a local brand may present competition to the entering multinational. In Peru, Inca Kola is as popular as Coca-Cola. In India, Thumbs Cola is a major brand. In the Siberian city of Krasnoyarsk, Crazy Cola has a 48% share of the market. The multinational might try more or different promotions or may acquire the local company or form an alliance with it.

Compatibility and Feasibility If a global target market is judged to be large enough, and if strong competition are either absent or not deemed to represent insurmountable obstacles, then the final consideration is whether a company can and should target that market. In many cases, reaching global market segments requires considerable resources such as expenditures for distribution and travel by company personnel. Another question is whether the pursuit of a particular segment is compatible with the companys overall goals and established sources of competitive advantage. Although Pepsi was firmly entrenched in the Russian market having entered in 1972, Coke waited 15 years to make its first move in Russia and 20 years before it decided to make major investments. At the time of Cokes entry, Pepsi had 100% of the Russian market.


There are three basic categories of target marketing strategies: Standardized Global Marketing Standardized global marketing is analogous to mass marketing in a single country. It involves creating the same marketing mix for a broad market of potential buyers.

This strategy calls for existence distribution in the maximum number of retail outlets. The appeal of standardized global marketing is clear: greater sales volume, lower production costs and greater profitability. The same is true of standardized global communications: lower production costs and if done well, higher quality and greater effectiveness of marketing communication. Coca-Cola, one of the worlds most global brands, uses the appeal of youthful fun in its global advertising. Concentrated Global Marketing The second global targeting strategy involves devising a marketing mix to reach a single segment of the global market. In cosmetics, this approach has been used successfully by the House of Lauder, Chanel and other cosmetics houses that target the upscale, prestige segment of the market. This is the strategy employed by the hidden champions of global marketing: companies that most people have never heard of that have adopted strategies of concentrated marketing on a global scale. These companies define their markets narrowly. They go for global depth rather than national breadth. Differentiated Global Marketing The third target marketing strategy is a variation of concentrated global marketing. It entails targeting two or more distinct market segments with different marketing mixes. This strategy allows a company to achieve wider marker coverage. E.g. in the segment of sports utility vehicle(SUV), Rover has a $50,000+ Range Rover at the high end of the market; a scaled down version, the Land

Rover Discoverer, is priced under $35,000, which competes directly with the Jeep Grand Cherokee. These are to different segments, and Rover has a concentrated strategy for each.


Positioning is the location of your product in the mend of your customer. Thus, one of the most powerful tools of marketing is not something that a marketer can do to the product or to any elememnt of the marketing mix: Postioninig is hat happens in the mind of the customer. The position that a product occupies in the mind of a customer depends on the host of variables, many of which are controlled by the marketer. After the global market has been segmented and one or more segments have been targeted, it is essential to plan a way to reach the target(s). To achieve this task, marketers use positioning. In today,s global market environment , many companies find it increasingly important to have a unified global positioning strategy. Can global positioning can work for all products? One study suggest that global positioning is most effective for the product cateogries that approach eithrt end of a high-touch or high-tech continuum. Both ends of the continuum are characterized by high levels of customer involvement and by a shared language among consumers.

High-Tech Positioning
Personal computers, video and stereo equipment and automobiles are examples of product cateogries in which high tech positioning has proven effective. Such products are frequently purchased on the basis of concrete product features, although image may also be important. High tech products can be divided into following three cateogries: 1. Technical Products Computers, chemicals, tires and financial services are just a sample of product cateogries whose buyers have specialized needs, require a great deal of product information and share a common language

2. Special Interest Products Although less technical and more leisure or recreation oriented, special interest product are also characterized by a shared experience and high involvement among users. Again, the common language and symbols associated with such products can transcend language and cultural barriers.

High-Touch Positioning
Marketing of high touch products requires less emphasis on specialized information and more emphasis on image. High touch products highly involve customers. Buyers of high touch products also share a common language and set of symbols relating to themes of wealth, materialism and romance. There are three categories of high touch products. These are: 1. Products that Solve Common Problems At the other end of the price spectrum from high tech products in this category provide benefit links to lifes little moments. Ads that show friends talking over a cup of coffee in a cafe or quenching thirst with a soft drink during a day at the beach put the product at the centre of everyday life and communicate the benefit offered in a way that is understood worldwide.

2. Global Village Products Chanel fragrances, designer fashions, mineral water and pizza are all examples of products whose positioning is strongly cosmopolitan in nature. Fragrances and fashions have travelled as a result of growing worldwide interest in high quality, highly visible, high priced products that often enhance social status. However, the lower priced food products just

mentioned show that the global village category encompasses a broad price spectrum. 3. Products that Use Universal Theme There are some advertising themes and products appeals are thought to be basic enough that they are truly transnational. Additional themes are materialism( keyed to images of well being or status), heroism(themes include rugged individuals or self-sacrifice), play(leisure/recreation) and procreation(images of courtship and romance)

Brand Launching and Sustainingin a developing country :

The case study of Honda on Vietnam Motorcycle Market Authors Thi Bich Ngoc Nguyen Thi Xuan Thu Nguyen
Purpose The project is to investigate the Brand Launching and Sustaining in a The Case Study of Honda on Vietnam Motorcycle Market developing country through the study on how Honda has successfully launched and sustained its Brand on the Motorcycle Market of Vietnam. Problems Honda's Brand Launching campaign and the company's strategies and initiatives to Sustain its Brand on the Motorcycle Market of Vietnam. Methodology The realistic approach and case study method are to be applied. The information should be gathered through numerous sources: primary data from the email qualitative interviews with the managers of Honda Motorcycle Vietnam, and the email quantitative surveys among Vietnam's Honda Motorcycle users; secondary data from the articles in a variety of newspapers and magazines as well as websites. Conceptual Model The contents covered in the project are Brand Launching and Sustaining. In particular, theories related to Brand Launching in terms of Brand Identity and Brand Positioning, as well as Brand Sustaining with respects

to Brand Growth and Brand Maturity should be investigated and analysed. In addition, what is of significance importance is the base of the company's Branding Strategies -the business environment of the destination country. Therefore, the disseration should thoroughly investigate the Grasp of the Market including Market Assessment (Government Policies, Demand Conditions and Market Opportunities) and Communications (Marketing and PR Activities and Social Corporate Responsibility) which serve as the foundation for the firm's market-based or fully tailored Branding Strategies to the specific conditions or characteristics of the destination nation. Findings Honda has adopted appropriate Branding Strategies (Brand Identity, Positioning, Growing and Sustaining) on Vietnam Motorcycle Market. The firm has identified its Brand as true Made-in-Japan products of high quality and reasonable price. It serves as 'the power of dreams' created in an ideal corporate culture and environment friendly working condition which is committed to advanced technology and society orientation. Honda Brand has been positioned to satisfy the needs for a transportation means of reliability, long duration, safety, hi-tech, fuel saving and environment protection of the middle and high class customer groups in Vietnam. To compete with such rivals as Yamaha, Suzuki, SYM and

Piaggio, Honda has adopted proper Growing Strategies with Cub and Scooter categories including a range of product lines. In addition, the company has implemented appropriate Sustaining Strategies focusing on Communication Efforts and Influencer Proximity with a variety of Marketing and PR activities, Safety Driving Plan and Social Activities ranging from Environmental Preservation, Educational Development, Safety Driving Support Activities to Donation and Charity Activities. Actually, Honda's Branding strategies have been fully tailored to the specific market conditions of Vietnam. Conclusion Honda has gained the leading position on Vietnam Motorcycle Market since 1996 when the company penetrated into the country. Honda Brand has received great love from Vietnamese customers and become more than a Brand, but a citizen of Vietnam who 'strives to become a company that the society wants to exist'. Recommendation Honda Brand success should only be maintained when the firm is managed to constantly strengthen Honda Brand itself as well as identify and fix the shortcomings: keep serving as a good Vietnamese citizen, be consistent with the company's reasonable pricing strategy, improve the firm's customer relationships and pay more attention to the counterfeit brand defense.

Lessons Honda's great achievements in Vietnam offer valuable lessons for the firms who desire to successfully brand in Vietnam in particular and developing countries in general: Concerning Brand Launching (Brand Identity and Positioning), the company should invest in Marketing and PR activities, adopt Reasonable Price and Localization strategies, pay attention to Customer Relationship, Influencer Proximity and Corporate Social Responsibility to become a good citizen of the market country. Regarding Brand Sustaining (Brand Growth and Maturity), the firm should take advantages of brand extension and line extension, maintain the Launching Strategies and simultaneously Bring Added Values and Recreate a Perceived Difference for its brands, Actively and dynamically involving itself in the Competition and also adopting Dual Management.

Emerging Markets :
a Case Study on Foreign Market Entry in Laos; MBA-thesis in marketing
University essay from Hgskolan i Gvle/Institutionen fr ekonomi
AUTHOR: Petter Lindh; [2009]
Background This thesis is conducted for Husqvarna AB with the aim to map the Laotian market for them in terms of market potential for forestry power equipment. In order to provide decision material for further action I was asked to give a description of the Laotian forestry sector; research potential harvesting volumes; analyze the competitive situation; describe the general business conditions in Laos; and provide some insight as to how Husqvarna can enter the Laotian market. Method The method I have used for collection of information is two-fold. The empirical data has mostly been derived via interviews with forestry officials and companies involved in forestry. The theoretical review and collection of secondary data has been performed by research of books, journals, reports, newspapers and online sources. The research methodology can accordingly be labelled "the actor approach" which methodology is based on understanding social entireties. An important element in this approach is a process referred to as the hermeneutic circle - a process in which new knowledge is continuously incorporated into the understanding and used as base for further research. An important part of the method is my personal experience of Laos, from which I consider myself being able to base some conclusions. Theoretical Review Foreign market entry can generally be made in four modes: Exporting, licensing, joint ventures, or sole ventures. Foreign market entry strategies may involve adapting the marketing strategy. It may also necessitate product adaption.

Market entry in developing countries will most likely mean being exposed to unfamiliar environments. The general business conditions might be very different from the home market and constitute higher levels of trade barriers and sociocultural distance may be difficult to deal with.

Case Study, Conclusions and Reflections The highlights from these two chapters include: 1. Laos offers foreign investors to use any of the four market entry modes. 2. Doing business in Laos receives a low international rating, especially in terms of labor restrictions. It also has rather high trade barriers. 3. Laos is developing its commercial tree plantation sector and estimates suggest that the harvesting volumes will be increasing rapidly in the coming 10-15 years. 4. Importing and selling forestry power equipment is restricted. Laos does not yet have any authorized dealer for chainsaws. This provides for interesting opportunities. 5. The market is flooded with cheap, illegally imported, Chinese chainsaws, but it is questionable whether this actually constitutes any competition to Husqvarna, being a high quality brand. The Chinese chainsaws might however soon increase in terms of quality and be more competitive. 6. Obtaining an import and sales license for outdoor power products may be a rather lengthy procedure but once in place would mean being the first authorized dealer - which might be advantageous.

Recommendation Due to Laos making efforts to increase the commercial tree plantation area, the harvesting volumes will increase rapidly the coming years. The sales potential for forestry equipment will hence increase in the years to come.

My recommendation to Husqvarna, if they have resources, is therefore to locate a dealer and enter the Laotian market. Plantations are however still mostly in the development phase. It is therefore doubtful that early entry is profitable enough to be motivated if there are other markets with higher potential that Husqvarna wants to enter.

Module VII

Global eMarketing
In the past few years there has been an explosion of online commercial activity enabled by the lnternet or world wide web. This is generally referred to as electronic marketing (c-marketing), with a maior component of c-marketing being electronic transactions taking place on Internet-based markets (electronic markets or e-markets). The development of the Internet as a 'new' distribution channel will result in a shift of power from the manufacturers and the traditional retail channels to the consumers. This increasing consumer power can be explained in the following ways: The search for convenience. The Internet gives people a new tool together information and purchase more easily than do traditional channels. The incorporation of the net into the purchase process. Pre-purchase and postsale use of the Internet is exploding, regardless of where the product is bought. A shift in loyalties. Consumers reward online merchants with higher repeatpurchase behavior. Future buying plans. Survey results indicate an increasing consumer disposition to buy online (Boston Consulting Group, 2000; IDC, 2000). Today's technology only scratches the surface of efficient comparison shopping and product search. The development of automated buying profiles networked buying clubs and online auctions will bring greater price competition to the Internet. Merchants must be prepared to live up to we will match any price' marketing guarantees. Competing on the Internet is different from the traditional industrial world. Competition no longer takes place in the physical marketplace, but in the market space. This computer-mediated environment has profound implications for how business is transacted between buyer and seller. The nature of transaction is

different in that is based on information about the product or services rather than on its physical appearance or attributes. The context of the transaction is different; instead of taking place in a physical world it occurs in a computermediated environment with the buyer conducting the transaction from a personal computer screen. Consequently, to be a player in many industries does not require a physical infrastructure such as buildings and machinery; a computer and communications platform are sufficient. Like so many 'buzz words in use today, c-marketing tends to mean different things to different people. The enablement of a business vision supported by advanced information technology to increase the effectiveness of the business relationships between trading partners. Examples of e-marketing transactions are: An individual purchases a book on the Internet. A government employee reserves a hotel room over the Internet. A manufacturing plant orders electronic components from another plant within the company using the company's intranet.

At internet Marketing
Search Engine Optimization Organic Marketing Web Design PPC strategy & maintenance Website Branding Traffic Analysis & Statistics Email Marketing Web 2.0 Marketing Niche Identification Viral Marketing

Internet Marketing Solutions Internet media marketing campaign is believed to be the best suitable solution for the problems faced by the present highly competitive world of marketing. Popularly known as online media marketing and digital media marketing, the discipline of internet media marketing provides a cost-effective target-oriented alternative for the promotion of products or services. Online media marketing campaigns are pursued with the help of several technology based tools like website banners, social networks, email newsletters, etc. There are several ways in which the internet media marketing can be done providing meticulous marketing solutions to the media marketers. One of the finest and most appropriate internet marketing solutions is Search Engine Optimization, popularly known as SEO. Search Engine Optimization means using the right keywords in the media marketing campaign so that the campaign finds place in any popular search engine like Google, MSN or Yahoo. The idea behind attaining the search engine optimization is to attract the maximum number of prospective leads. Every single person who enters that particular keyword can be attracted to the campaign by search engine optimization, which automatically means a very wide base of prospective leads. Apart from this, the media marketer can engage himself directly with the customers through social networks. There is a virtual world of social networks which have most of the internet users attached to them in one way or the other. By creating an id on any of the popular social networking sites, the internet media marketer can establish a direct contact with a large customer base. Apart from these very popular internet media marketing tools, the media marketer can also resort to email newsletters and online distribution of press releases. There are many online wire services which distribute the press releases around the world free of cost or at a very meager price. This makes the internet media marketer connect to the media houses around the world and publicize his product or services to the customer base across the globe. Therefore, an

appropriate mix of internet media marketing tools provides an apt internet marketing solution for the promotion of any kind of business around the world.

What is an Effective Internet Marketing Strategy? Before you even start creating internet marketing strategy for your website(s), you need to do a research. Thats where it all begins actually. Just like in any business, you have to understand where you are and what can you do.

#1 Phase - Online Research

In this phase, you must research your market. Who are your main competitors? What are they doing online? PPC, SEO, press releases, develop their own products, do affiliate marketing or Adsense? What are their weaknesses? Do they offer a guarantee? Is their product really good? Do they build links constantly or not? Who is your favourite customer? Where do they hangout: MySpace or YouTube? Are they freebie seekers or desperate buyers? What forces them to buy one or another product? Read reviews, forums, testimonials to find out as much as you can about your target market.

#2 Phase Data Analysis

If youve performed a thorough online market research, its time to systematize the data you have. Write down what are the main strengths and weaknesses of your competitors. Maybe you have more time than your competitors? Or maybe you know some targeted traffic source that others dont. How might this affect your business? Which are the places your target market usually visits? What are their main concerns? Maybe theyre not satisfied with the products in the market. Can offer

something better, maybe in a form of a bonus? After that, you come to the next step, which is developing your internet marketing strategy.

#3 Phase Strategy Development

When you already know your target market and your competitors, you are able to start creating your internet marketing strategy (or strategies). Just sit down and think about: who you are and what you can offer to the target market. It involves a little bit of planning. What marketing methods youll use and which ones you can afford? PPC, SEO, email, blogging, podcasting, video blogging, webinars, viral traffic generation, link building, banner exchange or others? You must prioritize your web marketing tactics. Find out whats going to bring you positive ROI in the shortest time possible. Do you have enough time to perform search engine optimization? If so, then sit and do everything you can, day in day out, to rank at the top in search engines. Dont have time? Then buy PPC traffic and start testing your landing pages effectively. Or buy resell rights to products and sell them on ClickBank with the help of JV partners. Dont have time AND money? Then you better get one or another, otherwise youre dead. Seriously, you must find ways to get time or money. You need to think about how you can exploit other peoples time and money to build your own web business. Thats what rich people do and thats what you must do if you want to survive in this competitive world.

#4 Phase Monitoring Performance

When you have an internet marketing plan, you can start implementing it right away. The last step is to start monitoring your internet marketing campaigns. Which keywords people typed into search engines to find your site? Which keywords brought you the most money in PPC marketing? Are you satisfied with your SEO rankings or not? Do majority of your visitors leave your site without even spending 30 seconds? And so on Only with the help of close monitoring you can discover what works and what doesnt. Testing landing pages, testing Adwords ads against each other (A/B split testing) can show you some amazing results. And remember you never know for sure until you TEST it!

There is no formula for an effective Internet marketing strategy. It depends on your individual situation. When you realize your strengths and weaknesses, youll be able to come up with a great marketing plan. No matter if youre thinking about Adsense site, affiliate site or your own product. When you find out what youre able to accomplish with your resources at the moment, you can create a great web marketing strategy for your online business and finally breakthrough on the internet.

Relationship Marketing
Relationship marketing is critical to any organization that wants to maintain and grow revenue and profitability from its existing customer base as well as attract new customers. Effective relationship marketing aligns to various means and channels that are permission based and provide accurate and relevant information to each recipient.

The key benefits of working with and using our capabilities for relationship marketing include integrated and synchronized communications from one resource and transparency between customer data and the results of your marketing initiative. We view relationship marketing as a continuous process that requires ongoing analysis to mine customer responses, identify trends and create communications, offers and or upsell opportunities in real time that align to those efforts.

The success of any customer relationship management program revolves around customer data. Some clients express a concern that they dont have the proper data or mechanisms in place to gather data to execute an effective relationship

management program. This is where the benefit and utility of our cross media capabilities provides great benefit and opportunity. We can develop and initiate programs and campaigns designed to gather, mine and or align data for scaling up to an ongoing relationship marketing programs. From online surveys, landing page sequencing and more effective segmentation to simple call center interview questions and messaging we can make relationship marketing work for you and your customers. Effective customer retention programs through relationship marketing help drive and increase customer profitability that increases over time. In addition customer acquisition costs are minimized the longer the relationship. That is why we believe prospects that have been pre-qualified to have a strong interest and desire to purchase are at the entry point of any relationship marketing program.

What is Relationship Marketing? Description Relationship Marketing is an approach which emphasizes the continuing relationships that should exist between the organization and its customers. It emphasizes the importance of customer service and quality and of developing a series of transactions with consumers. The terminology was first described by Theodore Levitt in 1983. Origin of the Relationship Marketing Approach. History Already in 1980, B. Schneider wrote: What is surprising is that researchers and businessmen have concentrated far more on how to attract customers to products and services than on retaining customers. In 1983 Levitt wrote: In a great and increasing proportion of transactions, the relationship actually intensifies subsequent to the sale. This becomes a central factor in the buyer's choice of the seller the next time. Relationship Marketing is strongly linked to Business Process Reengineering. According to this reengineering theory, organizations should be structured according to complete tasks and processes. Rather than functions. Usage of Relationship Marketing. Applications Relationship marketing and traditional transactional marketing are not mutually exclusive and they are not necessarily in conflict with each other. Relationship Marketing may be more suitable in the following circumstances or situations: High value products or services. Industrial products. Products are not generic commodities. Switching costs are high. Customers prefer a continuous relation. There is customer involvement in the production phase. Steps in the Relationship Marketing Process 1. Chart the service delivery system. Set standards for each part of the system, especially the 'encounter points'. 2. Identify critical service issues. 3. Set service standards for all aspects of service delivery. 4. Develop customer communication systems.

5. Train employees on building and maintaining a good relationship with clients. 6. Monitor service standards, reward staff for exceeding service levels, correct sub-standard service levels. 7. Ensure that each employee fully understands the importance of quality and relationships in the marketing philosophy. Strengths of Relationship Marketing. Benefits Focus on providing value to customers. Emphasis on customer retention. The method is an integrated approach to marketing, service and quality. Therefore it provides a better basis for achieving Competitive Advantage. Studies in several industries show that the costs to keep an existing customer are just a fraction of the costs to acquire a new customer. So often it makes economic sense to pay more attention to existing customers. Long-term customers may initiate free word of mouth promotions and referrals. Long-term customers are less likely to switch to competitors. This makes it more difficult for competitors to enter the market. Happier customers may lead to happier employees.

Limitations of the Relationship Marketing model. Disadvantages Relationship Marketing is less appropriate in the following circumstances: Relatively low value products or services. Consumer products. Generic commodities. Switching costs are low. Clients prefer a single transaction to relationships. No / low customer involvement in production.

Case Study: IBM Electronics Value Chain Management

The goal Improved operational effectiveness Are you looking for ways to deliver maximum value to your customers for the least possible cost? Could your business bring products to market faster? Electronics Value Chain Management from IBM can offer you consulting, applications and architecture to help you reduce value chain inefficiencies. The advantage Rely on our experience We can help you win in the marketplace through experience, technology and innovation tailored to meet your organisation's needs: The benefits of Electronics Value Chain Management have been proven within our demanding electronics manufacturing operations. Our consultants are experts in value chain strategy, organisational change and business designtheir detailed knowledge of the electronics industry enables them to develop comprehensive value chain solutions that can address your unique requirements. Few other companies have the breadth and depth of our service offerings. The benefits Successful business transformation Electronics Value Chain Management from IBM follows a proven methodology to build a customised value chain transformation for your business. We can help:

Determine the potential return on your investment by analysing the risk and reward for different implementation scenarios. Provide a strategy and road map for your entire supply chain. Objectively evaluate and select an enterprise solution and value chain process based on your unique business needs. Implement the applications needed to streamline your specific business operations. Provide the infrastructure to reliably support value chain management applications and processes. With value chain management you can: Improve your operational effectiveness with the rapid execution of business processes. Enable a more accurate view of future demand. Enable collaborative planning and execution with your business partners to maximise throughput. Enhance forecast, capacity and demand information by collaborating with trading partners. Achieve business value through effective end-to-end value chain management. The ROI Business benefits Electronics Value Chain Management can significantly lower costs and improve operational effectiveness. Many of our customers have seen: On-time delivery improved by 10-20%. Production cycles shortened by 10-50%.

Time to market reduced by 5-25%. Planning cycle time cut by 25-75%. Operating costs lowered by 8-12%. Transportation spending reduced by 8-12%. Direct material costs cut by 8-12%.

Further reading
Chaffey, D., Ellis-Chadwick, F., Johnston, K. and Mayer, R. (2006) Internet Marketing: Strategy, Implementation and Practice, (3rd edn), FT/Prentice Hall, Harlow (UK). Chakrabarti, R. and Scholnick, B. (2002) 'International expansion of eretailers: where the Amazon flows', Thunderbird International Business Review, 44(1), pp. 85-104. Clarke, I. and Flaherty, T.B. (2003) 'Web-based B2B portals', Industrial Marketing Management, 32(1), pp. 15-23. Connelly, M. (2006) 'In Europe, sexy will sell Dodge', Automotive News Europe, 11(3), pp. 20. Dobele, A., Toleman, D. and Beverland, M. (2005) 'Controlled infection! Spreading the brand message through viral marketing', Business Horizons, 48, pp. 143-149. Emiliani, M.L. and Stec, D.J. (2002) 'Realizing savings from online reverse auctions', Supply Chain Management: An International Journal, 7(1), pp. 1223. Gulledge, T. (2002) 'B2B emarketplaces and small- and medium-sized enterprises', Computers in Industry, 49(1), pp. 47-58. Jalassi, T. and Leenen, S. (2003) 'An e-commerce sales model for manufacturing companies: a conceptual framework and a European example', European Management Journal, 21(1), pp. 38-47. Joergensen, J.L. and Blythe, J. (2003) 'A guide to a more effective World Wide Web presence', Journal of Marketing Communications, 9, pp. 45-58. Phelps, J.E., Lewis, R., Mobilio, L., Perry, D. and Raman, N. (2004) 'Viral marketing or electronic word-of-mouth advertising: examining consumer responses and motivations to pass along email', Journal of Advertising Research, December, pp. 333-348. Sashi, C.M. and O'Leary, B. (2002) 'The role of Internet auctions in the expansion of B2B markets', Industrial Marketing Management, 31, pp. 103110.

Sevais, P., Madsen, T.K. and Rasmussen, E.S. (2007) 'Small manufacturing firms' involvement in international e-business activities', International Marketing Research: Opportunities and Challenges in the 21st Century, Advances in International Marketing, 17, pp. 301-321. Sheth, J.N. and Arun Sharma (2005) 'International e-marketing: opportunities and issues', International Marketing Review, 22(6), pp. 611622. Standifer, R.L. (2003) 'Managing conflict in B2B e-commerce', Business Horizons, March-April, pp. 65-70. Thiessen, J.H., Wright, R.W. and Turner, I. (2001) 'A model of e-commerce use by international SMEs', Journal of International Management, 7(3), pp. 211-233. Turban, E. (2002) Electronic Commerce: A Managerial Perspective, Prentice Hall, International Edition Upper Saddle River, N.J. Wilson, S.G. and Abel, I. (2002) 'So you want to get involved in ecommerce', Industrial Marketing Management, 31, pp. 85-94.
Global Marketing channels

1. Vernon, R. "International Investment and International Trade in the Product Cycle." Quarterly Journal of Economics, May 1966, pp 190 -207. 2. Perlmutter, H.J. "Social Architectural Problems of the Multinational Firm." Quarterly Journal of AISEC International. Vol. 3, No. 3, August 1967. 3. Cavusgil, S. T. "Differences among Exporting Firms based on Degree of Internationalisation". Journal of Business Research, Vol. 12,1984. 4. Firat A. F., Dholakia N., Venkatesh A., "Marketing in a Postmodern World. European" Journal of Marketing Vol 29 No. 1 1995 pp 40-56

5. Hakansson, H. (ed), "International Marketing and Purchasing of Industrial Goods." IMP Project Group, John Wiley and Sons, 1982. 6. Jaffee S. "Exporting high value food commodities." World Bank Discussion Paper No. 198. The World Bank 1993. 7. Johanson, J and Mattison, L.G. "Internationalisation in Industrial Systems - A Network Approach." Paper prepared for the Prince Bertil Symposium on Strategies in Global Competition. Stockholm School of Economies, 1984. 8. Keegan, W. J. "Global Marketing Management" 4th Edition. Prentice Hall International Edition 1989. 9. Kotler, P." Marketing Management, Analysis, Planning, Implementation and Control", 6th Edition. Prentice Hall International Edition, 1988. 10. Wensley J.R.C. "PIMS and BCG New Horizons" or False Dawns Strategic Management Journal No. 3 April/June 1982. 11. Carter, S. "Multinational and International Marketing in Constraint Economies." The Quarterly Review of Marketing, Summer 1988, pp 13-18. 12. Smith, P. "International Marketing." University of Hull, MBA Notes, 1990. 13. Terpstra, V. "International Marketing", 4th ed. The Dryden Press, 1987. 14. "The Business Herald " (Zimbabwe) January 19, 1995

REFERENCES International marketing by Rakesh Mohan Joshi Global Marketing Management by Warren J. Keegan
Case Studies
Emerging Markets : a Case Study on Foreign Market Entry in Laos; MBA-thesis in marketing

Brand Launching and Sustainingin a developing country : The case study of Honda on Vietnam Motorcycle Market