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Global Marketing Management

PART – A

1. Explain about the importance of International Marketing?


In the era of globalization, a company which fails to go global may also find itself in situation of
losing domestic business to its competitors with lower costs, greater experience, and better
quality products and in a nutshell, more value for the customers
Direct And Indirect Benefits on Foreign Trade to Ldcs. International trade possesses great
importance for LDCs. It provides the urge to develop the knowledge and experience that make
development possible, and the means to accomplish it
The introducing of foreign trade opens the possibility of a “vent for surplus” (or potential
surplus) in the primary producing LDCs. Since, land and labour are underutilized in the
traditional subsistence sector in such a country, its opening up to foreign trade provides larger
opportunities to produce more primary products in exchange for imports of manufactured
products which it cannot itself produce. Thus, it benefit from international trade
Indirect Benefits of Foreign Trade to Under Developed Countries
First, foreign trade helps to exchange domestic goods having low growth potential for foreign
goods with high growth potential. Being deficient in capital goods and materials, they are able to
quicken the pace of development by importing them from developed countries.
Second, foreign trade possesses an “educative effect”. Underdeveloped countries lack in critical
skills, which are a greater hindrance to development than is the scarcity of capital goods. Foreign
trade tends to overcome this weakness
Third, foreign trade provides the basis for the importation of foreign capital in LDCs. The larger
the volume of trade, the greater will be the ease with which a country can pay back interest and
principal
Lastly, foreign trade benefits an LDC indirectly by fostering healthy competition and checking
inefficient monopolies

2. How are the internal environmental factors influencing international marketing decisions
Marketing does not operate in a vacuum but it occurs in a complex and changing
environment. Other actors in this environment – suppliers, intermediaries, customers,
competitors, publics and others – may work with or against the company. Major
environmental forces – demographic, economic, political and cultural – shape marketing
opportunities, pose threats, and affect the company’s ability to serve its customers and devel-
op lasting relationships with them. An organization’s internal marketing system is largely
controllable by the management. An outline of the important internal factors (organizational)
is given below:
Value System
The value system of the founders and those at the helms of affairs has an important bearing on
the choice of business, the mission and objectives of the organization, business policies and
practices.

Mission and Objectives


The business domain of the company’s, priorities, direction of development, business
philosophy, business policy, etc. is guided by the mission and objectives of the company.

Management Structure and Nature


The organizational structure, the composition of the Board of Directors, extent of
professionalization of management, etc. are important factors influencing business decisions.
Internal Power Relationship
Factors like the amount of support the top management enjoys from lower levels and workers,
shareholders and Board of Directors have important influence on the decisions and their
implementation. The relationship between the members of the Board of Directors is also a
critical factor.

Human Resources
The characteristics of the human resources like skill, quality, morale, commitment, attitudes,
etc. could contribute the strength or weakness of an organization. Some organizations find it
difficult to carry out restructuring or modernization because of resistance by employees
whereas they are smoothly done in some others.
Company Image
The image of the company matters while raising finance, forming joint ventures or other
alliances, soliciting marketing intermediaries, entering purchase or sale contracts, launching
new products, etc.
Other factors
In addition to the factors mentioned above, there are other internal factors, which contribute
to business success/failure or influence the decision-making. They are: the production
capacity, technology and efficiency, the productive apparatus, etc. These factors influence
the competitiveness of a firm. Research and Development, the organization for marketing,
quality of the marketing men, distribution network, etc. has direct bearing on the marketing
efficiency. The financial policies, financial position and capital structure are also important
internal environment affecting business performance, strategies and decisions.

3. What are the steps involved in product planning for global markets?

In International marketing, ‘global product planning’ is a term which is used to describe the
complete process of bringing a new product or service to a new market.
There two parallel paths involved in the global product planning process: one involves the
idea generation, product design, and detailed engineering and the other involves market
research and marketing analysis.
Product Planning Process
The successful new product planning process consists of 8 major steps;
1. Idea Generation
• Internal sources
• Customers
• Competitors
• Distributors
• Suppliers
• Others
2. Idea Screening
To spot good ideas and drop poor ones
• is the product truly useful to consumers and society
• availability of market
• does it mesh well with company’s objectives and strategies
• is it easy to advertise and distribute
• availability of technology
• risk exposure, profitability, cost and benefit
• any other factor
3. Concept Development And Testing
• Product concept is a detailed version of the new product idea stated in meaningful
consumer terms
• Concept development – a new product idea is developed into alternative product concepts
• Concept Testing – calls for testing new product concepts with groups of target customers
4. Marketing Strategy Development
• Describe target market
• Planned product positioning
• Planned sales and market share
• Profit goals for the first few years
5. Business Analysis
• A review of the sales, costs and profit projections for a new product to find out whether
these factors satisfy they company’s objectives
• Sales forecast
• Estimation of costs and profits
6. Product Development • Development of product according to the decided specifications.
7. Test Marketing
• In realistic market setting
8. Commercialization
• Launch of product in commercial markets.

4. How can you maintain public relations in global marketing? Explain it with an
example.

Public Relations are very important in the business of altering or negotiating relationships
between organizations and other nations.
1. Achieving goals is much more difficult in global arena due to cultural and
language differences, regulatory environments, political and economic systems, media
and other local variables that must be considered.
2. But with a proper organizational thinking, it is possible to respond to all of
these factors, while at the same time pre-serving the local and global mandates..
3. GPR professionals would be likely to succeed in maintaining Public relations
when they are able to persuade people by personally taking action and devising creative
ways to solve a problem. They should be able to speak local languages, even dialects, and
be able to find and get local help. It is essential to learn the culture they are going to
interact with; and finally, to tell truth.
4. There is greater usefulness in articulating and analyzing client’s social,
political, economic, and cultural contexts, contexts to develop strategies of issues
management and environmental scanning, which allow professionals to foresee trends,
opportunities, and threats.
5. Eg. McDonald’s Canada set up a website which encourages consumers to ask
them questions, which they genuinely and quickly answer to keep the discussion going.
It’s a way of connecting the individual with the company and a brilliant tactic for busting
some of the myths about what goes into McDonald’s food. For a company that is always
in the public eye, giving people a place to ask what is in their food is very smart. It
quickly became a hit with the public.
6. Culture marketing is becoming more and more important in PR Eg. APPLE
One of the teams within Apple’s PR division is given over to “momentum and buzz
marketing”- “integrating Apple’s products into popular culture”.

5. What are the factors to be considered while selecting channels for distribution in
global markets?

Global marketing channels deal with channels within which goods and services pass to
reach their foreign consumers. This implies that manufacturers and consumers must be
located in either the manufacturers or consumers country or having presence in both
countries.
(1) The Nature of the Product- These factors include physical characteristics of a product
and their impact on the selection of a particular channel of distribution( Size and weight
of product: Perishability: Unit value of a product: Standardisation: Product Lines:)
(2) The Nature of the market- customer wants-how, where and under what circumstances
(3) The Nature of Middlemen- Cost of distribution of goods: Availability of desired
middlemen: Services provided by middlemen
(4) The nature and size of the manufacturing unit- Desire for Control of Channel: Ability
and Experience of the Undertaking
(5) Government Regulations and Policies - The Government may impose certain
restrictions on the wholesale trade of a particular product arid takeover the distribution of
certain products
(6) Competition- The nature and extent of competition prevalent in an industry is another
detrimental consideration in selecting a distribution channel
6. What do you mean by ethnocentric marketing/management concept? Explain in
detail.
Dr. Howard Perlmutter of the University of Pennsylvania first observed that there were
three basic orientations guiding the work of international executives: ethnocentric,
polycentric, and geocentric. This was later expanded to include a regional orientation and
became an EPRG schema (ethnocentrism, polycentrism, regioncentrism, geocentrism).
The ethnocentric orientation is an assumption that the home country is superior. It
believes that the products and practices that succeed in the home country are superior
and, therefore, should be used everywhere.
Overseas operations are viewed as being secondary to domestic and primarily as a means
of disposing of surplus domestic production. Plans for overseas markets are developed in
the home office utilizing policies and procedures identical to those employed at home.
There is no systematic marketing research conducted overseas, there are no major
modifications to products, and there is no real attention to consumer needs in foreign
markets.
It is based on a belief in home-country’s superiority. This leads to an extension of home
country products, polices, and programs.
Costs and benefits of ethnocentrism
Costs Benefits

Ineffective planning due to poor feedback Simple organization

Subsidiary 'valuable' executive flight Greater communication and control

Fewer innovations

Inability to build a high caliber local org.

Lack of flexibility and responsiveness


7. How demographic factors of a country is influencing global marketing?

Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics. The demographic environment is of major
interest to marketers because it involves people, and people make up markets

The world population is growing at an explosive rate. It now totals more than 5.9 billion
and will exceed 7.9 billion by the year 2025. The explosive world population growth has
major implications for business.
A growing population means growing human needs to satisfy. Depending on purchasing
power, it may also mean growing market opportunities.
The world’s large and highly diverse population poses both opportunities and challenges.
Thus, marketers keep close track of demographic trends and developments in their
markets, both at home and abroad. They track changing age and family structures,
geographic population shifts, educational characteristics, and population diversity.
Changes in the demographic environment will also have its impact on the international
marketing decisions. Data on demographic characteristics help marketers to produce
goods according to the specific requirements of population.
The population in different countries differs in their achieved educational level and this
will have its implications on the demand. Changes in household patterns also change the
demand for products. Hence, an international marketer has to adapt his production to suit
the requirements of different age groups.

8. Compare and Contrast Product Standardisation & Adaptation.

Basis Adaptation Standardization


Application in It is supported by strong market variety Companies should apply
Marketing especially by market individualism and the four basic marketing
Means market uniqueness. instruments (4P5) in the
same way world wide
Reason for Almost every international company MNC should think globally
Application takes into account (in higher or lower and apply integration
level), regional or local conditions access world wide
which are typical to the differentiation.
Product Altering relevant feature of product in Designing a product that is
Offered significant ways for each & every identical in every relevant
individual geographical market in the way for geographical
product is sold market in which the
product will be sold.
Characteristics A product is differential from A standard product does
competitor’s product and further the not need to have all the
products produced by particular characteristics of the other
company. products buyer requires.
Need Satisfy a particular need of buyer Satisfy the heterogeneous
needs of the buyer.

PART – B

9. Explain the various factors influencing pricing decisions in Global Marketing.

It is a universally accepted fact that “Price” is the hero of any transaction, because the
demand for any commodity or service, depends on the price quoted for it. Similarly,
the supply of any commodity or service also depends on the price is paid for it.

Price is defined as the particular value of exchange or money quoted for a particular
commodity at a particular time of a particular day. Wherever a new product is
introduced in the market, this factor called ‘Price Level’ must be considered as the
basis for the sales price or selling price.

The Price is very closely related to the utility, as utility is the ability of a commodity
to satisfy human wants. In the global marketing management “Price” refers to the
“Export Price” mainly. The global marketing management should pay a special at-
tention to the development of suitable policies for pricing. They are analyzed
thoroughly as product policies.

For the study of Global Marketing Management, the environmental analysis is very
important. The differences in culture, the economic environment and political and
legal factors are considered as important in global marketing.

Environmental Influence in Pricing Decisions


Social and Cultural Forces
Culture is a set of shared values passed down from generation to generation in a society.
These values determine the socially acceptable behaviour.
(a). Family
In some countries the family is an extremely close – knit unit, whereas in some other
countries the family members act more independently.
(b). Social Customs and Behaviour
Customary behaviour varies from country to country.
(c). Education
The literacy level influences advertising, branding and labeling.
(d). Language Differences.
Some words may have different meanings in some language. Therefore, it is better to
print the contents of label in the local and national language.

Political and Legal Factors


In this area, the stability of government and its attitudes towards free trade is more
important. The major legal forces affecting global markets are the barriers created by
governments to restrict trade to protect domestic industries.
The following are some of such barriers:
a. Tariff
This is normally a tax imposed on a product, entering a country. The tariffs are used to
protect the domestic producers. For example, Japan has a very high tariff on imported
rice.
b. Import Quota
This is a limitation on the amount of a particular product that may be brought into a
country. Like tariffs, the quotas are also intended to protect the local industries. For
example U.S.A has promulgated a law called “The Quantity Restriction Act”.
c. Local Content Law
This is a regulation, specifying the particular proportion of a finished products
components and labour which must be provided by the importing country. For
example, to sell a Japanese Car in Taiwan, the car must be assembled in Taiwan. A
firm may import most of the products parts and buy some parts locally and have the
final product assembled locally. These laws are used to provide jobs and protect
domestic industries.

Other Factors- Internal


• Return on Investment (ROI)-A firm may set as a marketing objective, the
prerequisite that all products achieve a certain percentage return on the organization’s
spending on marketing the product. This level of return along with an estimate of
sales will help determine suitable pricing levels needed to meet the ROI objective
• Cash flow-Firms might seek to set prices at a level that will insure that sales income
will cover product production and marketing costs. This is most likely to happen with
new products where the organizational objectives permit a new product to simply
meet its expenditures while efforts are made to establish the product in the market
Fixed costs-Likewise referred to as overhead costs, these represent costs the
marketing organization sustains that are not affected by level of production or sales
• Variable costs-These costs are directly related with the production and sales of
products and, consequently, might change as the level of manufacture or sales
changes.
• Market share-The pricing decision might be important when the firm has a goal of
gaining a hold in a new market or retaining a certain percentage of an existing market
• Maximize profits-Mature products that appeal to a market that is no longer growing
may have a company target requiring the price be set at a level that optimizes profits
External Factors
Elasticity of demand-Understanding how price changes influence the market
necessitates the marketer have a firm understanding of the idea economists call
elasticity of demand, which relates to how purchase amount changes as prices change
Customer expectations-Possibly the most noticeable external factors that influence
price setting, are the expectations of customers and channel partners. When it comes
to making a purchase decision customers assess the overall “worth” of a product
much more than they assess the price [11]. When deciding on a price marketers need
to conduct consumer research to determine what “price points” is satisfactory
Direct competitor pricing-Almost all marketing decisions, including pricing, will
contain an evaluation of competitors’ offerings. The impact of this information on the
actual setting of price will be contingent on the competitive nature of the market
Primary product pricing-Marketers may sell products regarded as complementary to a
primary product

10. Elucidate the role of logistics in global marketing.


“Logistics is the process of planning, implementing and controlling the efficient,
effective flow and storage of goods, services and related information from point of
origin to point of consumption for the purpose of conforming the customer
requirement”.
Logistics is also important on the global scale. Efficient logistics systems throughout
the world economy are a basis for trade and a high standard of living for all of us.
An efficient logistics system allows a geographical region to exploit its inherent
advantage by specializing its productive efforts in those products in which it has been
an advantage by specializing its productive to other regions.

Logistics has gained importance in the international marketing with the following
reasons:
1. Transform in the customers attitude towards the total cost approach rather than direct
cost approach
2. Technological advancement in the fields of information processing and
communication.
3. Technological development in transportation and material handling.
4. Companies are centralizing production to gain economies of scale.
5. Most of the MNC organizations are restructuring their production facilities on a
global basis.
6. In many industries, the value added by manufacturing is declining as the cost of
materials and distribution climbs.
7. High volume data processing and transmission is revolutionizing logistics control
systems.
8. With the advancement of new technologies, managers can now update sales and
inventory planning faster and more frequently, and factories can respond with more
flexibility to volatile market conditions.
9. Product life cycles are contracting. Companies that have gone all out to slash costs
by turning to large scale batch production regularly find themselves saddled with
obsolete stocks and are unable to keep pace with competitors‟ new-product
introductions.
10. Product lines are proliferating. More and more product line variety is needed to
satisfy the growing range of customer tastes and requirements, and stock levels in both
field and factory inevitably rise.
11. The balance of power in distribution chain is shifting from the manufacturers to the
trader

Following are the reasons behind the extension of logistics activities at global level to
do business internationally.
The magnitude of global business are:
• Increase in the magnitude global business. • Business are relying on foreign countries
to provide a source of raw materials and markets for finished goods. • Fall of global
trade barriers. • Increase in Global competition

a) A perspective change in business and marketing urged the necessity of


integrating logistics in marketing activities
b) A second change is that the customer‟ expectations of service have increased.
The customer is now more demanding and more sophisticated.
c) Another change that has had serve impact in many industries is the trend for
product life cycles to become shorter
d) The following areas are the major scope of logistics:
Demand forecasting • Distribution communication • Inventory Control •
Material Handling • Order Processing • Part & Service Support • Plant and
Warehouse side selection • Procurement • Packaging • Salvage & scrap
disposal • Traffic & transportation • Warehousing & Storage • Time & Place
Utility • Efficient Movement to Customer • Return goods handling • Customers
Service

Business success is increasingly linked to effectively managing international logistics.


Growing number of low-cost countries vis-à-vis their sourcing and rising sales to
international customers are triggering companies to seek new ways to manage the
costs, complexities, and uncertainties of moving goods across borders.

11. Summarize the different complexities in international marketing.


Due to global investments, evolution of internet and technology and international
trade/freedom of movement, the need for international market research has grown
exponentially. As international market research allows us to reach beyond the domestic
audience, it is beneficial for companies looking to expand globally. Even so, there are
many challenges concerning this type of research
1. Market Differences
In every product category, differences are still great enough across national and cultural
boundaries to require adoption of at least some elements of the marketing mix (product,
price, advertising and promotion, and channels of distribution).. Global marketing does
not work without a strong local team who can adapt the product to local conditions
2. Brand History
Even in cases where the product itself may be a good candidate for globalization, a
brand’s history may require a distinct and different marketing strategy and positioning
in each country. This is true even for high-potential products such as the image-driven
brands. If a brand has an established identity in national markets, it may not be possible
to achieve a single global position and strategy.
3. Management Myopia
In many cases, products and categories are candidates for globalization, but
management does not seize the opportunity. A good example of management myopia
is any company that does not maintain leadership in creating customer value in an
expanding geographical territory. A company that looks backward will not expand
geographically.
4. Organizational Culture
The successful global companies are marketers who have learned how to integrate
global vision and perspective with local market initiative and input.
5. National Controls/Barriers to Entry
Every country protects local enterprise and interests by maintaining control over market
access and entry. Today, tariff barriers have been largely removed in the high-income
countries. However, the other significant barriers, so-called the non-tariff barriers
(NTBs), make it difficult for foreign companies to gain access to a domestic market.
The worldwide movement toward deregulation and privatization, particularly during
the nineties that started with the disintegration of USSR in 1991 resulting in the
emergence of CIS countries, has softened or broken the link between government and
enterprises indeed is an initiative that has led to a significant opening up of formerly
closed markets.

12. In a globalized marketing scenario how can a company overcome the barriers on
account of cultural & social differences? Suggest a suitable mechanism.
Culture is something that shapes an individual's behaviour and perception for the
world. Small groups including family, work colleagues would create norms, rituals,
heroes, even symbols, and as a result of these practices in social life. Thus, it becomes
necessary for an individual to know more about the cultural differences prevailing in
the society.
In today's age of multinational companies flourishing internationally at rapid pace, it
gives scope for all to learn about various cultures existing. When people work
together, they come from various nationalities, beliefs, values, ideologies, languages.
It is very necessary for an international manager to know how to gauge the cultural
differences among his employees. There are certain strategies which helps a manager
in keeping the differences at bay. It also helps to learn how to change the differences
into advantages for an organization.

Strategies for Managing Cross-Cultural Differences:

As the managers and the employees in a multinational organization gradually


understand the dimensions and differences, it is the duty of both managers and the
employees to adopt the strategies to keep the diversity at bay. Following are the
strategies which help us to overcome the obstacles of cross-cultural differences;

1. Good knowledge of foreign culture:


The first strategy is acknowledging and admitting the existence of differences
between cultures. This mainly includes differences in perceptions, interpretations and
evaluations of social situations and people who create them and act within them.
These differences than have to be named, described, explained and understood.

2. Respect of a foreign culture:


Respect of a foreign culture means most of all accepting their differences without any
judgment. Cultures are different and for their members they represent optimum to
manage life situations in conditions they have been living in for a long time.

3. Helpful steps in the relationship to a foreign culture:


The next strategy of the recommended process should be the effort to find common
solution, mutual understanding and simplification of the complicated and demanding
process of behaving in different cultural conditions.

4. Ignore the cultural differences:


The ignorance of diversity precludes effective management of cultural differences
and also precludes the possibility of minimizing negative impacts and increasing
positive impacts of diversity.

5. Minimize differences:
In this strategy, the managers recognize cultural differences but only as a source of
problems. This strategy is mostly adopted by ethnocentric organizations. In such
organizations, managers try to reduce the problems of differences by reducing
cultural diversity.

6. Managing differences:
This strategy is adopted by synergistic organizations. These organizations recognize
the impacts of cultural differences that lead to both advantages and disadvantages.
The managers in synergistic organizations believe that "our way and their way of
believing and managing differ, but neither is superior to other". In this case, the
managers and employees minimize potential problems by managing the impacts of
cultural differences, not by minimizing the differences themselves
CONCLUSION:

As the globalization is increasing, cultural differences are bound to be found in


workforce. It becomes very important for a manager to deal with complex issues
arising out of the cultural differences and mold the differences into benefits. The
cultural differences in multinational companies are taken as positive factor and helps
in building synergies. This shapes the organization to equip the best to fight against
the rivals and get more competitive advantage of it. Once the cultural differences are
managed in proper way by the managers, it becomes easy for the organization to
flourish in all cultures across the globe

13. What modalities are okay for a diversified global company to have very good after
sales service network?
This is the golden age of services, and to survive and prosper, we’re told, every
company must transform itself into a services business. Executives swear by that
services-centric view of the world, but privately, they admit to one niggling concern:
Most companies either don’t know how or don’t care to provide after-sales services
effectively. Top managements the world over treat aftermarket services as a mere
afterthought.
Customers don’t expect products to be perfect, but they do expect manufacturers to
fix things quickly when they break down. Not surprisingly, customers are usually
unhappy with the quality of after-sales support
In the automobile industry, for example, there’s a distinct correlation between the
quality of after-sales service and customer intent to repurchase. Brands like Lexus
and Saturn inspire repeat purchases by providing superior service, and,
consequently, they have overtaken well-established rivals like Ford and Chrysler.
Companies can benefit in several strategic ways by focusing on after-sales
services. It can be a source of differentiation as well. . Being on par with your rivals
in performance, price, and quality gets you into the game; after-sales services can
win you the game
When businesses provide aftermarket support, they gain a deep understanding of
customers’ technologies, processes, and plans—knowledge that rivals can’t easily
acquire. That provides companies with an unlikely, but sustainable, competitive
advantage.
Tackling Aftermarket Challenges

It isn’t surprising, though, that companies find it tough to compete in the


aftermarket. Across industries, delivering after-sales services is more complex than
manufacturing products. When delivering service products, executives have to
deploy parts, people, and equipment at more locations than they do to make
products. An after-sales network has to support all the goods a company has sold in
the past as well as those it currently makes.
Businesses also have to train service personnel, who are dispersed all over the
world, in a variety of technical skills. Moreover, after-sales networks operate in an
unpredictable and inconsistent marketplace because demands for repairs crop up
unexpectedly and sporadically. On top of that, companies have to handle—in an
environmentally safe fashion—the return, repair, and disposal of failed components

To win in the aftermarket, executives need to recognize that after-sales services are a
commitment companies make to respond within a specific time frame to the
customer’s need for support. Three important managerial implications are there:-

First, companies must approach the promises they make as products that they design,
price, produce, and deliver to customers in order to generate revenues

Second, companies must design a portfolio of service products. Different customers


have different service needs even though they may own the same product

Third, companies should visualize a distinctive after-sales services supply chain that
delivers service products to customers through a network of resources: materials,
people & infrastructure.

Six Steps for Managing Service Networks

Identify the products- Decide whether to support all the products they sell or only
some

Design a portfolio of service products. Service products usually range from those
that are fast and expensive—platinum services, as they’re commonly known—to
those that are slow and economic—silver services

Use multiple business models. Companies can support service products by deploying
one or more business models at the same time. The suitability of a business model
sometimes depends on the nature of the product.

Determine after-sales organizational structures. Companies should develop new


metrics for evaluating the marketing, services, and manufacturing departments to
help prevent discord

Create an after-sales services supply chain. Companies must match the supply of
resources with demand.

Monitor performance.

Companies must monitor the performance of services supply chains because


customer needs are always changing. Smart businesses keep track of technologies
that may force changes in service strategies.
14. Suggest all possible sales promotion strategies for a global company.
According to the American Marketing Association, sales promotion is “those
marketing” activities, other than personal selling, advertising and publicity, that
stimulate consumer purchasing and the dealer effectiveness such as display shows,
expositions, demonstrations and various non – recurrent selling efforts which are not
in the ordinary routine”.
According to George W. Hopkins, “Sales promotion is an organized effort applied to
the selling job to secure the greatest effectiveness for advertising and for dealers help”.
The major function of sales promotion is to serve as a connecting link or a bridge
between advertising and personal selling, which are the two wings of promotion.
Objectives of Sales Promotion
1. To increase buying response at the Consumers level
2. To increase the sales effort of dealers and sales personnel
3. To attract new customers
4. To inform the public about the new product and its specialties, attraction, and
advantages
5. To capture the major share of the market
6. To enable a favorable attitude towards the product
7. To simplify the job of middlemen
8. To meet the competition of other firms
9. To effect off – season sales to boost the total sales
10. To stock more at level of traders, through whom aggressive sales can be affected
11. To stimulate the demand by popularizing the use of the products.
12. To establish and maintain communications with large market segments
13. To keep the memory of the product alive in the minds of the buyers
14. To create brand images
15. To create additional talking points to sales persons
16. To remove customers dissatisfaction
17. To bridge the gap between advertising and personal selling
18. To get back the lost customers and retain the existing ones.

Sales promotion encourages quick movements of products along with the channel
distribution. It gives extra benefits to consumers, dealers and salesmen, and thereby
enabling producers to push out maximum products in the market.
All the manufacturers use various sales forces to maintain the current sales and more
particularly to increase the volume of sales for their products. All vigorous efforts to
sell more products by widening the market result in aggressive selling. The
aggressive sales can be gained by utilizing the various sales promotions, described in
this lesson. These promotions will facilitate the progress of the organization as a
whole.
Product Standardization
A standardized product strategy is when your business decides to produce and
market the same basic product in all markets. This approach has economies of scale
benefits, as it is much less expensive to design one product and mass produce it to
meet global demand. Standardization works best when your product has the same
uses and benefits in each country or culture. Inability to differentiate to meet
different uses or preferences is a challenge with standardization, especially if your
product has variable uses in each market.
Global Product and Promotion Strategies
Product Customization
Customization as a global product strategy means that you offer product variations
or customized versions of your product in each country or market. A simple example
of this is when movies are presented with subtitles or dubbed voice-overs in markets
with different languages.
Global Promotion
A global promotion strategy is when your company presents the same basic message
of brand or product value around the globe. This approach ties closely with the
standardized product strategy. The general idea is to present a universal product with
benefits that apply to customers in each targeted marketplace. An advantage of a
globalized approach is consistency, in that customers in each market can identify
with your brands as they travel the world. While the company tailors menus and
messages in some instances, McDonald's has benefited from a consistent
commitment to its global message of efficient, family-friendly fast food.
International Promotion
An international promotion strategy is when promotional messages vary from one
country to the next or where campaigns are tailored to different regions. This
strategy is used with either the standardized or customized product. With a
standardized product that has different uses, variations in marketing project different
benefits or value propositions based on the uses in each market. With the customized
product strategy, promotions are tailored to emphasize the value of the customized
offering in each market. This can generate stronger loyalty in markets where brands
are perceived differently, though the costs are usually greater with customized
promotion
15. How can you manage a good relation with your international agents & distributors?

There may be a chain of intermediaries; each passing the product down the chain to
the next organization, before it finally reaches the consumer or end-user. This
process is known as the ‘distribution chain channel’

Channel Structure and SelectionThe channel decision is very important. Channel


structure varies considerably according to whether the product is consumer or
business-to-business oriented. In deciding on channel design the following have to
be considered carefully:
(i) Market needs and preferences;
(ii) The cost of channel service provision;
(iii) Incentives for channel members and methods of payment;
(iv) The size of the end market to be served;
(v) Product characteristics required, complexity of product, price,
Perishability, packaging;
(vi) Middlemen characteristics - whether they will push products or
Be passive;
(vii) Market and channel concentration and organization;
(viii) Appropriate contractual agreements and
(ix) Degree of control.

Enhancing the supplier-distributor relationship


Promoting good camaraderie between you and your distributors is the key to
achieving ultimate success in your business endeavors. As an empathetic distributor,
you should know that your distributors are your employees and your customers.

Here are a few steps in ensuring a smooth supplier and distributor bond:

a) By sharing your vision, practices, and resources with your distributors, you
can create a link of trust that could harmonize mutual benefits. This could
also keep your distributors interested in the kinds of service you will offer to
them.
b) You should be willing to help your distributor’s business succeed in their
endeavors. To achieve this, you should know your distributor’s company like
the back of your hand to create an impact on your trade relationship. In this
way, you’ve also garnered their respect for your company and their sincere
assistance to help you reach your ultimate goals.
c) Feedback from end customers is essential in creating a harmonious
relationship between you and your distributors. Feedback can call out service
or item incidence regarding your items. As a supplier, this feedback could
improve your service and items, which in turn, increase the sales and positive
image of your distributors.
d) For your international distributors, it is necessary to learn about the culture
and traditions of your distributor to avoid being intrusive or seem dictatorial
to them.
e) Distributors are partners. As a manufacturer, you should learn to treat them
with respect the way you would treat your own employees. Distribution,
especially international, is a specialized function that requires great expertise.

16. Explain with suitable example about different market segmentation.


Segmentation involves subdividing markets, channels or customers into groups with
different needs, to deliver tailored propositions which meet these needs as precisely
as possible.
The division of a heterogeneous market into different homogeneous groups of
consumers is known as market segmentation.
A market segment should be:
a) Measurable
b) Accessible by communication and distribution channels
c) Different in its response to a marketing mix
d) Durable (not changing too quickly)
e) Substantial enough to be profitable

A market can be segmented by various bases, and industrial markets are segmented
somewhat differently from consumer markets, as described below.
Consumer Market Segmentation
A basis for segmentation is a factor that varies among groups within a market, but that
is consistent within groups. One can identify four primary bases on which to segment
a consumer market:
Geographic segmentation is based on regional variables such as region, climate,
population density, and population growth rate.
Demographic segmentation is based on variables such as age, gender, ethnicity,
education, occupation, income, and family status.
Psychographic segmentation is based on variables such as values, attitudes, and
lifestyle.
Behavioral segmentation is based on variables such as usage rate and patterns,
price sensitivity, brand loyalty, and benefits sought.
The optimal bases on which to segment the market depend on the particular situation
and are determined by marketing research, market trends, and managerial judgment.
Business Market Segmentation
While many of the consumer market segmentation bases can be applied to businesses
and organizations, the different nature of business markets often leads to segmentation
on the following bases:
Geographic segmentation - based on regional variables such as customer
concentration, regional industrial growth rate, and international macroeconomic
factors.
Customer type - based on factors such as the size of the organization, its industry,
position in the value chain, etc.
Buyer behavior - based on factors such as loyalty to suppliers, usage patterns, and
order size.

Profiling the Segments


The identified market segments are summarized by profiles, often given a descriptive
name. From these profiles, the attractiveness of each segment can be evaluated and a
target market segment selected.
A market segment is a classification of potential private or corporate customers by
one or more characteristics, in order to identify groups of customers, which have
similar needs and demand similar products and/or services concerning the
recognized qualities of these products, e.g. functionality, price, design, etc.
An ideal market segment meets all of the following criteria:
a) It is internally homogeneous (potential customers in the same segment prefer the
same product qualities).
b) It is externally heterogeneous (potential customers from different segments have
basically different quality preferences).
c) It responds similarly to a market stimulus.
d) It can be cost-efficiently reached by market intervention.

The term segmentation is also used when customers with identical product and/or
service needs are divided up into groups so they can be charged different amounts
for the services.
A customer is allocated to one market segment by the customer’s individual
characteristics. Often cluster analysis and other statistical methods are used to figure
out those characteristics, which lead to internally homogeneous and externally
heterogeneous market segments.

Examples.
i. Numerous types of businesses use market segmentation to optimize their
ability to sell to a wide variety of consumers. From skin care and hair care
manufacturers to car companies, market segmentation enables businesses to
tailor their product development and advertising to key demographics to meet
their specific needs more effectively. Other types of businesses that utilize
market segmentation are clothing and apparel suppliers, banks and other
financial institutions, and TV networks
ii. One group of businesses that uses market segmentation to great effect are
manufacturers of hair care, beauty and other grooming products. For
example, the razors marketed to men and women are fundamentally the
same, but they have very different packaging and advertising messages. This
is a perfect example of market segmentation. Based on research, companies
devise different ways to sell products to men and women by using different
colors, music, spokespeople and verbiage.

Walk into any drugstore, and you quickly notice that women's skin care, hair
care and grooming products are packaged in soft, gentle colors, most often in
pink. The messaging used often refers to freshness, softness or a carefree
lifestyle. The women featured on the packaging are generally laughing or
smiling coquettishly, embodying the effortless beauty to which many women
aspire.
iii. You may also notice the price difference between male and female products.
Market segmentation theory is not just about how to sell products, but also
about how valuable those products are to different groups. In general, women
are willing to spend more on self-care products due to a higher premium put
on female beauty in today's society. Knowing this, companies can
confidently tack on an extra dollar or two to products aimed at women,
knowing that many women consider it a small price to pay for beauty.

Part - C
Case Study
In the light of the above situation
1. Does the role of promotion in the marketing mix vary from one country to another
country for the same product?

A global brand has a similar image, similar positioning, and is guided by the same
strategic principles. However, one or more elements of the marketing mix, such as
price, packaging, media, distribution channels, etc may be varied to suit the needs
of individual markets.
Some sales promotions may not work in foreign markets because of host country
differences.

a) Host Markets Rule Sales promotion tools effective in the United States
may create unwanted surprises when used in other countries, because of cultural,
regulatory and legal differences. For example, couponing in Malaysia will likely
backfire, because Malaysians find coupons embarrassing. You'll likely meet
cultural resistance by running sweepstakes promotions in Islamic countries, because
gambling is discouraged.

b) Countries with less-developed economies can challenge your promotional


options, as can host-country laws and regulations. Similarly, many countries
regulate "standard" retail prices and the frequency such prices can be reduced by
way of price promotions. Because of host-market idiosyncrasies, prudence suggests
tailoring your promotions to specific host markets.

c) In case of McDonald’s The starting point for McDonald's India was to


position itself as Indian, represent family values and culture and at the same time be
comfortable and easy,

a. McDonald's has adopted a highly flexible approach to its advertising, in


keeping with the broader shifts observable across India as a whole.
b. McDonald's has quietly made inroads into has been cleverly achieved
through innovative Indian menus, pricing, innovative promos and communication
that portrays the new middle class Indian family.

c. McDonald's is working to tailor menu items and promotions for different


regional markets.

2. Explain advertising & the stages of economic development in the light of the above
situation
International Advertising, generally speaking, is the promotion of goods, services,
companies and ideas, usually in more than one country performed by an identified
sponsor. Marketers see advertising as part of an overall promotional strategy. Other
components of the promotional mix include publicity, public relations, personal
selling, and sales promotion. Advertising is a cogent communication attempt to
change or reinforce ones' prior attitude that is predictable of future behavior.

It can be viewed as a communication process that takes place in multiple cultures


that differ in terms of values, communication styles, and consumption patterns. It is
also a business activity involving advertisers and the advertising agencies that
create ads and buy media in different countries. The sum total of these activities
constitutes a worldwide industry that is growing in importance. International
advertising is also a major force that both reflects social values, and propagates
certain values worldwide.

Stages of economic development:

1. The Traditional Society: In such a society there is a strong adherence to


long-lived economic and social systems and customs which implies that output per
head is low and tends not to rise.
2. The Stage of the Pre-conditions for Development: This is the stage of
establishment of the pre-conditions for take-off. This stage is a period of transition,
in which the traditional systems are overcome, and the economy is made capable of
exploiting the benefits of modern science and technology.
3. The Take-off Stage: Take-off represents the point at which the old blocks,
non-friendly barriers and the resistances to steady growth are finally overcome, and
growth becomes the normal condition of the economy. The economy begins to
generate its own investment and technological improvements at sufficiently high
rates so as to make growth virtually self-sustaining.
4. The Drive to Maturity Stage: This is the stage of increasing sophistication
of the economy. Against the background of steady growth, new industries in all the
sectors are developed, there is less reliance on imports and more exporting
activities, and the economy demonstrates its capacity to move beyond the original
industries which powered its take-off, and to absorb and to apply efficiently the
most advanced fruits of modern technology.
5. The Stage of High Consumption: The fourth stage ends in the attainment
of the fifth stage, which is the age of high consumption, where there is an affluent
population, and durable and sophisticated consumers’ goods and services are the
leading sectors of production. The economy has neither demand-side nor supply-
side problems and all this give an enormous push to the economy towards high and
sustainable rate of economic growth. Of course, there are upswings and
downswings in the short period, but the overall trend shows a rising trend,
especially in terms of growth rate.

3. Suggest to Mr. Toole the advertising appeals & product characteristics he should
consider during the proposed campaign in India

Advertising appeal gives a reason to buy a product. An advertising campaign may


have one or more advertising appeal. One appeal can be used and it can have sub
themes in an advertising campaign. Appeal needs to be unique and needs to give
positive impression about the product to the target audience.
The company’s marketing strategy is driven by the think global, act local’ approach
the company is concentrating on brand building initiatives, with a below-the-
line approach and on premise activities to establish the brand before going in
for national-level advertising .

There are mainly two types of appeals rational and emotional appeals. Rational
appeal is based on logic and product are been sold by highlighting the product
attributes, quality, its problem solving capacity and its performance.

Rational appeals are informative in nature and it focuses on the suitability of the
product. This appeal is used by consumer durables and in competitive advertising.
There are different types of rational appeal like feature appeal that focuses on
important traits and features of the product. Information content in such kind of
advertisement is very rich. It is used by high involvement product

Significant focus has been laid on mapping key concerns that could act as demand
drivers and proactive marketing campaigns aimed at addressing specific concerns of
prospective customers. For instance, instead of focusing on the basic space
conditioning attribute, LG’s AC marketing campaigns focus on health benefits
resulting from their superior air filtering technology, thus striking a chord with
urban consumers for whom safety from pollution and dust is perhaps as significant
a need as air-conditioning

The other major influence on the consumer durable industry is product


customization to address unique requirements of the Indian market. Some examples
of products customized for India include refrigerators that can keep foodstuff cool
for long even during a power cut and washing machines with extra rinse cycles. At
the same time, these features are to be delivered at no extra cost to the consumer,
given the price sensitive nature of the market.