FT-403-M: INTERNATIONAL MARKETING

Section A

1. Illustrate the role of IMF and WTO in International Trade.

The IMF and the WTO are international organizations with about 150 members in common. While the
IMF’s central focus is on the international monetary and financial system, and the WTO’s is on the
international trading system, both works together to ensure a sound system for global trade and payments.

The International Monetary Fund (IMF) is an international organization of 190 member countries that works
to ensure the stability of the international monetary and financial system. The IMF’s mandate includes
facilitating the expansion and balanced growth of international trade, promoting exchange stability, and
providing the opportunity for the orderly correction of countries’ balance of payments problems. The IMF
was established in 1945.

The World Trade Organization (WTO) is an international organization of 164 members that deals with the
rules of trade between nations. With Russia’s accession in August 2012, the WTO encompasses all major
trading economies. The WTO works to help international trade flow smoothly, predictably, and freely, and
provides countries with a constructive and fair outlet for dealing with disputes over trade issues. The WTO
came into being in 1995, succeeding the General Agreement on Tariffs and Trade (GATT) that was
established in 1947.

The work of the IMF and the WTO is complementary. A sound international financial system is needed to
support vibrant international trade, while smoothly flowing trade helps reduce the risk of payments
imbalances and financial crisis. The two institutions work together to ensure a strong system of international
trade and payments that is open to all countries. Such a system is critical for enabling economic growth,
raising living standards, and reducing poverty around the globe.

2. What is a New Product? Explain International Trade Product Life Cycle.

New Product

New products are goods and services that differ significantly in their characteristics or intended uses from
products previously produced by the firm.

In business and engineering, new product development (NPD) covers the complete process of bringing a
new product to market, renewing an existing product or introducing a product in a new market. A central
aspect of NPD is product design, along with various business considerations. New product development is
described broadly as the transformation of a market opportunity into a product available for sale. The
products developed by an organization provide the means for it to generate income. For many technology-
intensive firms their approach is based on exploiting technological innovation in a rapidly changing market.

The product can be tangible (something physical which one can touch) or intangible (like a service,
experience, or belief), though sometimes services and other processes are distinguished from "products".
NPD requires an understanding of customer needs and wants, the competitive environment, and the nature of
the market. Cost, time and quality are the main variables that drive customer needs.

International Trade Product Life Cycle

• New Product Introduction

The cycle always begins with the introduction of a new product. In this stage a corporation in a developed
country will innovate a new product.

• The Maturity Stage

At this point, when the product has firmly established demand in developed countries, the manufacturer of
the product will need to consider opening up production plants locally in each developed country to meet the
demand.
 • Product Standardization and Streamlining of Manufacturing

Exports to nations with a less developed economy begin in earnest. Competitive product offers saturate the
market which means that the original purveyor of the product loses their competitive edge on the basis of
innovation. In response to this, rather than continuing to add new features to the product, the corporation
focuses on driving down the cost of the process to manufacture the product.

3. Write a note on factors affecting International Pricing Strategy.

Factors affecting International Pricing Strategy

1. International Marketing Objectives:

Mostly price is decided with a view to capture international market, e.g., when a company wants to enter in
the market the product is sold at lower rates. When it intends to maximize use of its additional production
capacity, marginal cost of production is considered.

2. Cost of Product:

Price in international marketing cannot be determined without considering the cost of the product. Fixed and
variable costs of production, marketing and transport expenses are included in the cost of production.

3. Demand:

Demand is another factor that determines the prices in the international markets. The demand in international
markets is also affected by a number of factors which are different from those operating in domestic market.
Customs and tastes of foreign customers may differ widely.

4. Business Competition:

Competition in the foreign market is also an important factor. Competition in foreign market may be so
severe that the exporter has no other option except to follow the market leader.

5. Exchange Rate:

Foreign exchange rate plays a vital role in the price fixing in international marketing. For example, when
rupee falls against dollar an importer hesitates in filling tender.

6. Product Differentiation:

This factor plays a vital role in price fixing. When a product has specialties or is totally different compared
to those of its competitors, the company is more-free to decide price.

7. Prestige:

Prestige of the producer and of the country is reflected in the price of the product. Prestigious companies
determine higher price for their products. Underdeveloped countries cannot quote high price, even if their
product is better than that of the developed country.

8. Market Characteristics:

In addition to competition the following are some other factors which also affect price:

(i) Trend of demand

(ii) Consumer income levels

(iii) Importance of the product to the consumer, and

(iv) Margins of profit.

4. How a marketer can promote products or services in Overseas Market?

1. Leverage the Power of Storytelling

Stories sell products. You need to help people understand how your products add value to their lives. People
pay for value; not for products.

Storytelling is a powerful medium to capture audience attention and to remain in their minds forever. The
best stories can never be forgotten.

2. Use Local Influencers to Build Product Awareness

In order to expand to a new market, you will need endorsements from influencers. Social media is the best
place to find local influencers who can endorse your products and build brand awareness.

This doesn’t necessarily have to be expensive either. According to Influence.co, you can hire macro
influencers on Instagram with over 1M+ followers by spending around $1400 for a sponsored post. The rates
are even lower for influencers who have smaller followings.

3. Take Advantage of Advertising (Both Online and Offline)

Advertising helps improve brand loyalty, which further results in repeat purchases. There are endless options
that you can use to promote your product.

The best ones include:

Run a newspaper display ad in the local newspaper.

Advertise using online PPC, display, and banner ads.

Invest in sponsored social media ad campaigns or run banner ads on Facebook.

4. Partner With Established Businesses in Your Target Market

If you are looking to enter into a new market, you must never underestimate the power of other businesses
who already have a good understanding of the local market.

5. Sponsor Events

Event sponsorships are another effective way to reach potential audiences who might be interested in buying
your products.

You can get your product front and center at a mega event if you become one of the sponsors. This will help
you drive effective brand awareness along with media exposure.