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Questions and Answers
MODULE-01
1) Define international marketing. (June/July 09)
International marketing is defined as the performance of business activities designed
to plan, price, promote, and direct the flow of a companys goods and services to
consumers or users in more than one nation for a profit
Marketing concepts, processes, and principles are universally applicable all Over the
world

2) Explain the different stages of international marketing involvement.
(Dec/Jan11, June/July13)


3) Define uncontrollable environmental factors of international marketing
(June/July10)
Differences are in the uncontrollable environment of international marketing Firms
must adapt to uncontrollable environment of international marketing by adjusting the
marketing mix (product, price, promotion, and distribution)

Adaptation
(of Marketing Mix)
Standardization
(of Marketing Mix)
Continuum
INFLUENCED BY 7 ENVIRONMENTAL FACTORS
In general, firms go through five different phases in going
international:
Infrequent Foreign Marketing
No Direct Foreign Marketing
International Marketing
Regular Foreign Marketing
Global Marketing
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4) Explain the concept of EPRG schema (June/July 09)



Strategic Orientation: EPRG
Schema
Orientation

EPRG Schema
Domestic
Marketing
Extension
Multi-Domestic
Marketing
Global Marketing
(Ethnocentric)
(Polycentric)
(Regio/Geocentric)
The International Marketing Environment
7
3. ECONOMY
Environmental
uncontrollables
country market A
Environmental
uncontrollables
country
market B
Environmental
uncontrollables
country
market C
1. Competition
1. Competition
2. Technology Price Product
Promotion
Place or
Distribution
6. Geography and
Infrastructure
Foreign Environment
(Uncontrollables)
7. Structure of
Distribution
3. Economy

5. Political-
Legal
Domestic environment
(Uncontrollables)
(Controllables)
2 .Technology
4.
Culture
5. Political-
Legal
4. Culture
Target
Market

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5) Explain the recent global business trends in international business
marketing. (June/July10
The rapid growth of the World Trade Organization and regional free trade
areas, e.g., NAFTA and the European Union
General acceptance of the free market system among developing countries in
Latin America, Asia, and Eastern Europe
Impact of the Internet and other global media on the dissolution of national
borders, and Managing global environmental resources

6) Explain the importance of international marketing. (June/July 09)
International expansion helps firm:
Keep pace with competition
Reach a larger market
Reap higher profits
Prolong the lifecycle of their products

7) Which are the drivers of international expansion? (Dec/Jan11)
Competition
Regional Economic and Political Integration
Technology
Improvements in Transportation and Telecommunication
Economic Growth
Transition to Market Economy
Converging Consumer Needs

Firm-Specific Drivers
Product Life Cycle Considerations: opportunity to prolong product lifecycle by
entering growth markets.

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8) Explain the process of transition from domestic to international business.
(June/July10)
Pre Export Behaviour
1. Firm Characteristics
2. Perceived External Export Stimuli
3. Perceived Internal Export Stimuli
4. Level Of Organizational Commitment
Motivation To Export
a. Bulk Sales
b. Relative Profitability
c. Insufficiency Of Domestic Demand
d. Reducing Business Risks
e. Legal Restrictions
f. Obtaining Imported Inputs
g. Social Responsibility
h. Increased Productivity
i. Technological Improvements
How Much Commitment
a) No Involvement
b) Temporary Involvement
c) Continued Involvement
d) Global Involvement
e) Producing For Export

Sales
Intro Growth Maturity Decline
Profits
Sales
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9) What is balance of payment? Explain the different concepts constitute the
balance of payments. (June/July 12, June/July13)

1. When countries trade there are financial transactions among businesses or
consumers of different nations
2. Money constantly flows into and out of a country
3. The system of accounts that records a nations international financial
transactions is called its balance of payments (BP)
4. It records all financial transactions between a countrys firms, and residents,
and the rest of the world usually over a year
5. The BP is maintained on a double-entry bookkeeping system





(1) Current accounta record of all merchandise exports, imports, and services plus
unilateral transfers of funds;
(2) The capital accounta record of direct investment, portfolio investment, and
short-term capital movements to and from countries;



merchandise export sales.
money spent by foreign t ourists.
t ransportation.
payments of dividends and
int erest from FDI abroad.
new foreign investments in t he
U.S.
BP Receipts
cost s of goods imported.
spending by U.S. t ourist s
overseas.
new overseas investments.
cost of foreign military and
economic aid.
BP Payments
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(3) The official reserves accounta record of exports and imports of gold, increases
or decreases in foreign exchange, and increases or decreases in liabilities to foreign
central banks;
Changing Balance Of Payments
1. If a countrys expenditures consistently exceed its income, its standard of
living falls
2. Its exchange rate vis--vis foreign monies declines
3. When foreign currencies can be traded for more dollars, U.S. products are less
expensive for foreign customers and exports increase
4. Simultaneously foreign products are more expensive for U.S. buyers and the
demand for imported goods is reduced
Balance Of Payments Equilibrium
A nations balance of payments is said to be in equilibrium when it is neither drawing
upon its international reserves to make excess payments nor accumulating such
reserves as a result of its receipts. The disturbance in balance of payments may be
either short-term or long-term. Long term disturbances effect a lasting alteration in
relations of one nations economy to other nations economy. They result from
changes in the forces which govern the kinds or amounts of a countrys exports and
its imports, its position as a long-term debtor or creditor or the character of the
international services it renders. Each such disturbance upsets the pre-existing
stability in the balance of payments and sets in motion a number of consequences
which bring it to a stable position again.

10) What are the different levels of international marketing? (Dec/Jan11)

Domestic Marketing Export Marketing International Marketing Global
Marketing
Least
international
commitment

Domestic
focus
Limited
international
commitment

Involves direct
or indirect export

Substantial
international
commitment

Focus on
individual
countries or
Extensive
international
commitment

Focus on
segments,
rather than
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Ethnocentric regions

Polycentric or
Regiocentric
countries or
regions

Geocentric


11) Explain the hierarchy of international marketing of a company. (June/July
09)



12) List the different kinds of tariff barriers and its impact? (Dec/Jan11)

Tariff Barriers tend to Increase:
1. Inflationary pressures
COMMITMENT TO
EXPORT
ANALYSE
DECIDE
EXPORT
SET
IMPLEMENT
INTERNAL FACTORS
PRODUCT
RESOURCES
TARGET MARKET
MARKET SEGMENT
ENTRY METHOD
MARKETING STRATEGY
EXTERNAL FACTORS
MARKET ENVIRONMENT
COMPETITIVE PROFILE
ORGANISE
DEPARTMENT
SUBSIDIARY
JOINT VENTURE
EXPORT HOUSE
ALLOCATE
RESOURCES
BUDGET
ARRANGE
RESOURCES
TARGET
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2. Special interests privileges
3. Government control and political considerations in economic matters
4. The number of tariffs they beget via reciprocity

Tariff Barriers tend to Weaken:
1. Balance-of-payments positions
2. Supply-and-demand patterns
3. International relations (they can start trade wars)
Tariff Barriers tend to Restrict:
1. Manufacturer supply sources
2. Choices available to consumers
3. Competition
13) List the different kinds of non-tariff barriers and its impact?

Specific Limitations on Trade:
1. Quotas
2. Import Licensing requirements
3. Proportion restrictions of foreign to domestic goods (local content
requirements)
4. Minimum import price limits
5. Embargoes

(2) Customs and Administrative Entry Procedures:
1. Valuation systems
2. Antidumping practices
3. Tariff classifications
4. Documentation requirements
5. Fees

(3) Standards:
1. Standard disparities
2. Intergovernmental acceptances of testing methods and standards
3. Packaging, labeling, and marking

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(4) Government Participation in Trade:
1. Government procurement policies
2. Export subsidies
3. Countervailing duties
4. Domestic assistance programs

(5) Charges on imports:
1. Prior import deposit subsidies
2. Administrative fees
3. Special supplementary duties
4. Import credit discriminations
5. Variable levies
6. Border taxes

(6) Others:
1. Voluntary export restraints
2. Orderly marketing agreements

14) Distinguish between international marketing Vs domestic marketing.
(Dec/Jan11)
Sovereign political entities
I. Tariffs Or Customs Duties
II. Quantitative Restrictions
III. Exchange Controls
IV. Local Taxes

Different Legal Systems
Different Monetary Systems
Lower Mobility Of Factors Of Production
Differences In Market Characteristics
Differences In Procedures And Documentation
Greater Degree Of Risk

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15) Explain the different kinds of monetary barriers. (June/July 12)
Three types of monetary barriers include:
1. Blocked currency: Blockage is accomplished by refusing to allow importers
to exchange its national currency for the sellers currency.

2. Differential exchange rates: It encourages the importation of goods the
government deems desirable and discourages importation of goods the
government does not want by adjusting the exchange rate. The exchange rate
for importation of a desirable product is favorable and vice-versa

3. Government approval: In countries where there is a severe shortage of
foreign exchange, an exchange permit to import foreign goods is required
from the government

16) What is protectionism? Explain the tools of protectionism. (June/July 10)
Arguments for Protectionism
Excess productive capacity
Excess labor
Infant industry argument and industrialization
Natural resources conservation
and environmental protection
Consumer protection
National defense
Licenses
Non-automatic import licenses
Restrict volume and/or quantity of imports
Automatic import licenses
Granted freely to importing companies
Facilitate import surveillance
Discourage import surges
Place administrative and financial burdens on importer
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May raise costs by delaying shipments

Voluntary Expansion and Restraints

Voluntary import expansion
Governments agree to allow imports from a particular country as result of
pressure from another country
Increases foreign access to a domestic market
Increases competition and reduces local prices
Voluntary export restraints
Self-imposed export quotasimposed to avoid a greater penalty
Used by the importing country to protect local industries

Standards
Environmental, performance, manufacturing and other standards used as
barriers to imports; primarily imposed by highly industrialized countries
Excessive standards can help local and international industry alike, by
deterring gray markets
Percentage Requirements

Requirement that a percentage of the products imported be locally produced
Local content requirement
Met by manipulating and/or assembling the product on the territory of
the importing country, usually in a foreign trade zone

Favoring local contribution and labor
Alternatively, limiting foreign ownership to a certain percentage

Boycotts, Embargos, Sanctions
Boycotts
Action group calling for a ban on all goods associated with a particular
company and/or country
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Target company may be representative of, or even synonymous with,
its country of origin
Embargos
Prohibiting all business deals with the target country; affects third
parties
Sanctions
Punitive trade restrictions applied by a country or group against
another country for noncompliance
Currency Controls
Blocked currency
Does not allow importers to exchange of local currency for currency a
seller is willing to accept as payment
Differential exchange rates
Favorable and less favorable exchange rates imposed on imports, based
on the extent to which they are necessary and desirable
Can also be the difference between black market and government
exchange rates
Foreign exchange permits
Give priority to imports in the national interest
Delay access to hard currency exchange for products not deemed
essential












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MODULE-02

1). what is Global Marketing? (Dec/Jan11)
Global Marketing is the marketing on a worldwide scale reconciling or taking
commercial advantage of global operational differences, similarities and opportunities
in order to meet global objectives.

2). What is Product adaptation ? (June/July 09, June/July13)
A product that is perfectly good for one market may have to be adapted for
another. There can be many reasons for this. Physical conditions may be different.
Functional requirements may vary from market to market. People in different places
may use products differently or for different type of finish than furniture used indoors.
Finally tastes, levels of skill and technical development may be different and may
dictate changes in products. Adaptation may pertain to size, functions, materials,
design, style, colour, tastes and standards.

3). What is product standardization? (June/July 09)
Even though product adaptation becomes inevitable in the case of certain products,
it should be realized that there is sound economics logic behind a product policy
which suggests uniformity in all markets. Terpstra has identified six factors which
may favour international product standardization.
They are:
1.Economies of Scale in Production
2.Economies in Product Research and development
3.Economies in Marketing
4.Consumer Mobility
5. Made-in Image
6.Impact of Technology

4). What are the different alternative market entry statergies? (June/July10,
June/July13)
Import regulations may be imposed to protect health, conserve foreign
exchange, serve as economic reprisals, protect home industry, or provide revenue in
the form of tariffs.
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A company has four different modes of foreign market entry from which to select
exporting
contractual agreements
strategic alliances, and
direct foreign investment

5).What is Green Marketing? (June/July 09, 12, June/July13)
At the forefront of the green movement, with strong public opinion and specific
legislation favoring environmentally friendly marketing and products.
Green marketing is a term used to identify concern with the environmental
consequences of a variety of marketing activities.
The designation that a product is environmentally friendly is voluntary, and
environmental success depends on the consumer selecting the eco-friendly product
In some countries each level of the distribution chain is responsible for returning all
packaging, packing, and other waste materials up the chain

6). What are characteristics of marketing of service globally? (Dec/Jan11)
Many consumer services are distinguished by four unique characteistics:

1.intangibility,
2.inseparability,
3.heterogeneity, and
4.perishability

Most services are inseparable and require production and consumption to occur
almost simultaneously; thus, exporting is not a viable entry method for them.








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MODULE-03

1). What are the reasons for the markets to shift from domestic to global?
(June/July10)
Here are three reasons for the shift from domestic to global marketing
Saturation of Domestic Markets
For a company to keep growing, it must increase sales. Industrialized nations
have, in many product and service categories, saturated their domestic markets
and have turned to other countries for new marketing opportunities.
Companies in some developing economies have found profitability by
exporting products that are too expensive for locals but are considered
inexpensive in wealthier countries.

World Wide Competition
One of the product categories in which global competition has been easy to
track is in U.S. automotive sales. Three decades ago, there were only the big
three: General Motors, Ford, and Chrysler. Now, Toyota, Honda, and
Volkswagen are among the most popular manufacturers. Companies are on a
global playing field whether they had planned to be global marketers or not.

E-Commerce
With the proliferation of the Internet and e-commerce (electronic commerce),
if a business is online, it is a global business. With more people becoming
Internet users daily, this market is constantly growing. Customers can come
from anywhere. According to the book, Global Marketing Management,
business-to-business (B2B) e-commerce is larger, growing faster, and has
fewer geographical distribution obstacles than even business-to-consumer
(B2C) e-commerce.


2). What are the advantage and disadvantage of global marketing? (June/July
09)
Benefits Of Global Marketing:
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Economies of scale in production and marketing can be important competitive
advantages for global companies
Unifying product development, purchasing, and supply activities across
several countries it can save costs
Transfer of experience and know-how across countries through improved
coordination and integration of marketing activities
Diversity of markets by spreading the portfolio of markets served brings an
important stability of revenues and operations to many global firms
Helps to establish relationships outside of the "political arena"
Helps to encourage ancillary industries to be set up to cater the needs of the
global player.

Disadvantages

Differences in consumer needs, wants, and usage patterns for products
Differences in consumer response to marketing mix elements
Differences in brand and product development and the competitive
environment
Differences in the legal environment, some of which may conflict with those
of the home market
Differences in the institutions available, some of which may call for the
creation of entirely new ones (e.g. infrastructure)
Differences in administrative procedures
Differences in product placement.

3). Explain the organizing for global competition with the structure? (Dec/Jan11)
An international marketing plan should optimize the resources committed to
company objectives. The organizational plan includes the type of organizational
arrangements to be used, and the scope and location of responsibility. Companies are
usually structured around one of three alternatives:
(1) global product divisions responsible for product sales throughout the world;
(2) geographical divisions responsible for all products and functions within a given
geographical area; or
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(3) a matrix organization consisting of either of these arrangements with centralized
sales and marketing run by a centralized functional staff, or a combination of area
operations and global product management.











5). What is product adaptation? What are the environment factors which necessitates
the design factor?
A product that is perfectly good for one market may have to be adapted for another.
There can be many reasons for this. Physical conditions may be different. Functional
requirements may vary from market to market. People in different places may use
products differently or for different type of finish than furniture used indoors. Finally
tastes, levels of skill and technical development may be different and may dictate
changes in products.

Adaptation may pertain to size, functions, materials, design, style, colour, tastes
and standards. Sometimes this could be done easily and at low cost but at times it
may cost much. Robinson has identified thirteen environment factors which may
necessitate design changes. The factors are

Environmental factor Design change

1. Level of technical skills product simplification
2. Level of labour cost Automation or manulization of product
3. Level of literacy Remarking and simplification of product.
4. Level of income Quality and price change.
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5. Level of interest rates Quality and price change.
6. Level of maintenance Change of tolerance
7. Climatic differences Product adaptation
8. Isolation (heavy repair difficult and Product adaptation and durability
expensive) improvement.
9. Differences in standards Recalibration of product and resizing.
10.Availability of other products Greater or leaser product integration.
11..Availability of materials Change in product structure and fuel.
12. Power availability Resizing of product.
13.Special conditions Product redesign or invention.

All these factors are relevant in the marketing of durable consumer goods or
machinery items.

5. Explain in detail the international planning process? (June/July 12)

Planning is a systematized way of relating to the future. It is an attempt to manage
the effects of external, uncontrollable factors on the firms strengths, weakness,
objectives and goals to attain a desired end. Planning is the job of making things
happen that might not otherwise occur. Planning allows for rapid growth of the
international function, changing markets, increasing competition, and the turbluent
challenges of different national markets. The plan must be blend the changing
parameters of external country environments with corporate objectives and
capabilities to develop a sound, workable marketing program.

Planning relates to the formulation of goals and methods of accomplishing them,
so it is both a process and a philosophy. Structurally, planning may be viewed as
corporate, strategic, or tactical. International Corporate Planning is essentially long
term, incorporating generalized goals for the enterprise as a whole. Strategic planning
is conducted at the highest levels of management and deals with products, capital, and
research, and long and short-term goals of the company. Tactical planning or market
planning, pertains to specific and to the allocation of resources used to implement
strategic planning goals in specific markets.

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THE PLANNING PROCESS

Guidelines and systematic procedures are necessary for evaluating international
opportunities and risks and for developing strategic plans :

International planning process includes 4 phases:














T







Phase 1: Preliminary Analysis and Screening-Matching Comapany and Country
Needs
A critical first step in the international planning process is deciding in which
existing country market to make a market investment. A companys strengths and
weakness, products, philosophies, and objectives must be matched with a countrys

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constraining factors and market potential. In the first part of the planning process,
countries are analyzed and screened to eliminate those that do not offer sufficient
potential for further considerations. The next step is to establish screening criteria
against which prospective countries can be evaluated. These criteria are ascertained
by an analysis of company objectives, resources, and other corporate capabilities and
limitations. It is important to determine the reasons for enetering a foreign market
and the returns expected from such an investment. Minimum market potential,
minimum profit, return on investment, accepatable competitive levels.

Phase 2: Adapting the Marketing Mix to Target Makets:
When target markets are slelected, the market mix must be evaluated in light of the
data generated in the phase 1. Incorrect decisions at this point lead to products
inappropriate for the intended market or to costly mistakes in pricing, advertising, and
promotion. The primary goal of phase 2 is to decide on am marketing mix adjusted to
the cultural constraints imposed by the uncontrollable elements of the environment
that effectively achieves corporate objectives and goals. Phase 2 also permits the
marketer to determine possibilities for applying marketing tactics across national
markets.//

Phase 3: Developing the Marketing Plan
At this stage of the planning process, a marketing plan is developed for the target
market-whether it is a single country or a global market segment. The marketing plan
begins witn a situation analysis and culminates in the selection of an entry mode and a
specific action program for the market. The specific plan establishes what is to be
done, by whom, how it is to be done, and when. Included are budgets and sales and
profit expectations.

Phase 4: Implementation and Control
A go decision in phase 3 triggers implementation of specific plans and
anticipation of successful marketing. However, the planning process does not end at
this point. All marketing plans require coordination and control during the period of
implementation. An evaluation and control system requires performance-objective
action, that is, bringing the plan back on track should standards of perrformances fall
short. A global orientation facilities the difficult but extremely important
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management tasks of coordinating and controlling the complexities of international
marketing.

6. Explain the alternative market entry startegy? (June/July 12)
Import regulations may be imposed to protect health, conserve foreign exchange,
serve as economic reprisals, protect home industry, or provide revenue in the form
of tariffs.
A company has four different modes of foreign market entry from which to select
exporting
contractual agreements
strategic alliances, and
direct foreign investment









EXPORTING

Exporting can be either direct or indirect. In direct exporting the company sells to a
customer in another country. In contrast, indirect exporting usually means that the
company sells to a buyer (importer or distributor) in the home country who in turn
exports the product . The internet is becoming increasingly important as a foreign
market entry method. Direct sales, particularly for high technology and big ticket
industrial products a direct sales force may be required in a foreign country. This
may mean establishing an office with localor expatriate managers and staff
depending of course on the size of the market and potential sales revenues.

CONTRACTUAL AGREEMENTS

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Contractual agreements are long term, noneqauity associations between a company
and another in a foreign market. Contractual agreements involve the transfer of
technology, processes, trademarks, or human skills.

Contractual forms of market entry include:
(1)Licensing: A means of establishing a foothold in foreign markets without large
capital outlays is licensing of patent rights, trademark rights, and the rights to use
technological

(2)Franchising: In licensing the franchiser provides a standard package of products,
systems, and management services, and the franchisee provides market knowledge,
capital, and personal involvement in management.

STRATEGIC INTERNATIONAL ALLIANCES

Strategic alliances have grown in importance over the last few decades as a
competitive strategy in global marketing management. A strategic international
alliance (SIA) is a business relationship established by two or more companies to
cooperate out of mutual need and to share risk in achieving a common objective..
SIAs are sought as a way to shore up weaknesses and increase competitive strengths. SIAs
offer opportunities for rapid expansion into new markets, access to new technology, more
efficient production and marketing costs.

An example of SIAs in the airlines industry is that of the Oneworld alliance partners made up
of American Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and
Qantas .


INTERNATIONAL JOINT VENTURES

International joint ventures (IJVs) have been increasingly used since 1970s.JVs
are used as a means of lessening political and economic risks by the amount of the
partners contribution to the venture. JVs provide a less risky way to enter markets
that pose legal and cultural barriers than would be the case in an acquisition of an
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existing company. A joint venture is different from strategic alliances or
collaborative relationships in that a joint venture is a partnership of two or more
participating companies that have joined forces to create a separate legal entity. Joint
ventures are different from minority holdings by an MNC in a local firm.

Four factors are associated with joint ventures:
1. They are established, separate, legal entities
2. They acknowledge intent by the partners to share in the management of the Jv.
3. They are partnerships between legally incorporated entities such as
companies, chartered organizations, or governments, and not between
indiciduals
4. Equity positions are held by each of the partners.

CONSORTIA

Consortia are similar to joint ventures and could be classified as such except for two
unique characteristics.
(1)They typically involve a large number of participants.
(2)They frequently operate in a country or market in which none of the participants is
currently active.
Consortia are developed to pool financial and managerial resources and to lessen risks

DIRECT FOREIGN INVESTMENT

A fourth means of foreign market development and entry is direct foreign investment.
Companies may manufacture locally to capitalize on low-cost labor, to avoid high
import taxes, to reduce the high costs of transportation to market, to gain access to
raw materials, or as a means of gaining market entry. Firms may either invest in or
buy local companies or establish new operations facilities.

7. What is product standardization? What are the factors which favours the
international product standardization? (Dec/Jan11)
Even though product adaptation becomes inevitable in the case of certain products,
it should be realized that there is sound economics logic behind a product policy
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which suggests uniformity in all markets. Terpstra has identified six factors which
may favour international product standardization.

1.Economies of Scale in Production: When only one standard version is marketed in
all the areas, it will be possible to have larger production runs, which will result in
lower manufacturing costs.

2.Economies in Product Research and development: Similarly, product
standardization will allow recovery of all costs incurred in product research and
development from the entire sales. This will reduce the recovery period as also lower
the break-even point. Moreover, additional expenditure on adapting product to each
individual market can be avoided.

3.Economies in Marketing. When the same product is to be launched in different
markets, economies can be achieved in terms of sales literature, sales force training,
inventory management , advertising and after-sales requirements.

There are 3 marketing factors which may reinforce the standardization level:
1.Consumer Mobility: Consumers are becoming increasingly more mobile and
transcontinental travel in now fairly common. A consumer who is loyal to a
particular brand in his home market is more likely to remain loyal in a foreign country
as well when the product in question is the same.

2. Made-in Image: When the name of a country is associated with a high standard of
quality in the minds of the consumers, a product manufactured in that country may
enjoy a psychological premium in the foreign markets.

3. Impact of Technology: Industrial products generally tend to have standard and
specifications and do not require much adaptation for foreign markets unless climatic
and similar considerations call for it.




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MODULE-04
1. Define term Direct and Indirect exporting?
Direct exporting:
The company sells to a customer in another county. This is the most common
approach employed by companies taking their international step because the risks of
loss can be minimized. In contrast,

In direct exporting:
usually means that the company sells to buyer in the home country who in
turn exports the product. Customer include large retailers such as wal mart or sears,
wholesaler supply houses, trading companies, and other that buy to supply customers
abroad
Ex: Americas largest exporter

2. Define term licensing, franchising, and joint venture? (June/July 10)

LICENCING:
A means of establishing a foothold in foreign markets without large capital
outlays is licensing patent right, trademarks right, and the rights to use technological
processes are granted in foreign licensing. It is a favorite strategy for small and
medium sized companies, although it is by no means. Common examples of
industries that use licensing arrangements in foreign markets are television
programming and pharmaceuticals. Not many confine their foreign operation to
licensing alone it is generally viewed as a supplement to exporting or manufacturing
rather than the only mans of entry into foreign market.

Although licensing may be the least profitable way of entering a market, the risks and
headaches are fewer than for direct investments. It is a legitimate means of
capitalizing on intellectual property in a foreign market, and such agreements can also
benefit the economies of target countries.

FRANCHISING:

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Is a rapidly growing form of licensing in which the franchising provides a
standard package of products, systems, and management services, and the franchisee
provides market knowledge, capital and personal involvement in management. The
combination of skills permits flexibility in dealing with local market conditions and
yet provides the parent firm with a reasonable degree of control. The franchisor can
follow through on marketing of the products to the point of final sale.

INTERNATIONAL JOINT VENTURE:

International joint ventures as a means of foreign market entry have
accelerated sharply since the 1970s. Besides serving as a means of lessening
political and economic risk by the amount of the partners contribution to the venture.
IJV provide a less risk way to enter markets that pose and cultural barriers than would
be the case in an acquisition of an existing company.

3. What is channels of distribution? (Dec/Jan11)

Channel of distribution or marketing channels is defined as the whole set of
interrelated marketing agencies which are involved in making the goods available
form the producer to the consumers.

Distribution channels
Getting the product to the target market can be a costly process
Forging an aggressive and reliable channel of distribution may be the most
critical and challenging task facing the international firms
Each market contains a distribution network with many channel choices whose
structures are
In some markets the distribution structure is multi-layered, complex,
inefficient, even strange
Competitive advantage will reside with the marketer best able to build the
most efficient channel

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4. Briefly explain the distribution patterns in international marketing
channels? (June/July 10)
Distribution patterns
Even though patterns of distribution are in a state of change and new patterns
are developing , international marketers need a general awareness of the
traditional distribution base . The traditional system will not change overnight
and vestiges of it will remain for years to come .Nearly every international firm is
forced by the structure of the market to use at least some middlemen in the
distribution arrangement.
The following description should convey a sense of the variety of distribution
patterns.
General patterns : generalizing about internal distribution channel patterns of
various countries is almost as difficult as generalizing about behaviors patterns of
people. Despite similarities, marketing channels are not the same throughout the
world. Marketing methods taken for granted in the United States are rare in many
countries.
Middlemen Services:- The service attitudes of people in trade vary sharply
at both the retail and whole sale levels from country to country .
Line Breadth:- every nation has a distinct pattern relative to the breadth of
line carried by wholesalers and retailers . The distribution system of some
countries is characterized by middlemen who carry or can get everything
in other every middlemen is a specialist dealing only in extremely narrow
lines. Government regulation in some countries limit the breadth of line
that can be carried by middlemen and licensing requirement to handle
certain merchandise are not uncommon.
Costs and Margins :- cost levels and middlemen margins vary widely from
country to country depending on the level of competition , service offered ,
efficiencies for inefficiencies of scale and geographic and turnover factors
related to market size ,purchasing power , tradition and other basic
determinants.
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Channel Length :-some correlation may be found between the stage of
economic development and the length of marketing channels . In every
country , channels are likely to be shorter for industrial goods and high
priced consumer goods than for low priced products. In general , there is
an inverse relationship between channel length and the size of the purchase
.combinations wholesaler retailer or semi wholesaler exist in many
countries adding one or two link to the length of the distribution chain.
Nonexistent Channels : one of the things companies discover about
international channel of distribution patterns is that in many countries
adequate market coverage through a simple channel of distribution is
nearly impossible. In many instances , appropriate channels do not exist .
Blocked Channels :- International marketers may be blocked from using
the channel of their choice. Blockage can result from competitors already
established lines in the various channel or from trade associations or cartels
having closed certain channels.
Stocking :- the high cost of credit , the danger of loss through inflation , a
lack of capital and other concerns cause foreign middlemen in many
countries to limit inventories this often results in out of stock conditions
and sales lost to competitors.
Power and Competition :-distribution power tends to concentrate in
countries where a few large wholesalers distribute to a mass of small
middlemen . large wholesalers generally finance middlemen downstream .
the strong allegiances they command from their customers enables them
to effectively block existing channels and force an outsiders to rely on less
effective and more costly distribution .
Distribution patterns are always evolving and new patterns are developing and
marketing channels are not the same throughout the world

Some general distribution patterns that are similar globally include:

Retail Patterns
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Retail Size Patterns: - the extremes in size in retailing are similar to those that
predominate in wholesaling. The retail structure and the problem it engenders
cause real difficulties afro the international marketing firm selling consumer
goods .large dominant retailers can be sold direct , but there is no adequate
way to directly reach small retailers who in the aggregate handle a great
volume of sales.
Direct Marketing :-selling directly to the consumer through the mail , by
telephone or door to door is often the approach of choice market with
insufficient or underdeveloped distribution systems. The approach of course
also works well in the most affluent market.
Resistance to Change :- effort to improve the efficiency of the distribution
system new types of middlemen and other attempts to change traditional
ways as typically viewed as threatening and are thus resisted .
Alternative Middleman Choices :- A marketers options range from
assuming the entire distribution activity to depending on intermediaries for
distribution of the product . channel selection must be given considerable
thought because once initiated it is difficult to change and if proves
inappropriate , future growth of market share may be affected
a) Agent middlemen; - represent the principal rather than themselves
b) merchant middlemen:- take title to the goods and buy and sell on their
own account.
International retailing shows even greater diversity in its structure than does
wholesaling
Some general retailing patterns include:

Home-Country Middlemen: - located in the producing firms country provides
marketing services from a domestic base. By selecting domestic middlemen as
intermediaries in the distribution process, companies relegate foreign market
distribution to others.
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Manufacturers Retail Stores: - An important channel of distribution for a
large number of manufactures is the owned or perhaps franchised.
Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , Toys
R Us and Wallmart expand their global coverage , they are becoming a
major domestic middlemen for international markets.
Export Management Companies :- is an important middlemen for firms with
relatively small international volume or for those unwilling to involve
their own personnel in the international function.
Trading Companies:- trading companies have a long and honorable history as
important intermediaries in the development of trade between nation.
Trading companies accumulate, transport and distribute goods from many
countries.
U.S. Export Trading Companies :-the ETC act allows producers of similar
products to form export trading companies .A major goal of the ETC Act
was to increase U.S exports by encouraging more efficient export trade
services to producers and suppliers in order to improve the availability of
trade finance and to remove antitrust disincentives to export activities.
Complementary Marketers :-companies with marketing facilities or contacts
in different countries with excess marketing capacity or a desire for a
broader product line sometimes take on additional lines for international
distribution although the formal name for such activities is complementary
marketing.
Manufacturers Export Agent :- is an individual agent middlemen or an
agent middlemen firm providing a selling service for manufactures.
Home-country middlemen, or domestic middlemen, provide marketing
services from a domestic base and find foreign markets for products for local
manufacturers
Frequently used types of domestic intermediaries include:
. Home-Country Brokers:- the term broker is a catchall for a variety of
middlemen performing low cost agent services.
. Buying Offices: - a variety of agent middlemen may be classified simply
as buyers or buyer for export. Their common denominator is a primary
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function of seeking and purchasing merchandise on request from principals
as such they do not provide a selling service
. Selling Groups:- several types of arrangement have developed in which
various manufactures or producer cooperate in a joint attempt to sell their
merchandise abroad. This may take the form of complementary exporting or
of selling to a combined business such a Webb Pomerene export
association.
. Webb-Pomerene Export Associations:-are another major form of group
exporting. WPEAs Act of 1918 made it possible for American business
firms to join forces in export activities without being subject to the
Sherman antitrust . WPEAs cannot participate in cartel or other
international agreement that would reduce competition in the united states
but can offer four major benefits
1. Reduction of export costs
2. Demand expansion through promotion
3. Trade barriers reductions
4. Improvement of trade terms through bilateral bargaining.
Foreign Sales Corporation :- is a sales corporation set up in a foreign country or
U.S possession that can obtain a corporate tax exemption on a portion of the
earnings generated by the sale or lease of export property.
Export Merchants: - are essentially domestic merchants operating in foreign market.
As such they operate much like the domestic wholesaler. specifically they purchase
goods from a large number of manufacturers , ship them to foreign countries and
take full responsibility for their marketing .
Export Jobbers:- deal mostly in commodities they do not take physically
possession of goods but assume responsibility for arranging transportation.
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Foreign-Country Middlemen :- using foreign country middlemen moves the
manufacturers closer to the market and involves the company more closely with
problems of language , physical distribution , communications and financing . foreign
middlemen may be agents or merchants , they may be associated with the parent
company to varying degrees or they may be temporarily hired for special purposes.
Some of the more important foreign country middlemen are manufacturers
representatives and foreign distributors.

Manufacturers Representatives:- are agent middlemen who take
responsibility for a producers goods in a city , regional market area entire
country or several adjacent countries . when responsible for an entire
country the middlemen is often called a sole agent.
Distributors :- A foreign distributor is a merchant middleman. This
intermediary often has exclusive sales right in a specific country and works
in close co-operation with the manufacturer . the distributor has a relatively
high degree of dependence on the supplier companies and arrangements are
likely to be on a long run continuous basis.
Foreign-Country Brokers:- are agents who deal largely in commodities and
food products . the foreign brokers are typically part of small brokerage
firms operating in one country or in a few contiguous countries.
Managing Agents and Compradors :- A managing agent conducts business
within a foreign nation under an exclusive contract arrangement with the
parent company. The managing agent in some cases invests in the operation
and in most instances operates under as contract with the parent company.
Dealers :- generally speaking anyone who has a continuing relationship with
a supplier in buying and selling goods is considered a dealer . more
specifically dealers are middlemen selling industrial goods or durable
consumer goods direct to customers they are the last step in the channel of
distribution.
Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goods
directly from the manufacturers and sell to wholesalers and retailers and to
industrial customers . large and small wholesalers and retailers engage in
direct importing for their own outlets and for redistribution to smaller
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middlemen . the combination retailer wholesaler is more important in
foreign countries than in the united states. It is not uncommon to find large
retailers wholesaling goods to local shops and dealers.
Some of the more important foreign-country middlemen, who find markets for
foreign manufacturers include:
5. Explain the factor affecting the choice of channels? (June/July 09)

Factors Affecting Choice of Channels
The international marketers needs clear understanding of market characteristic
and must have established operating policies before beginning the selection of
channel distribution . the following points should be addressed prior to the
selection process
Identify specific target markets within and across countries.
Specify marketing goals in terms of volume, market share, and profit margin
requirements.
Specify financial and personnel commitments to the development of
international distribution.
Identify control, length of channels, terms of sale, and channel ownership
Once these points are established , selecting among alternatives middlemen
choices to forge the best channel can begin . marketers must get their goods
into the hands of consumers and must choose between handling all distribution
or turning part or all of it over to various middlemen . Distribution channels
vary depending on target market ,competition and available distribution
intermediaries.
1. Cost: - There are two kinds of channel cost
a. The capital or investment cost of developing the channel and
b. The continuing cost of maintaining it.
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The later can be in the form of direct expenditure for the maintenance of the
company selling force or in the form of margins , markup or commissions of
various middlemen handling the goods.
2. Capital requirement :- the financial ramifications of a distribution policy are
often overlooked .critical element are capital requirement and cash flow
patterns associated with using a particular type of middlemen .
3. Control ;- the more involved a company is with the distribution , the more
control its exerts . A company own sales force affords the most control , but
often at a cost that is not practical.
4. Coverage :- another major goal is full market coverage to gain the optimum
volume of sales obtainable in each market , secure a reasonable market share.
And attain satisfactory market penetration .coverage may be assessed by
geographic or market segments or both .
5. Character :- the channel of distribution system selected must fit the character
of the company and the markets in which it is doing business. Some obvious
product requirement often the first considered relate to perish ability or bulk of
the product , complexity of sale , sales service required and value of the
product.
6.Continuity :- channel of distribution often pose longevity problems . most
agent middlemen firms tend to be small institution when one individual retires
or moves out of a line of business the company may find it has lost its
distribution in that area. Wholesaler and especially retailers are not noted for
their continuity in business either. Most middlemen have little loyalty to their
vendors.





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MODULE-05
1. What is air transportation and advantages of air transportation? (June/July10)
Air transportation
Air transportation provide only worldwide transportation network which make the
essential for global business tourism .it play vital role in facilitating economic growth
particularly in developing country.

Advantages of air transport
Low inventory carrying costs
Decreased capital costs of goods in transit
less packing lowers cost and reduces chargeable weight
related surface transport costs are reduced
the loss due to rough handling and pilferage is reduced to the minimum
breakage is negligible
deterioration is avoided
obsolescence is eliminated
insurance premium is reduced.
Costs related to administration ,ordering etc are minimized.

2. Distinguish between surface and air transport? (June/July 12)
Surface vs air transport
The choice regarding modes of transport in relation to export marketing revolves
around the appropriateness of transporting goods by ship or by air ,assuming that
both types of transport systems are available to the shipper , the choice should
depend on the estimates he makes as to the total costs of distribution by ship and
air .it is found that the important elements of costs behave in the following fashion
for ocean and air transport.



Cost of element air transport Surface transport
Freight High Low
Depot costs Low High
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Fixed inventory Low High
Packaging Low High
Insurance Low High

3). What is warehousing and explain briefly and Necessity of warehousing
for export marketing? (Dec/Jan11)

Warehousing constitutes an important segment of the physical distribution
management . the need for warehousing in a corporate unit may arise for the
following reasons
Seasonality :- certain products , especially agro- based items , are produced
with in a limited season , while these are sold throughout the year.
Variation in demand :- there are items for which very high demand is
experienced during a short period e.g. demand for sugar during dewali in
India . To meet additional demand , stocks will to have to be built up and
stored over a period of time.
Speculation: - companies tend to maintain a large inventory of items whose
prices are highly volatile . this practice is essentially followed as a hedge
against price variations.
Product conditioning :- some products are to be stored in order to attain
the required level of quality . for example ripening of bananas is carried out
under controlled temperature conditions after they are picked.

Necessity of warehousing for export marketing

Ware housing operations become necessary especially for two reasons so far as
export marketing is concerned .these are
Break bulk:- break bulk operations are called for where the manufacture
ships the goods in bulk and then repacks them into small consignment
according to the orders received form individuals customers . In export
operations this system may prove to be a cost saving device especially
when individual orders are so small that the minimum space stipulation of
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the shipping lines cannot be fulfilled . shipping lines generally indicate the
minimum space that must be booked if the shippers requirements is smaller
than the minimum , he has to pay the freight as fixed for the minimum
space.
Re assembly:- re assembly operations are also critically important for
many export items , especially for engineering goods . in order to save
shipping space ,many items are exported on completely knocked down
condition .in fact there are certain countries where the government insist
that the goods must be imported in CKD conditions where ever shipment s are
made on this basis the exporter will need warehousing facility in the
importing country where the goods can be re- assembled.























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MODULE-06

1. Define Ad-volorem tariffs. (June/July10, June/July13)
An ad valorem tax (Latin for "according to value") is a tax based on the value of real
estate or personal property. It is more common than a specific tax, a tax based on the
quantity of an item, such as cents per kilogram, regardless of price.
An ad valorem tax is typically imposed at the time of a transaction(s) (a sales
tax or value-added tax (VAT)), but it may be imposed on an annual basis (real or
personal property tax) or in connection with another significant event (inheritance tax,
surrendering citizenship,
[1]
or tariffs). In some countries stamp duty is imposed as
an ad valorem tax.
2. Perhaps advertising is the side of international marketing with the greatest similarities
from country to country throughout the world. Paradoxically, despite its many
similarities, it may also be credited with the greatest number of unique problems in
international marketing. Discuss. (June/July 09, June/July13)
The paradox lies in the fact that advertising methodology is similar from country to
country but that the unique problems of company policy limitations, legal aspects,
linguistics, media limitations, all pose a distinct problem to the international
advertiser. Advertising must be related to the basic and existing motivation patterns.
The unique problem is to find this motivation and orient your campaign to the stimuli
which must make the majority of the people buy the product. But these problems are
generally mechanical and can be easily overcome by long-range research.
3. Someone once commented that advertising is Americas greatest export. Discuss.
(Dec/Jan11)
This comment portrays the fact that America was first to realize that advertising is a
crucial element in the integrated marketing plan. Since the American philosophy of
advertising has penetrated the foreign market, it is said to have been exported.
Many of Americas largest advertising agencies successfully operate in the foreign
market. World advertising is generally patterned after the American advertising
approach and system.
4. With satellite TV able to reach many countries, discuss how a company can use satellite
TV and deal effectively with different languages, different cultures, and different legal
systems. (June/July13)
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The reality of satellite TV provides the means to have truly global advertising. This
raises the question of the effectiveness of standardized advertising versus locally
produced ads. Problems of different languages and laws raise doubts about the
effectiveness of pan-European ads. In European satellite broadcasting, English is the
preferred language for programming since the satellites must cover a territory with 12
languages and 17 national borders. A study done on Sky Channel viewers indicated
that the English language programs are unacceptable for many. Germans watch the
English language programs for about a minute before deciding they have the wrong
station. European programming is developing, but slowly. One of the reasons for
using U.S. made programming is that producing quality programs for each country is
too costly. One approach to language differences and the production costs of
programming is a six-part series called Eurocops. It is a police series in which each
country produces one episode based in the country with their own police, in their own
style and with their own problems. Each broadcaster provides the episode produced in
his country to the other five. The five are then dubbed into the local language and
broadcast locally. The idea is to produce European programming but at a much lower
cost per country than if each country had to produce all six shows. There is no
question that cable, satellites, privatization and the advent of Europe 1992 will
revolutionize broadcasting and create greater demand for global advertising.

5. Outline some of the major problems confronting an international advertiser.
(June/July 08)
Of all the elements of the marketing mix, decisions involving advertising are the ones
most often affected by cultural differences among country markets. Consumers reflect
their culture, its style, feelings, value systems, attitudes, beliefs, and perceptions.
Since advertisings function is to interpret or translate the need/want satisfying
qualities of product and services in terms of consumer needs, wants, desires, and
aspirations, the emotional appeals, symbols, persuasive approaches and other
characteristics of an advertisement must coincide with cultural norms to be effective.
Reconciling international advertising and sales promotion effort with cultural
uniqueness of markets is the challenge confronting the international or global
marketer. The global advertiser is confronted with legal and tax considerations,
language limitations, media limitation and production and cost limitations. These
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limitations must all be dealt with effectively if a company is to have an effective
advertisement.
6. Defend either side of the proposition that advertising can be standardized for all
countries. (June/July10)
Yes, the basic theme, objectives, and philosophy of international advertising can be
standardized; but the vast mechanical problems most certainly cannot be solved
through international standardization. The ad man can adapt his basic skills to all
countries. If buying motives and company objectives are the same for various
countries, then the advertising approach may be the same. If they vary, then
customizing your approach to each country is a must.

7. Review the basic areas of advertising regulation. Are such regulations purely foreign
phenomena? Dec/Jan11)
a. The basic areas of advertising regulation are (1) the legal type such as
Germanys Comparative Terminology and Direct Comparison Laws, and
(2) taxation on advertising, prevalent in Britain, France, and Austria.
b. No, these regulations are not purely foreign. Here in the United States
there are certain advertising codes and standards that one must follow.
These are generally enforced by the advertising industry itselfbut the
FCC also imposes strict standards of truth in advertising.

8. How can advertisers overcome the problems of low literacy in their market?
(June/July10)
They can overcome low literacy by making use of ads that are self-
explanatory, and extensive use of radio which doesnt have written words.








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MODULE-07
1. What special media problems confront the international advertiser? (Dec/Jan11)
Special problems in mediaavailability, cost, and coverageconfront the
international advertiser. Local variations and lack of market data are also great
headaches.
Availability of media varies from country to country due to government restrictions.
Countries have either too many or too few media to adequately cover the majority of
the population. As far as price goes, the United States ad man must be prepared to
haggle greatly over costs. Most media costs are subject to negotiation. Agency
discounts are often split with the client to bring costs down. Coverage problems
generally arise when trying to reach certain sections of the population. There are
many uneconomical media divisions which do not permit enough regionality.
Underlying all these problems is the lack of market information which hampers a
good communication mix in foreign markets and causes much waste in ad campaigns.

2. After reading the section in this chapter on direct mail, develop guidelines to be used
by a company when developing a direct mail program. (June/July 10, June/July13)
Guideline for direct mail should be the same as for any advertising program, i.e.,
identify the target market, select a medium that reaches the target market, develop a
message that communicates how the attributes of your product fit the needs of the
target market. On this last point is the issue of translation. You want to avoid the
mistake a catalog producer, R.R. Donnelley, made when a collection of a dozen
American catalogs sent to Japanese consumers received only modest responses and
orders. Failure to receive sufficient response may have reflected more on the
American Showcase package than on the success of direct mail in the Japanese
market. Even though the covering letter and brochure describing the catalogs were in
Japanese, the catalogs were all in English. This error was further amplified by the fact
that the mailing list did not target English-speaking Japanese. In addition to these
general issues, special attention needs to give to characteristics of mail. Are mailing
lists that include your target market without excessive coverage of non-target market
recipients? Does the mailing system impose some additional burden on the recipient?
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For example, the situation in Chile where the person receiving mail must pay a
portion of the postage.
3. Will the ability to broadcast advertisements over TV satellites increase or decrease
the need for standardization of advertisements? What are the problems associated
with satellite broadcasting? Comment. (Dec/Jan11)
The ability to broadcast advertising over TV satellites will increase the need for
standardization of advertisements. The problems associated with satellite broadcasting
will focus on creating an advertisement that will be culturally acceptable in all the
countries receiving the BC satellite broadcast and created in such a manner that
language differences that may exist within the countries will not affect the message
sent. There are those, however, who feel that such an advertisement would be so
bland that it would be relatively ineffective.

4. In many of the worlds marketplaces, a broad variety of media must be utilized to
reach the majority of the market. Explain. (June/July 12)
Due to the uneconomical division of media coverage, a large amount of media must
be engaged to cover a majority of the market. If an advertiser wants to reach his total
market, the expenditure he will have to incur in using a broad variety of media is
great. The media competitors have segmented the market so that one must employ
most of them in a successful campaign.

5. Cinema advertising is unimportant in the United States but a major media in such
countries as Austria. Why? (June/July10)
Austria has 20 percent of all advertising in cinema as a solution to its huge taxes
against the other media; and the effectiveness of this type of advertising is reflected
by its dollar expenditure in this medium11 percent of the total ad expenditure in the
country per year.

6. Foreign newspapers obviously cannot be considered as homogeneous advertising
entities. Explain. (Dec/Jan11)
Literacy rates vary, and this results in coverage not being constant (selective rather
than intensive). Many countries have too many papers to run an effective campaign
because one must utilize all of them if one desires to cover large geographic areas.
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Even then, it is not known if effective readership exists. Political position of the
newspaper in which you decide to run an ad may have a bad effect on the reputation
of the product.
7. Borrow a foreign magazine from the library. Compare the foreign advertising to
that in an American magazine. (Dec/Jan11)
Library project.
8. What is sales promotion and how is it used in international marketing? (June/July10)
Sales promotions include all marketing activities other than advertising, personal
selling, and publicity that stimulate consumer purchases and improve retailer or
middleman effectiveness and cooperation. Sales promotions include such items as
cents-off, in store demonstrations, samples, coupons, product tie-ins, contests,
sweepstakes, sponsorship of special events, and point-of-purchase displays. Sales
promotions are used as short-term efforts directed at consumer and/or retailer to
achieve such specific objectives as (1) consumer product trial and/or immediate
purchase, (2) consumer introduction to the store, (3) gaining retail point-of-purchase
displays, (4) encouraging stores to stock a product, and (5) supporting and
augmenting the advertising, personal sales efforts.


















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MODULE-08
1. Show how the communications process can help an international marketer avoid
problems in international advertising. (June/July 12)
Since promotional activities are basically communications processes, all the attendant
problems in developing an effective promotional strategy is domestic marketing plus
all the cultural problems discussed in the chapter must be overcome to have a
successful international promotional program. A major consideration for a foreign
marketer is to ascertain that cultural diversity, media limitations, legal problems and
constraints, or control of the message can be communicated properly. International
advertising and promotional communications fail for a variety of reasons: (1) the
message may not get through because of media inadequacy, (2) the message may be
received by the intended audience but not be understood because of different cultural
interpretations, and (3) the message may be received by the intended audience and be
understood but have no effect because the marketer did not correctly assess the needs
and wants of the target market. Because of the many different influences that may
jeopardize the success of a promotional strategy, those international executives who
understand the communications process will probably be better equipped to manage
that diversity since the communications process forces the international advertiser to
examine all of those areas where problems in promotion may surface.

2. Take each of the steps in the communications process and give an example of how
culture differences can affect the final message received. (Dec/Jan11)
The information source may create a problem because the marketer does not truly
understand the needs and wants of the target market. This is especially important if
the marketer relies on the self-reference criterion and makes the naive assumption that
if it sells in one country it would sell in another. An example would be bicycles
designed and sold in the United States to consumers fulfilling recreational, exercise
needs which cannot be successfully sold for the same reasons in a market where the
primary use of the bicycle is transportation. The encoding step of the communications
process can also cause problems because such factors as colors, values, beliefs, tastes
and other symbols utilized by the international marketer do not correctly symbolize
the message intended. For example, Body by Fisher which decoded meant Corpse
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by Fisher was not General Motors intended message. The message channel may
create problems because of the difficulty of effectively reaching target markets in
many countries. Problems, such as illiteracy, the availability and types of media,
create problems at this level. Decoding problems are generally created by improper
encoding. The decoding process is one in which the receiver interprets the message in
terms of ones own culture, thereby receiving an incorrect message. For example,
Pepsis Come Alive was decoded by many as Come Out Of The Grave.
Sometimes decoding can create problems even when the encoder purposely attempted
to develop a message with no symbolism. An example was the toothpaste CUE which
was decoded as a pornographic word. Finally, the feedback step can create problems
in the sense that companies do not use feedback to effectively measure their
communications efforts and attempt to correct any problems that may have been
created by the other steps.
3. Discuss the problems created because the communications process is initiated in one
cultural context and ends in another. (June/July 12, June/July13)
The major problem here is that the encoder is in one culture using ones own SRC and
the message is decoded in another culture where the decoders are using their own
SRC. The challenge is that the encoder needs to be certain that the message is being
encoded in such a manner that it will be decoded in the other culture in a manner in
which it is intended. Thus, cultural decoding misinterpretations can be avoided.
4. What is the importance of feedback in the communications process? Of noise?
(Dec/Jan11)
The importance of feedback is to provide the marketers who are generally in one
cultural context with an immediate interpretation of the message sent so that any
problems created by errors in the communications process or errors created by the
different cultural contexts can be adjusted before significant harm occurs. The
importance of noise in the system is that such things as competitive activity and other
types of confusion can detract from the communications process and affect any or all
of the six steps. The most important factor about noise is that it is generally
uncontrollable and unpredictable, yet it can influence the outcome. Noise is also a
significant reason why feedback in any communications process is so very important.