N

1
 ASSIGNMENT SOLUTIONS GUIDE (2015-2016)
I.B.O.-2
International Marketing Management
Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the Questions given in the
Assignments. These Sample Answers/Solutions are prepared by Private Teacher/Tutors/Authors for the help and Guidance
of the student to get an idea of how he/she can answer the Questions of the Assignments. We do not claim 100% accuracy
of these sample answers as these are based on the knowledge and cabability of Private Teacher/Tutor. Sample answers
may be seen as the Guide/Help Book for the reference to prepare the answers of the Question given in the assignment. As
these solutions and answers are prepared by the private teacher/tutor so the chances of error or mistake cannot be denied.
Any Omission or Error is highly regretted though every care has been taken while preparing these Sample Answers/
Solutions. Please consult your own Teacher/Tutor before you prepare a Particular Answer and for up-to-date and exact
information, data and solution. Student should must read and refer the official study material provided by the university.

N
Answer all the questions.
Q. 1. An Indian Company wants to enter into international markets. The company decided to involve
another company in the foreign country. Explain the mode of entry where the involvement of foreign company
is possible and state in which situation each of them is suitable.
Ans. An Indian company wants to expand its business to the foreign soil. There that company wants to enter its
sister concern. Following are some of the modes company needs to follow:
A mode of entry into an international market is the channel which your organization employs to gain entry to a
new international market. This lesson considers a number of key alternatives, but recognizes that alteratives are
many and diverse. Here you will be consider modes of entry into international markets such as the Internet, Exporting,
Licensing, International Agents, International Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture
and International Sales Subsidiaries. Finally we consider the Stages of Internationalization.
Licensing
● Licensing includes franchising, Turnkey contracts and contract manufacturing.
● Licensing is where your own organization charges a fee and/or royalty for the use of its technology, brand
and/or expertise.
● Franchising involves the organization (franchiser) providing branding, concepts, expertise, and infact most
facets that are needed to operate in an overseas market, to the franchisee. Management tends to be controlled
by the franchiser. Examples include Dominos Pizza, Coffee Republic and McDonald’s Restaurants.
Turnkey contracts are major strategies to build large plants. They often include a the training and development
of key employees where skills are sparse – for example, Toyota’s car plant in Adapazari, Turkey. You would not own
the plant once it is handed over.
International Agents and International Distributors
Agents are often an early step into international marketing. Put simply, agents are individuals or organizations
that are contracted to your business, and market on your behalf in a particular country. They rarely take ownership of
products, and more commonly take a commission on goods sold. Agents usually represent more than one organization.
Agents are a low-cost, but low-control option. If you intend to globalize, make sure that your contract allows you to
regain direct control of product. Of course you need to set targets since you never know the level of commitment of
your agent. Agents might also represent your competitors - so beware conflicts of interest. They tend to be expensive
to recruit, retain and train. Distributors are similar to agents, with the main difference that distributors take ownership
of the goods. Therefore, they have an incentive to market products and to make a profit from them. Otherwise pros
and cons are similar to those of international agents.

2
Strategic Alliances (SA)
Strategic alliances is a term that describes a whole series of different relationships between companies that
market internationally. Sometimes the relationships are between competitors. There are many examples including:
● Shared manufacturing e.g. Toyota Ayago is also marketed as a Citroen and a Peugeot.
● Research and Development (R&D) arrangements.
● Distribution alliances e.g. iPhone was initially marketed by O2 in the United Kingdom.
● Marketing agreements.
● Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain independent and
separate.
Joint Ventures (JV)
● Joint Ventures tend to be equity-based i.e. a new company is set up with parties owning a proportion of the
new business. There are many reasons why companies set up Joint Ventures to assist them to enter a new
international market:
● Access to technology, core competences or management skills.For example, Honda’s relationship with Rover
in the 1980's.
● To gain entry to a foreign market. For example, any business wishing to enter China needs to source local
Chinese partners.
● Access to distribution channels, manufacturing and R&D are most common forms of Joint Venture.
● Overseas Manufacture or International Sales Subsidiary

N
A business may decide that none of the other options are as viable as actually owning an overseas manufacturing
plant i.e. the organization invests in plant, machinery and labor in the overseas market. This is also known as Foreign
Direct Investment (FDI). This can be a new-build, or the company might acquire a current business that has suitable
plant etc. Of course you could assemble products in the new plant, and simply export components from the home
market (or another country). The key benefit is that your business becomes localized – you manufacture for customers
in the market in which you are trading. You also will gain local market knowledge and be able to adapt products and
services to the needs of local consumers. The downside is that you take on the risk associated with the local domestic
market. An International Sales Subsidiary would be similar, reducing the element of risk, and have the same key
benefit of course. However, it acts more like a distributor that is owned by your own company.
Q. 2. Distinguish between the following:
(a) Warranty and Guarantee
Ans. ‘Guarantee’ is the general policy of the producers/manufacturers with regard to defective products. Guarantees
expressed or implied are obligations assumed by the seller promising buyers that they will receive certain services or
satisfactions. Thus, a guarantee is bundle of satisfaction a buyer receives when he buys a product.
Warranty is assurance of quality, service and performance given by the producer to the consumer. It is a written
guarantee of the intrinsic value of a product. It points out the responsibility of the maker for repairs, service, and
maintenance in case of consumer durables. The warranty is the outcome of the rule of law, viz., let the buyer beware.
Producers developed warranties to create confidence in buyer’s mind and to provide compensation in case the
product is not up to reasonable expectations.
The warranty usually gives clearly the name of the warrantor, which products and parts are covered and which
are not, exactly how they are covered, who pays, how long the warranty applies.
A guarantee may serve one of the two purposes;
(i) to protect against the abuses of the service policy and to limit his liability, or
(ii) to provide an additional promotional media in his programme for selling against the competitors.
(b) Direct Exporting and Indirect Exporting.
Ans. The main difference between direct and indirect exporting is that the manufacturer performs the export
task himself in case of direct exporting while the manufacturer delegates the export task to others (middle men) in
case and indirect exporting. As a result, the costs and risks involved in indirect exporting are less than those involved
in direct exporting.
Following are two advantages of indirect exporting over direct exporting:
(i) Indirect exporting involves less investment. The firm does not have to develop an export department, an
overseas sales force or a set of foreign contacts.
(ii) Indirect exporting involves less risk. Because international marketing intermediaries bring know-how and
services to the relationship, the seller will normally make fewer mistakes.

3
 Q. 3 . Write short notes on the following:
(a) Export Pricing Procedure
Ans. Following is the pricing process followed in the export marketing:
(i) Defining pricing objectives is the first step of pricing process. For example, if the objective is to utilise
excess capacity, even marginal cost pricing is acceptable. But if a firm has a good domestic market to sell
its full capacity output, the export price may be influenced by the long run objectives. Pricing depends on
entry strategy.
(ii) Cost and sales forecasting is another step which, facilitates the determination of floor price. The ceiling is
determined by demand factors and competition. Between these two points, price is set according to
judgement of the marketer.
(iii) Bargaining positions of the exporter and the importer also affect the pricing procedure.
Steps involved in Export Pricing Procedure: Following are the main steps involved in export pricing procedure:
1. Cost Analysis: The first step is to have an accurate estimate of the cost. The main elements that should be
covered in calculation of export costs are:
(a) Cost of product.
(b) Cost of distribution.
(c) Cost of marketing support.
2. Market Analysis: There are several market characteristics which affect export pricing. Market analysis
requires, analysis of following factors:
(a) Market size and segment relevant to the product.

N
(b) Price levels and price categories in respect of the product.
(c) Competition. If competition is very intense, price would be very sensitive on the other hand, if competition
is not severe, the company is likely to have more flexibility in pricing.
3. Determination of Price Limits: Following are the two limits within which an exporter has to fix price
according to his judgement:
(a) Lower limit, i.e., cost limit.
(b) Upper limit, i.e., market limit.
4. Determination of Pricing Objectives: Now the exporter will determine its pricing objectives in the light of
which the price is to be set within the two limits.
5. Calculation of Price Structure: The next step is to establish individual prices. Price structure gives a
detailed picture of all cost elements from factory gate to the consumer price. Price structure enables the exporter to
build up his final price stage by stage. Main elements of price structure are as under:
(a) Factory cost of goods
(b) Export packing, marketing and labelling
(c) Loading for transport from factory
(d) Transport to dock or airport
(e) Port/Airport handling charges and fees
(f) Cost involved in documentation
(g) Fees for consular invoice/certificate of origin
(h) Insurance premium and cost of policy
(i) Ocean Freight/Air Freight charges
(j) Unloading charges at destination
(k) Port/Airport handling charges and fees at destination
(l) Import duty and taxes
(m) Clearing agent’s fees
(n) Transport to importer’s warehouse
(o) Importer’s margin and mark up
(p) Wholesaler’s margin and mark up
(q) Retailer’s margin and mark up
(r) Other local taxes, if any.
6. Price Quotations and Terms: There are a number of price quotations and terms which express sale price
and the corresponding rights and responsibilities of the exporter and the buyers.
(b) Process of International Marketing Research.
Ans. International marketing research may be defined as a systematic collection and analysis of data and
information on international marketing operations. The committee on Definitions of the American Marketing

4
Association defines marketing research as “The systematic gathering, recording and analysing of data about problems
relating to the marketing of goods and services”.
International marketing research will cover the following aspects:
(i) Present and future size of the market for the relevant product(s)/service(s)
(ii) Nature, extent and source of competition
(iii) Consumer likes and dislikes and the reasons for the same
(iv) Marketing variables such as product, price, promotion, logistics, brand, packaging, etc.
(v) Marketing environment factors such as social, political, economical, economic, technological,
infrastructural, etc.
(vi) Relevant policies and procedures of the importing country and service
(vii) Entry techniques.
International marketing research involves use of quantitative techniques, objective analysis and subjective
interpretation of data and information. Depending upon the circumstances and requirements, the volume and depth
of international marketing research may vary. Enterprises may themselves conduct international marketing research
or they may avail of the services of specialised marketing research agencies.
Following are the steps in the process of international marketing research:
(i) Definition of objectives
(ii) Determining information requirements
(iii) Selection of methodologies
(iv) Collection of data and information

N
(v) Tabulation, analysis and interpretation of data and information
(vi) Preparation of Report.
(i) Definition of Objectives: The first step in the research process is definition of the objectives for which
research is being undertaken, such as understanding the basis of preferences of consumers, the nature, extent and
source of competition etc. Unless the objectives are clearly defined, it will be rather difficult to identify the nature
and sources of information and data or select the right technique of information collection.
(ii) Information Requirements: The second step is to decide about the type of information and data to be
collected in the light of the objectives laid down earlier. Since the company would like to avoid wastage of scarce
resources in collecting information that may not be considered relevant subsequently, it is highly important that
there is a clear idea in the beginning stages itself about the type of information to be collected.
(iii) Methodology: The next step is to determine the methodology to collect the required information. Some
information may be collected through desk research from published sources, microfilms, internet, computer disks
and files which are secondary sources of information. Some other may be collected only through survey research
which is a primary source of information. Again in survey research, whether to cover the entire population or a
sample has to be decided.
(iv) Collection: Collection of information in accordance with the chosen methodologies is the next step. This
involves planning the field work to contact the respondents personally or via mail or telephone, drafting of questionnaire
and actual collection of information. Great care should be taken to collect reliable, updated and relevant information
during this stage, since the quality of research will ultimately depend on the quality of information collected.
(v) Processing of Data and Interpretation: Editing, tabulating, analysing and interpreting the information
and data constitute the next step. It is highly important that analysis and interpretation of information are done in a
totally objective manner and no element of subjectivity is allowed to creep in.
(vi) Preparation of Report: The final stage is presentation of the findings of the research in the form of a
report. The findings should be backed by facts including statistical tables and other qualitative information.
Q. 4. (a) What is International Marketing? How is it different from domestic Marketing?
Ans. International Marketing: International marketing is the multinational process of planning and executing
the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives. International marketing consists of finding and satisfying global customer
needs better than the competition, both domestic and international, and of coordinating marketing activities within
the constraints of the global environment. Thus, international marketing is the coordinated marketing process
undertaken in several countries. The difference between domestic marketing and international marketing arise entirely
from the differences that exist in the national environment within which the marketing effort is directed and the
differences that arise in the organization and programme because of operations being conducted simultaneously in
different markets.

5
 Following terms are also used in the context of International Marketing:
1. Domestic Marketing: Domestic marketing is the marketing that is targetted exclusively on the home country
market.
2. Export Marketing: Export marketing is the first stage when a firm thinks of the exploring market opportunities
outside the country. In export marketing, there is no direct marketing effort in the foreign country. The emphasis is
on expanding the market size by exporting to other countries a firm involved in export marketing maintains a
department with international sales force in the organizational structure.
Following table shows the distinction between domestic marketing and international marketing:
Basis Domestic Marketing International Marketing
1. Geographical It is carried within the geographical limits It is carried outside the geographical limits
of limits the country of the country.
2. Restrictions There are generally no restrictions in It is subject to a large number of restrictions.
domestic marketing.
3. Cost Domestic marketing does not require International marketing requires a number
special costs, like special packing, of special costs like marking, labelling,
marking, labelling transportation, transportation, insurance etc., due to long
insurance, handling duties, taxes, etc. distance.

N
4. Risks Domestic marketing involves International marketing involves a number
comparatively less risks. of risks.

(b) Describe the phases in international product life cycle.

Ans. International Product Life Cycle: International product life cycle is extension of product life cycle
discussed above. According to Terpstra and Sarathy, following are the four phases in the international product life
cycle:
1. Introduction and Growth: In the beginning, developed countries possess resources to make innovations
in terms of technological know-how and capital. The customers in the home country are also affluent to
buy the new products. After meeting the demand of the home country, the manufacturers explore foreign
markets. Thus, the firm serves its home market first and then begins to export the new product.
2. Maturity: In the second phase importing countries gain familiarity with the new product. Gradually
producers in developed importing countries begin producing the product for their own markets because
product innovations move to the other countries. Production in foreign countries will reduce the exports
of the innovating firm.
3. Decline: During this stage foreign production becomes competitive in export market. Foreign firms gain
production experience and move down the cost curve. If they have lower costs than the innovating firms
which is frequently the case, they export to third country markets. replacing the innovator’s exports there.
In this stage, the product gets widely disseminated and products start becoming standardised.
4. Obsolescence or Elimination: In this phase the foreign producers now have sufficient production
experience and economies of scale to allow them to export back to the innovator’s home country.
Strategies to manage International Product Life Cycle: To resist the declining sales, the management has
the following alternatives:
(i) It may improve the product or revitalise it in some way.
(ii) It may review the marketing and production programmes to be sure that they are quite efficient.
(iii) It may streamline the product assortment by pruning out unprofitable size, styles, colours and models.
(iv) It may cut all costs to the bare minimum level that will optimize profitability over the limited remaining
life of the product; or
(v) Abandon the product.
The management should develop a systematic procedure for identifying and then phasing out its weak products.

6
 Product Planning: Product planning consists of all activities which enable producers and intermediaries to
determine what should constitute a company’s line of products. Following are the major areas of product planning:
(i) Introduction and development of new products.
(ii) Improvement of the existing products to meet the market requirements.
(iii) Weeding out the unprofitable items in the product line.
Q. 5. What do you mean by international market segmentation? Discuss various bases of international
market segmentation.
Ans. International Market Segmentation: International market segmentation refers to the process of dividing
its total international market into one or more parts (segments or sub-markets) each of which tends to be homogeneous
in all significant aspects. In other words, international market segmentation is the process of identifying groups or
set of potential customers at international level who exhibit similar buying behaviour. Through international market
segmentation, similarities and differences among potential buyers in foreign markets can be identified and grouped.
Objectives of Marketing Segmentation
In the words of Philip Kotler “The purpose of segmentation is to determine differences among buyers which
may be consequential in choosing away them or marketing to them.” Following are the objectives of market
segmentation:
(i) To spot and to compare market opportunities by examining the needs of each segment and how far these
needs are being tried to be satisfied.

N
(ii) To use his knowledge of the marketing response differences of various customers, he may decide how
much marketing funds may be allocated to different segments.
(iii) To make suitable adjustments of his products and marketing appeals. Instead of one marketing programme
aimed at to draw in all potential buyers the sellers can create separate marketing programme and as to
meet the needs of different buyers.
Importance of Market Segmentation
Market segmentation plays an important role in marketing management. Market segmentation offers following
advantages to producers and sellers:
(i) Market segmentation minimises aggregation of risk.
(ii) Market segmentation helps know company strengths and opportunities.
(iii) Market segmentation provides opportunities to expand market.
(iv) Market segmentation creates innovations.
(v) Market segmentation creates gains to consumer.
Bases of International Market Segmentation
The step towards developing a segmentation strategy is to locate base(s) for segmenting the market. Following
are the variables which may be used as the bases of market segmentation:
1. Geographic Segmentation: The first criteria for segmenting the market may be the geographical segmentation
of the whole operational area. The markets are divided on the basis of geographical factors, such as area, climate and
the density of population. According to area states may be taken the basis for segmentation. Each state may be
recognised a separate market. The area may further be segmented in rural, town and urban areas or where market is
international the division may be national or international market. On the basis of climate, markets may be hill areas
and plane areas. Such type of segmentation is best where the customers are stretched over a vast area and the
production is done on large scale. The producer may design his marketing strategies taking the characteristics of the
individual markets into consideration. Following are the geographic characteristics for segmentation:
(i) Region
(ii) City size
(iii) Density of Area
(iv) Climate
2. Demographic Segmentation: Demographic segmentation is the most popular base of segmentation because
of two reasons. Firstly, the consumer wants, preferences and usage rates are associated with demographic

7
characteristics. Secondly, these variables are easier to measure. Following are the demographic characteristics for
segmentation:
(i) Age
(ii) Sex
(iii) Marital status
(iv) Income
(v) Family size
(vi) Occupation
(vii) Education
(viii) Family life style
(ix) Religion
(x) Nationality.
3. Psychographic Segmentation: Personality, thinking, etc., are not the same in all the consumers. Some
customers are crazy for noval design or products of a new fashion that may increase their prestige in the society. The
motto of some other customers is simple living and high thinking and they never aspire for showy items. People
within the same demographic group can exhibit very different psychographic profiles. This basis of segmentation is
being increasingly used by the marketers. Following are psychographic characteristics for segmentation:
(i) Life style

N
(ii) Social class
(iii) Cultural values
(iv) Personality.
4. Behavioural Segmentation: Behavioural segmentation is based on the consumer response to his requirements.
Behavioural segmentation focuses on whether or not people buy and use a product as well as how often and how
much they use it. Consumer behaviour divides the markets on three bases:
(i) Usage rate
(ii) Buyer motives, and
(iii) Brand loyalty.
Customers may be grouped according to their usage habits. i.e., non-users, light users, medium-users and
heavy users etc. Non-users may also be divided in expected and unexpected users. In Buyer’s motives we may
include factors like economics, quality of goods, reliability and prestige in society, etc. Several groups may be
formed on these bases and market may be segmented accordingly. Customers may also be grouped to their loyalty to
a particular brand. If suppose, four brands of a commodity are in the market customers may be grouped in four
classes on the basis of their preference of a particular brand. Following are the behavioural characteristics of
segmentation:
(i) Behaviour segmentation such as needs, motivation, perception, attitudes, occasions.
(ii) Use situational segmentation like time, objective, location, person, place, etc.
(iii) Use related segmentation like usage rate, loyalty status, user status, etc.
5. Benefit Segmentation: This type of segmentation is a recent phenomenon and based on new marketing
concept which emphasises a matching between products features and customers needs. Benefit segmentation is
based on the benefits the consumers seek from a particular product. Each benefit seeking group had particular
demographic behavioural and psychographic characteristics. Benefit segmentation of the toothpaste market may
consist of the following:
(i) Economy i.e., low price
(ii) Medicinal i.e., decay prevention
(iii) Cosmetic
(iv) Taste
Essentials of Effective International Market Segmentation: Following are the essentials of effective
segmentation:

8
 1. Measurability: The purpose of segmentation is to measure the changing behaviour pattern of consumers.
This involves identifying the market segment in terms of size, purchasing power, etc.
2. Accessibility: It must be possible to reach different segments in regard to both promotion and distribution.
In other words, organization must be able to focus its marketing efforts on the chosen segment. Segment must be
accessible in two senses. First, firms must be able to make them aware of products or services. Second, they must get
these products to them aware of products or services through distribution system at reasonable cost.
3. Substantial: The segment should be large enough to be profitable. For consumer markets, the small segment
might disproportionally increase the cost and hence products might be priced too high. This might make the segment
non-profitable. However, for business markets even a single customer might mean big business. For example, house
construction takes several months. But with the information technologies under way, CAD and CAM have made it
possible to take on even smaller segments from consumer markets.
4. Differentiable: The basis of segmentation should be such that it leads to different segments. For example, if
young and old people behave in almost same way in tempting to eat Chips, Ruffle’s; Lays must not have tried the two
targets as one by combining the segments.
5. Actionable: The segments which a company wishes to pursue must be actionable in the sense that there
should be sufficient finance, personnel, and capability to take them all. Hence, depending upon the reach of the
company, the segments should be selected.

N
■■