International Business

Archive for November, 2011

Introduction

Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably. In pre-modern economies, the predominance of small enterprise and there was monopoly and there was no recognition of marketing as a separate field of expertise. Marketing emerged as a separate technical field only in the late 19th century.

In the present scenario, the changing needs and wants or taste and preferences among the customers leads to paradigm shift in marketing. This is due to changing attitude and behaviour of the customers, globalization, increasing purchasing power and changing life style of the customers.

Causes for Marketing in Transition

• Globalization – Globalization has brought changes in technology, quality, service, work culture and undoubtedly fierce competition.
• Emerging Middle-Class Consumers – the increasing Purchasing Power of the Middle-Class consumers creates the MNC’s to seek opportunity in the emerging market.
• Changing Lifestyle and attitude of Consumers – since there is a change in the customers lifestyle due to western influence the customer’s needs and expectations has increased.
• Increasing literacy rate
• Children influence in buying decision making
• Changing perspective of rural marketing in India
• Increasing penetration of mass media
• Consumer awareness
• Information revolution
• An Enormous growth in international business

Formation of marketing concepts and practices
• 1905 – the University of Pennsylvania offered a course in “The Marketing of Products”
• 1908 – Harvard Business School opens
• 1940s – electronic computers developed
• 1980s – emergence of relationship marketing
• 1984 – introduction of guerilla marketing
• 1995-2001 – the Dot-com bubble temporarily re-defines the future of marketing
• 1996 – identification of viral marketing

Emerging New Marketing Practices

Due to increased competition the companies had necessity to enhance additional features to their products to promote the sale of their products. Many companies followed different marketing practices to attract their customers.

Winning concepts and marketing practices are
• Relationship marketing
• Co-branding
• Viral Marketing
• Sachet Marketing
• Green marketing
• Rural marketing
• Destination marketing
• Online marketing
• Cause related marketing

MARKETING IN TRANSITION

A transition from a product oriented approach to a resource oriented approach

Transaction marketing Relationship marketing
Focus on Obtaining new customers Customer retention
Orientation to Service features Customer benefits
Timescale shorts long
Customer service Little emphasis High emphasis
Customer commitment Limited High
Customer contact Limited High

Quality

Primarily an operations concern

The concern to all

Nowadays many companies are practicing the new marketing concepts and practices. Some of the examples are as follows.

Relationship marketing:

The domain of relationship marketing extends into many areas of marketing and strategic decision making. In the phenomenon of cooperation and collaboration with customers becomes the dominant paradigm of marketing practices. Relationship marketing has the potential to emerge as the predominance perspective in the paradigm of marketing.

In the fierce competitive market customer relationship management is emerging as the core marketing activity in companies. For that to maintain companies practices customer retention strategies and having good relation with the customers.

Example:
HSBC bank sent greeting cards to the customers on their birthdays to have good relationship
Whirlpool do very good post sale service to the customers.

Sachet Marketing

In India, Unilever successfully markets Sunsil and Lux shampoo sachets sold in units of 2-4 dollar cents; Clinic All Clear anti-dandruff shampoo sachets at 2.5 rupees each; and 16 cent Rexona deodorant sticks.

Idhayam gingili oil available for Rs 4/- package.
To capture the BOTTOM OF PYRAMID also

Green Marketing

It refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way.

Green marketing can be a very powerful marketing strategy though when it’s done right. Nowadays all companies are trying to produce eco-friendly products. And many companies have got ISO 14001 awards and strive to get.
Examples are ITC products, in the note books, it is environment friendly notebook.

Changing Perspective Of Rural Marketing In India

The great Indian rural market is characterized by huge untapped potential and opportunities. It is estimated that almost 70% of Indian consumers live in rural areas, which generate almost half of the national income. The number of middle income households in rural India is growing to above 111 million by 2007. There are almost twice as many lower middle income households in rural areas as in the urban areas.

A large number of corporate are excited about tapping the potential of rural areas. The recent entry of some corporate like Bharti, ITC, DCM shriram consolidated, EID parry and Amul etc. proved their fascination towards this sector. These corporates tried to develop successful model of integrating information-technology in rural transformation in a profitable way.

The tamilnadu based EID parry has developed an agro-portal [http://www.indiaagrline.com] to cater the specific needs of the rural farming community. It is an endeavor to catalyze e-commerce in agricultural and non-farms products by offering a network of partnerships. The content is available in local tamil language.

The Anand, Gurajat based Amuls DISK dairy information system KIOSK project is yet another milestone of integrating corporate sector and information technology. These kiosk serve valuable information related to dairying, breeding and rearing cattle .

ITC e-choupal has emerged as one of the most ambitious project integrating information technology and corporate sector for rural transformation. ITC e-choupal network has already covered approximately 3.1 million farmers through 5050 choupal in 29,500 villages. The company has ambitious plan to reach 1,00,000 villages covering 10 million farmers by 2010 with whopping approximately 1,000 crore. It is opening 5-6 e-choupals everyday in six different states of India.

Pepsi rural marketing

Pepsi company India has entered into rural market by having joint programme with the Punjab agriculture university in ludiana and Punjab agro industries corporation in chandigarh. The programme focuses on evolving agricultural practices to help Punjab farmers produce crops that would make Indian products internationally competitive. To cultivate a range of sweet oranges for its Tropicana range.

Apart from that, they have given advertisement to attract the rural people with the celebrity of Amitabh bachchan and star cricketer sachin tendulkar.

Coca-cola rural marketing

With the help of Isha foundation coca-cola released the CD of the coca-cola tamil CSR film “NESA KARANGAL” and also acknowledged and appreciated coca-cola’s efforts in promoting social cohesiveness and sportsmanship with an aim to transform rural lives,

Advertisements to attract the rural customers are maasa-actress Rani Mukherji acted in this advertisement and says “masti ka chataka” , Satis shah’s maaza ad is also based on village background.

Aamir khan acted in the advertisement which showcases a beautiful village background with the punch line “thanda ka matlab cocacola” and also ad title “soni kudi” targeted the villagers.

Destination marketing:

Destination marketing is all about selling the experience. To sell the experience is far more difficult. In destination marketing media plays a major role . word of mouth plays a vital role in destination marketing . people love to discuss their tour, infact they feel proud in telling their experiences, they bring gifts for their close ones they show their photographs and purchases to their relatives and neighbours

Eg . kerala has implemented the destination marketing very successfully and emerged as the most acclaimed tourist destination of the country in the recent past. Because of this destination marketing kerala has achieved remarkable success in generating revenue and employment in state through tourism. It is estimated nearly $100 million which generate the employment opportunity in kerala.

In the recent past all the successful stories of destination marketing that is Malaysia, Goa, Kerala, Singapore etc.

Emergence of theme parks such as ADHISAYAM, MGM , BLACK THUNDER,- all are examples of destination marketing.

Transition from kirana stores to modern organized retail outlets:

Modern retailing in India is growing rapidly. Although it commands just 3% of the overall retail market share, changing demographics and consumer taste are driving the growth of more than 30% of the modern retail formats. It is expected to grow another 9% in the year of 2010. India is more attractive than ever to global retailers.

Major players in India are:

Pantaloon retail India limited or future group, RPG group, Tata group, k.Raheja corp. group of companies, RRL (Reliance retail limited), A.B.Birla group, Gati, Calvin klein,murjani group, Disney artist stores, Vishal group (vishal megamart)
Foreign players in India are
Wal-mart stores, Carrefour, Tesco, Rosy blue group, LVMH Group, Metro
This transition makes the marketing in transition

Transition in Segmentation:
Transition from demographic based segmentation to psychographic based segmentation . since 1950′s market segmentation has been referred to as a process of identifying groups of individuals who are similar in attitudes etc. and the segmentation is of demographic segmentation . after 1970s it is psychographic segmentation , know about the customer taste and preferences and collect at the real time point of purchase data. And now it is need based segmentation is using for different marketing functions like advertising and new product development .

Cause related marketing

Cause related marketing is practiced on the rationale that consumers are human beings are kind hearted. The customer pay the amount with some satisfaction that the specific amount is to for relevant social cause.

Example

A sanitary napkin brand “whisper” announced a contribution o Re.1 on every pack of sales for blind relief society. This helps in improving whisper’s market share.

HLL announced a contribution of Rs 0.50 on the sale of each of its brand of lifebuoy brand soap to a diarrhea project.

Co-branding

Co-branding is when two companies form an alliance to work together, creating marketing synergy. This co-branding is innovative in the marketing practices.

Examples:
• Andhra bank and ICFAI university are using the strategy of co-branding.
• Andhra bank and Hindustan petroleum also launched their co-branded card
• SBI card and LG electronics India launched the LG-SBI card. This is the country’s first co-branded credit card for the consumer appliances industry and can be used at more than 2 lakh outlets in India.
• Idea cellular and HDFC Bank launched two co-branded cards providing multiple benefits to customers of both.
• Pillsbury Brownies with Nestle Chocolate
• Dell Computers with Intel Processors

Online marketing

Internet marketing, also referred to as online marketing, Internet advertising, or eMarketing, is the marketing of products or services over the Internet. Internet marketing also includes management of digital customer data and electronic customer relationship management (E-CRM) systems.

Samsung marketing practices

Viral marketing , interactive marketing

Samsung created its “Fun Club” as a way to engage with Samsung mobile phone owners to help them get the most from their phones. Samsung provides content such as games, ringers, and wallpapers that are designed specifically for Samsung mobile phone models. Hearing about new mobile content is one of the benefits of joining the “Fun Club.” Samsung was looking for a new way to use rich multimedia to promote the game, Skipping Stone, to its customers. Samsung engaged Enpocket to create a mobile marketing campaign promoting Skipping Stone using the graphically rich MMS channel.

Conclusion

In the present competitive scenario, there should be transition in marketing practices in order to survive in the market. Since “change in the only thing which never change” in the world, companies have to adapt themselves according to the changing environment. The best emerging practices in the corporate world is win-win concept to be the leader in the market.

Recognize this: the external consultant is using a language you no longer understand. We first have to look at the “Business process.” Right, you think, but what is it and why is it important?

As defined before – The secret weapon of the consultant, slang is part of its repertoire. Sales people have their own jargon (closing the deal), so have accountants (budget, margins) and why not.. consultants: business process, functions, base qualities, …They are needed.

But the consultant should be able to make clear why you need it, what is it for and perhaps he should educate its audience sometimes. It is all part of the job.

So,

A business process: what is it?

A business process is what your company’s main activities are, at a high level. For example.
In a hospital the main activities are: cure and care. There are a few more main activities but these are the most visible and define the impact on the organization. But about that later.

For a translator the main business process is not to translate, but to intermediate. The intermediation however is not specific enough. That’s why a process is only a first part of understanding a company.

The next thing to know is the function.

Again for a hospital the functions are: surgery, radiology, gynecology or dental surgery. In the area of translation the functions are the languages to which to translate (English-Spanish, French-German, etc) These functions make the process specific and show how the business is focused. The process on itself cannot offer a goal to the company (cure many people), the additional function (offering the best surgery in the region) is specific enough to set a goal.

Then there “things” like base qualities. For example, “availability.” They do not tell anything about the process nor the function but all about who it is used. For a hospital it is important not only to cure clients, but also to do so when they are ill, and not when some specialist is available (from nine to five during the week and not in the weekends…)

Having these three defined it is possible to tell something about the organization; Who is going to do WHAT? Now you need not only one surgeon, but a backup “to be available.” This is when organizing comes in the picture. And management will follow…

People and foremost those that are specialized in a field have little knowledge about these abstractions. But when setting-up a (change) project you need to know about some basics in order to make the change. Make sure you involve people by explaining these terms and why they are needed. If there is a lack of involvement it could be just because of this slang, that leads its own life in the organization.

It is the responsibility of the consultant and advisor to educate people in this area and to explain why it is needed. It is all part of the job.

For those who are not familiar they should pose questions, starting with the basic, “what do you mean by that, or I don’t understand.”

Likewise, where there is a presentation about business, functions and more slang and … there is no feedback, no question from the audience, than probably there is no contact.

H.J.B.

Going global and taking a business international has many advantages and disadvantages. Everything that is involved should be considered and discussed before such an expansion is sought.

There are several areas of communication that must be considered when business is being done internationally. Not only do people from different countries speak many different languages, there are always cultural differences that must be taken into consideration. In some locations, the act of touching another person in any way, is forbidden and may actually be taken as an insult to the natives of the country. Certain words and phrases that are acceptable and complimentary in the US are not in some other countries, even if the phrase is said in the appropriate language.

If a company is planning to do a permanent expansion into another country, they should seek to hire people from that location to handle their business for them. This often helps to get around the language and culture barriers. Finding a local to help with business matters can help the company assimilate into the new country much faster. It also helps because having someone native tell the citizens that the product or services is worthy is good advertisement. If someone local cannot be found or hired, it is imperative to do as much research as possible into the intended country’s culture and customs before commencing business.

Business executives should prepare to change some of their standard policies, if they expect to be profitable on a global scale. The exchange of money, the procedures used and policies made must all fit the typical methods used by the particular country of interest, even if they seem far different from US policies. When culture differences are detected, they must be respected and accommodated.

It is a good idea to scope out the area before expanding a business internationally. Choose the location that is most appropriate for your particular industry and visit the area to get a feel for it, if possible. A lot of the success of new expansions depends on the current need for a certain product or service in a specific area of the world. Make sure the location you want to expand to is in need of the company’s services; otherwise, it could turn out to be a huge waste of money and effort with no potential for success. This can cause enough financial stress on a company to make it close down, either temporarily or permanently.

Having a well-thought out business plan ahead of time is the best idea for any company at all, and especially one with aspirations to expand into other countries. There are many things that must be considered and designing a good expansion plan is an excellent way to cover all of them.