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Global Marketing(Mktg 542) (Ibmg 547) Question Paper
Global Marketing(Mktg 542) (Ibmg 547)
Course:Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2013
TIME: 3 HOURS
Instructions
Answer question one (based on the case study) and any other three questions.
Porcelain Producer Ltd (PPL)
PPL is a Kenyan manufacturer and occasionally exports high quality porcelain tableware and ornaments. On the basis of preliminary field work and desk research, the company has selected the United Kingdom (UK) as a target for regular export trade.
It has several reasons for its choice first porcelain table ware is comparatively expensive, PPL has to restrict its choice of markets to those with per capita income of 8,000 dollars or more second to justify the costs of market entry PPL has decided to limit its opposition to country with substantial urban population.
Third it is essential to forms on country that are well save by shipping lines from Kenya and those with fully developed distribution facility using UK distributors specializing in porcelain products would be cheaper for PPL than establishing its own channels.
Research has show that the British retail market for ceramics has been growing rapidly. In the light of the growth rate of consumption and imports (goring inflation) the long term prospects for imports into the United Kingdom look promising. This country exports about 50% of the main foods produced domestically the increased use of newer and more advanced techniques of production has forced its one fragmented industry to be demanded by small number of larger companies.
The UK names among the worlds leading importers of ceramic and porcelain table ware and ornamental article during the past five years, imports increased 150% by value and 90% by quantity. About half of these imports come from German, France and Japan. Taken as whole industrialized nations hold about 70% of the UK market for porcelain developing countries, have expanded their share of this market.
Research indicates consumer demand in the UK shows that simple designs in contemporary colors are preferred. Elegant shapes and branded products sell better sets of 18 to 20 pieces sell best but five piece sets are gaining popularity.
Imports retail at four times their landed prices. Consumers at this infer higher quality for higher prices. This depends on the market segment. If demand in a market segment is inelastic pricing the product at the high end may be strategy.
For exports from developing countries two main types of buyers exist in the UK; importers/distributors and the large department stores. Importers/distributors handle about 70% of the imparted ceramic goods into the UK. These trade intermediaries handle about 70% of imported ceramics to multiple retail stores in like supermarkets (which concentrate on the lower and of the market) and to department stores and gift stores (which caller for upper end of market)
The intermediaries prefer to lay in bulk and occasionally insist on products that carry the manufacturers’ brand name. The also seek exclusive representation. The large department stores together with mail order handle about 50% of the holistic manufactures output catering and institutional users absorb the other 20%. Large department stores prefer products in decorative boxes of quality that are ready for sell like importers they look for exclusive distributership.
The UK importer/distribution handles promotion. The bulk of the domestic industry promotion activities are carried through advertising in magazines that have a high female leadership. Sunday color supplements to newspapers are also used. Promotion is carried out by way of organized displays in retail outfits. For most products the concentration tends to be on brand advertising.
SWOT Analysis – The domestic market offers limited potential for PPLs high quality porcelain table ware. The company can therefore concentrate on building up export markets. Its management is favorable disposed and is commitment to export as a means of increasing foreign exchange earnings. It is capable of preparing sound short and long term plans. It has the necessary manpower to carry out export tasks successfully. It has strong research and development capacities and adequate production facilities.
Economic Market Factors
The level of employment in the British ceramics industry is expected to be maintained. If redundancies do occur the government, takes action to restrict import of ceramics.
Social and Political factors
Its assumed that legal regulations in the form of tariffs NTBs quotas and value-added tax will be maintained at their current levels for the next five years.
Demographic Factors
The consumer analysis yielded only limited information on those factors.
Marketing and Competition
The ceramics market in the UK is dominated by a few large companies. This trend is expected to continue with these companies increasing their dominance of the market. It will therefore be difficult for small companies like PPL to compete on the basis of price alone. However, low priced imports of quality products may be able to challenge the market leaders.
PPL has limited experience in exporting. It has no identifiable brand name. These factors may influence the intermediaries’ evaluation of its products.
Although primary research indicates good prospects for PPL to compete successfully in the UK; there are three obstacles.
1. While quality, shape and designs of PPL products are acceptable to the British customers, its condemnation of product requires modification. This will necessitate exchange in size of packaging materials and will require additional investment.
2. Importers usually expect delivery within three months from the rate of order. They may prefer certain high value items to be air freighted. In this case delivery is expected within six weeks. The cost of sending goods by air or by sea have to be traded off against quicker delivery.
3. Inventory levels in export markets have to be carefully monitored if PPL intends to serve the UK market well.
The structure of the retail market for certain ceramic goods tends to hinder direct procurement from abroad. The main retail outlets and independent China and gift shops account for more than 50 per cent of retail sales.
The large multiple (eg department store) are thus increasingly resistant to assume the risks of trading direct with little known suppliers. They generally deliver within a maximum of six weeks from placement of orders and do not wish to run the risks of delivery delays and the stock shortages that may occur if they obtain their supplier from abroad. The reluctance of department stores to deal with small foreign supplies will be a major obstacle to PPL. Using importers/distributors may a good strategy during the first few years of exporting to the UK, as these intermediaries have extensive knowledge of the market.
However, they insist that new suppliers give them exclusive representation in exchange for the risk they carry off maintain large stocks of these suppliers products.
This is a major problem that PPL has to resolve in its strategy decision making.
Question One
Explain the criteria for market selection for PPL.
(5 marks)
What types if information do you required for formulating an export marketing strategy for PPL? What are the sources of this information? Suggest suitable methodology for collecting the data.
(10 marks)
Suggest a suitable marketing mix strategy for PPL.
(10 marks)
Question Two
Explain the different global market entry strategies available for a firm that wishes to enter the global market.
(15 marks)
You have been appointed a group product manager for a firm aspiring to become a global company. Explain five product related factors you will consider in order to enhance adoption of company’s product in the foreign markets.
(10 marks)
Question Three
Decisions such as production location, market participation and product development in the global market are highly affected by different cost globalization drivers. Discuss five of the cost globalization drivers that affect such decisions.
Multinational corporations with memory of subsidiaries concentrate production of goods in one location, and then sell to other subsidiaries. Explain four transfer pricing methods a firm will use in pricing such goods.
(10 marks)
Question Four
"Grey" market activities are of concern to MNCs smile they affect the company’s distribution channel member revenues."
Define grey markets.
(5 marks)
Explain the factors which account for rapid rise of the grey market.
(10 marks)
How a international product life cycle relevant for international pricing strategies.
(10 marks)
Question Five
A multinational firm entering a foreign market for the first time encounters several challenges or problems in a bid to implement its global promotions programme. Explain any five such problems the global markets must anticipate and manage.
(10 marks)
Explain the key branding decision that an international marketer will consider on entering foreign markets.
(10 marks)
Distinguish between standardization and adaptation.
(5 marks)
Question Six
Explain the four specific and environmental variables that affect the choice of mode of entry into foreign markets.
(10 marks)
In reference to the Porters theory of the competitive advantage of nations, explain the determinants of choice of a country as an investment destination.
(15 marks)
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