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MASTERS IN BUSINESS ADMINISTRATION(MBA):
BY DR ROBERT K. RUTAAGI
MODULES: [E]MBA & MSC (IMS); MSC(H&TM): [INTERNATIONAL] MARKETING
MANAGEMENT CURRICULUM [IMMC](GENERIC & EXPANDED VERSION: 01):
NOVEMBER, 2010.
DESIGNED BY DR ROBERT K. RUTAAGI
NOVEMBER, 2010
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[INTERNATIONAL] MARKETING MANAGEMENT CURRICULUM:
(GENERIC & EXPANDED VERSION 0I):
Learning objectives:
By the end of the course, students will be able to:
Appreciate marketing management skills, tools, techniques and their roles in
business organizations as well as other human institutions.
Efficiently and effectively apply marketing skills in their organizations.
Analyze and interpret correctly, global marketing environments.
Efficiently and effectively formulate and manage marketing programmes.
Use marketing and sales forces and be able to evaluate their performances.
Appreciate, internalize and apply marketing as an academic discipline,
managerial function and business and social practice.
Unit one (01): The Imperatives of Marketing:
This Unit will cover the following topics:
Session one: Why is marketing imperative in the economy?
Definition of Marketing.
Scope of Marketing.
Types of Marketing.
Functions of Marketing.
Marketing at a glance (Synopsis).
1.1 Session One: The imperatives of marketing:
1.1.1 The Definition of marketing.
Marketing is the selling and buying of goods and services to and from the
places of supply (Markets).
Marketing is the selling to or buying from a person, organization or
country.
Marketing, in a narrow sense, is the selling to and buying from another
nation. Two nations are involved. That is inter-nation(al) marketing.
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Multi-national marketing is the selling to and buying from more than two
nations hence the epithet multi.
Global marketing is the selling to and buying from the whole globe (world).
Many nations are involved not two (1.1.3) and not 3 or 4, 5, 6 10(1.1.4) but many more nations, if not the whole world.
Export marketing (exporting):
This entails the selling of goods and or services out of the country. Another
name for goods and or services in: Exports.
Importing entails buying of goods and services from outside country or
countries.
International Trade:
International Trade and marketing may be interchangeably used but there is a
distinction between the two. International Trade is status of exports and
imports between people, organizations and nations of the world. The policy
and practice of harmonizing the two is known as balance of payments (BOP)
for nations. This is a good measure of a countrys economic performance.
1.1.2 The scope of marketing
(i). Marketing is as ubiquitous as there are human activities. National,
regional, continental and global economies teem with economic and social
activities that produce goods and services that need to be sold or bought
in diverse markets.
(ii). The range of products and services:
The range and diversity is, simply, unfathomable. These are primary products,
secondary products and finished products and services. These are
agricultural, industrial and mineral products. Human and other services are
equally diverse.
(iii). Markets:
There are many types of markets depending on geography, levels of social
and human and economic development and industrialization.
The level of science and technology:
(iv). The scope of marketing is also greatly influenced by the level of science
and technology which effect, qualify, quantity, pricing distribution (logistics)
and promotion.
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(v). The scope of marketing also covers products (of all type) and services,
including but not limited social services such as health, education and
sports, military service, politics and governance, ideological orientations
and religious faiths meta marketing.
1.1.3 Types of marketing management:
The types of marketing, largely, depend on geography (where) and how the
marketing activity (how) is done.
(i) Domestic marketing
This type of marketing entails home marketing limiting the marketing
operations within the geographical and political borders of the country.
(ii) Regional marketing:
This type of marketing extends beyond domestic to, regional markets around
the home-market. Modern marketing parlance has code named this type
proximity marketing. Ugandas new booming markets in Southern Sudan and
Western Democratic Republic of Congo (DRC) are good examples.
(iii)Export marketing, international, multi-national and global marketing which
have already been defined (1.1.3 1.1.8) fall under this category.
(iv)The How-types of marketing:
These include but are not limited to:
Meta marketing.
Olympic marketing.
Papal marketing.
Pentecostal marketing.
Evangelical marketing.
E-marketing.
Personal marketing.
Black marketing.
Grey marketing.
Agricultural / industrial .. Marketing.
Experience marketing.
Quantum marketing.
Reality marketing.
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Service (kyeyoism) marketing.
Professional marketing.
Prosperity marketing.
Cross border marketing.
Import marketing.
1.1.4 Functions of marketing management:
The whole purpose, essence, mandate and function of marketing management, as a
managerial function and business practice is to enable a consumer of goods and or
services to access them, for consumption or utilization, right from the source of
supply to the point of consumption or utilization. A marketing or sales department, in
any organization is for all intents and purposes, the epitome and embodiment of thefunctions of marketing management.
(i) Designment of an appropriate marketing plan.
(ii) Designment of a suitable marketing department (division) organization
structure.
(iii) Recruiting or advising the human resource department (HRD) to recruit
qualified personnel.
(iv)Training, inducting, motivating and retaining the marketing / sales staff.(v) Conducting market research.
(vi)Executing the marketing / sales managerial functions. Implementing the
market plan.
(vii) Generally, managing the marketing mix (product, price, promotion place
[distribution]).
1.1.5 Marketing management at a glance (synopsis).
(i) Marketing is a well developed academic discipline.
(ii) Marketing is an important managerial function relevant in every human
endeavor it is ubiquitous.
(iii) There are many types of marketing determined by geography, product or
service and methodology used to carryout the marketing functions.
1.2.0 Session Two: Competition:
Definition of competition.
Definition of competitiveness.
Different levels of competition.
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Ugandas National, Regional and global competitiveness criteria for
competitiveness.
Review of international marketing institutions (IMIs) at national, regional and
global levels.1.2.1 Competition:
(i) Definition of competition:
Competition is the striving of market players to share and survive in the
market place.
(ii) Definition of competitiveness.
Competitiveness is the ability to efficiently and effectively sell to and from
domestic regional and global markets.
(iii)Competitiveness is the status and capacity (of a person, company or nation)
to provide an enabling environment for producers (of goods and services),
exports and buyers of those goods and services with international quality
standards and, therefore, are desirable enough to meet the needs of
consumers in the market (at all levels: domestic, regional and global
markets within the principles of the World Trade Organization (WTO).
1.2.2 Different levels of competition:
Competition takes place at different levels. There is competition between individual
players or persons in any human endeavor. There is competition between
companies / firms / organizations / groups / churches / political parties / academic
institutions etc. competition takes place between countries in a region. There is
global competition. There is now a popular parlance that the world has become a
global village market in which the forces of supply and demand are fondly or even
aggressively interplaying.
Figure 01
1.2.3 Domestic regional and global competitiveness:
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Individual
Companies
Nations
The World
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(i) Ugandas competitiveness is adversely affected by a plethora of specific and
generic multi-sectoral inefficiencies validated by empirical evidence
manifested by research (Dr. Robert K. Rutaagi, 2004) findings of this study
as discussed here under.
(ii) The positive factors affecting Ugandas competitiveness:
Superb climate (rains, temperatures, wind seasons).
Good fertile soils.
Flora and fauna.
A good variety of natural resources: water, forests, minerals, oil and gas.
Growing, energy etc and hospitable population.
A good and sophisticated educational system based on the Colonial BritishSystem.
The negative factors that affect Ugandas competitiveness.
Land lockedness.
High production costs.
Political instability.
Lack of adequate science and technology.
Lack of entrepreneurial and managerial skills.
Lack of efficient democratic institutions.
Poor policies.
Corruption.
(iii) World trade organizations (WTO) criterion for measuring competitiveness:
According to WTOs operational principles, for a product or service to be considered
competitive in the global (or nay other) market, that product or service must be able
to enjoy a stable market share of the global market of at least 3.25% for at least two
consecutive years. Based on this principle, Ugandas products and, therefore, are
not competitive. Not even coffee, Ugandas legendary export leader for several
decades. However, coffee, roses and cobalt met the test for a few years before
losing it. Other criteria include but may not be limited to: produce quality, packaging,
competitive prices, efficient distribution systems and promotional programmes.
Box 01: Ugandas top ten leading export products (1990)
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Product Market share Product Market share
1 Coffee 3.4% 6 Electricity 4.4%2 Fish 0.2% 7 Beans and Legumes 0%3 Tea
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International Bank for Reconstruction and Development (IBRAD) (World
Bank).
International Monetary Fund (IMF).
International Development Association (IDA). International Finance Corporation (IFC).
International Trade Centre (ITC) / World Trade Organization (WTO) /
General Trade on Agreement and Tariff (GATT) / Commonwealth
Secretariat (CWS).
United Nations and its Organs.
1.2.5 Africas versus global competitiveness
The World Economic Forum, based in Geneva has, since 1998, carried out studiesto determine African countries competitiveness compared to global competitive.
Results are quite revealing. Generally, African states are not competitive. However,
some countries such as Mauritius, Botswana, South Africa, Egypt and Rwanda are
showing a modicum of competitive growth compared to the world. World economic
forum, Africa competitiveness reports: 1998 / 1999 / 2000 / 2002 / 2004.
1.3.0 Evolutionary Process of International Marketing.
1.3.1 The evolution of marketing.
Stage one: Domestic marketing.
Stage two: Export marketing.
Stage three: International marketing.
Stage four: Multinational marketing.
Stage five: Global marketing.
1.3.2 Domestic marketing:
As the world domestic connotes, this is a stage (one) and form of marketing whereall the factors from conception to consumption are ethnocentric in nature and scope.
Ethnocentricism is defined here a predisposition of a firm to be predominantly
concerned with its viability world wide and legitimacy only in its home market
(Masaaki, Kotabe and Kristiaan Helsen, global marketing management 1998).
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1.3.3 Export marketing:
The home market is a natural predisposition for most manufacturers are marketers.
After they have gained enough experience, then, they use domestic success as a
spring board for international, multi national and global export marketing.
1.3.4 Why must a company export?
To use excess capacity utilization.
To enjoy (exploit) economies of scale.
To diversify and spread risks.
To prolong product life.
To take advantage of government.
Incentives and other economic opportunities.1.3.5 Why must a Nation Export?
To exploit the concept of comparative advantage.
To participate in international mutual exchange arising out of comparative
advantages.
To earn foreign exchange.
To expand home market to international, multinational and global markets.
To create employment for its nationals.
To acquire national identity and inter-cultural involvement.
1.3.6 International marketing
Inter-nation-al marketing, basically, entails marketing between two nations which,
then, becomes a spring board for beyond-home marketing. Although in common
marketing parlance internation-al marketing tends to mean worldwide marketing,
strictly speaking, that is a misnomer which is addressed in 1.3.7 and 1.3.8.
1.3.7 Multinational marketing.
MNM entails marketing in more than two markets but can be as few as three or five
nations or more, encompassing region by region.
1.3.8 Global marketing:
Global marketing, as the word global connotes, is marketing worldwide right from
conceptualization level to consumption level. The marketer employs proactive
willingness to adopt a global perspective instead country-by country or region-by-
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region perspective in developing a marketing strategy (Masaaki Kotabe and Kristiaan
Helsen, 1998).
1.3.9 Summary:
The marketer is analogous to a military Army commander who captures territory by
territory until he or she wins the battle. The marketer start with the domestic market,
moves to export, then international, multinational and, finally, global marketing.
Global marketing has supportive advantages of enjoyment of economies of scale
through standardization of the entire marketing mix chain, thereby attaining
competitive powerthat transcends all other marketers.
UNIT TWO: INTERNATIONAL MARKETING MANAGEMENT
ENVIRONMENT (IMME):
2.1.0 Global Economic environment:
2.1.1 Inevitability of interdependence:
Because of essentially, the concept of comparative and competitive advantage of
nations, different levels of social, political and economic development aggravated by
the equally comparative and competitive advances of science and technology, the
inevitability of social, political and economic interdependence has become a
sacrosanct law to which every nation must bow its knees. For examples Uganda
mainly produces raw materials: coffee, cotton, copper, cobalt, tea, tobacco, tourism,
fish, electricity, beans, flowers, maize, hide and skins, timber, minerals and exports
them to Europe, America, Asia hence she (Uganda) imports: industrial machinery,
general merchandise, pharmaceutical products, industrial inputs, motor vehicles and
petroleum products.
2.1.2 Economic environment in Uganda, East Africa and the World (synopsis):
(i). Economic environment in Uganda: Uganda is predominantly an
agricultural country whose majority population is rurally based. The
industry and service sector are still small and young. The private sector is
too small, young, unsophisticated and donor-driven. The economy, though
growing and macro-economically stable is uncompetitive at domestic,
regional and global level in terms of product quality, quantity, price,
distribution systems and promotional (marketing) initiatives (Dr. Robert K.
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Rutaagi, 2004, world economic forum, Africa competitive reports 1998,
2000, 2002, 2004).
(ii). Economic environment in E.A.C:
The E.A.C comprises of Uganda, Kenya, Tanzania, Rwanda and Burundi.
With a population of 90m people and an average of US$30B GDP, the E.A.C
market is expected to engender a new economic paradigm shift in terms
national, regional and global competitiveness. (Africa Peer Review Mission
2009).
(iii). Economic Environment in Africa.
Many years of tribal and religious wars, colonialism, post-independence
political wars, health epidemics and absence of adequate science and
technology kept the African continent in despicable social economic
conditions which were aggravated by natural disasters, neocolonialism and
poor political, economic and corporate governance. Through economic
integration and enlightened national, regional and global leaderships, Africa is
slowly but surely emerging out of its past socio-econo-political doldrums. The
invisible hand of God is in charge of the positive changes.
(iv). Economic environment in the world:
The dramatic advances of science and technology has made the great
and diverse geography a global village markets for long a popular topic
for speculation but now a reality.
Global leadership is emerging who, unlike, historical conquerors and
imperialists and colonialists are true democrats, peace lovers and
makers and integrationists.
Through economically integrated blocks such as: NAFTA, EU, ASEA,
EAC, ECOWAS etc globalization is being realized with all the benefits
(but also risks) that come with it.
One great risk that globalization engenders is inequitable distribution of
resources (globally) with a tendency to make the rich richer and the
poor poorer. Under globalization, production will (has already been)
surrendered to the developed countries and newly industrialized
countries (NICs) to produce, en mass (based economies of scale) as
much as they can market in the global village, using the best
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technology they have at the lowest cost possible and market them
(goods and services) as liberally and competitively as nobody else can
from the developing world which is totally disadvantaged. Paradoxically
and ironically, the developing world consumerhas the least purchasing
power, propensity to spend leave alone competitive power after its
comparative advantage has been eroded by the Developed Worlds
competitive advantage.
2.1.3 The roles of the World Trade Organization (WTO) and the general
agreement on tariffs and trade (GATT), United Nations conference on trade and
development (UNCTAD) international trade centre (ITC).
In 1948, after the two wards, the International Trade Organization (ITO) was initiated
but failed to take off.
The purpose of the ITO was to facilitate World Trade Damaged during the first and
second World Wars (1914 1944). When the ITO failed to take off an informal
organization called the General Agreement on Tariffs and Trade (GATT) was
established to handle trade matters especially tariffs on goods. In 1994, a more and
legal institution called World Trade Organization (WTO) with expanded mandate to
handle global trade, including the GATT issues which, henceforth, become part and
parcel of WTO.
2.1.4 Regional Economic Trading Blocks:
Refer to section 2.1.3 (IV)
2.1.5 The role of information communication technology (ICT) and the
changing nature of competition. The dramatic advances of modern science and
technology, in general, and ICT, in particular, have greatly revolutionalized domestic,
regional and global trade. Mass production, based on economies of scale, the
improved infrastructure including ICT, economic integrations and new marketing
techniques have all fallen in place to facilitate domestic, regional and global
marketing. The forces of supply and demand are now able to interplay in such a
competitive manner that challenges many theories and practices of marketing.
2.1.6 The role and examples of multinational corporations (MNCs):
A multinational corporation is one which operates in multiple nations. By 1998,
researchers at the United Nations reckon that these are now at least 36,000
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multinationals controlling some 180,000 affiliates (Masaaki Kotabe and Kristiaan
Helsen).
MNCs, from, especially, the developed world, find it imperative to operate multination
ally in order to exploit, in trade: economies of scale, reduced barriers of trade in trade
and investments, the advances of ICT and the need to be closer to the markets in
order to be more competitive. Examples of multinational corporations are: General
Motors, Toyota, Nissan, Microsoft, general Electric, MC Donald, Colgate, Sonny,
Gillette, MTN, Standard Chartered Bank, AIG (Chartis) etc.
2.2.0 Session Two: the Financial Environment:
2.2.1 The Historical role of the US Dollar:
The US Dollar was, and still is, the major and pioneer currency of the World. In the
1970s the US Dollar exhibited signs of weaknesses which almost ruined not only the
US but also the global economy. Soon after the World War II, the United States
agreed to exchange it at $35 per ounce of gold, the system of that era. That brought
about unprecedented financial stability which automatically accorded the US Dollar a
common denominator in World Trade until today. But because of the nature of gold
(scarcity), the wreckage caused by World War I and II (1914 1939 and 1939
1944), different levels of economic development, undeveloped in-fracture and poor
communications and different political ideologies, the initial dollar system continued
to show signs of instability in the 70s to the 80s. Later, in the mid 80s, as the US
economy stabilized, the value of the dollarsowered so high against other currencies.
That precipitated adverse balance of payments of nations as US export became
expensive against cheaper imports. This necessitated drastic interventions by US
and all industrialized countries. As a result, the value of the dollar was forced to fall
throughout the late 80s and the 90s.
2.2.2 The Gold Standard:
The gold standard era (1880 1914) was characterized by paper money of major
nations of the World (especially industrialized nations) being backed by physical
stock of gold held by theirCentral Banks. Each nation, under the gold standard, had
to declare a par value of its currency in terms of gold. The par value of the US Dollar
was $35 per ounce while that of the British pound was 7.3 per ounce of fine gold.
The three main features of the gold standard were as follows:
Exchange rates were fixed.
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Each nations money supply growth was limited by the very gold standard
because of the scarce nature of the metal.
Each nations balance of payments problems were automatically adjusted. In
case of a deficit, by the law of demand supply, gold would flow out of the
country, thereby decreasing economic activities to engender normalcy and
vice versa.
It should be understood that the gold supply grows quite slowly because of the
nature of the metal. Therefore, after the World War I, disharmony occurred between
gold supply and the needs of commerce. It is, generally, believed that attempt to
return back to the international gold stand (IGS) was a major contributing factor to
the great depression because of its incapacity to control inflation.
2.2.3 The interwar years: The Depression (1919 1939):
These years were characterized by wars: World War II, unstable currencies
(inflation), economic protectionism, and poor supply and demand depression. This
kind of situation called for new interventions.
2.2.4 The Development of the current International Monetary System: The
Bretton Woods Conference:
By the time the Second World War ended in 1945, the economies of all the
participating nations such as USA which were not directly involved though relatively
stronger and un-ruined by ravages of war, their opportunities to engage international,
multinational or global trade were minimal. Therefore, the need to repair promote,
develop and integrate World Trade was great. That was also the time the general
agreement on tariffs and trade was faltering and participating nations had withdrawn
to themselves with protectionist stances towards global trade. Inflation was rampant
and the depression of the 1930s had sent shockwaves to the world. The gold based
economic regime had proved disastrous.
In 1944 a World conference was convened at Bretton Woods Resort in Hampshire,
USA where important decisions were taken, negotiations to reform the International
Financial System operating under specific guidelines in the Bretton Woods
Agreements. Relevant institutions were established. These were the international
monetary fund (IMF), the international Bank for Reconstruction and Development
(IBRAD) [the World Bank]), the International Development Association (IDA) and the
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International Finance Corporation (IFC). These are the institutions that drive World
Economies up to today.
2.3.0 Session Three: Political and Legal Environment:
2.3.1 Individual Country Politics:
The World has many nations. Each nation has its own political and economic
systems which are beyond the scope of this study. However, suffice it to state, briefly
that each nation or country has its own politics, depending on its history, geography
and circumstances. Using Uganda as a microcosm of the Worlds Political System, it
has its own Political System. Uganda was created as a British colony in 1894. It
never evolved and integrated as a unified gradual process. It was, simply, created by
European imperial powers. Uganda was, originally, several little nations (tribal)
including and revolving around Buganda which was relatively more organized under
Kingdoms. The colonial master was Britain up to 1962 when she gained
independence. The first post-independence Uganda, under the Uganda Peoples
Congress (UPC) led by Dr. Apollo Milton Obote was overthrown by Idi Amin Dada in
1971 whose military was, in turn, overthrown by Tanzanian Peoples Defense Forces
(TPDF) and Ugandan Exile Forces. The Uganda National Liberation Front (UNLF)
led by Prof. Yusuf Lule, later, overthrown by Godfrey Binaisa, the military
commission by Paul Muwanga before returning to UPC II under Milton Obote who,
too, later was overthrown by Okello Lutwa and Okello Bazilio. The duos were
overthrown by the National Resistance Army/Movement led by Yoweri Kaguta
Museveni in 1986. The monolithic NRA/M has governed Uganda up to February
1996 when multiparty politics were introduced, still under National Resistance
Movement.
2.3.2 Individual country Laws:
The present Uganda is governed under the national constitution promulgated in
1995, which is based on the British common law because of the colonial history. The
Uganda parliament is the political law making body. Uganda has a judicial system
which is fairly independent by African and even international standards.
2.3.3 Multinational / Regional Laws:
These are laws that govern more than one nation or region. For example Uganda,
Kenya, Tanzania, Rwanda and Burundi have some agreements and laws which
govern common interests and institutions. Under the East African community (AEC)
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laws protocols and agreements have been put in place to manage various, social,
political, military and economic interests. Under such supra national laws and
politics, economic integration is slowly but surely being achieved for the god socio
economic development of individual and regional nations throughout the continent
and the World. Beyond EAC other economic blocks are being evolved e.g.
COMESA, SADC, ECOWAS, USA, NAFTA, NATO, EU, ASEAN etc.
2.3.4 International Laws:
These are laws, as the word international connotes are global in nature and
application. Laws: protocols, treaties, statutes, conventions, agreements are
designed and promulgated and enforced by relevant institutions to apply globally.
Such institutions include but not limited to the United Nations System (UNS) e.g.
United Nations (headquarters), UNDP, WTO, ITC, UNCTAD, WHO, UNICEF,
UNESCO, World Bank, IDA, IMF, IFC, ICC, International Court etc. Specific legal
(international) include but are not limited to international standards organization
(ISO), international intellectual property protection, Human Rights, Childrens Rights
etc.
Unit Three: Development of Competitive Strategy:
3.1.0 Marketing Research:
3.1.1 Research Problem Formulation:
Markets tend to be diverse and extremely dynamic. Therefore, for a marketer to be
to operate well and successfully in a market the need to understand the forces
interplaying in the market is imperative, hence the need to carry out research. Failure
to carry out market research is also costly but dividends are high immediately and,
especially, in the medium and long term. In order for market research to succeed,
the problem area to be researched on must be clearly and accurately defined. That
is called problem research formulation. The clich: A well-defined problem is a half
solved problem is self explanatory for market researchers.
3.1.2 Two Broader Types of Market Research:
Domestic Research.
International Market Research.
3.1.3 Six steps of conducting Market Research:
Define the research problem.
Develop research design.
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Determine information needs.
Collect the data (secondary and primary).
Analyze the data and interpret the results.
Report and present the funding of the study.3.1.4 Narrower types of Market Research:
Primary data.
Secondary date.
Desk research.
Field research.
3.1.5 Problems of Primary Research/data:
Costly value for money consideration.
Unreliability (cultural issues, geography, human weaknesses).
Political challenges.
Time management considerations.
Accuracy or inaccuracy of data.
Interpretation problems.
3.1.6 Secondary Research / Data Problems:
Lack of information or too much of it.
Inaccuracy of available information.
Reliability over time.
Comparability of data.
Inaccurate or exaggerated lumping of data.
3.1.7 Survey Methods:
Questionnaire design method.
Sampling methodology.
Contact methods.
3.1.8 Market size assessment:
In market research, market size is extremely important. A small sample of a market
may engender inaccuracies that will, inevitably, lead to wrong conclusions. On the
other had a huge market sample will not only be superfluous but also cost may be
exorbitant. The known methods of market size assessment are:
Analogy method.18
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Chain ratio method.
Cross sectional regression analysis (CSRA).
Trade Audit method.
3.1.9 New market information technologies:
Point of sale (POS) store scanner data.
Consumer panel data.
Single source data eg UEPB, UNCCI, Embassies etc..
Shift from mass to micro marketing.
Continuous monitoring of brand sales / market share movements.
Scanned data are used by manufacturers to support marketing decisions.
Scanned data are used to provide merchandising support to retailers.
3.2.0 Market Segmentation:
3.2.1 Purpose for Marketing Segmentation.
Purposes for market segmentation may be many depending on marketing mix (the
4Ps) but the major purpose is competition intensity and considerations of geography,
culture, economic conditions etc.
3.2.2 Reasons for Market Segmentation:
Measurability of the market.
Size of the market.
Accessibility of the market.
Action-ability about the marketing mix/product, price, places (distribution
channels) and promotion).
Competitive intensity.
Growth potential of the market regardless of the levels of competition and
other economic factors.
Country cream skimming prospects in the case of international market
segmentation.
Global market research indicators.
Entry decisions.
Positioning strategy.
Marketing mix policy, such as standardization or customization, uniform price
of differentiation etc.
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3.2.3 Market Segmentation Approaches:
Geographical approach (country, region.).
Economic e.g. RS capita GNP.
Political e.g. capitalist, industrial, same block. Cultural (sex, age etc).
Cosmopolitan, prosperity.
3.2.4 Basis for Market Segmentation:
Demographics:
Geriatric (elderly) care.
Travel services.
Leisure services.
Medical services.
Urbanization services.
Environmental services.
Socio-economic variables:
Luxury goods for the wealthy.
Cultural factors.
Religious factors.
Political factors/conditions.
Levels (stages) of economic development.
Culture.
3.2.5 Stages of economic development:
Traditional societies.
Pre-conditions for take off. That take-off.
The drive to maturity.
High mass consumption.
3.2.6 The Four (04) cultural dimensions:
Individualism versus collectivism.
Power distance.
Uncertainty avoidance.
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Masculinity femininity.
3.2.7 Segmentation tools:
Cluster analysis.
Regression analysis.
3.3.0 Market competitiveness analysis:
3.3.1 The concept of comparative advantage:
When an economy or country is endowed with natural resources, compared to
others, it is said to possess a comparative advantage over those that are not equally
naturally endowed. For example Uganda has a comparative advantage by being
possessed with rich and fertile soils, good climate, natural forests, fresh water bodies
and minerals.
3.3.2 The concept of competitive advantage:
On the other hand, if an economy or country lacks comparative advantage but if it
has other resources, especially, human resource and advantages to transform its
economy such as managerial, entrepreneurial, educational, political, cultural and
scientific knowledge such an economy is said to possess competitive advantage.
Examples are Japan, Singapore, Malaysia, South Korea etc.
3.3.3 Information Communication Technology (ICT)
ICT is a competitive advantages factor (CAF). With the advert of ICT,
competitiveness policies, strategies, tactics, programmes, procedures and activities
have been greatly enhanced in national, regional and global economies.
3.3.4 The marketing mix
The marketing mix, known as the 4Ps are important variables in the determination
and development of competitive strategy. It is covered else where in the course.
3.3.5 The Market Competitive Strategy (MSC):
In a nutshell, the MCS entails that efficient and effective management of the in
interplay among the marketing mix based on a firms countrys or economys
comparative and or competitive advantage. Basically, a firms economys or
countrys comparative advantage has been overthrown by the competitive advantage
endowed, largely, by human resources, science and technology including the
information communication technology (ICT). Therefore, competitive (not
comparative) is a function of:
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Managerial skills.
Entrepreneurial skills.
Science and technology.
Information communication technology.
Comparative advantage.
The quality of the marketing mix.
Environmental factors (enabling environment).
3.3.6 The competitive structure:
Competitive forces are dynamic and multifarious. They include but are not limited to:
Industry competitors.
Potential entrants.
The bargaining power of suppliers.
The bargaining power of buyers.
The threat of substitutes.
3.3.7 Hyper competition. The Schumpeterian Model of Competition:
Because of the dynamicity of the modern advances of science and technology,
including ICT, there is no known competitive strategy that can last. Schumpeterianist
strategy entails systematic and continuous disruption of the market no matter non
competitive through creative and dynamic innovations. This creates
hypercompetitive advantages in terms of price, quality, and time, know what and
know how. The Schumpeterianism is evident in four main areas:
Cost and quality.
Timing and know-how (and know what).
Strong holds (geographic and market segments).
Financial resources.
3.3.8 Market Interdependency:
The concept of competitive advantage, like the concept of comparative advantage is
interdependent in many ways. There is no firm that can be self sufficient in the long
run. The same applies to the nations of the globe. The developed nations are as
dependent, in many respect, on the developing nations as much the latter are
dependent on the firmer. Even if a firm is self sufficient in the short run, it will some
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emerge that it will be more effective to devote its limited expertise and resources to
what it has the competitive advantage and outsource the other needs (products and
services) to those how enjoy comparative advantage. This is in harmony with the
Schumpeterian strategy to unleash hypercompetitive advantages. The best
examples are computer, airlines and motor firms.
3.3.9 African competitiveness refer to 1.1.5
3.3.10 Ugandas competitiveness refers to 1.2.3 (i iv).
3.4.0 Marketing Entry Strategies:
3.4.1 Target market selection:
In many situations and circumstances, the marketer may use the simple rule of
thumb to determine ones market(s) for goods and services especially the domestic
market which coincides with the marketers residence. For example, when Mukwano
Industries Limited decided to manufacture Mukwano Soap Industry, his target was
Uganda market. Most probably, at that initial stage, he never anticipated that time
would come when his target would focus on other lucrative markets: Democratic
Republic of Congo (DRC), Southern Sudan, Rwanda, Northern Tanzania, Western
Kenya and even Malawi.
3.4.2 Choosing the mode of market entry:
In other circumstances and special situations a marketer may be faced with the
imperative need of analyzing before choosing a strategic mode of entry. Failure to do
that may mean imminent failure sooner than later. Criteria for choosing the mode of
market entry are:
Market and growth.
Risks involved.
Government regulations.
Competitive environment.
Local infrastructure.
Corporate objectives.
Need for control.
Internal resources (Assets and capabilities).
Flexibility.
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There are many good reasons why a company and a country need to export. The
main ones are two: one, to expand home market and two expand capacity utilization
either base on technical or natural comparative advantages. Therefore, in such a
situation the mode of market becomes direct exporting. But even this mode of entry
can be achieved through other means, not necessarily by the company, itself or the
country.
3.4.4 Licensing:
Licensing takes place when the manufacturer/marketer licenses a person or another
organization to take on the role of doing the export function on commercial terms.
This has the advantage of releasing the manufacturer to concentrate on the core
function of manufacturing and passing on the marketing to another player. However,
it may have the disadvantaged of loosing control of the marketing if the marketer is
not aggressive enough.
3.4.5 Franchising:
Under the franchise arrangement, the manufacturer or powder of a product or
service manufactures or creates a product or services and packages it into a final
firm ready for consumption or application. Even the how may be package. And what
remains is also monitored and influenced by the manufacturer or service creator. In
this way, any adulteration is avoided. The only disadvantage is that it kills motivation
on the part of the marketer but, other things being equal (or favourable) it could also
be in favour of the marketer whose job is made simple.
3.4.5 Contract manufacturing:
Contract manufacturing is an arrangement where the manufacturing of a product or
its parts (components ) are outsourced from another company but not the marketing
function is retained by the original manufacture or another agent may be appointed
to handle the marketing function. This arrangement has some benefits:
It is cost saving especially in labour intensive cases.
It exploits any other available incentives especially in international markets
where more than two countries are involved, each with comparative
advantages (energy, raw materials etc).
Under contract manufacturing and marketing, there is always a risk of nurturing a
future competitor. The contractor is also exposed to any socio-econo political
problems that may affect the contract.
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3.4.6 Joint Ventures:
Joint venture companies (JVC) usually become necessary where investors wish to
expand their operations regionally or internationally and investments are huge. The
common forms of JVCs are:
Majority (>50% ownership).
Fifty: fifty (50%:50% equal ownership).
Minority (>50% ownership).
JVCs may be purely local or, usually, between foreign and local
ownerships.
3.4.7 Cross-border strategic alliances:
CBSA are a Coalition of two or more organizations to achieve strategically significantgoals that are mutually beneficial (Masaaki Kotabe & Kristiaan Helsen, 1998). These
CBSAS include:
Licensing.
Franchises.
Joint ventures.
R&D Partnerships.
Informal arrangements.
Inter-company personnel visit exchanges.
Inter-company meetings between managers.
Network of cross shareholdings.
In Japan, these strategic alliances are termed Keiretsi.
4.0 Unit Four: marketing management strategy development:
4.1.0 Product policy and development:
4.1.1 Product Development Strategies:
Definitions:
(i) A product is a physical, tangible thing that possesses ability to satiate human
needs. Examples include but are not limited to:
Clothes.
Foods.
Drinks.
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Shoes.
Cars.
Soak.
(ii) A product is some non physical, intangible thing but possesses ability to satiatehuman needs. Examples include but are not limited to:
Music.
News.
Beauty.
Treatment.
Education.
n intrinsic product that is non physical, intangible but with ability to satiate
human senses. Examples include but are not limited to:
Brand new products from a laboratory.
Already invented products but new to a company.
Already existing product but only modified for different market segments.
New brands for different markets.
Definition of brand: the marketing motion of brand is a name, term, sign,
symbol, slogan or combination of them identifying a product nationally,
regionally or globally.
4.1.3 Product standardization versus customization.
In marketing, a product can be standardized or customized depending on market
dynamics. A standardized product will have the same features in all market
segments. The main advantage for standardization is that costs are substantially
reduced, both in manufacturing, pricing, distribution and promotional initiatives. The
disadvantage, however, are those local needs, which may not have been anticipated
may adversely, affecting demand. The best example is the pinto model car
manufactured by Ford Company for marketing in Brazilian market. Little did Ford
marketer know that in Brazil, Pinto meant small male genitals. The sales turned out
to be dismal. After realizing this cultural blunder the pinto model was changed to
corcel (horse). The sales were remarkable!
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4.1.4 Push-pull strategies:
The push strategy (the old) entails designing products, using the best
technology and possible and >
Company.
Customers.
Competitors.
Collaborators (distribution channels, suppliers).
The New product development process
Market evaluation.
Opportunity identification.
Screening.
Concept evaluation.
Pre-test market.
Test market.
Roll out.
Cultural contrasts in NPD:
Three main contrasts in NPN have been observed by researchers between North
American, European and Japanese: The NPD is highly influenced by the cultural
dimension dominant in a particular market:
High versus low-context cultures.
Cultural homogeneity.
Hofstedes classification scheme.
4.2.0 Product versus service marketing:4.2.1 Branding strategies:
As stated in the previous section (4.1) products can be physical and tangible or non-
physical and intangible. The extended product can be part of the physical product or
can be totally intrinsic.
Types of brands:
Local brands aim: exploit local culture.
Global brands aim: exploit economies of scale.
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Pharmaceuticals (e.g. Asporo).
Computers (e.g. Microsoft).
Chemicals (e.g. Hoest).
Automobiles.
Bicycles.
Pens.
Garments.
Aero planes.
4.2.7 Factors that affect branding:
History.
Competitive climate.
Market support.
Cultural receptivity to brands.
Product category penetration.
4.2.3 Managing diverse product lines:
A company (manufacturer or trader) may decide to specialize in one product or
service or may engage a wide range of same or different products and within a
limited range in terms of number of products or services. This is the width and length
concept of the product mix. The factors that influence the product mix policy are;
Competitive climate.
Organizational structure.
History of the company/product(s).
4.2.4 Product Piracy:
Piracy entails the who gambit of copying or imitating a product in an away that it
becomes, technically, difficult for an unsuspecting consumer to distinguish between
the original and the fake product. Experience has shown that pirated products are
poor quality but in terms of appearance they may even look better than the original
product. Product pirate can imitate the brand name, the logo, the design and the
packaging. Piracy must be forgotten by all stakeholders because they unfairly
interfere with normal economic activities. This fight can be achieved through:
Lobbying activities.
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Legal action.
Product policy options (use of holograms).
Communication options.
4.2.5 Country of origin (coo) stereotypes:(i). Definition of stereotypes:
A stereotype is a congenital or acquired bras in favour or against a product
because of its country of origin engendered by strongly held cultural beliefs
(stereotypes). Market research has revealed that European consumers view
Japanese-made products as technically advanced and reliable but short on
soul.
(ii). Generally, consumers, especially in developed world prefer domestic productsover imports. In Uganda, it is the reverse!
(iii). For a long time Africans in general and Ugandas, in particular adore a imports
from UK, USA and other parts of Europe and despised India and Japanese and
Chinese products today the situation has changed.
(iv). Strategies to cope with COOSs are:
Product mechanisms.
Pricing mechanisms.
Distribution policy and channels.
Communication policy and mechanisms.
4.3.0 Marketing of services:
4.3.1 Definition Services:
(i). Services are economic activities that provide time, place and form utility while
bringing about change in or for the recipient of the service. Services are
produced by (1) the producer acting for the recipient; (2) the recipient providing
part of the labour; and/or (3) the recipient and the producer creating the service
in interaction. Riddle, Dorothy I, service-led growth (1992) Praeger Publishers,
Green Wood press Inc. New York.
(ii). Services are consumer or producer goods which are mainly intangible and often
consumed at the same time as they are produced.. Service industries are
usually labour-intensive. (Bannock, Baxter and Reez 1972P.372).
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(iii). Service is all those intangible non-physical enjoyable provided by or for human
and other living things and their environment. Rutaagi, Robert, K. (2010).
4.3.2 Status of Services (Globally):
As countries develop, research ahs established their service sector becomes more
dominant past of the economy (GDP). Examples are: Hong Kong (more than 60%),
Singapore, Taiwan and Thailand. Globally, the service sector contributes more than
60% of output. In Uganda service exports (remittances from abroad) reached 88% of
total exports or 44% of total imports. Bank of Uganda, 2005.
4.3.3 Challenges of marketing services:
Protectionism between countries.
Immediate face to face contacts with service transactions.
Difficulties in measuring consumer satisfaction overseas.
4.3.4 The status of services sector in Uganda:
In the last decade, the service sector has been revolutionaries by:
Rapid growth of tourism.
Rapid growth of the food industry.
Rapid growth of the education sector.
Raid growth of information communication technology (ICT) especially thetelecommunication services.
The dramatic growth in the service exports (the Kyeyo industry).
4.3.5 Opportunities in service industries:
Deregulation of service industries:
World Trade organization (WTO) policies and programmes promote and
facilitate service industries globally.
Increasing demand for premium services:
With economic integrations and globalization as well as dramatic
advances of science and technology, consumers are free to access the
best services at competitive prices.
Increased value consciousness (IVC):
Global competitiveness, liberalization, globalization and availability of ICT,
dictate that consumers will want to maximize their benefits value for
money mentality. Through direct sourcing, consumers will make
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phenomenal savings as middle agents (men) become endangered
species.
4.3.6 Opportunities in service industries:
Deregulation of service industries. World Trade Organization (WTO) policies and programmes promote and
facilitate service industries globally.
Increasing demand for premium services:
With economic integrations and globalization as well as dramatic
advances of science and technology, consumers are free to access the
best services at competitive prices.
Increased value consciousness (IVC):
Global competitiveness, liberalization, globalization and availability of ICT,
dictate that consumers will want to maximize their benefits value for
money mentality. Though direct sourcing, consumers will make
phenomenal savings as middle agents(men) become endangered species.
4.3.7 Strategies for domestic and global marketing of services:
Capitalization of cultural forces in the host market. Customize the service
to be in harmony with cultural values and stereotypes. Examples: FordsPinto model in Brazil which was changed to (horse).
Standardization and customization.
Depending on cultural orientation, a standardized service product may suit
a foreign market. If not customize wisely.
Central role of information technology:
The best examples are computers and ICT (mobile phones) in the case of
Uganda. Add value by differentiation:
Differentiation possibilities in service industry, unlike the tangible product
services, are simply, enormous and hence should be exploited.
Psychological premium values can be introduced for customer with boated
egos or self esteem vanities e.g. elderly wealthy clients who abhor waiting
in queues allowed to pay by bank transfers.
4.3.8 Case study: Uganda Service Exporters Association (USEA).
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4.4.0 Pricing Policies and Mechanisms:
Price is the second P of the marketing mix structure. Price is the only component
of the marketing mix that brings in revenue (income) to the organization. And that is
where, precisely, it derives its importance. Compared to the other Ps (place and
promotion and product) which consume money.
4.4.1 Drivers of Pricing Policies:
Company (costs, goals etc).
Customers (price sensitivity, segments).
Competition (nature, intensity).
Channels (long, short, sophistication).
4.4.2 Company Goals and Costs:
Profit maximization policy.
Corporate image policy (low or high).
Rate of return investment (ROI).
Market share policy.
Pricing methodology (cost plus or marginal costing), geographical
differentials, dynamic incremental costing (DIC).
4.4.3 Market Demand:
Determinants of price include but are not limited to:
Customer tastes.
Customer buying power.
Customer habits.
Supply of substitutes.
4.4.4 Competition
Factors that affect competition:
Members of competitors.
Nature of competition (local or foreign, private or state-owned.
Existence of smugglers.
Existence of black/grey markets.
Existence of counterfeit products.
4.4.5 Distribution channels:
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Manufacturers / suppliers policy.
Member of agents.
Nature of agents.
Length of distribution channel.
Sophistication of agents.
Nature of the agreements.
Political environments.
4.4.6 Government Policies:
Possible factors include:
Tax rates (e.g. value addition).
Price control / interferences.
Health and policies.
4.4.7 Factors that influence pricing:
There are many domestic and international factors that influence prices:
Length and cost of distribution channels.
Cost of inputs (source, nature etc).
Costly product features (customer tailored).
Size of the product.
Location of manufacture local or foreign.
Tariff or tax avoidance by adaptation.
Currency fluctuation.
Modification of components, ingredients or packaging materials.
Government policies (taxes, incentives).
Nature and levels of demand and supply.
Company policies (pricing, profit, CSR etc).
4.4.8 Counter (Barter) Trade: Policies and Mechanisms:
Definition: Counter Trade or Barter Trade is the unconventional trade financing
transactions that involve some form of non-cash compensations. Counter Trade is
mainly practiced by former socialist countries and developing countries. But some
developed counties, including United States of America have been known to engage
in Counter Trade. By 1991, it was estimated that 10-15% forms of Counter Trade
was in form of Counter Trade Forms of Counter Trade include:
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Simple Barter:
This entails mutual exchange of physical goods. E.g. in 1988/90, Uganda
exported beans and maize to Cuba in exchange for sugar and other industrial
goods. Clearing agreements:
Trading Countries open accounts for each other. Each country exports and
imports a range of products. After an agreed period (usually a year), the
imbalances are settled in hard currency or specified products.
Buy-back (compensation).
A country imports a technology, turnkey or equipments under the understanding
that the supplier will buy products produced by the technology, turnkey orequipment and the proceeds will go towards paying for the technology, turnkey or
equipment until extinguished.
Counter purchase.
This is similar to buy-back but with a difference to products is unrelated. In the
late 1990s an Italian company (Famagusta) signed an agreement with the
Uganda government to be supplied (GOU) with Army helicopters in exchange for
beans and maize to be supplied by the defunct Foods and Beverages Ltd.
Offset:
This is a variation of counter purchase.
The seller agrees to offset the purchase price by sourcing from the importers
country or transferring technology, to the other parts of the country.
Switch Trading
This is similar to clearing agreement but involving a third party.
4.4.9 Uganda Experience of Counter Trader (1986 1992):
Immediately, after taking power in 1986, the NRM adopted Counter Trade policy as
away of solving foreign exchange problems. By 1990, it had become quite evident
that Counter Trade was, indeed, a primitive turn of trade which was too complicated
to manage by an unsophisticated country like Uganda. The policy was abandoned.
4.5.0 Communication in marketing.
4.5.1 Definition of Communication:
Communication is the sending and receiving of information and subsequent feed
back. The whole essence of communication in marketing is selling and buying
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(marketing) goods and services. Marketing strategies must avoid any misfiring
messages. The messages, by whatever method, must efficiently and effectively
promote and develop the marketing mix (product, price, place and promotion). There
are six (06) steps of developing a promotional plan:
Select target audience and positioning them.
Set specific campaign and objectives.
Define the promotional budget.
Decide a media strategy.
Monitor and assess campaign effectiveness.
Possible constraints of communication:
Language barriers.
Cultural barriers.
Local attitudes towards advertising.
Media infrastructure.
4.5.2 Advertising Budget:
Communication, generally and advertising, in particular, is expensive, yet so
important. It is also new given enough priority by management and all stakeholders
because its results are not easily measured or take long to manifest. Therefore, a
clear policy is important and management commitment is essential. A good budget
ensures success.
4.5.3 The Role of the Media:
In Uganda, there was a time when the media vehicles were limited to Uganda Radio
and Televisions are the Uganda Argus News Paper. Today there is a plethora of
media vehicles for marketers to choose from:
Numerous TV stations (local and international) Numerous Radio stations.
Daily Newspapers.
Weekly Newspapers.
Monthly journals and magazines.
Bill Boards (outdoor).
Cinemas.
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Direct mail (postal services or hand deliveries to homes, social places,
streets).
4.5.4 Advertising:
Advertising means bringing about awareness of a product or service about its: Existence.
Quality.
Utility (application / usage).
Environmental effects (promotion or degradation).
Price.
Source of purchase (availability) (supermarket, shop, pharmacy, bookshop,
mobile agents etc).4.5.5 Factors that influence advertising industry:
Quality of a copy (size, shape etc).
Expenditure considerations (negative, positive, low, high, medium).
Vehicles available (TV, Radio, Outdoor [Bill boards, Posters, Mass Transit ads
e.g. airports, sports, stadia, theatres]).
Newspapers, Magazines, Journals.
Websites.
Consistency: Daily, weekly, monthly, a periodically).
Sustainability: subject to budget and altitude of stakeholders.
4.5.6 Types of Consumer Promotions:
Coupons.
Sweepstakes.
Mail-in offers.
Free samples.
Promotional literature.
Price discounts (feature pricing versus shelf pricing).
NB: Shelf price (computer coded price) is the official price of the product
while feature price is the revised (current) (sale) price at discount.
4.5.7 Recent Developments in the International Media Landscape:
Growing commercialization and deregulation of amass media.
Shift from Radio and Print to TV and Internet advertising.
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Rise of global media (CNN, MTV, STV, LTV, etc).
Growing importance of multimedia advertising tools (the Internet).
Improving monitoring and regulations.
Improved TV-Viewership measurements.4.5.8 Other forms of Communication:
Sales Promotions:
These entails short term activities to boost sales e.g. sampling, price offs,
coupons, sweepstakes, bonus packs, and trade allowances.
Event sponsorships:
This is Olympic marketing where important events e.g. sports are taken
advantage of by advertisers (marketers) to promote, popularize, dynamise andentrepreneurialism demand of their products or service to create competitiveness
and increase sales as well as expanding market share by advertising during
popular sports such as World Cup in South Africa (June/July 2010).
Trade Shows:
Trade shows are very important especially for new products. Direct sales
are possible during a trade show. But also visitors become aware of the
existence of new products or even if they are older but may be new tovisitors who, after the show, may decide to buy.
Trade delegations.
Government agencies, private sectors, marketers, politicians do visit other
countries. While there, they come across new products or old products
and services they were not aware of. As a result, later they buy or seller.
5.0 UNIT FIVE: SALES MANAGEMENT:5.1.0 Sales management:
5.1.1 Sales management simply entails managing sales in such a prudent manner
that goods and or services are able to be moved from the source of supply to the
point of being bought for consumptions.
AManufacturer
(Supplier)
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Sales Management
BConsumer
(Buyer)
In many situations, the consumer never sees or interacts with the manufacturers
(suppliers) whom may be geographically or psychologically separated by a long
distance. The only relationship between consumer and the product is the product
(or service) and the sales man or agent/distributor. Therefore, the physical
presentation of the product and the sales force is very critical in marketing.
5.1.2 Market entry options and sales force strategy:
Direct export (to a consumer).
Sales to a local agent (distributor).
Foreign local subsidiary.
Foreign manufacturing facility.
5.1.3 Sales Force Strategy:
The six (06) steps:
Setting sales objectives.
Designing sales force strategy.
Recruiting and selecting sales people.
Training sales people.
Supervising sales people.
Evaluating sales people.
Sales Force strategy:
This entails, basically:
The structure.
The size.
The compensation.
5.1.4 The Role of Government:
It depends on government policy. Under liberation, privatization and decentralization
policy, the government may have very little role beyond policy formulation and
regulations.
5.1.5 Cultural Considerations and generalization:
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Personal selling, as the names connotes, is characterized by individual activities
which invokes personal human attributes. Hence, cultural values and influence
dominate and are dominated by cultural stereo types (generalizations).
The five (05) cultural dimensions (Geert H. Hofstede):
Power distance.
Individual versus collectivism.
Masculinity versus femininity.
Uncertainty avoidance.
Long term orientation.
Myers-Briers Type Indicator:
Extrovert versus introvert.
Sensing versus intuitive.
Thinking versus feeling.
Judging versus perceiving.
5.1.6 Sales Management dynamics and processes:
Basically, the tenets and precepts of sales management are the same in the
domestic as well as international market. However, because of personal trails
interesting with corporate, country and cultural values, appropriate tailoring of the
marketing mix to individual situations is fundamental. Marketing is a dynamic
managerial functions, academic discipline and economic practice which are
vulnerable to change the only constant in the business world.
5.2.0 Logistics and Distribution:
5.2.1 Definitions:
Logistics and distributions (LAD) means the design and management of a system
that directs and controls that flow of materials into, through and out of the firm acrossthe market to achieve its corporate objectives at a minimum total costs.
Global logistics is similar to the above general definition with a modification on the
market to encompass a cross boundaries of different markets. More complex and,
hence, costly.
Factors that influence logistics and distribution include but are not limited to:
Geographical distance.
Foreign exchange rate fluctuations.
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Foreign intermediaries (export agents, brokers, merchants etc).
5.2.2 Modes of Transport Includes:
Ocean shipping.
Airfreight. Intermodal transportation.
Warehousing and inventory management.
Order processing/delivery/customer service.
5.2.3 Channels of Distribution:
Channels of distribution entail that whole chain between a manufacturer, supplier to
the final consumer. The COD vary from product to product, organization to
organization and country to country. The chain is made even more complex byadding another variable mode of transport.
Examples of a pharmaceutical supplier from china.
(1) Chinese Manufacturer
(2) Domestic Private
Agency
(3) Chinese Government
Agency
(4)Chinese Exporting
Agency
(5)Regional (Africa)
Agency Nairobi Based
(6)Ugandan Manufacturer
Authorized Agent
(7)National Medical
Stores
5.2.4 Free Trade Zones (FTZ)
A FTZ is an area that is located within a nation (for example, Uganda) but is
considered outside of the customs of that nation (Uganda). In USA, such an area is
known as foreign Trade Zone (FTZ). A sub FTZ can be extended to a manufacturing
facility to serve the same purpose. A manufacturing which is accorded a FTZ has a
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status of an independent country. The benefits of a FTZ are enormous in terms of
cost savings to make, especially, exports competitive.
5.2.5 Masquerader operations
In Mexico FTZ are called maquiradora operations. The objectives and strategies are
the same as FTZ.
5.3.0 Session Three: Managing Imports:
5.3.1 Importing Involves the easier part of marketing where the importer (buyer)
(individual person, firm or government) identifies import, needs, locates where to buy
them and goes ahead into procedures of physically bringing them into the country for
various uses.
5.3.2 Why is it necessary for an individual person, firm or country to import?
To satisfy needs.
The goods or services not being available locally or not enough.
The goods or services being a cheaper price or better quality.
The supplier may be paying obligations to the importer in kind.
5.3.3 Mechanics of importing:
Banks are involved.
Establishing letter of credit.
Deciding on the modality of transport.
Verify compliance with national laws.
Examine evaluation foreign exchange status.
Establish liability for import of import duties etc.
5.3.4 Black (Grey) Markets:
Black (Grey markets) occur where these are geographical price differentials
especially markets within close proximity (common borders). Uncontrolled black(grey) market can seriously distort and even destroy markets if not prudently
managed.
5.3.5 Why Black or Grey markets develop:
Availability of similar products in other markets.
Trade barriers must be non existent or low enough to allow competitors to
operate in parallel with authorized agents.
Price differentials must be great to motivate black/grey marketers.
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5.3.6 Methods of combating black of grey marketing:
Strategic confrontation.
Price cutting.
Strategic pricing. Dealer development.
Marketing information systems.
Long term image reinforcements.
Establishing legal procedures.
Lobbying.
5.4.0 Session Four: Export management and Mechanics:
(i) Any export activity to be viable begins with research for the opportunities. There
are two main types of research:
Desk research.
Field research.
Criteria for determining export market segments:
Socio-economic characteristics (demogratic, economic.)
Political and legal characteristics.
Consumer variables (life style, tastes etc).
Financial conditions.
5.4.2 Direct channel of distribution:
Independent middlemen (agents, distributors). E.g. Sogo Shoshas in Japan (e.g.
Yamato or Marubeni). In US: Combination Export Manager (CEM), Export Merchant,
Export Broker, Export Commission House (ECH), Trading Company or Piggyback
Exporter.
5.4.3 Direct Export Marketing:
In DEM, the manufacturer or exporter exports directly to the importer. This has the
advantage of having full control over the whole chain from quality control through
pricing, distribution and promotion. However, it has the disadvantage of being
expensive.
5.4.4 Mechanics of Exporting:
The legality of exports.
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Export information needed by both parties.
Export procedures (manufacturer to importer).
Terms of shipment and sales (incoterms).
Terms of payment (settlement).5.4.5 The Role of Government:
Case study: Uganda Export Promotion Board (UEPB).
5.4.6 Services Exports:
Case study: Uganda Service Exporters Association (Dr Robert K. Rutaagi; USEA)
and Coalition of Service Industries (George Walusimbi, et all, CSI).
BIBLIOGRAPHY:
KEY READING MATERIALS:
1. Masaaki Kotabe & Kristiaan Nelson (1998);
Global International Marketing Management. John Wiley and Sons, Inc. USA.
2. Kotler Philip; International Marketing Management (2003, Prentice Hall, New
York, USA.
3. Gilligan Collin & Richard M.S. Wilson 2003. Strategic International Marketing
Planning. Butterworth & Heinemann, UK.4. Richard. R. Still, Edward. W. Cundiff & Norman A. P. Govon; Sales
Management: Decisions, Policies, and Cases., Third Edition. 1976, USA.
5. Porter Michael. E 1980; Competitive Strategy, Techniques for Analysis
Industries and Competitions. The Free Press, New York, USA.
6. Westwood John; The International Marketing Plan, a Practitioners Guide
(1990) Koran Page Ltd.
7. Allan West; Can you Market? Training, Publications. UK.
8. International Trade Centre/ITC/UNCTAD/GATT. Getting Started in Export
Trade, Geneva 1970.
9. ITC/UNCTAD/WTO & Common Wealth Secretariat. Business Guide to Uruguay
Round 1996.
10. Any other Books & Publications, including various websites (Free research &
reading).
11. Riddle, Dorothy J. Service-led growth (1992) Praegior Publications, Green
wood Press Inc. New York.
12. Moran, Theodore, H. Multinational Corporations. The Political Economy of
Foreign Direct Investment. D.C. Health and Company, 1985.
13. SAK on K. visit/John J. SHAW, International Marketing, Analysis and Strategy.