FINAL EXAMINATION

FACULTY OF BUSINESS & MANAGEMENT

Course :
BBCT 3023
International Marketing

Date : 4th July 2022

Time : 9.00 am – 11.00 am

Duration : 2 hours

Module Lecturer : Nur Zafirah Binti Abdul Rahim

Total marks : 100 marks (40%)

Instructions to candidates:

1. Write your name and student number on the Examination Paper.

2. Answer questions according to the instruction for each section

3. Do not detach any portion of the examination paper

4. Begin writing, as indicated, after the reading time has ended

5. All questions to be answered in the answer booklet.

Materials allowed for this examination:

1. NIL.

DO NOT REMOVE ANY PART OF THIS EXAMINATION PAPER FROM THE

EXAMINATION ROOM

Student ID : 202009040023

NIRC/Passport No : 901224-11-5017

Program : BACHELOR OF BUSINESS ADMINISTRATION (HONS)

Lecturer : Nur Zafirah Binti Abdul Rahim

Date :4th July 2022 Course : BBCT 3023 INTERNATIONAL MARKETING

SECTION A – SHORT ANSWER QUESTIONS [Total = 60 marks]

Answer ALL questions.

QUESTION 1

Explain FIVE (5) international entry strategies. Provide an example.

(1) Direct exporting

Exporting involves marketing the products you produce in the countries in which you intend to
sell them. Some companies use direct exporting, in which they sell the product they
manufacture in international markets without third-party involvement. Companies that sell
luxury products or have sold their goods in global markets in the past often choose this
method. Alternatively, a company may export indirectly by using the services of agents, such
as international distributors. Businesses often choose indirect exporting if they're just
beginning to distribute internationally. While companies pay agents for their services, indirect
exporting often results in a return on investment (ROI) because the agents know what it takes
to succeed in the markets in which they work.

For Export examples, A country's top exports depend on its climate, geographic region, factor
endowments like labour, capital, and land, political conditions, currency exchange rates, and
other factors. Here are some examples of exports: Coffee: Some of the top exporters of coffee
are Vietnam, Brazil, Colombia, Indonesia, Ethiopia, Honduras, India, and Mexico. Colombia
is a country known for its high-quality coffee because of its rich volcanic soil and shade-
grown cultivation. Cars: One of Japan's top exports is cars and automobile parts because
consumers trust the quality, safety, and dependability of Japanese-made cars. In addition,
Japanese manufacturers have a lot of experience and skills in producing cars.

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(2) Licensing

Under Licensing mode of entry, the company must maintain contact with the foreign business
to make them agree to sell the products of your business. However, it is not easy to convince
the foreign business for dealing with your products as there will be chances of failure.
However, a business that is earning good revenues can easily convince the foreign company
and sell their license by following various governmental or legal rules to continue the business
in that market Selling license in a foreign market does not mean that you lose control over the
other business but means to give rights to sell the goods to other business for a limited period
in a foreign country. Thus, this strategy is a sophisticated arrangement where the business can
provide goods to a large market if the new licensee has control over the large market.

For example, a movie production company may sell a school supply company the right to use
images of movie characters on backpacks, lunch boxes, and notebooks.
Suppose Company A, a manufacturer, and seller of Baubles was based in the US and wanted
to expand to the Chinese market with an international business license. They can enter the
agreement with a Chinese firm, allowing them to use their product patent and giving other
resources, in return for a payment. The Chinese firm can then manufacture and sell Baubles in
China.

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(3) Franchising

A franchise is a chain retail company in which an individual or group buyer pays for the right
to manage company branches on the company's behalf. Franchises occur most commonly in
North America, but they exist globally and offer businesses the opportunity to expand
overseas. Franchising typically requires strong brand recognition, as consumers in your target
market should know what you offer and have a desire to purchase it. For well-known brands,
franchising offers companies a way to earn a profit while taking an indirect management
approach.

For Business Format Franchise Examples, in a franchise business, franchisors grant

franchisees a license to operate a business with the franchisor’s established brand and
complete business model. An example of a business format franchise is Frutta Bowls. Frutta
Bowls is a cafe that serves high-quality, healthy, and delicious acai bowls and believes in
community and wellness. When becoming a franchisee, a team will provide support in real
estate, construction and design, training, marketing, and ongoing support at all levels.

(4) Joint ventures

Some companies attempt to minimize the risk of entering an international market by creating
joint ventures with other companies that plan to sell in the global marketplace. Since joint
ventures often function like large, independent companies rather than a combination of two
smaller companies, they have the potential to earn more revenue than individual companies.
This market entry strategy carries the risk of an imbalance in company involvement, but both
parties can work together to establish fair processes and help prevent this issue.

For Example, a joint venture, Redwood Clothing, an American business, decides that it would
like to start selling its products in the United Kingdom. One option is to go to the UK, scout
for a store location, set up a supply chain, learn about the local laws and regulations, hire
employees, and much more. This strategy takes a large amount of time and initial resources to
implement. The other option is to form a joint venture with an existing company within the
UK.

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(5) Outsourcing
Outsourcing involves hiring another company to manage certain aspects of business operations
for your company. As a market entry strategy, it refers to agreeing with another company to
handle international product sales on your company's behalf. Companies that choose to
outsource may relinquish a certain amount of control over the sale of their products, but they
may justify this risk with the revenue they save on employment costs.

For Example, outsourcing. Here are common tasks that companies outsource:
Content and blog writing, Graphic design, Branding services, Reputation management
Customer service, Marketing, Supply chain management, Human resource management
Accounting, financial consulting and tax compliance engineering, Computer programming and
other IT services, Research and design, Onboarding, and training of new employees.
(20 marks)

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QUESTION 2

Briefly discuss on benefits and costs of licensing.

1) It creates an opportunity for passive income.

If you are the owner of intellectual property, then licensing is an opportunity to create an
ongoing stream of passive revenues. You don’t need to do anything to generate those revenues
either. Just sell licenses after developing the IP and you’re good to go. If the licensees are
making money, then you’re going to be making money too and you don’t risk losing your
ownership rights. These payments could last for several years without interruption.

2) It creates new business opportunities.

A licensee can benefit from this type of arrangement because it requires less money from them
to start a business opportunity. They can purchase a license instead of outright ownership, then
begin to make profits right away. It takes less upfront cash to pay for a license. When a
licensee can improve upon a product, they can make even more money off their venture. Even
if the item wanted is a trademark or brand name, the new business benefits from the reputation
and consumer awareness of the information.

3) It reduces risks for both parties.

Licensing is designed to reduce the risks involved in doing business for everyone involved.
From a licensee standpoint, there are fewer risks in product development, market testing,
manufacturing, and distribution. From a licensor standpoint, there are fewer risks in the selling
and service of what is being offered. Neither party is required to throw their own money into
these areas to earn profits, which creates a win/win situation for everyone involved.

4) It creates an easier entry into foreign markets.

When a licensing arrangement is in place, then the licensor can get their product into new
markets much easier than if they were doing the work on their own. It is much easier to enter
foreign markets in this manner, as the license allows for the intellectual property to jump

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border requirements. That means tariff barriers to entry can be avoided because a domestic
company is using the IP, just as the licensor might be using the IP domestically.
5) It creates self-employment opportunities.
Licensing allows people to go into business for themselves. They get to experience all the
advantages of self-employment, such as setting their hours, while you get the benefits of
having someone invested in your IP. From a licensee standpoint, there is the opportunity to
gain a monopoly over a product or service in a specific territory at a lower investment rate
than going alone. From the licensor’s standpoint, personal IP carries the same advantages as
well.

6) It offers the freedom to develop a unique marketing approach.

A licensee knows their market much better than the average licensor. That knowledge allows
intellectual property to be marketed in a way that is more attractive to the average consumer. It
is a chance to expand the reach of a message, product, or concept without needing to invest in
them fully. Even when certain elements of the arrangement are pre-planned, there is still a
certain level of freedom and control given to the licensee in the management of their business.
(12 marks)

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QUESTION 3
Define the following terms:

a. Tariffs

A tariff is a type of tax levied by a country on an imported good at the border. Tariffs
have historically been a tool for governments to collect revenues, but they are also a
way for governments to try to protect domestic producers. As a protectionist tool, a
tariff increases the prices of imports.

b. Franchising

Franchising is a business strategy for getting and keeping customers. It is a marketing

system for creating an image in the minds of current and future customers about how
the company's products and services can help them. It is a method for distributing
products and services that satisfy customer needs.

c. Product

One can say a product is a good, service, or idea consisting of a bundle of tangible and
intangible attributes that satisfies consumers and is received in exchange for money or
some other unit of value.

d. Brand Equity

Brand equity, in marketing, is the worth of a brand in and of itself — i.e., the social
value of a well-known brand name. The owner of a well-known brand name can
generate more revenue simply from brand recognition, as consumers perceive the
products of well-known brands as better than those of lesser-known brands.

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(8 marks)

QUESTION 4

Elaborate THREE (3) product classification schemes.

1. Based on durability and tangibility of the product

Products are classified as – Non-durable Goods, Durable goods, and services based on
durability and tangibility.

i. Non-Durable Goods
These represent the tangible goods that are consumed for one or few uses.
Example Soap, Salt, coke, etc.

ii. Durable Goods

Tangible goods that go on or survive many uses.
Example Refrigerator, Clothing, television, etc.

iii. Services
They are acts provided by one party to another that are essentially intangible
and are usually manufactured and consumed simultaneously. Example Medical
services, Transportation Services, etc.

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2. Based on Consumer Shopping Habits.

Based on the first variable, the shopping habits, the products can be classified into
convenience goods, shopping goods, and unsought goods. At the end of the week when
you go to the supermarket to complete the necessary shopping for the next week, you
probably buy condiments, soap, etc. This kind of product, which has become a habit
and for which you don’t think too much before buying is part of the convenience goods
category. Common examples are FMCG products. Another example would be when
you enter a shop, and when going to the cash machine you see some umbrellas and
take one just because outside was raining, and you went out unprepared. This is also an
excellent example of impulse buying. Generally, for convenience goods, once
customers choose their preferred brand, they stay loyal to that brand because it is
convenient to keep repeating the choice over time. Other examples of such
convenience purchases include bread, cold drinks, chewing gum, etc. Shopping goods
are another category of products. Compared with convenience goods, shopping for
goods is not so frequent. A relevant example can be clothing, electronics, etc. This
category relies heavily on advertising and trained salespeople who can influence
customers’ choices. For the unsought goods, consumers don’t put much thought into
purchasing them and generally don’t have a compelling impulse to buy them. An
example in this category would be life insurance.

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3. Based on use in industry.

Under this classification, the Products are classified depending upon their application
in the industry as Materials and parts, Capital Items, Supplies, and Services. Materials
and parts are further classified into raw materials and manufactured materials. Raw
materials are further classified into Farm Products and Natural Products and
manufactured materials are further classified into Component Materials and
Component Parts. Similarly, Capital items are classified into Installations and
Equipment, and Supplies and Services are classified into Operating Supplies and
maintenance and Repairs. Raw materials are materials that are processed to make the
finished products. They are further classified as materials that are natural and extracted
from nature and farm products that are grown on the farm. For example, Natural raw
materials are iron ore, Lumber. Farm-produced raw materials Wheat, Cotton.

Manufactured Materials are materials that are manufactured in the manufacturing unit
using some raw material. They are classified into Component Materials and
Component Parts. The difference between component material and parts is that while
component material goes into a finished product it forms an indistinguishable part of
the product, whereas a part is usually a distinguishable part of the finished product.
Example Component material Cement, Yarn

Supplies and services are allied products that though not a part of the product or
finished product, they aid in the manufacturing of the product. These are classified into
Operating Supplies and Maintenance and repairs. For Example, Operating Supplies
Lubricants, Oils, Paints, etc. Maintenance and Repairs Consultancy, Annual
maintenance Contracts.

(10 marks)

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QUESTION 5

Explain Global Pricing Objectives & Strategies.

Pricing Objectives
Many pricing objectives are available for careful consideration. The one you select will guide
your choice of pricing strategy. You'll need to have a firm understanding of product attributes
and the market to decide which pricing objective to employ. Your choice of an objective does
not tie you to it for all time. As business and market conditions change, adjusting your pricing
objective may be necessary or appropriate. Pricing objectives are selected with the business
and financial goals in mind. Elements of your business plan can guide your choices of a
pricing objective and strategies. Consider your business's mission statement and plans. If one
of your overall business goals is to become a leader in terms of the market share that your
product has, then you'll want to consider the quantity maximization pricing objective as
opposed to the survival pricing objective. If your business mission is to be a leader in your
industry, you may want to consider a quality leadership pricing objective. On the other hand,
profit margin maximization may be the most appropriate pricing objective if your business
plan calls for production growth soon since you will need funding for facilities and labor.
Some objectives, such as partial cost recovery, survival, and status quo, will be used when
market conditions are poor or unstable, when first entering a market, or when the business is
experiencing hard times, for example, bankruptcy or restructuring. Brief definitions of the
pricing objectives are provided below.

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a) Partial cost recovery

a company that has sources of income other than from the sale of products may decide to
implement this pricing objective, which has the benefit of providing customers with a quality
product at a cost lower than expected. Competitors without other revenue streams to offset
lower prices will likely not appreciate using this objective for products in direct competition
with one another. Therefore, this pricing objective is best reserved for special situations or
products.

b) Profit margin maximization

seeks to maximize the per-unit profit margin of a product. This objective is typically applied
when the total number of units sold is expected to be low. Profit maximization seeks to garner
the greatest dollar amount in profits. This objective is not necessarily tied to the objective of
profit margin maximization.

c) Revenue maximization
seeks to maximize revenue from the sale of products without regard to profit. This objective
can be useful when introducing a new product into the market with the goals of growing
market share and establishing a long-term customer base.

d) Quality leadership
is used to signal product quality to the consumer by placing prices on products that convey
their quality.

e) Quantity maximization
seeks to maximize the number of items sold. This objective may be chosen if you have an
underlying goal of taking advantage of economies of scale that may be realized in the
production or sales arenas.

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f) Survival
put into place in situations where a business needs to price at a level that will just allow it to
stay in business and cover essential costs. For a short time, the goal of making a profit is set
aside for the goal of survival. Survival pricing is meant only to be used on a short-term or

a) Pricing Strategies
After selecting a pricing objective, you will need to determine a pricing strategy. This will
assist you when it comes time to price your products. As with the pricing objectives, numerous
pricing strategies are available from which to choose. Certain strategies work well with certain
objectives, so make sure you have taken your time selecting an objective. Careful selection of
a pricing objective should lead you to the appropriate strategies. If the pricing strategy you
choose seems to contradict your chosen pricing objective, then you should revisit the questions
posed in the introduction and your marketing plan. As a reminder, the diagram at the end of
this publication illustrates which pricing strategies work well with each of the pricing
objectives previously discussed. Additionally, different pricing strategies can be used at
different times to fit with changes in marketing strategies, market conditions, and product life
cycles. For example, if you're working under a status quo pricing objective with competitive
pricing as your strategy due to poor market conditions, and a year later you feel that the
market has improved, you may wish to change to a profit margin maximization objective using
a premium pricing strategy. Brief definitions of some pricing strategies follow.

b) Competitive pricing
pricing your product based on the prices your competitors have on the same product(s). This
pricing strategy can be useful when differentiating your product from other products is
difficult. So, let's say you produce fruit jams such as blueberry, strawberry, blackberry, and
raspberry. You may consider using competitive pricing since there are many other jams on the
market and you are unable to differentiate your jams to an extent that customers may be
willing to pay more for yours. Thus, if the price range for jams currently on the market is
$1.45 to $1.85 per jar, you may price your jams at $1.65 per jar to fall in line with the
competition. The strategy of competitive pricing can be used when the pricing objective is
either survival or status quo. When the objective of pricing products is to allow the business to

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either maintain the status quo or simply survive a difficult period, competitive pricing will
allow the business to maintain profit by avoiding price wars from pricing below the
competition or falling sales from pricing above the competition.

c) Good, better, best pricing

charges more for products that have received more attention. The same product is offered in
three different formats, with the price for each level rising above that of the previous level. For
example, the manager of a farm market that sells fresh apples may place some portion of
apples available for sale in a large container through which the customers have to sort to
choose the apples they wish to purchase. These apples would be priced at the “good" price.
Another portion of apples could also be placed in a container from which customers can
gather, but these apples would have been presorted to remove fewer desirable apples, such as
those with soft spots. These would be priced at the “better" price. The “best" apples those
priced higher than the rest may have been presorted, just like the “better" apples, but have also
been prepackaged for customer convenience. As demonstrated in this example, the “better"
and “best" levels require more attention by management or labor but, if priced appropriately,
may be worth the extra effort. This pricing strategy should be used when pursuing revenue
maximization and quantity maximization objectives. Revenue maximization should occur
because of quantity maximization. Quantity maximization should occur from the use of this
pricing strategy because the product is available to customers in three price ranges.

d) Loss leader
refers to products having low prices placed on them to lure customers to the business and to
make further purchases. For example, grocery stores might use bread as a loss leader product.
If you come to their store to purchase your bread; you are very likely to purchase other grocery
items at their store rather than going to another store. The goal of using a loss leader pricing
strategy is to lure customers to your business with a low price on one product with the
expectation that the customer will purchase other products with larger profit margins.
The loss leader pricing strategy should be paired with either the quantity maximization or
partial cost recovery pricing objectives. The low price placed on the product should result in

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greater quantities of the product being sold while still recovering a portion of the production
cost.

(10 marks)

QUESTION 6

Discuss on Channel Intermediaries.

Channel intermediaries are the groups and individuals who make it possible for consumers to
have access to products. A product's distribution process can vary based on the company that
owns the item and the delivery method used to deliver the product to customers.
Understanding what parties handle this process and how they distribute products can be
helpful to anyone interested in working in marketing or distribution. In this article, we define
channel intermediaries and intermediary marketing channels and list the main types of both.
Channel intermediaries are the external groups, individuals, and businesses that help a
company deliver its products to customers. They act as agents between the original creator of
the merchandise and the consumer who makes the last purchase. Companies need channel
intermediaries to deliver goods to their customers, making them a vital part of the distribution
process. Companies and product manufacturers use channel intermediaries to deliver their
products to consumers without owning or being otherwise responsible for a supply train. With
channel intermediaries, they can make a profit from their product before the final buyer
purchases the item. These intermediaries provide logistic support and ensure that all buyers
receive their products according to schedule. here are four main types of channel
intermediaries, including:

1. Agents
Agents act as an extension of the original manufacturers and represent the product's producer
when trying to make a sale. Agents can be individual salespeople or entire companies. They
work directly with customers to sell products and services. Agents do not possess any

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ownership of the original companies or the products they sell for them. Instead, they earn
commissions from each sale they make. This process sometimes includes convincing a
consumer to buy the product by explaining its benefits and using other forms of persuasion.
An example of an agent would be a car salesperson or a real estate agent.

2. Wholesalers
Wholesalers buy a company's products in bulk and resell them. Unlike agents, wholesalers
own the products they sell and make money by selling them to others. Often, wholesalers can
make a profit because of the discount they receive for buying a bulk amount of products. They
rarely interact with the final buyer of a product. Instead, wholesalers sell the goods to other
merchants at a higher price point than what they spent to get the items.

3. Distributors
Distributors have a business relationship with manufacturers and have partial ownership of the
product they sell. Some distributors buy exclusive rights to buy a company's product to ensure
that they are the sole distributor of that product in the area. Distributors often sell to
wholesalers and retailers, creating minimal contact with the final buyers.

4. Retailers
Retailers purchase products from other channel intermediaries, such as wholesalers and
distributors, to sell directly to consumers. Retailers can be small or large for-profit companies.
They usually buy smaller quantities of products than wholesalers and distributors. Examples of
retailers include grocery stores and department stores.
(10 marks)

-END OF QUESTIONS-

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