|7 P’s with respect to Domestic and International Market | |International Business | | | |Presented to: Prof. Muralidharan | | | |Presented by: Group no. | |MMS – II, LLIM | | | Team Members |S. N. |Name |Roll No. | |1. |Simran Kaur Chadha |18 | |2. Chetali Gupta |31 | |3. |Nitesh Kothari |48 | |4. |Prerna Majumdar |52 | |5. |Ridhi Sachdeva |82 |
Que: Discuss 7 P’s with respect to Domestic and International Market. Ans: 7 P’s of Marketing; The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. Traditionally the marketing mix consisted of just 4 Ps. They are as follows: • Product – It must provide value to a customer but does not have to be tangible at the same time. Basically, it involves introducing new products or improvising the existing products. • Price – Pricing must be competitive and must entail profit.Order now
The pricing strategy can comprise discounts, offers and the like. • Place – It refers to the place where the customers can buy the product and how the product reaches out to that place. This is done through different channels, like Internet, wholesalers and retailers. • Promotion – It includes the various ways of communicating to the customers of what the company has to offer. It is about communicating about the benefits of using a particular product or service rather than just talking about its features.
Getting the mix of these elements right enables the organisation to meet its marketing objectives and to satisfy the requirements of customers. In addition to the traditional four Ps it is now customary to add some more Ps to the mix to give us Seven Ps. The additional Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in this country. The additional Ps are: • People – People refer to the customers, employees, management and everybody else involved in it.
It is essential for everyone to realize that the reputation of the brand that you are involved with is in the people’s hands. • Process – It refers to the methods and process of providing a service and is hence essential to have a thorough knowledge on whether the services are helpful to the customers, if they are provided in time, if the customers are informed in hand about the services and many such things. • Physical (evidence) – It refers to the experience of using a product or service. When a service goes out to the customer, it is essential that you help him see what he is buying or not.
For example- brochures, pamphlets etc serve this purpose. International Marketing v/s Domestic Marketing: International marketing (IM) or global marketing refers to marketing carried out by companies overseas or across national borderlines. This strategy uses an extension of the techniques used in the home country of a firm. It refers to the firm-level marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic decisions to compete in international markets.
According to the American Marketing Association (AMA) “international marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives”. International Marketing is the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. Mode of engagement in foreign markets After the decision to invest has been made, the exact mode of operation has to be determined.
The risks concerning operating in foreign markets is often dependent on the level of control a firm has, coupled with the level of capital expenditure outlayed. The principal modes of engagement are listed below: • Exporting (which is further divided into direct and indirect exporting) • Joint ventures • Direct investment (split into assembly and manufacturing) Exporting Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing indirect exporting would utilise a channel/intermediary, who in turn would disseminate the product in the foreign market.
From a company’s standpoint, exporting consists of the least risk. This is so since no capital expenditure, or outlay of company finances on new non-current assets, has necessarily taken place. Thus, the likelihood of sunk costs, or general barriers to exit, is slim. Conversely, a company may possess less control when exporting into a foreign market, due to not control the supply of the good within the foreign market. Joint ventures A joint venture is a combined effort between two or more business entities, with the aim of mutual benefit from a given economic activity.
Some countries often mandate that all foreign investment within it should be via joint ventures (such as India and the People’s Republic of China). By comparison with exporting, more control is exerted, however the level of risk is also increased. Direct investment In this mode of engagement, a company would directly construct a fixed/non-current asset within a foreign country, with the aim of manufacturing a product within the overseas market. Assembly denotes the literal assembly of completed parts, to build a completed product. An example of this is the Dell Corporation.
Dell possesses plants in countries external to the United States of America, however it assembles personal computers and does not manufacture them from scratch. In other words, it attains parts from other firms, and assembles a personal computer’s constituent parts (such as a motherboard, monitor, GPU, RAM, wireless card, modem, sound card, etc. ) within its factories. Manufacturing concerns the actual forging of a product from scratch. Car manufacturers often construct all parts within their plants. Direct investment has the most control and the most risk attached.
As with any capital expenditure, the return on investment (defined by the payback period, Net Present Value, Internal Rate of Return, etc. ) has to be ascertained, in addition to appreciating any related sunk costs with the capital expenditure. Domestic Market A domestic market is a financial market. Its trades are aimed toward a single market. A domestic market is also referred to as domestic trading. In domestic trading, a firm faces only one set of competitive, economic, and market issues and essentially must deal with only one set of customers, although the company may have several segments in a market.
Domestic marketing means that the company has to market its products within the national jurisdiction of the country without considering the effects of global competition. The product might face global competition but marketing campaigns are targetted to the local consumer segments. Product development and competition from the outside competitors are not considered and sole stress is put on the local competition and local customer segments. The disadvantage of domestic marketing could be the ignorance of global market competition which might snatch their marketshare in the local market in the future.
Example of Domestic marketing using the 7 Ps Life Insurance Corporation of India PRODUCT: A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In India, the Life Insurance Corporation of India (LIC) is the leading company offering insurance services to the users.
Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organisation buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational.
The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage and requires more professional excellence.
The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. PRICING: In the insurance business the pricing decisions are concerned with: i) The premium charged against the policies, ii) Interest charged for defaulting the payment of premium and credit facility, and iii) Commission charged for underwriting and consultancy activities. With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant.
In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors. Mortality (deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases. • Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy. • Interest: The rate of interest is one of the major factors which determine people’s willingness to invest in insurance.
People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums. PLACE: This component of the marketing mix is related to two important facets – i) Managing the insurance personnel, and ii) Locating a branch. The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services.
This is also to process the services to the end user in such a way that a gap between the services- promised and services – offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem. The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism.
The front-line staff and the branch managers also are found not assigning due weightage to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality upgradation, the promised services hardly reach to the end users. It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellence.
While recruiting agents, the branch managers need to prefer local persons and provide them training and conduct seminars. In addition to the agents, the front-line staff also needs an intensive training programme to focus mainly on behavioral management. Another important dimension to the Place Mix is related to the location of the insurance branches. While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises.
In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellence to make place decisions productive.
PROMOTION: The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff.
They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organisation of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders. PEOPLE: Understanding the customer better allows to design appropriate products.
Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into. PROCESS: The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance.
The processing method should be easy and convenient to the customers. Installment schemes should be streamlined to cater to the ever growing demands of the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments.
PHYSICAL EVIDENCE: Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India’s large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was looked upon as a complex product with a high advice and service component.
Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries, not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. The financial services industries have successfully used remote distribution channels such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and increase profitability.
A good example is UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the largest motor insurance operator. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks.
In India also, banks hope to maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and banks will emerge, popularly known as bancassurance. Another innovative distribution channel that could be used are the non-financial organisations. For an example, insurance for consumer items like fridge and TV can be offered at the point of sale. This increases the likelihood of insurance sales.
Alliances with manufacturers or retailers of consumer goods will be possible and insurance can be one of the various incentives offered. Example of International marketing using the 7 Ps Mc Donald PRODUCT: Mc Donalds product portfolio primarily comprises of vegetarian and non-vegetarian burgers. The vegetarian burgers like Veg surprise, salad sandwich, Mc Aloo Tikki Burger, Mc veggie burger are offered to the customers. Non-vegetatarian burgers include Chicken Mc grill, Mc chicken burger, Fliet of fish and chicken maharaja burger.
Along with these french-fries, veg pizza mc puff, wrap chicken Mexican, wrap paneer salsa, potato wedges, soft serve pineapple and choclate ice creams, Mc swirl soft drinks, coffee and Mc shakes are also offered to increase the variety in the product portfolio. Mc Donalds also provides mean combos with medium fries and medium soft drink, happy mean with small soft drink, econo meals with small soft drink and value meals with potato wedges and small soft drink. PRICE: Mc Donalds vegetarian burgers are priced between Rs 20 and Rs 48. Wrap paneer salsa is priced at Rs 45-50.
The non vegetarian burgers are priced between Rs 30 and Rs 60. Wrap chicken Mexican is priced at Rs 55. Medium French fries are priced at Rs 28, potato wedges at Rs 20, soft serves at Rs 35, mc swirl at Rs 12, medium soft drinks at Rs 20 and medium shakes at Rs 45. PROMOTION: At Mc Donalds the prime focus is on targeting children. In happy meals too which are targeted at children small toys are given along with the meal. Apart from this, various schemes for winning prices by way of lucky draws and also scratch cards are given when an order is placed on the various mean combos.
In fact, the various econo meals and value meals also signal to the customer that buying separate items results in greater value for money for the customer. PLACE: Mc Donalsa€™ outlets are very evenly spread throughout the NCR region. Mc Donalds does not offer home delivery but its outlets are very readily accessible. Mc Donalds also offers take away drive through facilities. PEOPLE: The employees in Mc Donalds have a standard uniform and Mc Donalds specially focuses on friendly and prompt service to its customers from their employees. PROCESS:
The food manufacturing process at Mc Donalds is completely transparent i. e. the whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the hygienic standards at Mc Donalds by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food. PHYSICAL EVIDENCE: Mc Donalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints.