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BBDM3133 International Business Management

Tutorial 11
Case Discussion
A Call for Progress Pg 474
The closing case describes the cell phone market and marketing strategies employed by
companies in developing countries. The case discusses Millicom International Cellular, Nokia,
and Ericsson, and references operations in India, China, and Bangladesh.
ey !oints
Changes in communications technology and the cell phone have had a dramatic
impact on business and economic progress throughout the developing "orld.
#hile the market for cell phones has leveled off in markets like #estern Europe and
the $nited %tates, it has been booming in emerging markets such as India, China,
and Bangladesh.
&s companies enter these ne" markets, a decision has to be made as to the
marketing mi' strategies. They have to decide to "hat e'tent they should
standardi(e or customi(e )adapt* their product, price, promotion, and distribution
strategies "hen marketing internationally.
The case described provides background and e'amples of the marketing strategies
used by Millicom International Cellular in doing business in these emerging markets.
Case Questions
1. Identify and describe the roles of product policy, pricing, promotion, and distribution
in the cell phone market in developed countries.
&ll !s of the marketing mi' play a role in marketing cell phones in the developed
countries. +irms develop the product, price, promotion, and distribution strategies for
the market. #ith reference to the developed "orld, perhaps a greater emphasis
"ould be placed on market segmentation, "hich involves identifying groups "ithin
groups. The companies "ould try to identify groups of customers "ithin a general
market "ho have different "ants and needs, and then identify ho" best to satisfy the
needs of these segments.
2. Identify and describe the roles of product policy, pricing, promotion, and distribution
in emerging markets.
&ll !s of the marketing mi' play a role in these markets. The product is tailored to
meet the preferences of the local market )although the case does mention that plain
no,frills phones are not al"ays the choice*, prices are set lo" because of the lo" per
capita income of these markets and distribution channels, including ho" individuals
could purchase or add usage time having to be customi(ed for these markets.
3. What are the relative opportunities for standardization and customization in the cell
phone industry?
%tandardi(ation "ould reduce marketing costs, promote efficiencies in research and
development, and the company "ould benefit from economies of scale in production
operations. -n the other hand, customi(ation "ould account for differences in the
buyer and their behavior, reflect different conditions in ho" the product might be
used, and promote local marketing initiatives that could lead to increased sales.
. What are the roles of legal forces and cultural influences in the cell phone industry?
Businesses in the cell phone industry )cell phone manufacturers or service providers*
"ould be assuming large risks if they did not reali(e that many legal forces "ill affect
them and if they "ere not alert to recogni(e them and prepared to get e'pert
assistance to deal "ith them. This "ould include issues such as licensing
re.uirements, ta'ation, product liability, price/"age control, labor la"s, currency
e'change controls, etc.
The study of culture is also essential for any international business e'ecutives "ho
must operate in cultures different from their o"n. -perating in various international
markets re.uires firms to use different marketing mi'es in different markets. &
changing approach is necessary due to uni.ue attitudes and values in different
cultures.
Essay Questions
1. What are the basic factors involved in deciding !hether to use standardization or
customization?
& firm follo"ing a policy of standardi(ation simply markets its products the same "ay
every"here, "hile a firm follo"ing a policy of customi(ation adapts the marketing mi' to meet
the needs of each target market. %tandardi(ation is attractive to firms because it permits
efficiency in 012, production economies of scale can be achieved, it promotes lo"er marketing
costs, it enables a firm to centrali(e control of the marketing program, and it reflects the trend
to"ard a single "orld market. Customi(ation, on the other hand, reflects varying conditions of
product use, recogni(es local differences in la"s and regulations as "ell as differences in buyer
behavior, promotes local initiative and motivation in implementing the marketing program, and
allo"s a firm to better meet the needs of individual markets.
2. Why are brand names an important marketing tool for international business?
Brand names are an important marketing tool for international business because if a product3s
name can be standardi(ed, a firm can reduce packaging, design, and advertising production
costs.
3. What is a distribution channel? What options does an international firm have in developing
its channels?
& firm3s distribution channel refers to the various stages through "hich a product passes as it
moves from the manufacturer to the consumer. The basic channel options include manufacturer
, import agent , customer, manufacturer , import agent 4 retailer , customer, and manufacturer ,
import agent 4 "holesaler 4 retailer , customer.