Question No. 4 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 4

a) Probability and Non-probability Sampling Methods

Sampling means selecting a particular group or sample to represent the entire population. Sampling methods are majorly divided into two categories probability sampling and non-probability sampling. In the first case, each member has a fixed, known opportunity to belong to the sample, whereas in the second case, there is no specific probability of an individual to be a part of the sample.

For a layman, these two concepts are same, but in reality, they are different in the sense that in probability sampling every member of the population gets a fair chance of selection which is not in the case with non-probability sampling. Other important differences between probability and non-probability sampling are compiled in the article below.

The significant differences between probability and non-probability sampling

1. The sampling technique, in which the subjects of the population get an equal opportunity to be selected as a representative sample, is known as probability sampling. A sampling method in which it is not known that which individual from the population will be chosen as a sample, is called non-probability sampling.
2. The basis of probability sampling is randomization or chance, so it is also known as Random sampling. On the contrary, in non-probability sampling randomization technique is not applied for selecting a sample. Hence it is considered as Non-random sampling.
3. In probability sampling, the sampler chooses the representative to be part of the sample randomly, whereas, in non-probability sampling, the subject is chosen arbitrarily, to belong to the sample by the researcher.
4. The chances of selection in probability sampling, are fixed and known. As opposed to non-probability sampling, the selection probability is zero, i.e. it is neither specified not known.
5. Probability sampling is used when the research is conclusive in nature. On the other hand, when the research is exploratory, non-probability sampling should be used.
6. The results generated by probability sampling, are free from bias while the results of non-probability sampling are more or less biased.
7. As the subjects are selected randomly by the researcher in probability sampling, so the extent to which it represents the whole population is higher as compared to the non-probability sampling. That is why extrapolation of results to the entire population is possible in the probability sampling but not in non-probability sampling.
8. Probability sampling test hypothesis but non-probability sampling generates it.

b) Adaptation and Standardization International Advertising

c) Domestic agent and Domestic merchants

A manufacturer may often not sell directly to the various foreign parties (i.e. foreign distributors, foreign retailers, government department, state controlled trading companies, end users etc.). There are many intermediaries that operate between the foreign buyers and the local manufacturers.

The manufacturer deals with one or more domestic middlemen who, in turn, move or sell the product to foreign middlemen or final users. Although there are many kinds of local .sales intermediaries, all of them can be grouped under two broad categories:

i) Domestic Agents

ii) Domestic Merchants

The basic difference between the two arises on account of ownership(title) and not the physical possession of the merchandise. Domestic agents never take title to the goods, regardless of whether they take possession of the goods or not. While domestic merchants, on the other hand, own the merchandise, regardless of whether they take possession of the goods or not. 

Domestic Agents

Agents can be classified according to the principal whom they represent. Some agent intermediaries represent the buyer; others represent the interest of the manufacturer. Those who work for the manufacturer include export broker; manufacturer's export agents, export management companies and cooperative exports. Agents who look after the interests of the buyer include purchasing agents and country controlled buying agents.

These are discussed below:

Export Management Companies: In some countries, there are Export Management Companies (EMC), which manage, under contract, the entire export activities of a manufacturer. When compared with expert agents, the EMC has greater freedom and authority. EMCs provide extensive services to manufacturers ranging from promotion of products overseas to shipping arrangement and documentation. In short, the EMC is responsible for a the manufacturer's international marketing activities and they are compensated in

forms of commission or retainers plus commission.

Export Broker: The function of an export broker is to bring the buyer and the seller together for a fee. The broker may be assigned one or more foreign markets by the seller He negotiates the terms for the seller (i.e., manufacturer) but cannot conclude the transaction without the principal's approval of the

arrangement. For any action performed. the broker receives a fee or commission. An export broker does not take possession or title to the goods. In effect. he has no financial responsibility other than sometimes making an arrangement for credit. The export broker is considered useful because of his extensive knowledge of the overseas markets and foreign customers. This knowledge enables the broker to negotiate the most favourable terms for the principal.

Manufacturer's Export Agent: Export agents are individual or firms that assist manufacturers in exporting goods. Unlike EMC's, export agents provide limited services. These agents focus more on sale and handling of goods. Using an export agent has the advantage that the firm does not need to have an export manager to handle all the documentation .and shipping tasks. While the disadvantage arises from the export agent is limited market coverage, which may require the services of a number of export agents to cover different parts of the world. The export agent works on commission.

Purchasing Agent: The purchasing agent represents the foreign buyer. By residing and conducting business in the exporter's country, the purchasing agent is in a favourable position to seek a product that matches the foreign principal's (buyer's) preferences and requirements. Operating on the overseas customer behalf, the purchasing agent acts in the interest of the buyer by seeking the best possible terms. The purchasing agent's client pays a commission for the services rendered. The purchasing agent is also known as the commission agent or buying agent.

Country Controlled Buying Agent: This kid of agent performs exactly the same functions as the purchasing agent, the only distinction being that a country controlled buying agent is a foreign government's agency or a quasi government firm. The country .controlled buying agent is empowered to

locate and procure goods for his country. This agent may have offices located in countries that are major suppliers.

Resident Buying : Another variation on the purchasing agent is the resident buyer. A resident buyer IS an independent agent who is located near highly concentrated production centres. Although functioning much like a regular purchasing agent, the resident buyer is different because he is retained by the principal on a long term basis to maintain continuous search for suitable new products. The long-term relationship makes it possible for the resident buyer to be compensated with a retainer, besides commission for business transacted.

Domestic Merchant

Export Merchant: The domestic based export merchant buys the manufacturer's product and sells it abroad on his own. When this type of middlemen is used for overseas marketing, the job of the manufacturer is

limited to essentially production and at most domestic marketing. In such cases, except production related functions such as carry out modifications in the product and product mix which may-be sometimes required to suit . the export market, all other international marketing tasks are handled by the export merchant.

Export Houses: In India, there are a number of export houses that export products produced by manufacturers. Some companies have established their own' export marketing subsidiaries. They perform export marketing functions for manufacturing companies including physical handling of the products, promotion in overseas markets, etc. leaving the manufacturer to concentrate on production. They extend credit to manufacturers , provide advice on product modification etc. They have good contacts in the

overseas markets and may also have established network of sales offices round the world.

Trading Companies: Unlike an export house, which concentrates on exports, a trading company is active both in exports and imports. Japanese trading companies have been very successful in promoting the country's exports. Like export houses, the trading companies, offer a broad range of services from marketing research to financing and present a relatively inexpensive choice for the small and medium enterprises to undertake international business.

(d) Ethnocentric orientation and Polycentric orientation

The term ethnocentric orientation means that a company does not differentiate between domestic and foreign markets and applies same techniques in foreign markets which are applied in domestic marketing. Polycentric orientation is opposite of ethnocentric orientation. The term polycentric orientation means each overseas market is different from other and local techniques and personnel are best suited to deal with local conditions. On the basis of above, following points of distinction emerge:

According to ethnocentric orientation foreign operations are secondary to domestic operations while according to polycentric orientation foreign operations are equally significant.

Under ethnocentric orientation, international marketing activities are controlled from the home country while under polycentric orientation subsidiaries are established in all overseas markets. Subsidiaries are given free hand in framing and implementing policies.

Ethnocentric orientation is appropriate when overseas sales volume is insignificant compared to total sales of the firm. Polycentric orientation is appropriate when firm is committed to international marketing.