The UK, West Germany and the Netherlands have cut their import requirement though the American demand has shown some growth. Brazil has been resorting to aggressive selling at lower prices and the expectations are that its exports will reach an all-time peak of 32,000 tons in the 1981-82 season. The 1981-82 Indian seasons are only about six weeks away. The Brazilian offensive has forced India to withdraw so to any from the US and West European markets and increase its reliance on communist buyers. As many as 1980-81. the Soviet Union alone accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale of this trade.
Question: 1. Had you been the pepper exporter, what would be your short term and medium-term export marketing strategy in the above environment? Caselet 2 Smart Kids – Selling Educational Games and Resources to the World Smart Kids Ltd. An Auckland company that makes educational games and resources to read and understand math’s has won a Trade New Zealand Export Award for its success in international markets in 2003. Established eight years ago in the family home basement, Smart Kids is led by husband and wife team, joint chief executives David and Sun Milne and their sons Duncan and Frase.
She Milne, an ex-teacher, says from just 30 products when it started, the company produces more than 200 produces catering for student’s activities, grammar concepts and numeracy. She says the international appeal of Smart Kids products was highlighted recently, when company’s SMART PHONICS was listed amongst the top five products out of almost 100 in the education trade show in the United Kingdom. The key requirement for every new Smart Kids products is that it stimulates student’s minds in the classroom, teaches them a specific concept easily, enjoyably and permanently and enables problem solving.
David Milne says Smart Kids started selling its educational games and resources to New Zealand schools in 1995, drawings an immediate and strong response. It quickly became apartment that the New Zealand market was not large enough to sustain considerable investment in product development, and secondly, that their products have done so well that they deserved wider exposure. ”Our export research came down to two options. Find educational distributors in other countries or set-up our own operations. The first option was less risky and easy to
IIBM Institute of Business Management 2 Examination Paper: Marketing Management manage but it meant that Smart Kids products were lost in a wide range of materials. So we went for the second option and over the next few years established offices in Australia, in UK and Canada”. This has successfully branded Smart Kids as a leading supplier of educational resources in these countries. Mr. Milne says the Smart Kids product catalogue is now sent regularly to teachers in more than 50,000 schools across the UK, Ireland, Canada and Australia. We also sell to schools in the US. In that market we elected to work through a distributor, we didn’t have the financial resources to setup an operation that could cover almost 70,000 schools and compete with every established educational publisher”. He says annual exports now exceed $2. 2 million and account for more than 90% of turnover. In order to grow the business, surplus profits are reinvested back into product development, infrastructure – the company recently moved its Auckland operation into new 20,000 square feet premises in Ellerslie. Mr.
Milne says the Smart Kids brand is now well established internationally with the company enjoying many competitive advantages, including its New Zealand origin. New Zealand education is highly regarded overseas and we find that international teachers to get hold of educational products made in this country. Questions: 1. What are the major considerations for a firm in order to while deciding its markets entry strategy? To what extent direct control and ownership are critical for Smart kids export distribution strategy? 2. END OF SECTION B Section C: Applied Theory (30 marks) • • • • This section consists of Applied Theory Questions.
Answer all the questions. Each question carries 15 marks. Detailed information should form the part of your answer (Word limit 200 to 250 words). 1. “India’s export markets are still largely limited to the developed countries. ” Critically examine this statement highlighting the main factors responsible for the present state of affairs and your views about the future prospectus. “A world in which exchange rates fluctuate constantly is a threat to international marketing”. Discuss. 2. END OF SECTION C IIBM Institute of Business Management 3 Examination Paper: Marketing Management
Detailed information should form the part of your answer (Word limit 150 to 200 words). Caselet 1 Swastika Computer System was established in 1981 at Delhi to provide computer training. In 1980s computer education was relatively new in India. Personal computers 286 existed and MS DOS was the operating system. Languages like Basic, Pascal, COBOL, FORTRAN were used in programming. Swastika Computer Systems was established with their support departments namely computer assembly, faculty training and computer servicing department. In the first financial year, it recorded a turnover of Rs 11. lakhs. Within a few years of its existence, Swastik Computer System opened its branches in eight major cities of India and had a gross annual turnover of Rs 86 lakhs. The organization was highly centralized. The head office at Delhi handled all accounts, recruitment, and placement of students and servicing of computers. The Bhopal branch of Swastik Computer Systems was set up in May 1987. The branch was headed by a dynamic branch manager Hemant Gupta. He was a BSc in computers and had previously worked in the data processing department of a manufacturing concern.
To establish the Bhopal branch, Hemant Gupta realized the need for making Swastik Computer Systems, Bhopal known to the younger generation. With this in mind he introduced some innovative promotional schemes like offering scholarships to students doing well in the intelligence tests administered by the branch, giving personal computers to students to deposit term fees at their convenience. Hemant Gupta also ensured that teaching standards were high and computers at the branch were well maintained, so a student once enrolled felt that he had made the right decision by joining Swastik Computer Systems.
He also made himself available from 8. 00 a. m to 7. 00 p. m at the branch. Students were free to go to him with their problems, which he took pains to solve. Soon Swastik Computer Systems was one of the leading computer training centres in Bhopal. As the Bhopal branch prospered, the head office at Delhi started taking an active interest in the running of this branch. The Regional Manager who visited Bhopal once a month started making frequent visits. During one of his visits, his attention was drawn to rumors that branch funds were being misappropriated.
When the Regional Manager informed the Delhi office about the rumor, a team was sent to the Bhopal Branch to look into the matter. On investigation, the term was convinced that the rumors had some truth in them. It was found that a larger number of students attended the IIBM Institute of Business Management 5 Examination Paper: Marketing Management classes than were enrolled. It was felt that this fraud was not possible without the consent of Hemant Gupta, and without any further inquiry a decision was taken to remove him forthwith.
Amit Verma who was a senior faculty at Swastik Computer Systems, Delhi was asked to take over the Bhopal branch as Manager. He was an MCA and had been associated with the organization since its inception. Amit Verma’s appointment at Bhopal was welcomed at the Bhopal branch by both, staff and faculty as he had the reputation of being an easy going person. After he joined the Bhopal, it was observed that Amit Verma, although academically sound, was not an effective administrator. His approach towards staff and faculty was lenient. He was not particular about punctuality and was not available during office hours.
This had an adverse effect on faculty in general and classes in particular. Not only did classes suffer but even administrative work was affected. Monthly reports to the head office were not sent on time, as a result requisitions for computer servicing, reading material and funds were unduly delayed. Due to lack of maintenance, computer breakdowns became common, students did not receive their reading material on time and payment of building rent, and telephone bills etc were unnecessarily delayed. The symptoms of deterioration at the Bhopal branch were obvious. The branch which had an annual turnover of Rs 30. lakhs fell to Rs. 4 lakhs. As enrollments decreased the head office at Delhi started feeling the pinch. It started delaying transfer of funds to the Bhopal branch. As a result faculty salaries were unduly delayed. The faculty started leaving for greener pastures. Worried by the number of faculty turnover, the head office started a practice of recruiting only those faculties willing to sign a bond of 3 years. The organization started a practice of taking a deposit of Rupees 5000 from the joining faculty, which would be refunded after 3 years. In case the faculty left before this duration, the deposit stood forfeited.
This policy further reduced the quality of faculty joining Swastik Computer Systems, Bhopal. Questions: 1. What according to you went wrong at the Bhopal branch? 2. What can be done to revive the Bhopal branch? Caselet 2 INTRODUCTION Rohit Jha, a small businessman from Rewa was a man full of ideas, enthusiasm and vision. He started his career with a small stationery business. With zeal to capitalize his business further, and with the desire to echo the voice of the people, he started with newsprint business in 1955. He launched the first six page Hindi newspaper daily, News Update, from Bhopal, capital of Madhya Pradesh.
This was the beginning of the success journey. After having a good local response he decided to move further and the next edition was launched at Jabalpur, M. P. in the year 1958. In the expansion process after a decade News Update editions began from Sagar and Faridabad. Surprisingly, Jabalpur was the breadwinner, not Bhopal, though it was the capital city. Till 1983, it was like one of those family businesses. In the same year, Rohit Jha came into the print business as a result of an internal division of the family business, and decided to move on and relaunched the Bhopal edition.
All newspapers then were working on sheet-fed machinery; and it became the first paper to get into web offset printing in Bhopal. Soon, the paper became number one in Bhopal, beating Kranti, the then local leader. IIBM Institute of Business Management 6 Examination Paper: Marketing Management FIRST MILESTONE With an objective to grow further a market survey was carried out in the city of Indore, which was developed as a commercial capital and as an educational hub of the Central Indian region. Recognizing it as a strong potential market, the Indore edition was started in 1988, while closing Sagar.
At that time in Indore, Lok Satta, a daily Hindi newspaper was enjoying market monopoly. The paper was mainly focusing on national and international news coverage. However, focus on local and regional happenings was ignored. Identifying this as an opportunity. News Update started concentrating on local news and issues of social interest. With continuous market surveys, the paper increased its number of pages and improved upon the quality of printing, designing and contents. By 1995, the paper was Number 2 in Madhya Pradesh.
It took three years to break the readership monopoly of Lok Satta and News Update had established a strong foothold in the market by the year 1998. Meanwhile, the Raipur and Bilaspur editions in 1995 and 1997 were launched respectively, but only to register their presence, though there wasn’t enough potential in the Chhatisgarh region. The focus was always Bhopal, Jabalpur and Indore. Between two readership surveys conducted in 1995 and 1998, News Update grew at a rate of 104%, the highest among the top ten newspapers of the country.
In Indore, the largest newspaper market of the state, News Update enjoyed a massive 85% share among all Hindi daily readers, of which 56% were sole readers. GREENER PASTURES It was in 1999 that the group decided to move beyond the M. P. region. The first option for any Hindi newspaper was Uttar Pradesh (UP), being a Hindi speaking belt. But UP always had No 1 and No 2, and a lot of accompanying clutters. So, the Chairman, Sagar Jha, son of Rohit Jha, visited Rajasthan, which was also a total Hindi state. He found that Awaz was the only Hindi daily having a huge market share in Rajasthan.
This was the market where Morris’s Vision had shut down its editions. To take advantage of this opportunity the Sunshine Group made a plan to enter the Udaipur market, which was the first venture outside the state. A market survey on two lakh households was carried, which happened to be the biggest survey conducted by any other newspaper in the country. The survey results found that Vision had closed down because the problem was with the product, but not with the market. It was also identified that 95% of the people in Jaipur were looking for an option and 80% said that their current paper was biased.
Among their requirements, they wanted more city news. Keeping the survey results into account they made pre-launch estimates, which was never the norm in the industry. The second round included order booking. They went back to the same households, and briefed them about the summary of the feedback they had collected and the kind of paper, which they decided to come up with. They planned with a target of 75,000 copies for Udaipur edition in December 19, 1999, whereas at that time Awaz was selling around 1,50,000 copies. The key benefit of the survey was it resulted as part of brand-building exercise for the group.
The paper was priced competitively at Rs 2. 10 if the consumer had an advance booking in that case the paper was given for Rs 1. 60 for four months. Awaz was selling at Rs 2. 35. once they started procuring the orders, 1,70,000 copies a third machine was bought overnight, for a premium. They finally launched with 1,87,000 copies, all paid, becoming No 1 from day one. Five days later, December 25, 1999, Awaz further reduced the cover price from Rs 2. 35 to Rs 1. 50. Now, to buy two newspapers, all the customer had to do was to pay only 85 paisa more, and soon the sales touched 2. lakh. By the year 2001 they captured Jodhpur, Bikaner, Jaipur and Kota and the fight with Awaz was now on quality parameters. Meanwhile, after the first victory outside their home-state MP, the management decided to enter northern belt of the country. On May 27, 2001 they moved to Haryana with Panipat and Hisar after carrying out the market survey on 2 lakh households. In the year 2001, three editions – two in Haryana and one in Chandigarh were launched. They planned to cover Himachal with the IIBM Institute of Business Management 7
Examination Paper: Marketing Management Chandigarh edition but due to the distance, the distribution was restricted to Simla only. By this time, they started consolidating in terms of quality, systems and resources so that the system could run on its own. However, because of the newsprint price hike, the expansion into Punjab was delayed. News update’s strategy was to build a strong and loyal base of readers. The Rs. 2,000 crore groups had its heart set on Gujarat. Ahmadabad being the commercial capital of Gujarat had a high standard of living and literacy rate.
As research had been integral to the total marketing effort, the Ahmadabad launch was carried through an elaborate consumer contact program and in this regard a door-to-door survey was conducted. Ten lac plus households in Ahmadabad and 5 lakh households in the upcountry districts like Mehsana and Anand were called on in the month of October 2004. The key findings of the survey were that 90% of the people wanted an unbiased newspaper. In spite of the strong presence of four major competitors. The Sunshine Group launched News Ahead, a12-page Gujarati daily newspaper, on December 22, 2004 with a confirmed circulation of 542,151 copies.
With launch of the same the group was able to overcome the language barrier. It saw a frenzy of activities in otherwise dormant Gujarat Newspaper market. News Ahead was competitively priced at Rs 1. 60 compared to Rs 2 cover price of the other competitors prevalent in the market. The paper was accompanied by a feature supplement every day of the week. The group in its expansion mode had set up full-fledge state of the art printing press at Anand. In its promotional programs in Gujarati, the group started printing the coupons on the newspaper and collection of prescribed number made one eligible to prizes.
Besides the fixed prizes on deposit of coupons, there was a lottery at the end of month, in which attractive prizes like scooters, television, home appliances etc. were given. In the year 2004, News Ahead was launched in Washington, USA with the objective to cater the needs of Gujarati community residing there and with they entered the global market. NEW HORIZONS News Update in Indore had achieved the heights of popularity as the market share increased from 20% in the year 1991 to 80% by the year 2004.
They enjoyed the market monopoly as they kept on adding various supplements for different age groups, after carrying sequential market surveys. In this regard they started a career, Bulletin, Career Guide for youth; Bal Dunia, fortnight magazine for children; Guldasta, weekly supplement for women; Colour, Saturday Supplement; Inderdhanush, Sunday supplement, and daily supplement City Update, which focused on issues related specifically to Indore city. They sponsored various events like career fares, deliberations of religious gurus, quiz, game shows, etc.
As a part of the corporate social responsibility they started a senior citizen club. Adarsh the centre for cultural activities was also promoted by the group and the fund generated by it was donated from time to time for natural calamities. As proving its mettle amongst Hindi dailies the group realized that they weren’t able to grow in English until and unless they have an editorial and marketing network across the country. Taking it as a challenge, Sunshine Group decided to collaborate with Sanchar Tele network and launched an outdoor campaign of Rs 80 crore in Mumbai.
As Mumbai was cosmopolitan and the biggest commercial city of the country, it plastered Mumbai with 300 hoardings and 700 kiosks with advertisements, and mounted a campaign on FM radio stations too. The group used its time-tested strategy of resorting to consumer research on the kind of paper the city wants. The trained team surveyed 15 lakh households and 300,000 traders in Mumbai to understand what they expected of a newspaper. And finally they launched First News in first week of December 2005, where giant English dailies had an established market presence.
THE ROAD AHEAD The group also harboured long-term ambitions of launching a financial daily magazine in English in order parts of the country depending upon the success of the First News as it had printing press in several towns and cities countrywide, which would only add a little operational cost to the group. Simultaneously, the group diversified in various unrelated categories like textiles, FMCG, oil, IIBM Institute of Business Management 8 Examination Paper: Marketing Management pharmaceutical, electronic media and educational institutions. The group had also placed equity privately to rise between Rs 350 crore and Rs. 00 crore. The money was to be used for the diversification into television in Punjab and to launch more editions of the Hindi newspaper countrywide. But the biggest challenge they would face may come not from within their own English language newspaper fraternity but from aggressive Hindi newspaper groups. They had started to factory beyond their traditional Hindi print businesses to new media business. On the other hand, Rs 700 crore Agra-based Chetna Prakashan Group, which publishes Janta, too had started diversifying into several new areas. It had chalked out plans for forays into television.
The group had already launched a Hindi news channel and had decided to venture into News Update group’s home turf Madhya Pradesh. According to Nitin Jha, Director Marketing, Sunshine Group, they wanted to be a media group of worldwide recognition in the next five years with systems, writing style, operations which ought to be world class. Circulation was a big parameter to grow worldwide. With a market of Rs. 3,500 crores they had covered eight status and one Union Territory and presently had a customer base of 3 crores the globe, which had fetched them the number two position in the world newsprint market.