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MKT630 International Marketing GDB 2 Solution Spring Semester June 2013
Objective: Total Marks 20
To make the students aware of the online transactions
To enable students to know how the business is carried out online
Outcomes:
Student will be able to understand the online business model.
Student will be able to know how business strategies and practices are altered in the international scenario to meet the needs of the different markets.
The case:
“Beautybox”” is engaged in selling beauty product online. It offers a wide variety of perfumes, cosmetic and skincare products like nail polishes, lipsticks, bronzers, foundations, moistures, sunscreen creams, toners and cleansers to list a few. After the success in their local and European market, its online service is expanding in Asian region as well. Considering the nature of beauty industry which requires a trial of product before actually buying it, it has designed its business model on the philosophy of “try and buy”. Customers have to subscribe for $ 10 per month and in return they will get a sample box every week containing a sample of five different products. The product sample boxes are customized according to the data collected through a questionnaire filled by customers at the time of subscription. Customers can then place online order of the required product by making online payment using credit and debit cards. Now “Beautybox” is planning to enter Pakistani market as the fashion industry is flourishing there. There are certain constraints as the Pakistan is not technologically advance country. Most of the people are less aware of the online buying and selling activity and they are reluctant to use debit and credit cards while making online transactions.
Student’s task:
Your task is to recommend the most appropriate subscription and payment method to “Beautybox” other than debit and credit cards along with three benefits of selecting that method.
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There are five main variants of countertrade:
Barter: Exchange of goods or services directly for other goods or services without the use of money as means of purchase or payment.
Barter is the direct exchange of goods between two parties in a transaction. The principal exports are paid for with goods or services supplied from the importing market. A single contract covers both flows, in its simplest form involves no cash. In practice, supply of the principal exports is often held up until sufficient revenues have been earned from the sale of bartered goods. One of the largest barter deals to date involved Occidental Petroleum Corporation's agreement to ship sulphuric acid to the former Soviet Union for ammonia urea and potash under a 2 year deal which was worth 18 billion euros. Furthermore, during negotiation stage of a barter deal, the seller must know the market price for items offered in trade. Bartered goods can range from hams to iron pellets, mineral water, furniture or olive-oil all somewhat more difficult to price and market when potential customers must be sought.
Switch trading: Practice in which one company sells to another its obligation to make a purchase in a given country.
Counter purchase: Sale of goods and services to one company in other country by a company that promises to make a future purchase of a specific product from the same company in that country.
Buyback: occurs when a firm builds a plant in a country - or supplies technology, equipment, training, or other services to the country and agrees to take a certain percentage of the plant's output as partial payment for the contract.
Offset: Agreement that a company will offset a hard - currency purchase of an unspecified product from that nation in the future. Agreement by one nation to buy a product from another, subject to the purchase of some or all of the components and raw materials from the buyer of the finished product, or the assembly of such product in the buyer nation.
Compensation trade: Compensation trade is a form of barter in which one of the flows is partly in goods and partly in hard currency.
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