Chapter 1

The Concept of International Marketing

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Globalization
• Globalization of production • Globalization of markets

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Globalization index
• economic integration: trade, portfolio, foreign direct investment, and investment income • personal integration: telephone, travel, remittances, and personal transfers • technology integration: internet users, internet hosts, and secure internet services • political integration: international organization, UN peacekeeping, treaties, and government transfers

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Globalization index
1 2 3 4 5 6 7 8 9 10 61

(contd)

Rank

Country

Ireland Singapore Switzerland Netherlands Finland Canada United States New Zealand Austria Denmark India

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Domestic marketing and international marketing decisions Overseas Environmental Challenges (Uncontrollables) Domestic Environmental Challenges (Uncontrollables) Economic Economic (Controllables) Product Political Marketing Challenges in country Y Legal Competition Marketing Challenges in country X Political Marketing Challenges in country Z Political Place Consumer Price Socio Cultural Promotion Competition Infrastructure Logistics Legal Geography International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Reasons for entering international markets • growth • profitability • achieving economies of scale • risk spread • access to imported inputs • uniqueness of product or servies • marketing opportunities due to life cycle • spreading R&D cost International Marketing ©Oxford University Press.

Evolutionary process of global marketing Domestic marketing : Marketing Focus Orientation Marketing Mix Decisions domestic ethnocentric focussed on domestic customers International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Evolutionary process (contd) Export marketing: Marketing Focus overseas (targeting and entering foreign markets) Orientation Marketing Mix Decisions ethnocentric focussed mainly on domestic customers overseas marketing-generally an extension of domestic marketing decisions made at headquarters International Marketing ©Oxford University Press.

All rights reserved .Evolutionary process (contd) Multinational marketing: Marketing Focus consolidation of operations on regional basis gains from economies of scale Orientation Marketing Mix Decisions regiocentric product standardization within regions but not across the region International Marketing ©Oxford University Press.

All rights reserved . habits or norms Step 2: define the business problem or goal in terms of the foreign country cultural traits. habits. or norms Step 3: isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem Step 4: redefine the problem without the SRC influence and solve for the optimum business goal situation International Marketing ©Oxford University Press.Adaptation Strategy to isolate self-reference criteria Step 1: define the business problem or goal in terms of the home-country traits.

All rights reserved .EPRG concept • ethnocentric orientation • polycentric orientation • regiocentric orientation • geocentric orientation International Marketing ©Oxford University Press.

Theories of international trade • theory of mercantilism • theory of absolute advantage • theory of comparative advantage • factor endowment theory • theory of international product life cycle • theory of competitive advantage International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Chapter 2 Emerging Opportunities in International Markets International Marketing ©Oxford University Press.

Trends in world trade 700 Value (Billion US$) 600 500 400 300 200 100 Netherlands Japan China Canada United States India 0 Exporting Country International Marketing ©Oxford University Press. All rights reserved .

Trends in world trade (contd) 1400 Value (Billion US$) 1200 1000 800 600 400 200 0 Japan Italy Canada Germany France China United States United Kingdom Netherlands Hong Kong. All rights reserved . China India Im porting C ountry International Marketing ©Oxford University Press.

Leading exporters in world trade in commercial Services 2002 300 Value (Billion US$) 250 200 150 100 50 0 International Marketing ©Oxford University Press. All rights reserved .

Leading importers in world trade in commercial services 2002 250 Value (Billion US$) 200 150 100 50 Netherlands United States France Japan Canada India 0 Importing Country Source : World Trade Organization. All rights reserved . International Marketing ©Oxford University Press.

All rights reserved .Composition of world merchandise exports 100% 80% 60% 40% 20% 0% Percentag e 1965 1970 1980 1995 2000 2001 Food Ores and metals Manufactured goods Years Agricultural raw materials Fuels International Marketing ©Oxford University Press.

All rights reserved .B.Direction of world exports 5000000 (F. US$ Million) 4000000 3000000 2000000 1000000 0 1980 1990 1995 2000 2001 2002 Years Developed M arket Economy Countries Developing Countries & Territories Countries in Central and Eastern Europe International Marketing ©Oxford University Press.O.

6 5.4 2.6 6.0 4.0 -0.8 7.8 100.6 1.9 5.World Economic Outlook World Trade Outlook 2002 Projections 2004 2005 4.9 Commonwealth of Independent States (CIS) B World Trade Volume (goods and services) C World Trade Prices (in US$ terms) Manufactures Oil Non-fuel primary commodities D Emerging Market and Developing countries.2 A World Output Other emerging market and economies developing 3.5 47.0 6. 6.0 6.1 3.5 0.4 -10.1 2. Private capital flows (net) in US$ billion) International Marketing ©Oxford University Press.8 7.0 4.7 3.9 All rights reserved .6 162.4 5.

2003-04 1955-56 All rights reserved .An overview of India’s foreign trade India's Foreign Trade 80000 60000 40000 20000 0 US$ (Million) 1951-52 1959-60 1963-64 1967-68 1971-72 1975-76 1979-80 1983-84 1987-88 1991-92 1995-96 1999- Years Exports Imports International Marketing ©Oxford University Press.

Composition of India’s trade
Com position of India's T rade : Export
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Percentage

2000-01

2002-03

2001-02

2003-04

1999-

(Apr.-

2000

Years

A griculture & allied M anufactured goods O thers & unclassified item s

O and m res inerals C rude & petroleumproducts

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Composition (contd)
Composition of India's Trade : Import
100% 80% 60% 40% 20% 0%

Percent age

1999-2000

Years

Food and allied products Paper board, manufactures & newsprint Others

Fertilizers Capital goods

Unclassified items

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2003-04 (Apr.-Jan.)

2000-01

2001-02

2002-03

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Direction of India’s trade : exports
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Percentage

1970-71

1980-81

1990-91

1998-99

1999-00

2001-02

Years

OECD

OPEC

Eastern Europe

Others LDCs**

2002-03

1960-61

1995-96

2000-01

Others

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Direction imports (contd)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Percentage

1960-61

1970-71

1980-81

1990-91

1995-96

1998-99

1999-00

2000-01

2001-02 Others

Years

OECD

OPEC

Eastern Europe

Others LDCs**

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2002-03

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Balance of trade 2000 0 1956-57 1965-66 1968-69 1974-75 1950-51 1953-54 1959-60 1962-63 1971-72 1977-78 1980-81 1983-84 1986-87 1989-90 1992-93 1995-96 1998-99 2001-02 -2000 US$ (Million) -4000 -6000 -8000 -10000 -12000 -14000 -16000 Years Trade Balance Source : Based on International DGCI&S data Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Gains from international markets • to measure the benefits derived by a nation from exports. “terms of trade” is a widely used instrument • terms of trade : a measure of relative changes in import and export prices of a nation expressed as the ratio of price index of its exports to price index of its imports International Marketing ©Oxford University Press.

All rights reserved .Terms of Trade Net Terms of Trade : Unit value index of exports expressed as a percentage of unit value index of imports Gross Terms of Trade: Volume index of imports expressed as a percentage of volume index of exports Income Terms of Trade: Product of net terms of trade and volume index of exports expressed as a percentage International Marketing ©Oxford University Press.

All rights reserved .Terms of Trade (base year 1995= 100) 160 140 120 100 80 60 40 20 0 1995=100 1980 1990 1998 1999 2000 2001 Years Developed Countries Developing Countries International Marketing ©Oxford University Press.

All rights reserved .India’s Terms of Trade (base year 1978-79= 100) (Base 1978-79=100) 900 800 700 600 500 400 300 200 100 0 1970-71 1980-81 Gross 1990-91 Net 2000-01 Income 2001-02 2002-03 Years Source : DGCI&S International Marketing ©Oxford University Press.

Key issues in India’s export growth • Developing a proactive approach to international trade • Promoting Foreign Direct Investments • Promoting Competitiveness • Simplification of procedures • Encouraging large-scale manufacturers • Reducing transaction costs • Infrastructure development International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Key issues (contd) • Entrepreneurship facilitation • Strengthening SEZs • Encouraging SMEs • Devolution of power to states • Abolition of indirect taxes for certain sectors • Strategy for promoting services’ export International Marketing ©Oxford University Press.

Identifying opportunities in international markets • • • • Extreme focus product strategy Products-country matrix strategy Growth-share matrix of exports Market focus strategies International Marketing ©Oxford University Press. All rights reserved .

Chapter 3 World Trade Organization: international marketing implications International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Major implications of WTO’s multilateral trade regime • Security of access of international markets • Stability of access to international markets • Implications for importers of raw materials and other inputs International Marketing ©Oxford University Press.

All rights reserved .From GATT to WTO Year 1947 1949 1951 1956 1960-61 1964-67 1973-79 1986-94 Round/Name Geneva Annecy Torquay Geneva Dillon Kennedy Tokyo Uruguay Countries 23 13 38 26 26 62 102 123 Average Tariff Cut (%) 35 NA 25 NA NA 35 33 36 International Marketing ©Oxford University Press.

administration.Functions of WTO • Facilitates the implementation. All rights reserved . and operation of the trade agreements • Provides a forum for further negotiations among member countries on matters covered by the agreements as well as on new issues falling within its mandate • Responsible for the settlement of differences and disputes among its member countries International Marketing ©Oxford University Press.

All rights reserved .Functions (contd) • Responsible for carrying out periodic review of the trade policies of its member countries • Assists developing countries in trade policy issues through technical assistance and training programmes • Encourages cooperation within the international organization International Marketing ©Oxford University Press.

All rights reserved .Principles of multilateral trading system under WTO • Trade without discrimination • Most-Favoured Nation (MFN) treatment • National treatment • Gradual move towards freer markets through negotiations • Increased predictability of international marketing environment • Promoting fair competition in international markets International Marketing ©Oxford University Press.

WTO agreements • An umbrella agreement (the agreement establishing WTO) • Agreements for each of the broad areas of trade covered by WTO • goods • services • intellectual Property • Dispute settlement • Review of governments’ trade policies International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .General Agreement on Tariffs and Trade (GATT) • Increasing opportunities for goods in international markets • Creating marketing opportunities in the industrial section • Reduction in Tariffs • Tariffs Bindings • Creating fairer markets in agriculture sector • Elimination of non-tariff measures through the ratifications process • Binding against further increase of tariffs • Domestic support • Export subsidies • Opening up marketing opportunities in textiles International Marketing ©Oxford University Press.

All rights reserved . standards. and certification procedures do not create unnecessary obstacles to trade International Marketing ©Oxford University Press. testing.Standards and safety measures for international markets • Agreement on Sanitary and Phytosanitary (SPS) Measure sets out the basic rules on food safety and plant health standards • Agreement on Technical Barriers to Trade (TBT) ensures that regulations.

All rights reserved .General elements of GATS • General Agreement on Trade in Services (GATS) are first and only set of multilateral rules governing international trade in services • The main text containing general obligations and disciplines • Annexes dealing with rules for specific sectors • Individual countries’ specific commitments to provide access to their markets and also indicting sectors where countries are temporarily not applying the ‘MostFavoured-Nation’ principle of non-discrimination International Marketing ©Oxford University Press.

Complexity of international trade in services Trade in services is much more diverse compared to trade in goods and GATS address this diversity through rules governing: • movement of natural persons • financial services • telecommunications • air transport services International Marketing ©Oxford University Press. All rights reserved .

All rights reserved . It establishes a mechanism for consultations and surveillance at the international level to ensure compliance with these standards by member countries at the national level. International Marketing ©Oxford University Press.Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) Lays down minimum standards for the protection of intellectual property rights as well as the procedures and remedies for their enforcement.

governments should be able to show that dumping has taken place .calculate the extent of dumping . All rights reserved .demonstrate that dumping is causing injury or threatening the local industry International Marketing ©Oxford University Press.Curbing unfair marketing practices • Agreement on anti-dumping practices (ADP) allows governments to act against dumping where there is genuine injury to the competing domestic industry • Procedure to initiate dumping: .

All countries All rights reserved .Top ten users of anti-dumping measures 1995-2003 2500 2000 1500 1000 500 0 379 329 274 180 166 163 122 109 73 72 2416 European Union Canada South Africa India Mexico Country International Marketing ©Oxford University Press.

All rights reserved . and it sets time limits ( a sunset clause) on all safeguard actions International Marketing ©Oxford University Press.Emergency protection from imports • A WTO member may restrict imports of a product temporarily (take ‘safeguard’ actions) if its domestic industry is seriously injured or threatened with injury caused by a surge in imports • The WTO agreements on safeguards prohibit ‘greyarea’ measures.

Procedure of settlement of international trade disputes • Consultation • Panel established • Terms of reference composition • Panel examination • Interim review stage International Marketing ©Oxford University Press. All rights reserved .

etc. mediation. Panel set up and panelists appointed Final panel report to parties Final panel report to WTO members Dispute settlement body adopts no appeal) One Year (without appeal) Appeal resort Dispute settlement body adopts report 15 months (with appeal) All rights reserved International Marketing ©Oxford University Press.Time frame for settlement of international trade disputes 60 days 45 days 6 months 3 weeks 60 days report (if Total 60-90 days 30 days appeals Total Consultations. .

The implications of WTO on international marketing • Binding of concessions and commitments • Valuation of goods for customs purposes (Agreement on Customs Valuation) • Use of pre-shipment inspection services (Agreement on Pre-shipment Inspection) • Import licensing precedures (Agreement on Improt Licensing Procedures) • Rules applicable to exports • Anti-dumping and countervailing action International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Chapter 4 Scanning the International Economic Environment International Marketing ©Oxford University Press.

International economic institutions • World Bank Group • International Bank for Reconstruction and Development (IBRD) • International Development Association (IDA) • International Finance Corporation (IFC) • Multilateral Investment Guarantee Agency (MIGA) • International Centre for Settlement of Investment Disputes (ICSID) • International Monetary Fund (IMF) International Marketing ©Oxford University Press. All rights reserved .

Special Drawing Right (SDR) An international reserve asset introduced by the IMF in 1969 SDR are allocated to members countries (as book-keeping entries) as a percentage of their quotas International Marketing ©Oxford University Press. All rights reserved .

The United Nations Conference on Trade and Development (UNCTAD) Established in 1964 UNCTAD aimed at integrating developing countries into the world economy Basic functions includes: • serve as the focal point within the United Nations for the integrated treatment of trade and development issues • undertake research. All rights reserved . policy analysis. and data collection in order to provide substantive inputs to experts • facilitate cooperation with other organisations and donor countries and provide technical assistance to member countries International Marketing ©Oxford University Press.

All rights reserved .Common Fund for Commodities (CFC) Established in 1989 with the following objectives: • To serve as a key instrument in attaining the agreed objectives for the integrated programme for commodities adopted by UNCTAD • To facilitate the conclusion and functioning of ICAs (international commodity agreements). particularly concerning commodities of special interests to developing countries International Marketing ©Oxford University Press.

Generalized System of Preferences (GSP) GSP is a non-contractual instrument by which industrialized countries unilaterally and on the basis of non-reciprocity extend tariff concessions to developing countries EU GSP Scheme: • Special Incentive Scheme • US GSP Scheme International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .World Intellectual Property Organization (WIPO) Established in 1970 as an international organisation to protect the rights of creators and owners of intellectual property the worldover Main functions: • Advice and expertise in the drafting and revision of national legislation important for whose WIPO member states with obligations under TRIPS agreement • Comprehensive education and training programmes at national and regional levels International Marketing ©Oxford University Press.

International Trade Centre (ITC) Created by GATT in 1964 ITC works in six areas: • Product and market development • Development of trade support services • Trade information • Human resource development • International purchasing and supply management • Needs assessment and programme design for trade promotion International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .International economic integration Major reasons for economic integration are: • Neighbouring countries generally have a common history and interest and they are more willing to cooperate in each other’s policies • Consumer tastes are likely t o be similar and distribution channels can easily be established in adjacent countries • The distances that goods need to travel between such countries are shortened International Marketing ©Oxford University Press.

All rights reserved .Types Preferential Trading Agreement (PTA) Member countries reduce import tariffs on identified products from one another Free Trade Area (FTA) Member countries remove all tariffs and non-tariff barriers among themselves but are free to maintain their own tariffs and non-tariff barriers with non-member countries. Customs Union In addition to eliminating trade barriers among member countries. a common external trade policy is adopted for non-members International Marketing ©Oxford University Press.

movement of labour.Types Common Market (contd) All restrictions on cross-border investment. All rights reserved . and sharing of capital resources are eliminated to form a common market Economic Union The member countries in an economic union maintain a fiscal discipline. and stability in interest rates by way of unified monetary and fiscal policy International Marketing ©Oxford University Press. stability in exchange rates. management. technology transfer.

Major regional trade blocks (RTA’s) High-income and low and middle-income economies • Asia-Pacific Economic Cooperation (APEC) • European Union (EU) • North American Free Trade Area (NAFTA) Latin America and the Caribbean • Association of Caribbean States (ACS) • Andean Group • Group of Three • Latin American Integration Association (LAIA) • Southern Cone Common Market (MERCOSUR) International Marketing ©Oxford University Press. All rights reserved .

Major RTA’s Africa (contd) • Common Market for Eastern and Southern Africa (COMESA) • Economic Community of West African States (ECOWAS) • Southern African Development Community (SADC Middle East and Asia • Association of south-East Asian Nations (ASEAN) • Bangkok Agreement • East Asian Economic Caucus (EAEC) • Gulf Cooperation Council (GCC) • South Asian Association for Regional Cooperation (SAARC) International Marketing ©Oxford University Press. All rights reserved .

India’s participation in RTAs • Framework Agreement on comprehensive economic cooperation between ASEAN and India • Bangladesh-India-Myanmar-Sri Lanka-Thailand economic cooperation (BIMST-EC) • Indo-Sri Lanka Free Trade Agreement • Bangkok Agreement • Framework Agreement for establishing free trade between India and Thailand • SAARC preferential trading agreement (SAPTA) South Asian Free Trade Agreement (SAFTA) International Marketing ©Oxford University Press. All rights reserved .

Chapter 5 International Marketing Research International Marketing ©Oxford University Press. All rights reserved .

International marketing research • a study conducted to assist decision-making in more than one country • research that crosses national borders and involves respondents and researchers from different countries and cultures International Marketing ©Oxford University Press. All rights reserved .

Challenges • overlooking cross-cultural market behaviour • employing standardized research methodologies across the international markets • using English as a standard language for market communication • inappropriate sample selection • misinterpretation of cross-country data • failure to use locals to conduct field surveys International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Cross-cultural marketing behaviour and research The collective programming of the mind which distinguishes the members of one group or category from the other International Marketing ©Oxford University Press.

femininity • masculine societies. All rights reserved . collectivism • the tendency of people to look after themselves and their immediate family’s interests alone Masculinity vs. advancement. the dominant values emphasize work goals such as earnings. and friendly atmosphere Uncertainty avoidance • lack of tolerance of ambiguity and the need for formal rules International Marketing ©Oxford University Press. and success • feminine society are achievement of personal goals such as quality of life. care for others.Comparison of cross-cultural behaviour Power distance • the degree of inequality among the people that are viewed equitably Individualism vs.

and religion International Marketing ©Oxford University Press. beliefs. and religion • heterophilous culture: countries that have a fair amount of differentiation in language. language. All rights reserved .Comparison of cross-cultural behaviour Cultural context The context of a culture has crucial implications in communicating and interpreting verbal and non-verbal messages Cultural homogeneity • homophilous culture: countries where people share the same beliefs.

All rights reserved .Process Problem dentification Decide Research Methodology Workout Information Requirement Identify Sources of Information (Both Primary and Secondary) Prepare Research Design Collect Primary Information Analyse Information Evaluation and Interpretation International Marketing ©Oxford University Press.

test marketing • product benefit and attitude research • product formulation and feature testing International Marketing ©Oxford University Press. All rights reserved .International marketing research and marketing decisions • product policy Marketing mix decision Type of research • focus groups and qualitative research to generate ideas for new product • survey research to evaluate new product ideas • concept tasting.

International marketing research (contd) Marketing mix decision Pricing distribution Type of research • pricing sensitivity studies Marketing mix decision Distribution Type of research • survey of shopping patterns and behaviour • consumer attitudes toward different store types • survey of distributor attitudes and policies International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .International marketing research Marketing mix decision Advertising (contd) Type of research • advertising pre-testing Marketing mix decision Advertising post-testing. recall scores Type of research • surveys of media habits International Marketing ©Oxford University Press.

All rights reserved .International marketing research Marketing mix decision • Sales Promotion (contd) Type of research • surveys of response to alternative types of promotion Marketing mix decision Sales force Type of research • tests of alternative sales presentations International Marketing ©Oxford University Press.

Emic vs. and behaviour are unique to a culture and best understood in their own terms. interests. and emphasizes studying the research problem in each country’s specific context ETIC Emphasizes identifying and assessing universal attitudinal and behavioural concepts and developing ‘pan-cultural’ measures International Marketing ©Oxford University Press. All rights reserved . Etic dilemma EMIC Holds that attitudes.

All rights reserved .Chapter 6 Decision-making Process for International Markets International Marketing ©Oxford University Press.

actionable International Marketing ©Oxford University Press.accessible . All rights reserved .substantial . it must be: .differentiable .Segmentation of international markets • division of the market of potential customers into homogeneous sub-groups • a small firm can compete more effectively in specific market segments as it concentrates its resources on the target segment • for a market segment to be effective.measurable .

etc. education. gender. All rights reserved . family size.) International Marketing ©Oxford University Press.Types • geographic segmentation: dividing markets into geographical subsets • demographic segmentation: dividing markets on the basis of demographic characteristics (age.

All rights reserved .Country segmentation on the basis of income World Bank’s classification on the basis of 2002 per capita gross national income (GNI) • Low-income countries : US$ 735 or less US$ 736-2935 US$ 2936-9075 US$ 9076 or more • Lower middle-income countries: • Upper middle-income countries : • High-income countries : International Marketing ©Oxford University Press.

2.000 Rs.000 – 22. All rights reserved .000 – 45.000 International Marketing ©Oxford University Press.15.000 Rs. 16. 16.000 – 2.Segmentation of Indian market on the basis of household income Group Income • Rich • Consuming • Climbers • Aspirants • Destitutes : : : : : Annual Above Rs.000 Rs.000 Less than Rs. 22.45.15.

Segmentation of international markets on the basis of core values Strivers (12%): place higher emphasis on material and professional goals Devouts (22%): place more value on traditions and duty Altruists (18%): more interested in social issues and social welfare Intimates (15%): place more value on close personal relationships and family above all Fun Seekers (12%): pays more emphasis on fun and enjoyment in life Creatives (10%): this market segment has strong interest in education. and technology International Marketing ©Oxford University Press. knowledge. All rights reserved .

Segmentation on the basis of international marketing opportunity • Existing markets • Latent markets • Incipient markets International Marketing ©Oxford University Press. All rights reserved .

Segmentation on the basis of market attractiveness • Platform countries • Emerging markets • Growth markets • Maturing markets • Established markets International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Selection of international markets • preliminary screening of international markets .market size .on the basis of time length: tariff surcharge vs.on the basis direction of trade • tariff . revenue tariffs . countervailing duty International Marketing ©Oxford University Press.accessibility to international markets • tariff barriers .on the basis of purpose: protective vs.

and combined . All rights reserved .on the basis of production and distribution points: (i) single stage sales tax (ii) value added tax (VAT) (iv) cascade tax (v) excise tax (vi) turnover tax International Marketing ©Oxford University Press.Selection (contd) -on the basis of tariff rates : specific. ad valorem.

Selection (contd) • Non-tariff marketing barriers .absolute quota tariff quota voluntary quota International Marketing ©Oxford University Press.government participation in trade . All rights reserved .customs and entry procedure .product requirements • Quotas .

Selection and targeting international markets • Trade analysis method • Analogy method International Marketing ©Oxford University Press. All rights reserved .

Tools for international market analysis • Growth-share (Boston Consulting Group) matrix • Market attractiveness / company strength matrix International Marketing ©Oxford University Press. All rights reserved .

Chapter 7 Entering International Markets International Marketing ©Oxford University Press. All rights reserved .

the level of risk the firm is willing to take International Marketing ©Oxford University Press. • mode of entry determined by: .the ability and willingness of the firm to commit resources .Concept of international market entry • mode of entry: an institutional mechanism by which a firm makes its products or services available consumers in international markets. All rights reserved .the firms’ desire to have a level of control over international operations .

All rights reserved .Modes of international market entry Production in home country exports: production is carried out in home country and finished goods are shipped to the overseas markets for sale indirect exports: process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets direct exports: process of selling the firm’s products directly to an importer in the overseas market International Marketing ©Oxford University Press.

Modes (contd) complementary exporting: use of distribution channels of an overseas firm to make the product available in the overseas market provide offshore services: to overseas clients with the help of information and communication technology International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Modes (contd) Production in a foreign country • contractual entry modes international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty) international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing International Marketing ©Oxford University Press.

construct. install. own (BOO) international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm International Marketing ©Oxford University Press. operate. and transfer (BOT).Modes (contd) overseas turnkey projects: conceptualize. built. built. design. and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation types : built and transfer (BT). operate. All rights reserved .

All rights reserved .Modes (contd) international strategic alliance: the relationship between two or more firms that cooperate with each other t o achieve common strategic goals but do not form a separate company international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries International Marketing ©Oxford University Press.

All rights reserved .Modes (contd) Investment entry modes assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas international joint ventures: equity participation of two or more firms resulting into formation of a new entity International Marketing ©Oxford University Press.

Factors for selecting partners for cooperation
• the alliance partner should have some strength which can be translated into business values for the alliance • the alliance partners should be committed to cooperative goals • it is preferable that the alliance partner should have multi-cultural business environment
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Factors

(contd)

Wholly owned foreign subsidiaries
• to have complete control and ownership of international operations a firm opts for foreign direct investment through: 1. acquiring a foreign company and all its resources in a foreign market (acquistion) 2. the establishment of production and marketing facilities by a firm on its own from scratch (green field)

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Factors affecting the selection of entry mode
External factors

• Market size
• Market growth • Government regulations • Level of competition • Level of risk
• political • economic • operational

• Production and shipping costs
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Factors affecting the selection of entry mode (contd)
Internal factors
• ompany objectives • availability of company resources • level of commitment • international experience • flexibility

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Chapter 8 Product Strategy for International Markets International Marketing ©Oxford University Press. All rights reserved .

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Identification of products for international markets • a firm has to carry out preliminary screening for markets and products by conducting market research poorly conceived product often leads to marketing failures International Marketing ©Oxford University Press. All rights reserved .

Developing products for international markets • ethnocentric approach • polycentric approach • regiocentric approach • geocentric approach International Marketing ©Oxford University Press. All rights reserved .

Product standardization • product standardization : the process of marketing a product in overseas markets with little change except for some cosmetic changes such as modified packaging and labelling • benefits .facilitating the development of a product as a global brand International Marketing ©Oxford University Press.projecting a global product image .cost savings in terms of economies of scale in production .catering to customers globally . All rights reserved .designing and monitoring various components of marketing mix economically .

Factors favouring product standardisation in international markets • high level of technology intensity • formidable adaptation costs • convergence of customer needs worldwide • country of origin impact International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Product adaptation • product adaptation: making changes in a product in response to the needs of the target market is termed product adaptation or customization • benefits • enables a firm to tap markets. which are not accessible due to mandatory requirements • fulfills the needs and expectations of customers in varied cultures and environments • helps in gaining market share • increases sales leading to economies of scale International Marketing ©Oxford University Press.

Factors influencing product adaptation in international markets Mandatory factors • government regulations • standards for electric current • operating systems • measurement systems • packaging and labelling regulations International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Factors Voluntary • consumer demographics • culture • local customs and traditions • condition of use • price (contd) International Marketing ©Oxford University Press.

New product launch waterfall approach: the launch of a new product in international markets in a phased manner sprinkler approach: simultaneous product launch in various international markets International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .International product strategy International competitive posture matrix • kings • barons • crusaders • commoners International Marketing ©Oxford University Press.

International product strategies Product Do not change product Adapt product Product adaptation Dual adaptation Develop new product Promotion Do not change promotion Adapt promotion Straight adaptation Communication adaptation Product Invention International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Chapter 9 Building Brands in International Markets International Marketing ©Oxford University Press.

All rights reserved .Benefits of branding • provides a marketing edge to the brands so as to maintain their prices at relatively higher levels than the competitors’ • secure better margins • facilitate coping with market competition • increase the life of a product • serve as an important tool in international marketing as the image of the brand crosses national boundaries • facilitates the forging of an emotional relationship between consumers and products International Marketing ©Oxford University Press.

Brands in international marketing • it is important to understand the cultural traits of the target markets • the failure to recognize the repercussions of the brand name in international markets proved detrimental to brand image. All rights reserved . • a firm should carefully research the linguistic and cultural repercussions while taking a decision on ext ending its brand name in international markets International Marketing ©Oxford University Press.

Strategies for building brands • brand based on a tangible product component • brand based on an intangible product component . All rights reserved .feature based .user imagery based • balance brand based on tangible-intangible product component International Marketing ©Oxford University Press.

Strategy for building global brands • dominates the domestic market. All rights reserved . which generates cash flow to enter new markets • meets a universal consumer need • demonstrates balanced country-market coverage • reflects a consistent positioning worldwide • benefits from positive country of origin effect • focus is on the product category International Marketing ©Oxford University Press.

0 33.8 50.0 0.0 67.0 10.The World's 10 Most Valuable Brands (2004) 70.4 61.1 US$ (Billions) 40. All rights reserved . of the Morgan Stanley Group International Marketing ©Oxford University Press.4 60.7 22.0 27. Chase & Co.5 30.1 25.0 IBM GE McDonald's Disney Nokia Intel Coca-Cola Microsoft Marlboro Toyota Brands pP.0 53.0 44.1 20.0 22.0 24.

International brand building strategy h g i H Build Category dnar B t ne m o eve D pl xe dn I Maintain leadership Secure trial Low Build market share h g i H Low Category Development Index International Marketing ©Oxford University Press. All rights reserved .

Chapter 10 Pricing Decision for International Markets International Marketing ©Oxford University Press. All rights reserved .

Pricing in developing countries • lower production and technology base • relatively low share in international markets makes them marginal suppliers in most product categories with little bargaining power • majority of products sold as commodities with marginal value addition International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Factors influencing pricing decisions in international markets • cost • competition • irregular or unaccounted payments in exportsimports • purchasing power of customers • buyers’ behaviour • foreign exchange fluctuations International Marketing ©Oxford University Press.

sight draft (documents against payment) .Terms of payment in international transactions • advance payment • open account • consignment • documentary credit • documentary credit without letter of credit . All rights reserved .usance or time draft (documents against acceptance) International Marketing ©Oxford University Press.

Terms of payment (contd) • documentary credit with letter of credit . All rights reserved .revocable .unconfirmed International Marketing ©Oxford University Press.confirmed .

deferred payment credit • revolving • back to back International Marketing ©Oxford University Press.acceptance credit . All rights reserved .Types of credit • sight • term credits .

Insurance.Important terms of delivery • EXW (Ex Works) named place • FCA (Free Carriers) named place • FAS (Free Alongside Ship) named port of shipment • FOB (Free on Board) named port of shipment • CFR (Cost and Freight) named port of destination • CIF (cost. and Freight) named port of destination • CIP (Carriage and Insurance Paid to) named place of destination International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Terms of delivery (contd) • CPT (carriage Paid To) named place of destination • DAF (Delivered at Frontier) named place • DES (Delivered Ex Ship) named port of destination • DEQ (Delivered Quay) named port of destination • DDU (Delivered Duty Unpaid) named place of destination • DDP (Delivered Duty Paid) named place of destination International Marketing ©Oxford University Press.

All rights reserved .persistent dumping International Marketing ©Oxford University Press.sporadic dumping .Dumping • selling a product or commodity below the cost of production or at a lower price in overseas markets as compared to its price in domestic markets.predatory dumping . • types of dumping .

Counter trade • price setting and trade financing are tied together in one transaction involving reciprocal commitments other than cash payments • importing country’s inability to pay in hard currency • importing country’s regulations to conserve hard currency • importing country’s concern about balance of trade • exploring opportunities in new markets • gaining access to capital goods markets in countries with shortage of hard currency International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Types of counter trade • barter • simple Barter • clearing Arrangement • switch Trading • counter Purchased • buy-back (compensation) • offset International Marketing ©Oxford University Press.

Transfer pricing • price of an international parties • market based (Arm’s Length) transfer pricing • non-market pricing • pricing at direct manufacturing cost transaction between related International Marketing ©Oxford University Press. All rights reserved .

Grey marketing • import or export of goods and marketing them through unauthorized channels • parallel importing • re-importing • lateral re-importing International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Chapter 11 International Logistics and Distribution International Marketing ©Oxford University Press.

and implementation of a system to direct flow of goods and services across national border • components .International logistics • conceptulization. All rights reserved . design.physical distribution International Marketing ©Oxford University Press.materials management .

All rights reserved .Channels of international distribution • a set of interdependent organisations networked together to make the products or services available to the end consumers in international markets International Marketing ©Oxford University Press.

broker/commission agent .importer’s buying agent .international trading companies .International marketing channels • agents .export / trading house International Marketing ©Oxford University Press. All rights reserved .buying office • merchant intermediaries .country controlled buying agent .merchant exporter .

Criteria for selection of international distribution channels • international marketing objectives of the firm • financial resources • organisational structure • experience in international Markets • firm’s marketing image • existing marketing channels of the firm • channel availability in the target market • speed of market entry required • legal implications International Marketing ©Oxford University Press. All rights reserved .

125 0.425 International Marketing ©Oxford University Press.International retailing Top 200 retailers : by country of origin 0. All rights reserved .035 0.07 0.065 0.055 0.095 0.13 0.

Retail outlets in international markets • department stores • supermarkets • convenience stores • specialty stores • discount stores • superstores • hypermarkets International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Cross-country comparison of organized retail sector Country Size (US$ Billion) 2325 115 20 22 100 75 55 325 180 Traditional channel (In percentage) 15 19 45 60 64 70 80 80 98 Modern channel (In percentage) 85 81 55 40 36 30 20 20 2 US Taiwan Malaysia Thailand Brazil Indonesia Poland China India International Marketing ©Oxford University Press.

physical distance .compatibility of logistics systems . All rights reserved .differences in legal systems .Managing international logistics • managing logistics in international markets is complex due to: .number of intermediaries involved International Marketing ©Oxford University Press.differences in logistics systems .

Constituents of physical distribution • warehousing • inventory • packing and unitisation • information and communication technology • transportation International Marketing ©Oxford University Press. All rights reserved .

Transportation • modes of transport . All rights reserved .rail transportation .road transportation .air transportation .ocean transportation International Marketing ©Oxford University Press.

All rights reserved .bulk .containerized International Marketing ©Oxford University Press.Ocean transportation • types of ocean cargo .break bulk .neo-bulk .

container vessels • on the basis of vessel size .single deck vessel .shelter deck vessels . All rights reserved .Types of commercial vessels • on the basis of decks .handy-size .cape-size International Marketing ©Oxford University Press.tween-deck vessel .handy-max .panamax .

bulk carriers .general cargo vessels .combination carriers (contd) International Marketing ©Oxford University Press.tankers . All rights reserved .neo-bulk carriers .barges .Types of commercial vessels • on the basis of type of cargo .

Charter shipping • charter vessels do not have any fixed itinerary or fixed sailing schedule • these can be hired or engaged to ship a firm’s cargo on charter basis as per the terms and conditions of the charter party • the contract made between the charterer and the ship owner is known as charter party that contains details of the ship. port of call International Marketing ©Oxford University Press. met hods of cargo handling. All rights reserved . routes.

Forms of chartering • voyage charter • time charter • bare boat charter • back-to-back charter • trip time charter • contract of affreightment International Marketing ©Oxford University Press. All rights reserved .

and unloading of the vessel • net terms: The ship owner is not responsible for cost of loading and discharge • free in and out: the charterer has to arrange the stevedores and to load/discharge the cargo on his own account • liner shipping: regular scheduled vessel services between two ports • container: transport equipment to facilitate handling and carriage of goods by one or more modes of transport International Marketing ©Oxford University Press. trimming.Contract terms used in vessel chartering • gross terms: the ship owner is responsible for the cost of loading. stowing. All rights reserved .

prevents pilferage and theft . All rights reserved .facilitates door-to-door delivery .reduces susceptibility to cargo damage International Marketing ©Oxford University Press.Containerisation and multimodal transportation • benefits of transporting the cargo by containers .lowers warehousing and inventory costs .reduces the documentation work .reduces cost of packing as the container acts as a strong protective cover .

Chapter 12 Communication Decision for International Markets International Marketing ©Oxford University Press. All rights reserved .

Marketing communication
• effective communication is crucial to a firm’s success in international markets • marketing communication mix involves advertising, sales promotion, public relation, personal selling, and direct and interactive marketing

International Marketing ©Oxford University Press,

All rights reserved

Factors influencing international marketing communication mix
• market size • cost of promotional activity • resource availability • media availability • type of product and its price sensitivity • mode of entry into international market • market characteristics
International Marketing ©Oxford University Press,

All rights reserved

Consumer response hierarchy models
AIDA model
Attention

Interest

Desire

Action
International Marketing ©Oxford University Press,

All rights reserved

Adoption model
Awareness

Interest Evaluation Trial Adoption
International Marketing ©Oxford University Press,

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Standardized advertising
• using the same advertising strategy across the country • advertisement with no change • advertisement with changes in illustration • benefits • economies of scale • projection of uniform image in international markets
International Marketing ©Oxford University Press,

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Communication adaptation
• modification in the advertisement message, copy or content • helps to reduce difference in cultural values among the countries • difficulties in language translation • variations in the level of education of the target groups • media availability • social attitudes towards advertising • regulatory framework of the target market
International Marketing ©Oxford University Press,

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Tools of international marketing communication
• direct marketing: selling products and services to the customers without using any market intermediary • direct mailing: sending letters, brochures or catalogues, emails, faxes, or even product samples directly to the consumers, who may, in turn, purchase the product through mail • door-to-door marketing: selling door to door • multi-level marketing: involves a revolutionary distribution system with little spending on advertising and infrastructure • personal selling: involves personal meeting of a firm’s representatives with the customer
International Marketing ©Oxford University Press,

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consumer fairs .minor trade fairs .specialized trade fairs .general trade fairs .solo exhibitions International Marketing ©Oxford University Press.Tools (contd) • international trade fairs are organized gatherings where the buyers and the sellers meet and establish communication • types . All rights reserved .

All rights reserved .Tools (contd) • catalogue shows: display of catalogues generally accompanied by trade samples often organised by government organisations or industry association • trade missions: groups of business people travelling abroad to promote their business by meeting foreign companies or foreign government officials • sales promotion: tools used as short-term incentives to induce a purchase decision such as trade and consumer promotion • public relations: aim at building corporate image and influencing media and other target groups to have a favourable publicity International Marketing ©Oxford University Press.

All rights reserved .Factors influencing international communication decisions • culture • language • education • media Infrastructure • government regulations International Marketing ©Oxford University Press.

straight adaptation .product extension-promotion adaptation .dual adaptation International Marketing ©Oxford University Press.Framework for international productpromotion strategies • provides a good insight into marketing decisions • offers adapation alternatives: . All rights reserved .product adaptation-promotion extension .

Chapter 13 Framework of Export-import Policy International Marketing ©Oxford University Press. All rights reserved .

Agriculture.India’s Export-Import (EXIM) Policy • formulated and implemented by the Ministry of Commerce and Industry. and Reserve Bank of India International Marketing ©Oxford University Press.Government of India • other concerned ministries include Finance. and Textiles. All rights reserved .

All rights reserved .Principal objectives of India’s Exim policy • to facilitate sustained growth in exports in order to attain a share of at least 1% of global merchandise trade • to stimulate sustained economic growth by providing firms an access to essential raw materials. components. and capital goods required for augmenting production and providing services International Marketing ©Oxford University Press. consumables. intermediates.

to improve their competitive strength while generating new employment opportunities. and to encourage the attainment of internationally accepted standards of quality • to provide consumers with good quality products and services at internationally competitive prices while at the same time create a level playing field for the domestic producers International Marketing ©Oxford University Press. All rights reserved . and services.Principal objectives (contd) • to enhance the technological strength and efficiency of the Indian agriculture sector. industry.

including their body parts and products and ivory • beef and products containing beef in any form International Marketing ©Oxford University Press. and / or oils. All rights reserved . rendered or unrendered of any animal origin • animal rennet • wild animals. fat.Items prohibited for imports • tallow.

Items prohibited for exports • wild animals • birds • tallow • wood products • beef • sandalwood products • certain species of sea shells • peacock feathers including handicrafts and other articles made from the feathers • manufactured articles • shavings of shed antlers of deer • human skeleton International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Export promotion schemes and incentives • schemes for concessional imports are aimed at removing the anti-export bias inherent in the system of indirect taxation and to encourage exports • several schemes have been established which allow importers to benefit from tariff exemptions. especially on inputs International Marketing ©Oxford University Press.

Export promotion schemes • duty drawback is an export incentive to refund customs duty paid on imports of inputs used in manufacture of goods subsequently exported • drawback comprises: .customs allocation .central excise allocation • export promotion capital goods (EPCG) scheme allows for the import of capital goods at concessional rate of duty subject to an appropriate export obligation accepted by the exporter International Marketing ©Oxford University Press. All rights reserved .

All rights reserved .Types • all industry rate: average industry drawback rates fixed by Ministry of Finance from time to time • brand rates: drawback incentive for exporters of manufactured goods determined on case to case basis for individual exporters on particular brands International Marketing ©Oxford University Press.

which is equal to excise duty) on imported inputs used for the manufacture of export products International Marketing ©Oxford University Press. All rights reserved .Duty remission schemes • duty exemption passbook scheme (DEPB) grant credit on post-export basis as specified percentage of freight on board value of exports made in freely convertible currency • duty-free replenishment certificate (DFRC) provides post-export remission of duty (basic and special additional duty.

Schemes to promote export production and related infrastructure • assistance to states for infrastructure development for exports and other allied activities (ASIDE) • export promotion industrial park (EPIP) scheme gives assistance to the states to create infrastructure facilities for export-oriented production (export promotion industrial park) • critical infrastructure balance (CIB) scheme provides assistance to states to facilitate balancing of capital investments for relieving bottlenecks in infrastructure for export production and conveyance International Marketing ©Oxford University Press. All rights reserved .

Santacruz. Noida. Falta. All rights reserved .Creation of enclaves for export production and promotion • Free Trade Zones (FTZ) and Export Processing Zones (EPZs develop infrastructure for export production at internationally competitive prices and environment • EPZs are set up at Kandla. Vishakhapatnam International Marketing ©Oxford University Press. Cochin. Chennai.

and related organisations so as to facilitate production and exports of agro products International Marketing ©Oxford University Press.Creation of enclaves for export production and promotion (contd) • special economic zones (SEZs)are duty-free enclaves to be treated as foreign territory for trade operation duties and tariffs so as to provide an internationally competitive and hassle-free environment for export production. • agri-export zones (AEZ) scheme involves comprehensive package of services in an identified zone by all related state and Central Government agencies. state agricultural universities. All rights reserved .

STP. All rights reserved .EOU. hardware. and electronic hardware International Marketing ©Oxford University Press. EHTP • Export-Oriented Units (EOU) are complimentary to EPZ scheme for units located in domestic tariff area • Software Technology Parks (STPs)/electronic Hardware Technology Parks (EHTPs) facilitate exportoriented production of computer software.

.enhancement in normal repatriation period from 180-360 days All rights reserved .• give recognition to the established exporters and large export houses to build up the marketing infrastructure and expertise required for export promotion • benefits .priority finance or medium and long-term capital requirement as per conditions notified by the RBI International Marketing ©Oxford University Press.fixation of input / output norms on a priority bias .license/certificate/permission and customs Export Houses/Trading Houses/Star Trading Houses clearances for both imports and exports on selfdeclaration basis .

All rights reserved .Other export schemes • market development assistance (MDA)isassistance given to exporters and export promotion organizations for market exploration and export promotion on cost –sharing basis • market access initiative (MAI) scheme to support market promotion efforts to exporters and export promotion organisations based on focus product-focus country approach • India brand equity fund (IBEF Trust) offers financial assistance by way of medium-term loans for promotion of generic products and Indian brands International Marketing ©Oxford University Press.

All rights reserved .Chapter 14 International Trade Finance and Risk Management International Marketing ©Oxford University Press.

All rights reserved .Need for trade finance • international markets are becoming increasingly competitive and overseas buyers often demand credits from the exporters • exporting firms require finance right from the time of procuring inputs or raw materials for export production to the time they receive the final payment from the overseas buyers • countries around the world offer export credit at concessional terms International Marketing ©Oxford University Press.

All rights reserved .Types of export credit • pre-shipment credit is a loan or advance granted by a bank for financing the purchase. or packing of goods prior to shipment International Marketing ©Oxford University Press. manufacturing. processing.

Export credit in foreign currency • in order to make the credit available to the exporters at internationally competitive rates. All rights reserved . banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest International Marketing ©Oxford University Press.

Pre-shipment credit in foreign currency (PCFC) scheme • exporters procure export finance as pre-shipment credit in rupees and post-shipment credit either in rupees or discounting/rediscounting of export bills under Export Bills Abroad (EBR) scheme • pre-shipment credit in foreign currency and discounting or rediscounting of the export bills in foreign currency under the EBR scheme International Marketing ©Oxford University Press. All rights reserved .

Post-shipment export credit in foreign currency • exporters have the option to avail of post-shipment export credit in either foreign currency or domestic currency • post-shipment credit has to be in foreign currency if the pre-shipment credit has already been availed of in foreign currency in order to liquidate the pre-shipment credit • the scheme covers bills with usance period upto 180 days from the date of shipment International Marketing ©Oxford University Press. All rights reserved .

and other bookkeeping services are carried out by the factors . All rights reserved . factors assume credit risk International Marketing ©Oxford University Press. collection of account receivables from the importer.Factoring • purchase of receivables by the factor at a discounted price • benefits .facilitates expansion of sales in international markets by offering prospective customers the same terms and conditions as local competitors .in the event of buyer’s default or refusal to pay.facilitates immediate payment against receivables and increases working capital .credit investigations.

All rights reserved .by discounting export receivables evidenced by bills of exchange or promissory notes .on a fixed rate basis (discount) .up to 100% of the contract value International Marketing ©Oxford University Press.without recourse to the exporter .carrying medium to long-term maturities (usually over 120 days) .Forfaiting • a mechanism for financing exports forfaiting discounts receivables by negotiating bills drawn under a letter of credit or co-accepted bills of exchange • benefits .

All rights reserved .Financing to overseas importers • buyer’s credit is extended by a bank in India to an overseas buyer enabling him to pay for machinery or equipment that he may be importing from India for a specific project • line of credit is extended by a bank in India to an overseas organization for facilitating imports from India International Marketing ©Oxford University Press.

Risks in international transactions • an international transaction involves a number of risks that adversely affect a firm’s smooth operation • managers operating in international markets need to develop a thorough understanding of these risks and the various options available to minimize them International Marketing ©Oxford University Press. All rights reserved .

non-acceptance of goods by the importer despite its compliance with the export contract .insolvency of the purchaser • economic risks .Types of risks in international transactions • commercial risks .non-payment by the importer at the end of credit period or after some specified period after the expiry of credit term .exchange controls .foreign exchange risk International Marketing ©Oxford University Press.local content requirements .import restrictions . All rights reserved .

maritime .war .strike International Marketing ©Oxford University Press.confiscation .expropriation .domestication • transit risks .extraneous .Types of risks (contd) • political risk .nationalization . All rights reserved .

constructive total loss (CTL) the cost of saving.general average (GA) is a loss specific to marine cargo insurance . or reconditioning of insured goods is greater than the value of goods . repairing.particular average is partial losses or damage that is not covered by general average and particular charges International Marketing ©Oxford University Press.actual total loss occurs when goods are completely damaged or destroyed or undergo such a marked change that they no longer remain marketable . • partial loss All rights reserved .Types of cargo losses • total loss .

Business Environment Risk Intelligence (BERI) Index .Credit Risk Insurance .Marine Cargo Insurance International Marketing ©Oxford University Press.International business risks • measuring international business risk .EIUs Business Environment Ranking • managing international business risk . All rights reserved .

All rights reserved .Chapter 15 Export Procedure and Documentation International Marketing ©Oxford University Press.

as both exporters and importers are situated in two different countries and are governed by different legislative frameworks • export documentation facilitates international transactions and protects the interest of the exporters and importers International Marketing ©Oxford University Press.Export procedures and documetation • export procedures and documentation are crucial to international marketing. All rights reserved .

• regulatory documents are prescribed by different government departments / bodies for compliance of formalities under relevant laws International Marketing ©Oxford University Press. All rights reserved .Types of export documents • commercial documents are used by ‘custom of trade’ in international commerce by exporters and importers in discharge of their respective legal and other incidental responsibilities under sales contract.

cartons.detailed description of goods . and details of the weights and measurement of each package in the consignment • transport documents documents that evidence shipment of goods. combined transport document. such as bill of lading. the contents of different boxes. All rights reserved .Commercial documents • commercial invoice is a document of content that provides: . waybill. or consignment note International Marketing ©Oxford University Press. or bales.identification of shipment .description of quantity • a packing list provides details of how the goods are packed.

Bill of lading • marine bill of lading (B/L) .it is the receipt of cargo by the shipping company .a document of title International Marketing ©Oxford University Press.a transport document issued by the shipping company to the shipper for accepting the goods for the carriage of merchandise • airway bill (AWB) . All rights reserved .a contract of carriage (or transport) .issued by the carrier as an evidence of contract of carriage • a bill of lading serves three purposes: .

All rights reserved .Types of bill of lading • on board or shipped bill of lading • received for shipment bill of lading • clean bill of lading • dirty (clause) bill of lading • stale bill of lading • through bill of lading • trans-shipment bill of lading International Marketing ©Oxford University Press.

produced or manufactured Certificate of origin International Marketing ©Oxford University Press. All rights reserved .• used as an evidence of the origin of goods in the importing country • includes the details of the goods covered and the country where the goods are grown.

Types of certificates of origin • inspection certificate is related to quality of goods • insurance certificate provides protection to the cargo-owner. All rights reserved . an insurance cover is necessary while the cargo is in transit from the consignor to the consignee • mate’s receipt is a cargo receipt issued by the master of the vessel for every shipment taken on board • bill of exchange is an unconditional order in writing prepared and signed by the exporter addressed to the importer requiring the importer to pay a certain sum of money to the exporter or his / her nominee • shipment advice advice is sent to the importer informing of the details of the shipment International Marketing ©Oxford University Press.

Regulatory documents • shipping bill / bill of export is the principal document required by customs authority mentioning details of shipment for exports • bill of entry is a document needed for customs clearance of imported cargo International Marketing ©Oxford University Press. All rights reserved .

Procedure for export-import • compliance with legal framework • obtaining import-export code number • registration with export promotion council • registration with sales tax and central excise authorities • concluding an export deal • arranging export finance • appointing C& F Agent • procuring manufacturing of goods •arranging cargo insurance • port procedures and customs clearance • presentation of documents at the negotiating bank • claiming export incentives • receiving payment and export incentives International Marketing ©Oxford University Press. All rights reserved .

All rights reserved . popularly known as ICEGATE International Marketing ©Oxford University Press. Indian customs and central excise electronic commerce / electronic data interchange (EC /EDI) gateway has been created.Electronic processing of export documents • use information technology in the field of international business has facilitated computerized generation and processing of export documents • for electronic filing and processing of documents.

Systems components of ICEGATE • Indian Customs EDI system (ICES) • The Message Exchange Servers (MES) • ICEGATE and ICENET (Indian Customs and Central Excise Gateway and Indian Customs and Central Excise Network) International Marketing ©Oxford University Press. All rights reserved .

Chapter 16 Institutional Infrastructure for Export Promotion International Marketing ©Oxford University Press. All rights reserved .

or national level International Marketing ©Oxford University Press.Export promotion • public policy measures which actually on potentially enhance exporting activity at the company. industry. All rights reserved .

All rights reserved .Functions of export promotion programmes • to create awareness about exporting as an instrument of growth and market expansion • to reduce and remove barriers to exporting • to create promotional incentives • to provide various forms of assistance to potential and actual exporters International Marketing ©Oxford University Press.

for bringing in required changes Department of Commerce frames trade policy Tier III Tier IV Tier V Tier VI Commodity Organisations assist the export effort of a specific product group Service Organisations Government Trading Organisations State Export Promotion Agencies facilitate and assist exporters to expand markets handle export import of specific commodity facilitate export promotion from the states All rights reserved International Marketing ©Oxford University Press.Institutional framework for export promotion in India Tier level Tier I Tier II Bodies Advisory Bodies Responsibilities coordinating discussion between industry & govt. .

All rights reserved . and developing and regulating export-oriented industries • functional divisions • economic division • trade policy division • foreign trade territorial division • export product division • export industries division • export service division • directorate general of foreign trade (DGFT) • directorate general of commercial intelligence and statistics International Marketing ©Oxford University Press. maintaining commercial relations with other countries.Department of Commerce • the primary government agency responsible for evolving and directing foreign trade policy and programmes.

Advisory bodies • provide an effective mechanism for continued interaction with trade and industry and increased coordination among various departments and ministries concerned with export promotion • Board of trade • Export promotion board International Marketing ©Oxford University Press. All rights reserved .

Commodity organizations • these organisations look at sector-specific exports and perform a wide range of functions right from product development to export marketing International Marketing ©Oxford University Press. All rights reserved .

All rights reserved . pharmaceuticals. and cosmetics • chemicals and allied products • gems and jewellery • leather • sports goods • cashew International Marketing ©Oxford University Press.Export Promotion Councils • engineering • project • electronics and computer software • plastics and linoleums • basic chemicals.

All rights reserved .Export Promotion Councils (contd) • shellac • apparel • synthetic and rayon • Indian silk • carpet • handicrafts • wool and woollens • cotton textiles • handloom • powerloom • export oriented units (EOUs) and special economic zones (SEZs) International Marketing ©Oxford University Press.

Export Promotion Councils (contd) • major functions .organize visits of delegations of its members abroad to explore overseas market opportunities .offer professional advice to the members in areas such as technology upgradation. etc.organize participation in trade fairs. and buyer-seller meets in Indian and abroad International Marketing ©Oxford University Press. product development. exhibitions. quality and design improvement. innovation. standards and specifications. All rights reserved . .provide commercially useful information and assistance to the members in developing and increasing their exports .

All rights reserved .Commodity boards • Tea Board • Coffee Board • Coir Board • Central Silk Board • All-India Handlooms and Handicraft Board • Rubber Board • Cardamom Board • Tobacco Board • Spices Board International Marketing ©Oxford University Press.

All rights reserved .Autonomous bodies • Agriculture and Processed Food Products Export Development Authority (APEDA) • Marine Products Export Development Authority (MPEDA) International Marketing ©Oxford University Press.

Service institutions • Indian Institute of Foreign Trade • Indian Council of Arbitration • India Trade Promotion Organization • National Centre for Trade Information • Export Credit Guarantee Corporation • Export-Import Bank of India • Indian Institute of Packaging • Federation of Indian Export Organizations (FIEO) International Marketing ©Oxford University Press. All rights reserved .

Government participation in foreign trade • the Government of India has set up a number of corporations to supplements the efforts of the private sector in the field of foreign trade: .Minerals and Metals trading Corporation (MMTC) .State Trading Corporation (STC) .Meal Scrap Trading Corporation (MSTC) International Marketing ©Oxford University Press.Spices Trading Corporation Limited . All rights reserved .

All rights reserved .States’ involvement in promoting exports • States’ cell in the Ministry of Commerce • institutional infrastructure for export promotion by state governments • apex-level organisations under the chairmanship of chief ministers /chief secretaries to consider and sort out the problems faced by the exporters/importers in their respective states • most state governments nominate a sernior officer at the level of Commissioner of Industries/Secretary of Industries as its ‘Niryat Bandhu’ International Marketing ©Oxford University Press.

Chapter 17 Emerging Issues International Marketing ©Oxford University Press. All rights reserved .

Emerging issues in international marketing • accelerated growth of global markets • breaking down of marketing boundaries .path to free markets .economic liberalization . All rights reserved .death of distance • emerging new marketing barriers • emergence of global customer segment • product proliferation and shortening product life cycles • growing strength of retailers • emergence of knowledge economy • increasing customer sophistication • market beyond the urban middle class International Marketing ©Oxford University Press.

post purchase behaviour • reverse marketing .Global e-marketing • physical marketplace to virtual market space .reverse product design .purchase decision .reverse advertising .reverse pricing .evaluation of alternatives .reverse segmentation International Marketing ©Oxford University Press.reverse promotion .information search . All rights reserved .problem recognition .

Russia All rights reserved .2 88 .4 5 .0 47.9 6 3 10 8 6 4 2 0 Score 3 .7 4 2 .56 4 .8 6 5 .6 1 South Africa India Denmark Germany C o u n try International Marketing ©Oxford University Press.8 3 6 .7 9 5 .Cross-country comparison of e-readiness (2004) 8 .

Types of e-marketing models • Business to Business (B2B) • Business to Consumers (B2C) • Consumers to Business (C2B) • Consumers to Consumers (C2C) International Marketing ©Oxford University Press. All rights reserved .

personal digital assistant (PDA). All rights reserved .m-marketing • the conduct of marketing activities through the use of mobile technology such as mobile phones. and telematics • facilitates customers’ interaction with locationspecific context and worldwide web • enables marketing communication through mobile devices and text applications such as SMS International Marketing ©Oxford University Press.

All rights reserved .Customer relationship marketing (CRM) • process of creating and maintaining business relationship by a firm with its customers • identifies key customers in terms of long-term potential profits • analyzes the expectations of customers and the sellers • finds out strategies to work more closely with the customers • identifies the changes required in the operating procedures • customizes the marketing mix • establishes an institutional mechanism for regular interactions with the customers International Marketing ©Oxford University Press.

All rights reserved .A glance at India’s strengths • India produces 3 million graduates and 700.000 post- graduates • India has the second best developed entrepreneurial culture in the world • 10% of researchers and 15% of scientists engaged in the pharma/biotech R&D in the US are of Indian origin • one third of the start-ups in silicon valley are by Indians • India is among the select group of six nations with satellite launch capabilities • 3500 firms operating in 39 software parks export over US$ 8 billion worth of IT products and services • over 70 MNCs have set up R&D facilities in India in the past five years International Marketing ©Oxford University Press.

and health and nursing are the services targeted mainly at individual customers International Marketing ©Oxford University Press. All rights reserved . e-learning. record keeping.Services • India’s strategic strength in offering services to international markets lies both in individual and corporate services • major potential for remote servicing to individual customers lies in telemedicine. and tax advisory services • tourism. education.

while over 15 companies are traded on the London Stock Exchange International Marketing ©Oxford University Press.000 people in 2002 • seven Indian companies are listed on the NYSE and three on the NSDAQ.441 Indian companies have operations in Singapore • 92 Indian-American owned companies in the USA • generated business of US$ 2. • 1.2 billion and provided employment to about 19.India’s strengths in international markets • Indian firms have about 440 investments in the UK making India the 8th largest investor in the UK. All rights reserved .

All rights reserved .Foreign direct investment (FDI) • India offers talent and low cost that fits well with the perspective of global corporations • increase profits and ensure business continuity through multi-country strategies • India is fast emerging as one of the largest consumer markets in the world International Marketing ©Oxford University Press.

5 Country 2.40 1.5 1 1.45 1.25 1.17 1.FDI Confidence Index China United States India United Kingdom Germany 0 0.5 International Marketing ©Oxford University Press. All rights reserved .03 2 2.

Short vs. medium-term attractiveness of emerging markets (percentage of total respondents) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% China India Poland Country 1-3 Years 10 Years Brazil Mexico 48% 41% 35% 80% 85% 68% 55% 55% 46% 82% International Marketing ©Oxford University Press. All rights reserved .

India’s competitiveness and information and communication technology • skilled manpower • cost competitiveness • mature destination for IT outsourcing International Marketing ©Oxford University Press. All rights reserved .

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