INTERNATIONAL MARKETING

The Concept of International Marketing

Globalization
• Globalization of production • Globalization of markets

International marketing
• • • • • • • • • Selling goods in international markets as old as 3000BC in India. Indian goods reached markets in Persia, Mesopotamia, Egypt and other markets of South East Asia. Breakthrough in ICE around the world witnessed a unprecedented change in international marketing Growth in income has also triggered choice of foreign goods and wider choices. Lower trade barriers . Active role of WTO has also triggered the internationalization of companies . Globalization-process defined as the process of economic integration of the entire world through the removal of barriers to free trade and capital mobility as well as diffusion of knowledge and information World output during 1986-95 grew 3.3% while trade grew at 6.2% during the period. In the years to come the figure is expected to be 3.9% and 6.1%. Emerging of BEMs even in Asia (like China, India, Philippines, Singapore, Taiwan etc. Globalization of processes, production, and markets.

International marketing
• Cateora defines International Marketing as the performance of businesses activities designed to plan, price, promote and direct the flow of company’s goods and service to consumers or users in more than one nation for profit. • • Consequent to economic liberation a firm operating in domestic markets can no longer rely on domestic only IT IS RISKY. International marketing involves-identifying needs and wants of the customers in international markets, taking decisions of marketing mix keeping view of the diverse consumer behaviour across different countries/ • Decisions keeping in view of international marketing environment Penetrating the international markets using various different modes of entry.

Domestic marketing and International marketing
Domestic
• • • • • • • Political Economic Legal Socio-Cultural Legal Technology Marketing • • • •

International
• • Political Stability-Pakistan and India, CIS countries unpredictable Economic-currency issues, payment issues (Argentina, Brazil) hyperinflation in CIS countriespayment modes, manage foreign risks Legal Cultural and Social Technology Marketing Channels

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

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 .

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 .

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 .

Evolution of Global marketing Types of mkting Domestic Export Market Focus Orientation Domestic Overseas Ethnocentric Ethnocentric M. overseas marketing.Mix Focused on domestic markets Domestic. decision decentralized International Multinational marketing Differentiating Polycentric Consolidation of Regio-centric Intraregional product stnd. operations on interregional pd different regional basis Consolidation of Geocentric operations on global basis Glocal decisions Global . centralized decisions Developing local products.

Process of Internationalization International Glocal t e kr a M xel p m c o yi t Exporting Global Domestic Time .

Some more international marketing concepts… • Adaptation is the key. • EP and RG concept of International marketing ..

Evolutionary process of global marketing Domestic marketing : Marketing Focus Orientation Marketing Mix Decisions domestic ethnocentric focussed on domestic customers .

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 .

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 .

Adaptation Strategy to isolate self-reference criteria Step 1: define the business problem or goal in terms of the home-country traits. 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 . habits. habits or norms Step 2: define the business problem or goal in terms of the foreign country cultural traits.

EPRG concept • ethnocentric orientation • polycentric orientation • regiocentric orientation • geocentric orientation .

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 .

Emerging Opportunities in International Markets .

Trends in world trade .

Trends in world trade (contd) .

Leading exporters in world trade in commercial Services 2002 .

Leading importers in world trade in commercial services 2002 .

Composition of world merchandise exports .

Direction of world exports .

4 2.8 100.0 6.7 3.8 7.4 -10.0 7.9 .6 162.5 0.6 1.World Economic Outlook World Trade Outlook A World Output Other emerging market and economies developing 2002 3.1 3.0 4.1 2004 2005 4.4 5.6 6.0 6.2 6.6 5.8 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.5 47.9 5. Private capital flows (net) in US$ billion) 2.0 -0.9 4.

An overview of India’s foreign trade .

Composition of India’s trade .

Composition (contd) .

Direction of India’s trade : exports .

Direction imports (contd) .

Balance of trade .

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 .

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

Terms of Trade (base year 1995= 100)

India’s Terms of Trade (base year 1978-79= 100)

Source : DGCI&S

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

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

Identifying opportunities in international markets
• • • • Extreme focus product strategy Products-country matrix strategy Growth-share matrix of exports Market focus strategies

World Trade Organization: international marketing implications .

• Earlier GATT • Major function is to ensure smooth function of int. Aimed at evolving a liberalized trade regime under a rule based system. trade • It is a multilateral trade organ.WTO • Is the only international org dealing with global rules of trade between nations • Came into existence in 1-01-1995. .

WTO… • National Govts of all member countries negotoated under th Uruguay Round to improve access to international markets so as to enable business enterprises to convert trade concessions into new marketing opportunities. .

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 .

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 .

Functions of WTO • Facilitates the implementation. 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 . administration.

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 .

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 .

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 .

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 .

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. and certification procedures do not create unnecessary obstacles to trade . testing. standards.

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 .

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 .

. 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.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.

demonstrate that dumping is causing injury or threatening the local industry .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: .governments should be able to show that dumping has taken place .calculate the extent of dumping .

Top ten users of anti-dumping measures 1995-2003 .

and it sets time limits ( a sunset clause) on all safeguard actions .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 .

etc.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. 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) . mediation.

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 .

Scanning the International Economic Environment .

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) .

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 .

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 .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.

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 .

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 .

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 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 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 .

a common external trade policy is adopted for non-members .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.

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 .Types Common Market (contd) All restrictions on cross-border investment. stability in exchange rates. movement of labour. 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) .

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) .

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 Research

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

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

Cross-cultural marketing behaviour and research
The collective programming of the mind which distinguishes the members of one group or category from the other

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

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, language, and religion • heterophilous culture: countries that have a fair amount of differentiation in language, beliefs, and religion

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 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. test marketing • product benefit and attitude research • product formulation and feature testing .

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 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 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 .

Etic dilemma EMIC Holds that attitudes. and behaviour are unique to a culture and best understood in their own terms. 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 .Emic vs. interests.

Decision-making Process for International Markets .

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.substantial .actionable .measurable . it must be: .accessible .

) . education. family size. gender.Types • geographic segmentation: dividing markets into geographical subsets • demographic segmentation: dividing markets on the basis of demographic characteristics (age. etc.

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 : .

2.000 – 2.15.Segmentation of Indian market on the basis of household income Group Income • Rich • Consuming • Climbers • Aspirants • Destitutes : : : : : Annual Above Rs.000 – 45.000 – 22.45.000 Rs.000 Rs.000 Less than Rs. 22.000 .15. 16.000 Rs. 16.

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. knowledge. and technology .

Segmentation on the basis of international marketing opportunity • Existing markets • Latent markets • Incipient markets .

Segmentation on the basis of market attractiveness • Platform countries • Emerging markets • Growth markets • Maturing markets • Established markets .

on the basis of purpose: protective vs.Selection of international markets • preliminary screening of international markets . countervailing duty .market size .on the basis of time length: tariff surcharge vs. revenue tariffs .accessibility to international markets • tariff barriers .on the basis direction of trade • tariff .

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 . ad valorem. and combined .Selection (contd) -on the basis of tariff rates : specific.

government participation in trade .product requirements • Quotas .absolute quota tariff quota voluntary quota .Selection (contd) • Non-tariff marketing barriers .customs and entry procedure .

Selection and targeting international markets • Trade analysis method • Analogy method .

Tools for international market analysis • Growth-share (Boston Consulting Group) matrix • Market attractiveness / company strength matrix .

Entering International Markets .

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.the ability and willingness of the firm to commit resources .the level of risk the firm is willing to take . • mode of entry determined by: .the firms’ desire to have a level of control over international operations .

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 .

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 .

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 .

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

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 .

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 .

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 .

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) .Factors (contd) Wholly owned foreign subsidiaries • to have complete control and ownership of international operations a firm opts for foreign direct investment through: 1.

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 .

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

Product Strategy for International Markets .

design.Product • core : the core benefit or problem solving services offered by the product • packaging : the features. guarantees and after sales service . packaging. branding. and other attributes integral to a product’s core benefit • augmented : the support services and other augmented components such as warranties. quality.

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 .

Developing products for international markets • ethnocentric approach • polycentric approach • regiocentric approach • geocentric approach .

cost savings in terms of economies of scale in production .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 .designing and monitoring various components of marketing mix economically .projecting a global product image .catering to customers globally .facilitating the development of a product as a global brand .

Factors favouring product standardisation in international markets • high level of technology intensity • formidable adaptation costs • convergence of customer needs worldwide • country of origin impact .

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 .

Factors influencing product adaptation in international markets Mandatory factors • government regulations • standards for electric current • operating systems • measurement systems • packaging and labelling regulations .

Factors Voluntary • consumer demographics • culture • local customs and traditions • condition of use • price (contd) .

Begins Importing to Home Country Developing Country Competitor Exports Product To MNC Home Country. MNC Home Country Market Is Diminishing Sales Time .The International Product Life Cycle Introduction and Growth Stages: Early Maturity: Late Maturity Decline MNC Manufactures Product in Developed Countries. Competes with MNC Imports Developing Country Markets Remain Viable Target Markets for MNC. Exports to Developing Countries MNC Moves Production to Developing Country.

continued • The Product Introduction Stage  Products are developed and marketed in developed countries .International Product Life Cycle.

International Product Life Cycle. continued • The Growth Stage    Increasing competition and rapid product adoption Marketed primarily in developed countries Product is exported to developing countries .

International Product Life Cycle. continued • The Maturity Stage      Product is adopted by most target consumers Sales are leveling off Profits decline due to intense competition Manufacturing operations move to developing countries to take advantage of cheap labor New competitors: firms from developing countries .

International Product Life Cycle. continued • The Decline Stage    Products are rapidly losing ground to new technologies and product alternatives Decrease in sales and profits Product lifecycle is extended through sales to consumers in developing countries .

Dimensions of the International Product Mix • Product length  Total number of brands • Product width  Total number of product lines • Product depth  Total number of different offerings for a product category .

New Product Development • Substantial risk and costs • Complex in international markets     Competition can appropriate the product/service idea and deliver final product or service to the market more swiftly than the initial developer International consumers might not respond as anticipated Local and/or home-country government might impose restrictions on product testing Technological infrastructure of individual markets may be substandard and unable to support the product .

and desires of consumers • Technology firms focus on the products  Focus on research and development . wants.Generating New Product Ideas • Most product and service firms are driven by the marketing concept  Product development decisions are based on identifying the needs.

Product Ideas • • • • • • • • Consumers Competitive Analyses Channel Members Employees Top Management Inventors Consultants University Research .

experience of the firm . skills.Screening Ideas • Consider:     Fit with target consumers and the overall mission of the organization The extent to which product offers unique benefits The extent to which target market is large and/or is likely to grow Fit between new product requirements and resources.

• Develop detailed description of product • Ask consumers to evaluate and indicate willingness to buy • Use:   Developing and Evaluating Product Concepts Focus Groups Conjoint Analysis .

Product Business Analysis • Estimate:     Project costs Return on investment Cash flow Fixed/variable costs .

Product Development • Create prototypes • Create brand identity and marketing mix • Coordinate strategy across international subsidiaries .

Test Marketing • Involves testing new product performance in a limited area of a national or regional target market • Provides estimate of product performance in the respective country or region • Expensive • Time consuming • Open to competitive sabotage .

Types of Test Marketing • Simulated Test Marketing  Test marketing simulating purchase environment where samples of target consumers are observed during the decision-making process Test marketing that involves offering a new product to a group of stores and evaluating market reaction Full-blown test marketing Focus on cities appropriate for the test. involves selecting distributors and the ancillary marketing infrastructure Most costly Leaves the company most exposed to competitive sabotage • Controlled Test Marketing  • Test Marketing     .

Launching Product Internationally • Quality of launch      High service quality On-time shipment Appropriate product availability Quality sales force and support Quality and amount of promotion .

International Launch Decisions • Timing of launch • Consumers and countries • Marketing mix decisions     Product mix Place Price Promotion .

Degree of Product/Service Newness • • • • • New product to existing market New product to existing company New line New item in an existing product line Modification of an existing company product • Innovation .

or communicability to other consumers Trialability – the ability of consumers to experience the product with only minimal effort • Country (Market) Factors – the country may be a   Lead country – wealthy industrialized country where the product is adopted first Lag country – developing country that adopts the product later .Product Diffusion • Product Factors     Relative advantage compared to competitive products Compatibility with the needs of the consumers Observability.

5% of the total market) Primarily consumers in developed countries .Adopters • Innovators   Risk takers who can afford to pay a higher price during the introduction stage (2.5% of the total market) Primarily consumers in developed countries • Early adopters    Consumers who purchase the product early in the lifecycle stage and who tend to be opinion leaders in their community (13.

continued • Early majority   Consumers who enjoy status of being among the first to purchase a popular product (34% of the total market) Consumers are primarily from developed countries Consumers who adopt popular products when the risk associated with them is minimal (34% of the total market) Consumers are from both developed and developing countries The last consumers to adopt a product.Adopters. they are risk averse and conservative in their spending (16% of the total population) Consumers are primarily from developing countries • Late majority   • Laggards   .

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 product strategy International competitive posture matrix Product Strength • kings-• barons • crusaders • commoners High High Low Low Geo Cov High Low High Low .

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 .

Building Brands in International Markets .

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 .

• a firm should carefully research the linguistic and cultural repercussions while taking a decision on ext ending its brand name in international markets .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.

Strategies for building brands • brand based on a tangible product component • brand based on an intangible product component .feature based .user imagery based • balance brand based on tangible-intangible product component .

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 .Strategy for building global brands • dominates the domestic market.

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 .

David Aaker’s Model of Brand Equity Brand awareness Perceived Quality Brand equity Brand Association Brand Loyalty Brand Packaging .

International Brand Equity-Kapferer External facet Relationship F i r m Physique Reflection c u s t o m e r Personality Self Image Culture Internal facet .

International Logistics and Distribution .

materials management .International logistics • conceptulization. design.physical distribution . and implementation of a system to direct flow of goods and services across national border • components .

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 .

broker/commission agent .country controlled buying agent .export / trading house .buying office • merchant intermediaries .international trading companies .merchant exporter .importer’s buying agent .International marketing channels • agents .

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 retailing .

Retail outlets in international markets • department stores • supermarkets • convenience stores • specialty stores • discount stores • superstores • hypermarkets .

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 .

number of intermediaries involved .differences in legal systems .compatibility of logistics systems .physical distance .differences in logistics systems .Managing international logistics • managing logistics in international markets is complex due to: .

Constituents of physical distribution • warehousing • inventory • packing and unitisation • information and communication technology • transportation .

rail transportation .Transportation • modes of transport .air transportation .ocean transportation .road transportation .

break bulk .Ocean transportation • types of ocean cargo .bulk .neo-bulk .containerized .

handy-size .panamax .tween-deck vessel .handy-max .single deck vessel .shelter deck vessels .Types of commercial vessels • on the basis of decks .container vessels • on the basis of vessel size .cape-size .

general cargo vessels .neo-bulk carriers .bulk carriers .Types of commercial vessels • on the basis of type of cargo .barges .combination carriers (contd) .tankers .

routes. port of call .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. met hods of cargo handling.

Forms of chartering • voyage charter • time charter • bare boat charter • back-to-back charter • trip time charter • contract of affreightment .

Contract terms used in vessel chartering • gross terms: the ship owner is responsible for the cost of loading. 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 . stowing. trimming.

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

Pricing Decision for International Markets .

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 .

Factors influencing pricing decisions in international markets • cost • competition • irregular or unaccounted payments in exportsimports • purchasing power of customers • buyers’ behaviour • foreign exchange fluctuations .

sight draft (documents against payment) .usance or time draft (documents against acceptance) .Terms of payment in international transactions • advance payment • open account • consignment • documentary credit • documentary credit without letter of credit .

Terms of payment (contd) • documentary credit with letter of credit .confirmed .revocable .unconfirmed .

acceptance credit .Types of credit • sight • term credits .deferred payment credit • revolving • back to back .

Insurance. and Freight) named port of destination • CIP (Carriage and Insurance Paid to) named place of destination .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.

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 .

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.persistent dumping .sporadic dumping .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 .

Types of counter trade • barter • simple Barter • clearing Arrangement • switch Trading • counter Purchased • buy-back (compensation) • offset .

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 .

Grey marketing • import or export of goods and marketing them through unauthorized channels • parallel importing • re-importing • lateral re-importing .

Communication Decision for International Markets .

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

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 .

Consumer response hierarchy models AIDA model Attention Interest Desire Action .

Adoption model Awareness Interest Evaluation Trial Adoption .

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 .

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 .Communication adaptation • modification in the advertisement message.

brochures or catalogues. 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 . in turn. or even product samples directly to the consumers.Tools of international marketing communication • direct marketing: selling products and services to the customers without using any market intermediary • direct mailing: sending letters. emails. faxes. who may.

India’s competitiveness and information and communication technology • skilled manpower • cost competitiveness • mature destination for IT outsourcing .

general trade fairs .Tools (contd) • international trade fairs are organized gatherings where the buyers and the sellers meet and establish communication • types .consumer fairs .solo exhibitions .minor trade fairs .specialized trade fairs .

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 .

Factors influencing international communication decisions • culture • language • education • media Infrastructure • government regulations .

Framework for international productpromotion strategies • provides a good insight into marketing decisions • offers adapation alternatives: .product extension-promotion adaptation .product adaptation-promotion extension .dual adaptation .straight adaptation .

Framework of Export-import Policy .

Agriculture.India’s Export-Import (EXIM) Policy • formulated and implemented by the Ministry of Commerce and Industry. and Reserve Bank of India .Government of India • other concerned ministries include Finance. and Textiles.

consumables. components.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. and capital goods required for augmenting production and providing services . intermediates.

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 .Principal objectives (contd) • to enhance the technological strength and efficiency of the Indian agriculture sector. industry. and services. to improve their competitive strength while generating new employment opportunities.

and / or oils. rendered or unrendered of any animal origin • animal rennet • wild animals. fat. including their body parts and products and ivory • beef and products containing beef in any form .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 .

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 .

customs allocation .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: .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 .

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 .

which is equal to excise duty) on imported inputs used for the manufacture of export products .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 .

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, Santacruz, Falta, Noida, Cochin,

Chennai, Vishakhapatnam

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, and related organisations so as to facilitate production and exports of agro products

EOU, STP, 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, hardware, and

electronic hardware

• give recognition to the established exporters and large export houses to build up the marketing infrastructure and expertise required for export promotion • benefits - license/certificate/permission and customs

Export Houses/Trading Houses/Star Trading Houses

clearances for both imports and exports on selfdeclaration basis - fixation of input / output norms on a priority bias - priority finance or medium and long-term capital requirement as per conditions notified by the RBI - enhancement in normal repatriation period from 180-360 days

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 Trade Finance and Risk Management

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 .

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 . manufacturing. processing.

banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest .Export credit in foreign currency • in order to make the credit available to the exporters at internationally competitive rates.

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 .

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 .

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

without recourse to the exporter .carrying medium to long-term maturities (usually over 120 days) .by discounting export receivables evidenced by bills of exchange or promissory notes .up to 100% of the contract value .on a fixed rate basis (discount) .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 .

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 .

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 .

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 .local content requirements .non-acceptance of goods by the importer despite its compliance with the export contract .foreign exchange risk .import restrictions .exchange controls .insolvency of the purchaser • economic risks .

maritime .Types of risks (contd) • political risk .strike .war .domestication • transit risks .confiscation .extraneous .expropriation .nationalization .

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

International business risks • measuring international business risk .Marine Cargo Insurance .Business Environment Risk Intelligence (BERI) Index .EIUs Business Environment Ranking • managing international business risk .Credit Risk Insurance .

Export Procedure and Documentation .

Export procedures and documetation • export procedures and documentation are crucial to international marketing. 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 .

• regulatory documents are prescribed by different government departments / bodies for compliance of formalities under relevant laws .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.

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

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

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 .

produced or manufactured Certificate of origin .• 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.

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 .Types of certificates of origin • inspection certificate is related to quality of goods • insurance certificate provides protection to the cargo-owner.

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 .

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 .

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. popularly known as ICEGATE . Indian customs and central excise electronic commerce / electronic data interchange (EC /EDI) gateway has been created.

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) .

Institutional Infrastructure for Export Promotion .

industry. or national level .Export promotion • public policy measures which actually on potentially enhance exporting activity at the company.

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 .

Institutional framework for export promotion in India Tier level Tier I Tier II Bodies Advisory Bodies Responsibilities coordinating discussion between industry & govt. 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 .

maintaining commercial relations with other countries.Department of Commerce • the primary government agency responsible for evolving and directing foreign trade policy and programmes. 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 .

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 .

Commodity organizations • these organisations look at sector-specific exports and perform a wide range of functions right from product development to export marketing .

pharmaceuticals. and cosmetics • chemicals and allied products • gems and jewellery • leather • sports goods • cashew .Export Promotion Councils • engineering • project • electronics and computer software • plastics and linoleums • basic chemicals.

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) .

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

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 .

Autonomous bodies • Agriculture and Processed Food Products Export Development Authority (APEDA) • Marine Products Export Development Authority (MPEDA) .

Service institutions • Indian Institute of Foreign Trade • Indian Council of Arbitration • India Trade Promotion Organization • National Centre for Trade Information • Export Credit Guarantee Corporation(ECGC) • Export-Import Bank of India • Indian Institute of Packaging • Federation of Indian Export Organizations (FIEO) .

Meal Scrap Trading Corporation (MSTC) .Minerals and Metals trading Corporation (MMTC) .Spices Trading Corporation Limited .State Trading Corporation (STC) .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: .

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’ .

Emerging Issues .

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 .path to free markets .Emerging issues in international marketing • accelerated growth of global markets • breaking down of marketing boundaries .economic liberalization .

purchase decision .evaluation of alternatives .reverse promotion .problem recognition .post purchase behaviour • reverse marketing .reverse segmentation .reverse product design .Global e-marketing • physical marketplace to virtual market space .reverse pricing .reverse advertising .information search .

Cross-country comparison of e-readiness (2004) .

Types of e-marketing models • Business to Business (B2B) • Business to Consumers (B2C) • Consumers to Business (C2B) • Consumers to Consumers (C2C) .

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

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 .

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 .A glance at India’s strengths • India produces 3 million graduates and 700.

e-learning.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. education. and health and nursing are the services targeted mainly at individual customers . and tax advisory services • tourism. record keeping.

India’s strengths in international markets
• Indian firms have about 440 investments in the UK making India the 8th largest investor in the UK. • 1,441 Indian companies have operations in Singapore • 92 Indian-American owned companies in the USA • generated business of US$ 2.2 billion and provided employment to about 19,000 people in 2002 • seven Indian companies are listed on the NYSE and three on the NSDAQ, while over 15 companies are traded on the London Stock Exchange

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

FDI Confidence Index

Short vs. medium-term attractiveness of emerging markets

Framework of Export-import Policy

India’s Export-Import (EXIM) Policy
• formulated and implemented by the Ministry of Commerce and Industry,Government of India • other concerned ministries include Finance, Agriculture, and Textiles, and Reserve Bank of India

and capital goods required for augmenting production and providing services . components. consumables.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. intermediates.

to improve their competitive strength while generating new employment opportunities.Principal objectives (contd) • to enhance the technological strength and efficiency of the Indian agriculture sector. 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 . industry. and services.

including their body parts and products and ivory • beef and products containing beef in any form .Items prohibited for imports • tallow. and / or oils. fat. rendered or unrendered of any animal origin • animal rennet • wild animals.

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 .

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 .

customs allocation .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: .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 .

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 .

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. which is equal to excise duty) on imported inputs used for the manufacture of export products .

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 .

Chennai. Noida.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 . Santacruz. Cochin. Falta.

and related organisations so as to facilitate production and exports of agro products .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. state agricultural universities. • agri-export zones (AEZ) scheme involves comprehensive package of services in an identified zone by all related state and Central Government agencies.

STP. and electronic hardware . hardware.EOU. 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 .• give recognition to the established exporters and large export houses to build up the marketing infrastructure and expertise required for export promotion • benefits .fixation of input / output norms on a priority bias .priority finance or medium and long-term capital requirement as per conditions notified by the RBI .license/certificate/permission and customs Export Houses/Trading Houses/Star Trading Houses clearances for both imports and exports on selfdeclaration basis .

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 Trade Finance and Risk Management .

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 .

or packing of goods prior to shipment . manufacturing. processing.Types of export credit • pre-shipment credit is a loan or advance granted by a bank for financing the purchase.

banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest .Export credit in foreign currency • in order to make the credit available to the exporters at internationally competitive rates.

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 .

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 .

collection of account receivables from the importer.in the event of buyer’s default or refusal to pay. factors assume credit risk .facilitates immediate payment against receivables and increases working capital . and other bookkeeping services are carried out by the factors .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 .credit investigations.

without recourse to the exporter .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 .by discounting export receivables evidenced by bills of exchange or promissory notes .carrying medium to long-term maturities (usually over 120 days) .up to 100% of the contract value .on a fixed rate basis (discount) .

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 .

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 .

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

confiscation .strike .extraneous .Types of risks (contd) • political risk .war .expropriation .maritime .domestication • transit risks .nationalization .

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

International business risks • measuring international business risk .Business Environment Risk Intelligence (BERI) Index .Credit Risk Insurance .Marine Cargo Insurance .EIUs Business Environment Ranking • managing international business risk .

Export Procedure and Documentation .

Export procedures and documetation • export procedures and documentation are crucial to international marketing. 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 .

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. • regulatory documents are prescribed by different government departments / bodies for compliance of formalities under relevant laws .

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

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

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 .

• 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. produced or manufactured Certificate of origin .

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 .Types of certificates of origin • inspection certificate is related to quality of goods • insurance certificate provides protection to the cargo-owner.

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 .

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 .

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. popularly known as ICEGATE . Indian customs and central excise electronic commerce / electronic data interchange (EC /EDI) gateway has been created.

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) .

Institutional Infrastructure for Export Promotion .

Export promotion • public policy measures which actually on potentially enhance exporting activity at the company. industry. or national level .

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 .

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 .Institutional framework for export promotion in India Tier level Tier I Tier II Bodies Advisory Bodies Responsibilities coordinating discussion between industry & govt.

Department of Commerce • the primary government agency responsible for evolving and directing foreign trade policy and programmes. 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 . maintaining commercial relations with other countries.

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 .

Commodity organizations • these organisations look at sector-specific exports and perform a wide range of functions right from product development to export marketing .

and cosmetics • chemicals and allied products • gems and jewellery • leather • sports goods • cashew . pharmaceuticals.Export Promotion Councils • engineering • project • electronics and computer software • plastics and linoleums • basic chemicals.

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) .

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

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 .

Autonomous bodies • Agriculture and Processed Food Products Export Development Authority (APEDA) • Marine Products Export Development Authority (MPEDA) .

Service institutions • Indian Institute of Foreign Trade • Indian Council of Arbitration • India Trade Promotion Organization • National Centre for Trade Information • Export Credit Guarantee Corporation(ECGC) • Export-Import Bank of India • Indian Institute of Packaging • Federation of Indian Export Organizations (FIEO) .

State Trading Corporation (STC) .Meal Scrap Trading Corporation (MSTC) .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) .Spices Trading Corporation Limited .

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’ .

Emerging Issues .

path to free markets .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 .Emerging issues in international marketing • accelerated growth of global markets • breaking down of marketing boundaries .economic liberalization .

purchase decision .information search .reverse pricing .reverse segmentation .evaluation of alternatives .Global e-marketing • physical marketplace to virtual market space .reverse promotion .post purchase behaviour • reverse marketing .problem recognition .reverse advertising .reverse product design .

Cross-country comparison of e-readiness (2004) .

Types of e-marketing models • Business to Business (B2B) • Business to Consumers (B2C) • Consumers to Business (C2B) • Consumers to Consumers (C2C) .

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

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 .

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 .

education. and health and nursing are the services targeted mainly at individual customers .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. record keeping. e-learning. and tax advisory services • tourism.

441 Indian companies have operations in Singapore • 92 Indian-American owned companies in the USA • generated business of US$ 2.000 people in 2002 • seven Indian companies are listed on the NYSE and three on the NSDAQ. • 1.2 billion and provided employment to about 19. while over 15 companies are traded on the London Stock Exchange .India’s strengths in international markets • Indian firms have about 440 investments in the UK making India the 8th largest investor in the UK.

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 .

FDI Confidence Index .

medium-term attractiveness of emerging markets .Short vs.

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