International Marketing

INTERNATIONAL MARKETING
MBA(II) - 06-08 BATCH

MADURAL KAMARAJ UNIVERSITY
Marketing A Universal Discipline
Marketing (1): the process of focusing the resources & objectives of an organization on environmental opportunities & needs Marketing (2): a set of concepts, tools, theories, practices, procedures, & experiences Although marketing is a universal discipline, marketing practice varies from country to country
The Marketing Concept (1)

Concept has chanced dramatically 1950s: Focus on products 1960s:

Focus on customer orientation Development of marketing mix: product, price, place, promotion (4Ps)
1990s:
Focus on customer in the context of the broader external environment
Competition, government policy & regulation
Focus on stakeholder value

employees, customers, shareholders, society
Today: Two key tasks of marketing

Focus on customer & his/her environment Create value for consumers & stakeholder
Shift towards
Focus on managing strategic partnerships Positioning of firm in value chain to optimize value creation
Profit as a measure of success, not an end in itself
What is international marketing?

International marketing occurs when firms plan and conduct transactions across international borders in order to satisfy the objectives of both consumers and the firm. International marketing is simply a strategy used by firms to improve both market share and profits.
Why grow beyond the country?

Market saturation Take advantage of factors of production

Land, labour, capital and organization Resulting in better product, cost quality etc.
Domestic market constraints Competition Government policies and regulations Monopoly power Growth opportunities
Better market share Better profits Creation of wealth
Nestle swz 2, philips hol 8
challenges of International Marketing
Other Driving Forces / challenges Affecting International Marketing Technology Regional Economic Agreements Market Needs & Wants Transportation & Communication Improvements Product Development Costs Quality World Economic Trends Leverage The Global/ Transnational Corporation
Evolution of Global Marketing
In most countries, markets are composed of:

Local brands one marketed in a single country. Regional brands one marketed throughout a region. International brands available virtually everywhere in the world.
How does a local brand become a global brand?
Nature and process of International Marketing

Home Country Production
Exporting
Nationalization and Regionalization
Home Country Production
When a product begins to reach a saturation point in its home market and cant grow faster than the population, may move outside. Management tries to introduce new products at home or expand into foreign markets. Other reasons for going abroad include:
Market potential for products exists in other countries, Mergers and acquisitions with foreign businesses, Preempting competitive development.
Exporting
Exporting a Product Requires Placing the Product in the Distribution System of Another Country.
Appoint a Distributor or Importer Who Markets in the New Country. Exporting is the First Step in International Marketing. Many Service Providers Also Market Internationally.
Nationalization and Regionalization

If Product Sales Grow in Export Markets, Exporter May Send If Product Sales Grow in Export Markets, Exporter May Send A Manager to Work or Supervise the Importers Organization A Manager to Work or Supervise the Importers Organization Manager Typically Must Secure Approval of Plans, Obtain Manager Typically Must Secure Approval of Plans, Obtain Funds for Operations, and Defend Sales Forecasts. Funds for Operations, and Defend Sales Forecasts. As Sales Grow, Exporter Typically Will Want More As Sales Grow, Exporter Typically Will Want More Control and May Either: Control and May Either: Buy Back Importers Buy Back Importers Rights Rights Set Up Assembly Facilities Set Up Assembly Facilities In Importing Country In Importing Country
Once Exporter Becomes Nationalized, Company Often Once Exporter Becomes Nationalized, Company Often Establishes an Office and Transfers Responsibilities. Establishes an Office and Transfers Responsibilities.
Company evolution from local to global

Domestic company International company Multinational company Global/transnational company
The Global Perspective

Companies Today Are Faced With the Question: Should It Establish a World Corporate Headquarters?
Seeking a Global Perspective Philosophy that Seeking a Global Perspective Philosophy that Directs Products and marketing efforts toward a Directs Products and marketing efforts toward a Worldwide Market. Worldwide Market. Companies Need to Internationalize the Companies Need to Internationalize the Management Group Management Group The product thus grows from one that of a The product thus grows from one that of a Local brand to Regional and in time Local brand to Regional and in time an International Brands. an International Brands.
Driving and Restraining Forces Affecting Global Marketing

Restraining forces External factors National Controls & Barriers Internal factors Management Myopia & Organizational Culture
Driving forces
Liberalisation MNCs Technology Transportation and communication revolution Product development costs and efforts Quality and cost Rising aspirations and wants Competition World economic trends Regional integration Leverages
Experience transfers, scale economies, resource utilization, global strategy,
Management Orientation and International Marketing (1)
Different Management Orientations in the Global Arena EPRG Framework Polycentric Ethnocentric Regiocentric Geocentric
Management Orientation & International Marketing (2)
Ethnocentric Orientation:
Characteristic of domestic & international companies Opportunities outside the home market are pursued by extending various elements of the marketing mix
Polycentric Orientation
Characteristic of multinational companies Marketing mix is adapted by autonomous country managers
Management Orientation & International Marketing (3)
Regiocentric or Geocentric Orientation:

Characteristic of global & transnational companies Marketing opportunities are pursued by both extension & adaptation strategies in global markets
Domestic vs. international marketing
While firm managers may try to employ the same basic marketing strategies used in the domestic market when promoting products in international locations, those strategies may not be appropriate or effective.
differences across borders, Nation-states generally have unique government systems, laws and regulations, taxes and duties, different cultures and practices. Region, orientation, politics, currency, language, infrastructure, trade practices.
Un-Controllable Vs Controllable factors
un controllable factors
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Controllable factors
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Un-Controllable Vs Controllable factors
un controllable factors
Most external factors
Political Economic Social Legal Demographic Cultural
Controllable factors
All internal factors
Technology in use Resources

Material Non material Etc
Manpower
International Marketing
Look at the international marketing environment Decide whether to enter Decide which markets to enter Decide how to enter Plan marketing programs Plan marketing organization .the real issue here is what role national boundaries play in a firms strategic planning process.
International Marketing environment

Level of economic development, countries can be classified as free-market, centrally planned, or mixed.
Free-market economies are those where government intervenes minimally in business activities, and market forces of supply and demand are allowed to determine production and prices. Centrally planned economies are those where the government determines production and prices based on forecasts of demand and desired levels of supply. Mixed economies are those where some activities are left to market forces and some, for national and individual welfare reasons, are government controlled.
Physical Environment
Climate, topography, resources
US has big products
Economic Environment
Population, industry structure, stage of development
Lack of wholesalers in developing countries, Infrastructure, planned developmental process

Political-Legal Environment
Advertising restrictions, Tariffs/non-tariff barriers, Patents/Trademark protection A particular concern of international firms is the degree of political risk in a foreign location. Political risk refers to the likelihood of government activity that has unwanted consequences for the firm. Generally, risk is associated with instability and a country is thus seen as more risky if the government is likely to change unexpectedly, if there is social unrest, if there are riots, revolutions, war, terrorism, and so on. forced divestment ,
where a government requires the firm give up its assets, or more moderate,
unwelcome regulations or interference in operations. uncertainty about the likelihood of government activity occurring. The degree of political risk is not solely a function of the country, but depends on the company and its activities as wella risky country for one company may be relatively safe for another Firms naturally prefer countries that are stable and that present little political risk, but the returns need to be weighed against the risks, and firms often do business in countries where the risk is relatively high. Firms seek to manage the perceived risk through insurance, ownership and management choices, supply and market control, financing arrangements

Cultural Environment
Language, Attitudes, Time Concepts, Space Concepts, How business is conducted, Friendship The cultural environment is one of the critical components of the international business environment and one of the most difficult to understand. This is because the cultural environment is essentially unseen; it has been described as a shared, commonly held body of general beliefs and values that determine what is right for one group, National culture is described as the body of general beliefs and values that are shared by a nation. Beliefs and values are generally seen as formed by factors such as history, language, religion, geographic location, government, and education; thus firms begin a cultural analysis by seeking to understand these factors - Kluckhohn and Strodtbeck.
Barriers facing international marketer

Political and legal differences Cultural differences Economic differences Differences in currency unit Differences in language Differences in marketing infrastructure Trade restrictions High cost of distance Differences in trade practices
What influences the decision to enter?
Stability of government Stability of currency Tariffs/non-tariff barriers Crime/corruption Protection of property rights/technology
Which markets?
Current market potential Future market potential versus risk
Russia, Iran, Iraq, UAE, GB/UK, East Timor, Fiji .?
Marketing Plan
Standardize versus adapt for each market
Marketing Organization
Based on entry strategy Requirement for in-country participation
Balance of Payments
A record of all economic transactions between residents of a country & the rest of the world Capital Account records
Long-term direct investment, Portfolio investment, Other short & long-term capital flows
Current Account records

Trade in merchandise & service, Private gifts, Public aid transactions between countries
Trade Patterns (1)

World merchandise trade has grown faster than world production during the last 50 years
Top 5 exporting countries
United States Germany Japan China France
Top 5 importing countries

United States Germany Japan United Kingdom France
Trade Patterns (2)

Services Trade
The fastest- growing sector of world trade In 1994, U.S. service exports totalled $195 Billion
WTO - World Trade Organization
The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the bulk of the world's trading nations and ratified in their parliaments.[3]
Most of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round, and earlier negotiations under the GATT. The organization is currently the host to new negotiations, under the Doha Development Agenda (DDA) launched in 2001.[4]
functions of the WTO
The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters are in Geneva, Switzerland. Among the various functions of the WTO, these are regarded by analysts as the most important:
It oversees the implementation, administration and operation of the covered agreements. It provides a forum for negotiations and for settling disputes.
Principles of the trading system
1. 2. 3. 4. 5.
The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: Non-Discrimination. Reciprocity. Binding and enforceable commitments. Transparency. Safety valves.

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves
It has two major components:

most favoured nation -MFN "Grant someone a special favour and you have to do the same for all other WTO members." National treatment
National treatment means that imported and locally-produced goods should be treated equally (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e. g. technical standards, security standards et al. discriminating against imported goods).

It reflects both a desire to limit the scope of freeriding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets.
A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialize.[35]

The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedules (list) of concessions. These schedules establish "ceiling bindings":
a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.

The WTO members are required

to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO.
These internal transparency requirements are supplemented and facilitated by periodic country-specific reports
Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.[34]

In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction:
articles allowing for the use of trade measures to attain non economical objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons.
GATT Vs WTO
1.
2.
3. 4.
5.
The GATT was a set of rules for conducting international trade with no solid institutional basis (only an ad-hoc provisional secretariat). Although it was in place for over forty years, the GATT was a provisional agreement from a legal point of view. The GATT dealt only with trade in goods. A large number of agreements adopted under the GATT were "plurilateral", and therefore selective agreements. Another major difference is the dispute settlement system, which is slower and more bureaucratic than in the old GATT system. Its rulings cannot be blocked.
1. 2. 3.
4. 5.
The WTO is an intergovernmental organization, and has its own secretariat The WTO and its agreements are mandatory and permanent The WTO covers trade in services (under the General Agreement on Trade of Services, GATS), trade related aspects of intellectual property (under the TRIPS) and continues dealing with trade in goods through the so called "GATT 1994" which is an updated version of the old text "GATT 1947". The Agreement on Trade Related Investment Measures (TRIMs) But WTO agreements are multilateral and all member states are concerned Another major difference is the dispute settlement system, which is faster and more automatic than in the old GATT system. Its rulings cannot be blocked.
Trading blocks and inter regional trade
Free trade area

NAFTA
Customs union
Mauritius
Common market
Singapore
Economic union (EU) Economic integration (EU)
Regional trade Agreements

The European Union, - The European Free Trade Association (EFTA), - The North American Free Trade Agreement (NAFTA),
LAFTA 1961(area), CACM (central American common market)
EFTA 1960 ,
- The Southern Common Market (MERCOSUR), - The Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), and - The Common Market of Eastern and Southern Africa (COMESA). Indo- Lankan free trade agreement SAPTA- SAARC preferential trading agreement GAAT >>>>> WTO
International Marketing Mix

Product Price Promotion Place
Additional three Ps
People, process, Physical evidence
Some more Ps
Personalization, participation, Peer-to-peer, Predictive modeling
International Marketing Management

Understanding foreign consumers

International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Marketing Information system

A means for gathering, analysing & reporting relevant data to provide managers & other decision makers with a continuous flow of information about markets, customers, competitors & company operations.
Marketing research links the consumer, customer, and public to the marketer through information Information is used to ...
identify & define marketing opportunities & problems generate, refine & evaluate marketing actions monitor marketing performance improve understanding of marketing as a process.
Inadequate International Marketing Research Can Cause Costly Mistakes Kellogg's corn flakes The Dvorak keyboard, a "superior" alternative to our current QWERTY standard. The Betamax video cassette format, which lost out to VHS in the consumer market. The Macintosh operating system, supposedly preferable to the dominant Windows platform.
In international marketing, information is critical in developing effective marketing strategies!
Religion, culture,
An issue of a religious nature arose in the UK when BK introduced a new prepackaged ice cream product; the label of the product included a silhouette of the ice cream that when rotated on its side bore a resemblance to the Islamic inscription for God. Several local Muslim groups pointed out the issue of the possible interpretation and Burger King voluntarily recalled the product and reissued it with a new label.
Market research areas

Markets Competition Foreign Exchange Prescriptive Information Resource Information General Conditions
Surveillance / sources of information

Informal information gathering Constant, on-going effort Also known as presearch Accounts for nearly 75% of corporate information As much as 2/3 of corporate info Executives based abroad, company subsidiaries & affiliates Travel - builds contact & rapport 75% from face-to-face conversations
Research process primary data

Step I: Identifying the research problem Step 2: Developing a research plan Step 3: Collecting data Step 4: Analysing research data Step 5: Presenting the findings
Secondary data
Data from sources that already exist they have not been gathered for the specific research project Therefore: Minimal effort and cost Possible problems
accuracy availability timeliness costs and comparability of data
Sources of secondary data Government & govt agenciess International Organisations

UN, OECD, Worldbank,
Trade Associations Databases

The Economist Intelligence Unit {OECD=Organisation for Economic Co-operation and Development }
Need for primary research

when secondary data not available ... provides accurate data which give exact answers to a given research problem Possible problems
difficulties in gaining the data cost more time is necessary to gather the data
Examples
Demand pattern analysis, Income elasticity measurements, Market estimation by analogy, Comparative analysis, Cluster analysis
Difficulties in international research

Must analyse many markets to recognize unique characteristics Devise techniques to study small markets In developing countries, data may be questionable Compatibility Consumer may be hard to reach
National markets have different definitions It is essential that data have the same meaning & the same level of accuracy, precision of measurement & reliability
This aspect must cover all stages of marketing research from problem definition to data analysis
Information is one of the most important assets in international marketing Among the idiosyncrasies of global marketing research are the complexity of factors to be considered and the lack of research infrastructure Comparability and equivalence in an international context is essential; i.e. the data must have the same meaning and the same level of accuracy, precision of measurement and reliability
Exporting
Low investment Low control of promotion
Licensing
Low investment Low control of promotion, positioning, and quality Able to benefit from existing distribution and market knowledge
Joint venture
Considerable investment More control Able to benefit from partners experience Must work with partner
Direct investment
Large investment Risky Greater control May lack knowledge of market
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Basic Concept of Products

Products can be defined as a collection of physical, psychological and symbolic attributes that can collectively yield satisfaction, or benefit, to a buyer or user. Products can be classified into consumer & industrial goods Products can be classified by the way they are purchased or their life-span
Local, National, International and Global Products

Local products are offered in a portion of a national market National products are offered in a single national Market International products are offered in multinational, regional markets Global products are offered in the global market. They are international and multi-regional
Global Brand
A symbol about which customer have beliefs & perceptions Same name or same meaning in another language Similar image & position Guided by same strategic principles Marketing mix may vary from country to country
Positioning of Products and Services

Attribute or Benefit Quality/Price Use/User High-Tech Positioning High-Touch Positioning

Marketing of high-touch products requires less emphasis on specialized information and more emphasis on image. Like high-tech products, however, high-touch categories are highly involving for consumers. Buyers of high-touch products also share a common language and set of symbols relating to themes of wealth, materialism, and romance. The three categories of high-touch products are products tJ1at solve a common problem, global village products, and products with a. universal theme
Products That Solve a Common Problem Global Village Products Products That Use Universal Themes
Product Saturation Levels in Global Markets

Many factors determine a product`s market potential Product saturation level increases as national income per capita increases The presence or absence of a particular companion product can be significant
Product and Service Design Considerations

Preferences Costs Laws and Regulations Compatibility Labeling and instructions
Attitude towards the Country of Origin

Stereotyped attitudes toward foreign products & services can favour or hinder marketing efforts If the quality is perceived to be low
Foreign origin of the product can be disguised Foreign identification of the product can be continued & consumer attitudes towards the product can be changed
In some market segments foreign products have a substantial advantage because they are foreign
Geographic Expansion-Strategic Alternatives

Different Strategy 2: Product Extension, Communications Adaptation Example: Motorbikes Strategy 4: Dual Adaptation Example: Greeting Cards
Communications
Strategy 1: Dual Expansion Example: Applications Software
Strategy 3: Product Adaptation, Communication Extension Example: Electrical products
Same Same
Product
Different edlich
Global Product Planning: Strategic Alternatives for Expanding into Global Markets
Strategy 1: Product/Communication Extension or Dual Extension

Company sells exactly the same product or service with the same advertising as used in the home country Company assumes that all markets are alike Does not work in all markets Often used because it saves costs Example: Campbell Soup
Strategy 2: Product Extension, Communications Adaptation

If the product serves different needs in various countries, only marketing communication may have to be adapted Adaptation can happen by design or accident Cheap implementation because product does not change Example: Motor scooters
Strategy 3: Product Adaptation, Communication Extension

Product is adapted to the new market, but basic home market communication strategy remains unchanged Product is adapted to the environment and the preferences of the consumers in the new market Example: Exxon
Strategy 4: Product/Communication Adaptation or Dual Adaptation
Using Dual Adaptation the company must adapt the product or service as well as the marketing communication to the foreign market Example: Unilever fabric softener
Strategy 5: Product Invention

Demanding but potentially rewarding strategy for reaching mass markets in LDCs Product quality is essential but must be supported with imaginative, value-creating advertising & marketing communication
How to Choose a Strategy
3 Stages Cave Dweller primary motivation is to dispose of excess capacity Nave Nationalist Sees adaptation as the only alternative Globally Sensitive- Evaluated across countries with some standardization & some differentiation
New Products and Services in Global Marketing (1)

New to consumer & company ( Product or service innovation) New to consumer but not new to company (Product/service or line extension) Not new to consumer but new to company (New product or service duplication)
New Products and Services in Global Marketing (2)
New-product development process

Permanent identification of new-product ideas Screening of these ideas and identification of candidates for further investigation Stringent investigation and analysis of the selected newproduct ideas Organisation of sufficient resources
The international new-product department Testing new products & services in national markets
New Products in Global Markets - Reiner

Global companies in fierce competition so must be world class Focus on 1 or a few businesses Senior management is actively involved Recruit & retain the best & the brightest Understand the importance of speed to market
Next 15 slides
Global Market Segmentation

... is the process of dividing the world market into distinct subsets of customers that have similar needs (eg country groups or individual interest groups).
Criteria for Global Market Segmentation

Geographic segmentation Demographic segmentation Psychographic segmentation Behaviour segmentation Benefit segmentation Vertical v. horizontal segmentation
Psychographic Segmentation
... is based on attitudes, values and lifestyle ... is measured through extensive item batteries which cover activities, interests and opinions (AIO-studies) lifestyle surveys,
the Values and Life Styles (VALS) by SRI International
Psychographic Profiles of Porsches American Customers

Category % of all owners
Top Guns Elitists Proud Patrons Bon Vivants Fantasists 27% 24% 23% 17% 9%
Description
Driven and ambitious; care about power and control; expect to be noticed Old money; a careven an expensive oneis just a car, not an extension of ones personality Ownership is what counts; a car is a trophy, a reward for working hard; being noticed doesnt matter Cosmopolitan jet setters and thrill seekers; car heightens excitement Car represents a form of escape; dont care about impressing others; may even feel guilty about owning car
Source: ALEX III Taylor, Porsche Slices up its Buyers, Fortune, 16 January 1995, p. 24
Backer Spielvogel & Bates Global Scan (BSB Global Scan)

... encompasses 18 countries, mostly in the Triad The researchers studied

consumer attitudes & values, media viewership/readership, buying patterns, product use.
5 global psychographic segments represent 95% of the adult populations in the countries surveyed.
The Target Groups of BSBs Global Scan
Darcy Massius Benton & Bowles Euroconsumer Study

... focuses on Europe ... identified four lifestyle groups: Successful idealists Affluent materialists Comfortable belongers Disaffected survivors
Behaviour and Benefit Segmentation
Behaviour segmentation
Focus on whether & how much people buy or use a product; usage rates: heavy , medium, light users, nonusers user status: potential users, nonusers, ex-users, regulars, first timers & users of competitors products
Benefit segmentation
Today, consumers basic needs are fulfilled. Therefore, consumers seek additional value from purchase decisions
Global Targeting
After markets have been segmented, targeting aims at evaluating and comparing the indentified segments in order to select one or more as prospect(s) with the highest potential.
Criteria for Targeting

Current size of the segment & growth potential Potential competition Compatibility & feasibility
Selecting a Global Target Market Strategy
standardised global marketing

mass marketing, the same marketing mix for a broad market of potential buyers
concentrated global marketing

targeted at a single segment of the global market
differentiated global marketing

2 or more different segments
Global Product Positioning
is the location of a product in the mind of the consumer is partly controlled by the marketer (marketing mix) and partly not! is visualised by a positioning map
2 dimensions or multidimensional (MDS)
Positioning Map of American FastFood-Restaurants in the Mind of Consumers
Source: adapted from James H. Myers, Segmentation and Positioning for Strategic Marketing Decisions (American Marketing Association, Chicago, 1996), S. 187
High-Tech Positioning
Positioning stragtegy for products which are purchased on concrete product features; buyers typically already possess or wish to acquire considerable technical information Suitable for
technical products, such as computers or chemicals, special-interest products, such as sporting goods
High-Touch Positioning
The emphasis lies more on the products image; specialised information appears of minor relevance Suitable for
products that solve a common problem: soft drinks global village products: cosmetics or fashion products that use universal themes
Summary

Before a company expands to foreign markets it must analyse the global environment. Global market segmentation aims at identifying similarities and differences of potential customers. Global targeting: The market segments are evaluated and compared and an appropriate targeting strategy is developed. To reach the targeted market segment(s) a positioning strategy must be chosen; in a global context high-tech or high-touch positioning are promising.
Packaging
is the enclosing of a physical object, typically a product that will be offered for sale. It is the process of preparing items of equipment for transportation and storage and which embraces preservation, identification and packaging of products.
Packing
is recognized as an integral part of modern marketing operation, which embraces all phases of activities involved in the transfer of goods and services from the manufacturer to the consumer. Packaging is an important part of branding process as it plays a role in communicating the image and identity of a company.
Kotler defines packaging as "all the activities of designing and producing the container for a product." Packaging can be defined as the wrapping material around a consumer item that serves to contain, identify, describe, protect, display, promote, and otherwise make the product marketable and keep it clean.
is the outer wrapping of a product. It is the intended purpose of the packaging to make a product readily sellable as well as to protect it against damage and prevent it from deterioration while storing. Furthermore the packaging is often the most relevant element of a trademark and conduces to advertising or communication.
Material cost Storage and handling cost of empty packages Packaging operation costs: Storage of filled packages Transportation cost of filled packages Loss and Damage cost Insurance cost Effect of packages on sales Obsolescence Cost Package developmental cost
Brand Sign, symbol.. The global marketer

has to pay attention to the interaction of the elements of the communication mix has to ascertain that the right message is communicated and received by prospective consumers (i.e. cultural diversity, media limitations, legal problems)
Needs to take care of cultural diversity, media limitations, legal differences, etc.
Global campaigns
help to build long-term product identities offer significant savings in production costs
Global advertising
offers companies economies of scale in advertising improves access to distribution channels
The international product life cycle can be defined as market life span stages the product goes through in international markets sequentially, simultaneously or asynchronously.
The sequential stages are introduction, growth, maturity, decline and extinction in the international markets.
When a product is positioned in different international markets at the same time and is going through similar life cycle stages, the cycle process is simultaneous.
The life cycle stages are asynchronous when the product is in different stages in different international markets at the same time. The life cycle stage in which a product can be positioned is influenced by macro variables indigenous to country markets.
Stanton and others cite examples of this phenomenon. Steel-belted auto radial tires had reached the saturation level in Western Europe when they were being discovered by the U.S. market. Thus it was in the maturity stage in Western Europe and introductory stage in the United States
Channel Objectives
Create utility of place, time & information Can be a source of competitive advantage Important because of number & nature of relationships Must analyze each market Must fit overall marketing objectives of company
International Channel Strategies
Two forms of channel strategy direct involvement Own sales force, retail stores, etc. indirect involvement Independent agents, distributors, wholesalers
Characteristics Impacting on Channel Design and Strategy I

Customer characteristics customer number, geographic distribution, income, shopping habits, reactions to different selling methods Need for multiple channels increases as the number of customers increased Product characteristics perishability, service requirements, bulk
Characteristics Impacting on Channel Design and Strategy II

Middleman characteristics attitude towards the manufacturer selection & care of distributors & agents distributor & agent performance termination Environmental characteristics economic, social & political dimensions
Distribution Channels for Consumer Products

Door-to-door Manufacturer-owned store Franchise operations Combined structures
Top 5 Food Franchises Abroad

Chain: 1. McDonalds 2. KFC 3. Pizza Hut 4. Burger King 5. Tim Hortons
Source: Restaurant Business
Intl share 49% 52 35 21 97
Distribution Channels for Industrial Products
3 Options Manufacturers sales forces Distributor Wholesaler

B2B is rapidly growing B2C is also growing
International Channel Innovation

Only in the most highly developed systems Directly related to level of economic development Helped or hindered by local demographic/geographic factors, social mores, government action, competitive pressures & infrastructure Accelerated by actions of aggressive individual firms
Strategy for New Market Entry

Use established channels, build own channels or abandon the market Must provide incentive to channel agents to take on a new product Either using existing channels or establishing their own direct distribution is expensive Direct distribution is most effective
Physical Distribution & Logistics

Order processing Warehousing Inventory management Transportation
Summary
Channel decisions are difficult to manage globally A global marketer must
tailor the marketing program to different types of channels or introduce new retail concepts
Retailing will see an increasing trend towards globalisation of operations
Advertising
May be defined as any sponsored, paid message placed in a mass medium (or)
Paid form of non personal communication by an identified sponsor
Global advertising refers to the use of the same advertising appeals, messages, art, copy, photographs, stories, and video segments in multiple-country markets
Global Advertising and Branding I
The global marketer

has to pay attention to the interaction of the elements of the communication mix has to ascertain that the right message is communicated and received by prospective consumers (i.e. cultural diversity, media limitations, legal problems)
Needs to take care of cultural diversity, media limitations, legal differences, etc.
Global Advertising and Branding II
Global campaigns
help to build long-term product identities offer significant savings in production costs
Global advertising
offers companies economies of scale in advertising improves access to distribution channels
Growing Popularity of Global Advertising

Spur short-term sales Build long-term product identities Significant savings Growth of Pan-European brands
Top 15 Categories by Ad Spending

1. 2. 3. 4. 5. 6. 7. 8.
Automotive Personal care Food Entertainment Drugs Soft Drinks Electronics Cleaners
Fast Food 10. Computers 11. Beer, wine & liquor 12. Toys 13. Retail 14. Cigarettes 15. Cell Phones
9.
Top 10 Global Marketers

1. 2. 3. 4. 5.
Unilever Procter & Gamble Nestle Coca-Cola Ford
General Motors 7. LOreal 8. Volkswagen 9. Toyota 10. Peugeot

6.
The Extension versus Adaptation Debate I
Four major difficulties
message may not get through to intended recipient message may reach target audience but may not be understood or may even be misunderstood message may reach target audience & may be understood but still not induce the recipient to take the action desired by the sender effectiveness of the message can be impaired by noise
The Extension versus Adaptation Debate II
Key question for global marketers

Does the specific advertising message & media strategy need be changed because of environmental requirements?
Two positions
one world, one voice approach localized approach
Extension versus Adaptation Debate III

Nick Brien of Leo Burnett says: As the potency of traditional media declines on a daily basis, brand building locally become more costly and international brand building become more cost effective. The challenge for advertisers and agencies is finding ads which work in different countries and cultures. At the same time as this global tendency, there is a growing local tendency. Its becoming increasingly important to understand the requirements of both.
Advertising Appeals & Product Characteristics
The most effective appeal may vary

products might be at different stages in their life cycle in various national markets basic cultural, social & economic differences
Identify opportunities where:

economies of scale exist barriers to standardisation such as cultural differences are not significant products satisfy similar functional & emotional needs across different cultures
Creating Advertising
Art Direction Copy Cultural considerations values & motives advertising form execution of the advertising
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
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. a firm should carefully research the linguistic and cultural repercussions while taking a decision on ext ending its brand name in international markets
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
Strategy for building global brands

dominates the domestic market, 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
The World's 10 Most Valuable Brands (2004)

70.0
67.4 61.4
60.0
53.8
50.0
44.1 US$ (Billions)

40.0
33.5
30.0
27.1
25.0
24.0
22.7
22.1
20.0
10.0
0.0 IBM GE McDonald's Disney Nokia Intel Coca-Cola Microsoft Marlboro Toyota
Brands
pP. Chase & Co. of the Morgan Stanley Group
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
Selecting an Advertising Agency I
Options:
create ads in-house use an outside agency combine both strategies
One or more outside agencies

can serve product accounts on a multi-country or global basis
Selecting an Advertising Agency II
In selecting an advertising agency, the following issues should be considered: Company organization National responsiveness Area coverage Buyer perception
Global Media Considerations
Media decisions
Availability varies around the world Government regulations Censorship
Media expenditures
Largest per capita advertising expenditures occurred in highly developed countries Basis of compensation
Summary
Marketing communications includes advertising, public relations, sales promotion, and personal selling Selecting an advertising agency is difficult Either local adaptation or distinct local campaigns may be required Media usage varies around the world
Export Procedure and Documentation
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
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
Commercial documents
commercial invoice is a document of content that provides: - identification of shipment - detailed description of goods - description of quantity a packing list provides details of how the goods are packed, the contents of different boxes, cartons, or bales, and details of the weights and measurement of each package in the consignment transport documents documents that evidence shipment of goods, such as bill of lading, combined transport document, waybill, 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) - issued by the carrier as an evidence of contract of carriage
a bill of lading serves three purposes:

- it is the receipt of cargo by the shipping company - a contract of carriage (or transport) - a document of title
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
Types of certificates of origin

inspection certificate is related to quality of goods insurance certificate provides protection to the cargo-owner, an insurance cover is necessary while the cargo is in transit from the consignor to the consignee mates 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
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
waybill
A waybill is a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods.
Typically it will show
the names of the consignor and consignee The point of origin of the consignment its destination Route method of shipment the amount charged for carriage.
Unlike a bill of lading, which includes much of the same information, a waybill is not a document of title
Combined Transport Document
Combined Transport Document

When goods are transported using more than one mode of transport, the issuer of the Collection takes responsibility for the whole of the journey through a combined transport document
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, Indian customs and central excise electronic commerce / electronic data interchange (EC /EDI) gateway has been created, popularly known as ICEGATE
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, processing, manufacturing, or packing of goods prior to shipment
Export credit in foreign currency

in order to make the credit available to the exporters
at internationally competitive rates, banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest
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
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
- facilitates immediate payment against receivables and increases working capital - credit investigations, collection of account receivables from the importer, and other bookkeeping services are carried out by the factors - in the event of buyers default or refusal to pay, factors assume credit risk
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 - on a fixed rate basis (discount) - without recourse to the exporter - carrying medium to long-term maturities (usually over 120 days) - up to 100% of the contract value
Financing to overseas importers

buyers 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 firms 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
- non-acceptance of goods by the importer despite its compliance with the export contract - insolvency of the purchaser
economic risks
- import restrictions - local content requirements - exchange controls - foreign exchange risk
Types of risks (contd)

political risk - confiscation - expropriation - nationalization - domestication
transit risks
- maritime - extraneous - war - strike
Types of cargo losses

total loss
- 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, repairing, or reconditioning of insured goods is greater than the value of goods - general average (GA) is a loss specific to marine cargo insurance - particular average is partial losses or damage that is not covered by general average and particular charges
partial loss
International business risks

Measuring international business risk
- Business Environment Risk Intelligence (BERI) Index - EIUs Business Environment Ranking Managing international business risk - Credit Risk Insurance - Marine Cargo Insurance Hull insurance
Module - IV
Insurance
Insurance is a contract between two parties by which one of them (Underwriter or the insurer) agrees for a consideration called premium to indemnify the other (insured) on the happening of some event.
All insurance contracts are contracts of indemnity
Insurance - RISK
Insurance removes the hindrance of risk The different risks
Life
Death Survival
General insurance
Loss, theft, damage, fire, natural calamities, accidents etc,.
ESSENTIAL REQUIREMENTS OF INSURANCE

The insured must be subject to risk The time and occurrence of the event must be uncertain Both the insured and insurer should not have any control over the happening of the event The risk insured should not be a very minor one
Cost of insurance may be uneconomical
The cost of insurance should not be prohibitive The risk must be capable of approximate mathematical estimation
PRINCIPLES
Law of large numbers

The greater the number of individuals faced with risk the grater is the distribution of cost and lesser the premium.
Insurable interest
Must have insurable interest and it must be of a pecuniary nature
Utmost good faith Uberrimae fidei

Utmost good faith and frankness between the insured and insurer
Indemnity
Get you back to the same state in which you were in before the occurrence of the event (indemnify the loss)
Subrogation
Insurer gets all the rights of the insured after compensating the insured. Recovery from a third party in case of accident
classification
Life
Term Insurance Policy Whole Life Policy Endowment Policy Money Back Policy Annuities and Pension
Non-life
Marine, fire and miscellaneous
IRDA
Mission
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
Authority
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) a Chairman; (b) five whole-time members; (c) four part-time members. (all appointed by the Government of India)
a. b.
c. d. e. f. g.
h.
issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; specifying the code of conduct for surveyors and loss assessors; promoting efficiency in the conduct of insurance business; promoting and regulating professional organisations connected with the insurance and re-insurance business; levying fees and other charges for carrying out the purposes of this Act;
calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;
Duties,Powers and Functions of IRDA
Duties,Powers and Functions of IRDA

i. j. k. l. m. n. o. p. q.
control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; regulating investment of funds by insurance companies; regulating maintenance of margin of solvency; adjudication of disputes between insurers and intermediaries or insurance intermediaries; supervising the functioning of the Tariff Advisory Committee; specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f); specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and exercising such other powers as may be prescribed
INSURANCE ORGANISATIONS IN INDIA
Insurance Act 1938 Provides the broad frame work for the insurance sector/industry/services in the country.
INSURANCE ORGANISATIONS IN INDIA
Insurance business may be carried on by

i. A public company, ii. a cooperative society iii. an insurance cooperative society
i. (Paid up capital of 100 crores and no body corporate holds more than 26% of its paid up capital and whose sole purpose is to carry on business in India)
iv. A body corporate other than a private company incorporated in any country outside India
(After the enactment of IRDA act, 1999, only Indian Insurance companies are permitted to carry out any class of insurance business ) 26% of Paid up capital by a foreign company
Structure of insurance companies
Before 1999
LIC
Currently 18 insurance companies are functioning
Bajaj Allianz Life Insurance Company Limited . Birla Sun Life Insurance Co. Ltd HDFC Standard Life Insurance Co. Ltd ICICI Prudential Life Insurance Co. Ltd ING Vysya Life Insurance Company Ltd. Life Insurance Corporation of India Max New York Life Insurance Co. Ltd Met Life I
GIC
Currently 18 insurance companies are functioning
Bajaj Allianz General Insurance Co. Ltd. , ICICI Lombard General Insurance Co. Ltd. , IFFCO Tokio General Insurance Co. Ltd., National Insurance Co.Ltd., The New India Assurance Co. Ltd. Ltd., Co.Ltd., The Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd, Ltd. Ltd, Tata AIG General Insurance Co. Ltd., United India Insurance Co. Ltd., Cholamandalam MS General Insurance Co. Ltd., Ltd. HDFC General Insurance Co. Ltd. Export Credit Guarantee Corporation of India Ltd. Agriculture Insurance Co. of India Ltd. Star Health and Allied Insurance Company Limited Apollo DKV Insurance Company Limited, Future Generali India Insurance Company Limited, Universal Sompo General Insurance Co. Ltd.
Reinsurance
Individuals in insurance busines
Actuary: is a business professional who deals with the financial impact of risk and uncertainty. They evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events Agent: Life insurance agent, General insurance agent or Composite insurance agent
Composite agent is an insurance agent who holds a licence to act as an insurance agent for a life insurer and a general insurer;
Surveyors and Loss assessors are independent professionals appointed by an insurance company to assess the loss or damage, when a claim is notified under a policy issued by them.
An insurance surveyor must be duly licensed by the Insurance regulatory and development authority. Licenses are issued to technically qualified people who are qualified in insurance subjects and are Fellows or Associates of the Insurance Institutes of India or Chartered Insurance Institute of London or any other technically qualified like Engineering graduates or diploma holders in any discipline, Chartered Accountants, Graduates in Medical Sciences. A surveyor after obtaining the license, may be empanelled by any or all of the insurance companies in India
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)
Framework of Export-import Policy
Indias 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
Principal objectives of Indias 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, components, consumables, and capital goods required for augmenting production and providing services
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 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
Items prohibited for imports

tallow, fat, and / or oils, rendered or unrendered of any animal origin animal rennet wild animals, including their body parts and products and ivory beef and products containing beef in any form
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
Export promotion schemes

duty drawback is an export incentive to refund customs
duty paid on imports of inputs used in manufacture of goods subsequently exported drawback comprises: - customs allocation - central excise allocation export promotion capital goods (EPCG) scheme allows for the import of capital goods at concessional rate of duty subject to an appropriate export obligation accepted by the exporter
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
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, processing, manufacturing, or packing of goods prior to shipment
Export credit in foreign currency

in order to make the credit available to the exporters
at internationally competitive rates, banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest
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
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
- facilitates immediate payment against receivables and increases working capital - credit investigations, collection of account receivables from the importer, and other bookkeeping services are carried out by the factors - in the event of buyers default or refusal to pay, factors assume credit risk
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 - on a fixed rate basis (discount) - without recourse to the exporter - carrying medium to long-term maturities (usually over 120 days) - up to 100% of the contract value
Financing to overseas importers

buyers 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 firms 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
- non-acceptance of goods by the importer despite its compliance with the export contract - insolvency of the purchaser
economic risks
- import restrictions - local content requirements - exchange controls - foreign exchange risk
Types of risks (contd)

political risk - confiscation - expropriation - nationalization - domestication
transit risks
- maritime - extraneous - war - strike
Types of cargo losses

total loss
- 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, repairing, or reconditioning of insured goods is greater than the value of goods - general average (GA) is a loss specific to marine cargo insurance - particular average is partial losses or damage that is not covered by general average and particular charges
partial loss
International business risks

measuring international business risk
- Business Environment Risk Intelligence (BERI) Index - EIUs Business Environment Ranking managing international business risk - Credit Risk Insurance - Marine Cargo 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
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
Commercial documents
commercial invoice is a document of content that provides: - identification of shipment - detailed description of goods - description of quantity a packing list provides details of how the goods are packed, the contents of different boxes, cartons, or bales, and details of the weights and measurement of each package in the consignment transport documents documents that evidence shipment of goods, such as bill of lading, combined transport document, waybill, 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) - issued by the carrier as an evidence of contract of carriage
a bill of lading serves three purposes:

- it is the receipt of cargo by the shipping company - a contract of carriage (or transport) - a document of title
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
Types of certificates of origin

inspection certificate is related to quality of goods insurance certificate provides protection to the cargo-owner, an insurance cover is necessary while the cargo is in transit from the consignor to the consignee mates 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
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, Indian customs and central excise electronic commerce / electronic data interchange (EC /EDI) gateway has been created, popularly known as ICEGATE
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
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
Department of Commerce
the primary government agency responsible for evolving and directing foreign trade policy and programmes, maintaining commercial relations with other countries, 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
Export Promotion Councils

engineering project electronics and computer software plastics and linoleums basic chemicals, pharmaceuticals, and cosmetics chemicals and allied products gems and jewellery leather sports goods cashew
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 - provide commercially useful information and
assistance to the members in developing and increasing their exports
- offer professional advice to the members in areas such as technology upgradation, quality and design improvement, standards and specifications, product development, innovation, etc. - organize visits of delegations of its members abroad to explore overseas market opportunities - organize participation in trade fairs, exhibitions, and buyer-seller meets in Indian and abroad
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 Export-Import Bank of India Indian Institute of Packaging Federation of Indian Export Organizations (FIEO)
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:
- State Trading Corporation (STC)
- Minerals and Metals trading Corporation (MMTC) - Spices Trading Corporation Limited - Meal Scrap Trading Corporation (MSTC)
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
Chapter 17
Emerging Issues
Emerging issues in international marketing

accelerated growth of global markets breaking down of marketing boundaries
- economic liberalization - 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
Global e-marketing
physical marketplace to virtual market space
- problem recognition - information search - evaluation of alternatives - purchase decision - post purchase behaviour
reverse marketing
- reverse promotion - reverse advertising - reverse pricing - reverse product design - reverse segmentation
Cross-country comparison of e-readiness (2004)

8 .2 88 .0 47.8 3 6 .8 6 5 .7 9 5 .56 4 .4 5 .9 6 3
10 8 6 4 2 0
Score
3 .7 4 2 .6 1
South Africa
India
Denmark
Germany
C o u n try
Russia
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 Indias 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
Services
Indias 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, e-learning, record keeping, and tax advisory services tourism, education, and health and nursing are the services targeted mainly at individual customers
Indias 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

China United States India United Kingdom Germany 0 0.5 1 1.45 1.40 1.25 1.17 1.5
Country
2.03
2.5
Short vs. medium-term attractiveness of emerging markets

(percentage of total respondents)
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% China India Poland Country 1-3 Years 10 Years Brazil Mexico
48% 41% 35% 80% 85% 68% 55% 55% 46% 82%
Indias competitiveness and information and communication technology

skilled manpower cost competitiveness mature destination for IT outsourcing
The World Economy - Overview

During the last 50 years:
Emergence of global markets Integration of world economy
Capital movements are driving force Production is uncoupled from employment Macroeconomics of individual countries no longer control economic outcomes
Economic Systems
Three types of economic systems:
Capitalist Socialist Mixed
Classification based on dominant method of resource allocation

Market allocation Command allocation Mixed system
Economic Systems Market Allocation

Relies upon consumers to allocate resources Role of state
Promote competition Ensure consumer protection
Predominately market economies:

US, Western European Countries, Japan
Economic Systems Command Allocation

State has broad powers to serve public interest
Decides which products to make Decides how to make them
Elements of marketing mix are not used as strategic variables Countries that relied upon command allocation systems for decades: China, former USSR, India
Economic Systems Mixed Systems

In reality, no pure market or command allocation systems among the worlds economies In OECD countries, the portion taxes ranges from 32% GDP in US to 64% in Sweden
Economic Systems
Index of Economic Freedom (Source: Heritage Foundation)
Free:
Hong Kong, Singapore, New Zealand, , Bahrain, Luxembourg, US,
Mostly Free
Canada, Chile, El Salvador, Taiwan
Mostly Unfree
Cambodia. Mexico, Slovak Rep., Slovenia, Swaziland
Repressed
North Korea, Iraq, Libya, Somalia, Cuba
Stages of Market Development

Countries/markets are at different stages of development GNP per capita provides a useful way of grouping countries into 5 categories Categories are a useful basis for:
Market segmentation Target marketing
Country Income Segmentation

$9,656 High Income (Advanced Countries) -Triad -Others + $3,126 Upper Middle Income (NICs) + $786 < $768 Lower Middle Income (DCs) Lower Income (LDCs) Basket Cases (BCs)
Global Income & Population 2001

Income World High Up-Mid GNP (billion) $30,251 $24,280 $2,111 GNP/ Capita $4,931 $24,693 $4,476 $1303 $355 % Population % Pop. GNP (Millions) 100 80 7 10 3 6,134 983 449 2,418 2,284 100 16 7 39 37
Low-Mid $3,150 Low $810
Top 10 GNP
(in millions)

United States Japan Germany France United Kingdom China Italy Brazil Canada Spain
$8,259,358 4,427,104 2,127,086 1,446,515 1,359,764 1,179,345 1,168,771 850,852 602,158 544,944
Stages of Market Development High Income Countries

GNP per capita above $9,656 Norway at $38,070, US at $20,953 Post-Industrial Countries
Importance of service sector more than 50% of GNP Ascendancy of knowledge over capital
Stages of Market Development Upper Middle Income Countries

GNP per capita between $3,126 and $9,656 Characteristics
Rising wages High rates of literacy Advanced education Experience rapidly, export-driven economic growth Become formidable competitors
Stages of Market Development Lower Middle Income Countries

GNP per capita between $785 and $3,125 Characteristics
Early stages of industrialization Expanding consumer markets
Major competitive advantage in the production of mature, standardized, labor-intensive products
Stages of Market Development Low Income Countries

Income per capita less than $785 Characteristics
Limited industrialization High birth rates Low literacy rates Heavy reliance on foreign aid Political instability Concentration in Africa, south of the Sahara
A country with economic, social & political problems that are so serious they make the country unattractive for investment and operations Low-income, no-growth countries (E.g.. Ethiopia)
Stages of Market Development Basket Cases
One-time growing & successful countries that have become divided by political struggles
Stages of Economic Development

Stages of market development based on GNP per capita correspond with the stages of economic development
Low & lower-middle-income countries = less developed countries (LDCs) Upper- middle-income countries = industrializing countries High-income countries = advanced, industrialized & postindustrial
Income and Purchasing Power (1)

Income
Single most important indicator of market potential
Purchasing Power Parities

Comparison of goods & services that can be bought with local currency in different countries
Gross National Product (GNP)

Sum of the money values of all final goods & services produced during a year

Top 10 Nations ranked by GNP/Capita (2000) Luxembourg Norway Singapore Switzerland Kuwait Japan Denmark United States Hong Kong Austria

Top 10 Nations ranked by GNP/Capita adjusted for Purchasing Power (PPP)
Luxembourg United States Singapore Norway Hong Kong Switzerland Denmark Japan Belgium Austria
The Location of Population

Country World China India United States Indonesia Brazil Population (thousands) 1,268,121 1,015,287 275,746 210,785 170,661 GNP/Capita GNP 3.9 1.4 27.3 0.7 2.8 %
(thousands) 930 424 29,953 1,176 5,535
Marketing & Economic Development

Does marketing play an important role in the economic development of a country? Is marketing only relevant to conditions that apply in affluent, industrialized countries? The marketing process of focusing an organizations resources on environmental opportunities is a process of universal relevance
Summary
Economic environment is major determinant of global market potential & opportunity World economies can be categorized into market allocation systems, command allocation systems, & mixed systems For many products, most important indicator of market potential is income
Reducing Political Vulnerability

MNCs can use the following strategies to minimize political MNCs can use the following strategies to minimize political vulnerability and risk: vulnerability and risk: Joint Ventures Joint Ventures Expanding the Investment Base Expanding the Investment Base Licensing Licensing Planned Domestication Planned Domestication Political Payoffs Political Payoffs

International Marketing

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INTERNATIONAL MARKETING

MBA(II) - 06-08 BATCH

Marketing A Universal Discipline

The Marketing Concept (1)

Concept has chanced dramatically 1950s: Focus on products 1960s:

The Marketing Concept (2)

Focus on stakeholder value

The Marketing Concept (3)

Today: Two key tasks of marketing

Profit as a measure of success, not an end in itself

What is international marketing?

Why grow beyond the country?

Market saturation Take advantage of factors of production

Nestle swz 2, philips hol 8

challenges of International Marketing

Evolution of Global Marketing

In most countries, markets are composed of:

Nature and process of International Marketing

Nationalization and Regionalization

Home Country Production

Nationalization and Regionalization

Company evolution from local to global

The Global Perspective

Driving and Restraining Forces Affecting Global Marketing

Management Orientation and International Marketing (1)

Management Orientation & International Marketing (2)

Management Orientation & International Marketing (3)

Regiocentric or Geocentric Orientation:

Domestic vs. international marketing

Un-Controllable Vs Controllable factors

Un-Controllable Vs Controllable factors

Material Non material Etc

International Marketing environment

International Marketing environment

International Marketing environment

Barriers facing international marketer

Current Account records

Trade Patterns (1)

Top 5 importing countries

Trade Patterns (2)

WTO - World Trade Organization

functions of the WTO

Principles of the trading system

Principles of the trading system

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves

It has two major components:

Principles of the trading system

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves

Principles of the trading system

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves

Principles of the trading system

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves

The WTO members are required

Principles of the trading system

Non-Discrimination Reciprocity Binding and enforceable commitments Transparency Safety valves

Trading blocks and inter regional trade

Free trade area

Economic union (EU) Economic integration (EU)

Regional trade Agreements

International Marketing Mix

International Marketing Management

Understanding foreign consumers

Understanding foreign consumers