58 58 international marketing chapter wise

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Global Marketing Integration



Export marketing

The international marketing dimension involvesmarketing across national borders. This is differentfrom domestic marketing because the mere fact of crossing the border confronts with new economic,political, and legal constraints, such as floatingexchange rates, boycotts, and international law.

These constraints will usually force modification of the firm’s marketing program as it crosses national

boundaries.



Foreign marketing

The foreign marketing dimension involves marketingwithin foreign countries, as a U.S firm markets inBelgium or Brazil. Such marketing is unlike domesticmarketing because that firm faces different kinds of competition, consumer behavior, distributionchannels, and promotional possibilities in Belgium or

Brazil from what it is familiar with at home. The tasksis further complicated because each country has anindividual idiosyncratic marketing environment.



Multinational marketing

The multinational marketing dimension emphasizes thecoordination and integration of the firm’s marketing

in many diverse foreign environments. The uniquenature of each foreign market fragments theinternational marketing effort and bringsdiseconomies of scale. The international marketer must plan and control carefully to maximize the

integration and synergy in the global marketingprogram while minimizing the costs of adapting toeach foreign market.



International Marketing Defined

International marketing: the performance of

business activities that direct the flow of acompany’s goods and services to consumers

or users in more than one nation for a profit.



Country market Cenvironment(uncontrollable)

Country market Benvironment

(uncontrollable)

Country market Aenvironment

(uncontrollable)

The International MarketingTask

Po

litical/legalforces

Economicforces1

2

Competitivestructure

CompetitiveForces

Level of Technology

Price Product

PromotionChannels of distribution

Geographyand

Infrastructure

Foreign environment(uncontrollable)

Structure of distribution

Economic climate

Cultural

forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

Irwin/McGraw-Hill

Copyright©2002 by The McGraw-Hill Companies, Inc. All rights reserved.



Evolution of Marketing

Domestic Marketing - ethnocentric

Export Marketing- ethnocentric International Marketing - polycentric or

multidomestic

Multinational Marketing- regiocentric

Global Marketing - geocentric

Domestic export international multinational globalmarketing marketing



Meeting International Challenges

Be prepared and develop activeresponses.

Develop new strategies.

New plans are needed.

Adaptation to the new

environment and markets.



The main steps in the marketing

management process

R – STP – MM – I – C

R= researchSTP= Segmentation, Targeting, Positioning

MM= Marketing-mix

I= ImplementationC=control



MARKETING-MIX

4 Ps 4Cs

1.Product Customer value

2. Price Cost to the customer 3. Place Convenience

4. Promotion Communication

-------------------------------------------------------------

5. Probe Customer, consumer

6. Phacilitate (Facilitate) Consumptionservices

7. Plan Curve

8. People Count



The ProcessStages in the Marketing ProcessAnalysis:• Collect data from sources- primary and secondary, internal and external,

formal and informal. Screen data for opportunities to employ company

resources for competitive advantage.

Planning:• Develop a marketing plan which includes a situation analysis, goals and

objectives, long-term strategies and short-term tactics, cost and profit

estimates, and anticipated changes in organizational structure.

Implementation:

• Take actions to put the plan into action. Adjust implementation activitiesto account for environmental changes in market conditions.

Control:• Use annual planning (sales to forecast), profitability, and efficiency

controls to monitor the plan’s successes and failures.



CHAPTER 2.

THE INTERNATIONAL ENVIRONMENT

1. ECONOMIC AND FINANCIAL FACTORS

2. SOCIO-CULTURAL ENVIRONMENT3. POLITICAL/LEGAL ENVIRONMENT

4. COMPETITION



ECONOMIC AND FINANCIALFACTORS

1. Population, Income (Per capita income, GNP)2. Convertibility or possibility of effective utilization of

resources; financial stability.3. Banking facilities available and nature of credit

facilities offered, short medium and long-term(conditions, terms, interest rates. etc.)a) Domestic

b) foreignc) Governmental or other lending institutions andfacilities.



ECONOMIC AND FINANCIAL

FACTORS

4. Availability of local and accounting services.

5. Currency, exchange rates and controls6. Capital repatriation and remittance of profits,licensing and other payments.

7. Availabilities of insurance

8. Situation of the Balance of Payments9. Communications and transports

10. Urbanization



ECONOMIC AND FINANCIALFACTORS

11. Market prospect

+ Estimated size, trends, and potential of market in the country

+ Export markets and estimated size

+ Sources of market information

+ System of distribution of good

12. Product and product modification



2.SOCIO-CULTURAL ENVIRONMENT

1. The elements of culture

Language

Nonverbal languageReligion

Values and attitudes

Manners and customs

Material elements

AestheticsEducation

Social institutions

Family




2. Adapting to cultural differences

Some companies have made special effortsto adapt their products or services to variouscultural environments.



Cultural factors

+ Never touch the head of a Thai or pass and object over it. Thehead is considered sacred in Thailand

+ Avoid using triangular shapes in Hong Kong, Korea, and Taiwan.+ The number 7 is considered bad luck in Kenya and good luck in

the Czech republic and Magical connotation in Benin, Africa.

+ The number 10 is bad luck in Korea

+ The number 4 means death in China

+ Red represents death in many African countries.+ Red is a positive color in Denmark



Cultural factors

+ In Canada information on products is often providedin English and French.

+ Swiss chocolate manufactures know that UScustomers believe Swiss chocolate product are of high quality (value), so that companies emphasizetheir Swiss origin and thus generate high sales.(attitude)

In short, by being aware of the value and attitudesof the people in the culture, a business firmeffectively position its product.



Cultural factors

Education influences many aspects of culture.

Education also helps to provide infrastructureneeded for developing managerial talent.

For example, educationally advanced countrieslike England, France… are more likely to be

markets for computers and other high –techequipment than poor countries.




3. The authors of Managing Culture Differences(Philip R. Harris and Robert T. Moran, 1987) offer

the following ten tips to deflate the stress andtension of cultural shock:

Be culturally prepared.

Learn local communication complexities

Mix with the host and nationals.

Be creative and experimental.




Be culturally sensitive

Recognize complexities in host cultures. Perceive oneself as a culture bearer.

Be patient, understanding, and accepting of oneself and hosts.

Be most realistic in expectations. Accept the challenge of intercultural

experiences



3. POLITICAL/LEGAL ENVIRONMENT

Role of government Government controls

+ License requirements+ Tariffs+ Quotas+ Extra taxes+ Qualitative controls+ Exchange controls

Promotional activities Financial activities Information services Export facilitating activities Promotion by private organizations



4. COMPETITION

4.1.Nature of competition+ The structure of competition: the number and types of

competitors;+ The action of competitors: the competitive tools available to

marketing executives in the decision areas of product, channel,price, and promotion

+ Competition in international markets4.2. Factors influencing competition

(1) General business, cultural. Economics, and socialconditions; (2) costs; (3) laws and regulations; and (4) Theactivities and policies of competitors themselves affectcompetition.



CHAPTER 3. RESEARCHING THE

WORLD MARKET

1. SOURCES OF INFORMATION

2. THE EXPORT MARKETING RESEARCHPROCESS

3. SEGMENTATION

4. FOREIGN MARKET PORTFOLIOS:TECHNIQUE AND ANALYSIS



INTERNATIONAL MARKETING

RESEARCH

The scope of research:

+ Market measurement studies+ Competitive studies

+ Environmental studies

International marketing research is used tomake strategies and tactical decisions.



International marketing research

The importance of International marketingresearch:

Before making market entry, product position,or marketing mix decision, a marketer musthave accurate information about the marketsize, market needs, competition, and so on.Marketing research provides the necessaryinformation avoid the costly mistakes of poor strategies or lost opportunities.



1.SOURCES OF INFORMATION

1.1. Secondary data

+ Internal source+ External source

1.2. Primary data



1.1. Secondary data

+ Internal sourceSales and cost records, markets,… + External sourceUN, OECD, EU, IMF, WB, IBRD, IFC… Embassy, Consulate;Non -government agencies;Universities and other educational institutions… Internet

CD-ROMThe Business International Market Report.…



1.1.Secondary data

The major issues are data

availability, reliability andcomparability.



1.2. Primary data

Primary data can be collected in four broadways:

+ Observation

+ Focus groups

+ Surveys

+ Experiments



Primary data

Observation research: Fresh data can be gatheredby observing the relevant actors and settings.

EX; The American Airlines researchers might hangaround airports, airline offices, and travel agencies tohear travelers talk about the different carriers andhow agents handle the flight arrangement process.The researchers can fly on American andcompetitors’ planes to observe the quality of in-flightservice and hear consumer reactions. Thisexploratory research might yield some usefulhypotheses about how travelers choose their air carriers.



Primary data

Focus groups research: A focus group is agathering of six to ten persons who spend a few

hours with a skilled interviewer to discuss a project,service, organization, or other marketing entity. Thediscussion is recorded through note taking or Audioor video tape and is subsequently studied tounderstand consumer belief, attitudes, and behavior.

In American Airlines example, the group interviewer may start with a broad question, such as “ How doyou feel about air travel?”



Primary data

Survey research: Survey research standsmidway between observational and focusgroup research, on the one hand. Andexperimental research on the other hand.

Companies undertake surveys to learn about

people’s knowledge, beliefs, preferences,satisfaction, and so on, and to measurethese magnitudes in the population.



Primary data

Experiments research: the most scientifically validresearch is experimental research.

Experimental research calls for selecting matchedgroup of subjects, subjecting them to differenttreatments, controlling extraneous variable, andchecking whether observed response differences arestatistically significant. The purpose of experimental

research is to capture cause-and- effectrelationships by eliminating explanations of theobserved findings.



Primary data

Research instrument: Questionnaires

Contact methods:+ The mail questionnaire

+ Telephone interviewing

+ Personal interviewing



1.2. Primary data

The challenges:

+ Comparability of data+ Willingness of potential respondent

+ Ability of the respondent to understand andcommunicate.

( Challenge in survey research involvestranslation from one language to another)



1.2. Primary data

To avoid these translation errors, experts suggest thetechnique of back-translation. First, thequestionnaire is translated from the home languageinto the language of the country where it will beused, by a bilingual who is a native speaker of theforeign country. Then this version is translated backto the home language by bilingual who is nativespeaker of the home language. Another translation

technique is parallel translation, in which two or moretranslators translate the questionnaire. The resultsare compared, and differences are discussed andresolved.



Using the internet and e-mail data

collection

Some problems:

+ Sampling+ Language

+ Respondent cooperation



2.THE EXPORT MARKETING

RESEARCH PROCESS

Problem formulation

Research method and design Data collection techniques

Sample

Data collection

Analysis and interpretation

Reporting results



Research study report

+ Cover: topic, organization, name of author, time… + Abstract

+ Table of contents+ List of figures+ List of tables+ Chapter1. Introduction

Problem statementObjectives of studyScope and research methodStructure of study



Research study report

+ Chapter 2. Literature review

+ Chapter 3. Introduction of the company or Sector of…

+ Chapter 4. Research design+ Chapter 5. Presentation and critical discussion of

results

+ Chapter 6. Conclusions and recommendations,

further research+ References

+ Appendix



3. Foreign consumers and foreign

markets

3.1. Foreign consumers

+ How foreign consumers differ

+ What they buy

+ Why they buy

+ Who makes the purchase decision

+ How they buy+ when they buy

+ Where they buy




markets

3.2. Foreign industrial markets

+ What they buy+ Why they buy

+ Who makes the purchase decision




markets

3.3 Foreign government

+ The size of government’s role as customer, however,

varies from country to country+ Another variable in the economic role of government

is the kind of economic activity undertaken.

+ Government markets differ from consumer and

industrial markets in what they buy, how they buy,and why they buy- and government in differentcountries also vary among themselves on thesedimensions.



Export market segmentation

1) It is important to note that any decision tosegment on particular basis should beevaluated in term of the following:

+ Measurability

+ Accessibility

+ Profitability

+ Actionability




2) Base of segmentation

+ Country market level; demographic and population

characteristics ; socio-economic characteristics;political characteristics; cultural characteristics.+ Customer market level: Demographiccharacteristics: age, gender, life cycle, religion,nationality, etc;

socio-economic characteristics : income, occupation,education, etc.

Psychographic characteristics: personality




The four strategies:

+ Increase penetration (existing product andmarkets)

+ Develop products (new products in existingmarkets)

+ Extend markets (existing products in newmarkets)

+ Widen activities (new products and markets)



4. Foreign market portfolios: technique

and analysis

Country attractiveness/ competitive strength matrix

Using these variables, and some scheme for

weighting them, countries are classified into one of the nine cells depicting relative market investmentopportunity.

+ Invest/grow countries

+ Harvest/divest/license/combine countries+ Dominant/divest countries

+ selective countries




and analysis

Country attractiveness

Market size (total and segments)

Market growth (total and segments)Market seasons and fluctuations

Competitive conditions (concentration, intensity, entrybarriers, etc.)

Market prohibitive conditions ( tariff, non tariff barriers,import restrictions, etc.)

Economic and political stability.




and analysis

Competitive strength

Market share

Marketing ability and capacityProduct fitContribution marginImageTechnology positionProduct qualityMarket supportQuality of distributions and service




and analysis

Invest/grow Invest/grow Dominate/divest

Join venture

Invest/grow Selectivitystrategies

Harvest/divest/

License/combinecountries



CHAPTER 4. EXPORT MARKET ENTRYSTRATEGIES

1. ENTRY AS STRATEGY

2. FACTORS INFLUENCING CHOICE OFENTRY MODE

3. EXPORT ENTRY MODES

4. NON-EXPORT ENTRY MODES

5. SELECTING THE ENTRY MODE



1.ENTRY AS STRATEGY

The elements of entry strategy:

+ The objectives and goals in target market;

+ Needed policies and resource allocations;

+ The choice of entry modes to penetrate themarket;

+ The control system to monitor performance in the market

+ A time schedule



2. FACTORS INFLUENCING CHOICE

OF ENTRY MODE

Target market

Product Availability of marketing organization

Company considerations

Government policies




3.1. Indirect export+ Export merchants

+ Trading company+ Export commission house+ Resident buyer + Broker + Export management company+ Manufacturer’s export agent + Cooperative organization:

Piggyback marketing; Exporting combination




3.2.Direct export

+ Home country based department:

1) Built-in department2) Separate export department

3) Export sales subsidiary

+ Foreign sales branch

+ Storage or warehousing facilities+ Traveling salesperson

+Foreign based distributors and agents



3.2.Direct export

With direct export, manufacturer of exportable goods undertakes the entireexport process without any intermediaries.

By becoming a direct export exporter, thefirm takes responsibility for the entire range

of export activities starting with identifyingcustomers through to collecting payment.



3.2.Direct export

In order to export directly, the firm may haveto establish an export department fromdomestic sale division which could be fundedon the basis its requirements. Employees of the department must be trained in foreign

trade affaires.



3.2.Direct export

Direct exporting has several advantages such as:

1. The firm is able to control the whole process of export.

2. The firm can increase net profit because of operating withoutexpenditure for intermediary.

3. The firm can develop closed relation with foreign partners.

But, the firm is responsible for the following aspects:

1. The firm have to spent time and money to success in foreignmarket.

2. The firm must suffer directly risks may be occurred.



What is involved in a typical export

process?

An export process involves three main functions: feasibilityanalysis, planning foreign market entry, and implementation.These functions involve 20 steps.

FEASIBILITY1. Analyze domestic performance of the business2. Assess the firm’s capability. 3. Research various factors of population, economy, politic and

society of target markets.4. Confer with experts of international trade concerning

marketing, financial, legal problems and delivery term of goods and services.

5. Select target market




process?

PLANNING FOREIGN MARKET ENTRY

6. Conduct market research concerning section of good andspecific products to be exported.

7.Make plan, strategy or entering target markets.

8. Collect knowledge about country’s requirements concerningcertificates, standards and licenses of target countries.

9. Collect necessary documents concerning license, trade.Copyright protection of target countries.

10. Identify internal: import taxes, quotes or other non-tariff tradebarriers of the target countries.

11. Establish pricing schedule.




process?

IMPLEMENTATION12. Determine method of sale.

13. Establish marketing methods.14.Choose sale representatives or sales methods.15. Negotiate financial problems.16. Obtain insurance of good17. Complete the required paper work.18. Package and label products.19. Ship products20. Get payment.



The most common mistakes made by

exporters

The following are twelve most common mistakes often made bysmall firm as they begin to export or expand business onforeign markets:

1. Lack of full investigation of market, lack of qualified exportexpert enable to make international business strategy andmarketing plan before starting an export business;

2. Lack of support by administrative offices to overcome initialdifficulties and financial problems of exporting;

3. Inadequate care in selecting overseas sales representatives or distributors.

4.Seeking orders from a lot corners of the world rather thanconcentrating on one or two main geographical areas;




exporters

5.Neglecting export to foreign markets when domesticmarkets booms;

6. Lack of treating international distributors andcustomers on an equal basis with domesticcounterparts;

7. Assuming that a particular trade technique andproduct will automatically be successful in manycountries;

8. Unwillingness in modifying products in order to meetregulations or cultural preferences of foreigncountries




exporters

9. Lack of printing information of sale, guarantee andafter-sale service in foreign language;

10. Lack of considering the use of an exportdevelopment company if the firm cannot afford itsown export department because of lacking financialor other conditions;

11. Worry about expenditure for investigating new

markets, so that lacking of definitiveness in export;12. Lack of providing after-sale services for the product.



4. NON-EXPORT ENTRY MODES

Licensing

Franchising

Assembly operations

Contract manufacturing

Joint venture

Wholly owned plant

Management contracting



5.

Naive rule

Pragmatic rule

The strategy rule

SELECTING THE ENTRY MODE



CHAPTER 5. PRODUCT DECISIONS

1. PRODUCT PLANNING ANDDEVELOPMENT

2. PACKAGING

3. BRANDING ISSUES

4. PRODUCT MIX DECISIONS

5. STANDARDIZATION VS ADAPTATION



1. PRODUCT PLANNING AND

DEVELOPMENT

1.1. New product development

1.2. Changes in existing products

1.3. Finding new uses for existing products

1.4. Product elimination



1.1.New product development

New product decision process:

Idea generation

Initial screening

Business analysis

Develop the product

Market testing

Commercialization



2. Standardization vs. adaptation

+ Standardization is common for certain agriculturalproducts, raw materials, and processed commodities

sold to industry.+ Adaptation can be mandatory or voluntary.

Mandatory adaptation may be required because of such things as language differences, differing

electrical systems, differing measurement systemsand product specifications, and governmentrequirements.



2. Standardization vs. adaptation

In general, however, some type of mandatoryadaptation may have to be made or a voluntary

change (minor or major) may be beneficial.EX: Product Adaptation

+ Sony TV Voltage, broadcast standard

+ McDonald’s Menu, decor of restaurant

+ Levi jeans Size mix, fabric, cut+ Coca-cola Brand name (China), package



3.PACKAGING

VIEW

V- visibility

I- informative

E- emotional impact

W- workability



4. BRANDING ISSUES

A brand; a brand name; a trademark; label;logo; slogan

Brand protection

Branding decisions



Choosing a brand name

(1) It should suggest something about the product’sbenefits

EX: Beautyrest mattress, Craftsman tools(2) It should suggest product qualities such as action or

color.

EX: Sunkist oranges, Firebird automobile

(3) It should be easy to pronounce, recognize, andremember, short names help.

EX: Tide, Crest



Choosing a brand name

(4) It should be distinctive.

EX: Kodak, Exxon.

(5) It should not carry poor meaning in other countries and language.

EX: Nova Is a poor name for a car to be sold in

Spanish-speaking countries; it “doesn’t go”



Brand protection

+ The international Convention for theprotection of Industrial Property (Paris

Union).

+ The Madrid Agreement for InternationalRegistration of Trademarks.



Branding decisions

+ Selecting a good brand

+ Determining how many brands should be inthe company’s product line



Branding decisions

(1) A single brand, or family brand

(2) Individual (local) brands

(3) Multiple brands



Tools for building the brand identity

(1) Owned word

EX: Company Word

Volvo “Safety”

BMW “Driving performance”

Federal Express “Overnight”

Apple computer “graphics”

Kodak “Film”




(2) Slogan

EX: AT&T: “The Right choice”

Budweiser: “The King of Beers”

Fort: “ Quality is Our Number One job”

General Electric: “ We bring Good Things

to life” British Airways: “The Word’s Favorite

Airline”




(3) Colors

EX: Yellow is also the corporate color of Kodak firm.

IBM uses blue in its publications

(4) Symbols and logos

Chanel No.5 used Catherine Deneuve, One of the word’s mostbeautiful women, as its symbol,

(5) A set of stories

Some brands will be associated with stories, which are benefit if favorable and interesting, about the company or brand. Thestories might relate to the founder (s) and the struggle to createthe company.



4. PositioningIn searching for a specific positioning, the business unit

should consider the following possible sources:+ Attribute positioning:EX: A hotel describes itself as the city’s tallest hotel + Benefit positioning:EX: Volvo claims that its cars are safer + Use/application positioning:

EX: Nike might describe one of its shoes as the best towear for racing and another as the best to wear for playing basketball



4. positioning+ User positioningEX: Apple Computer describes its computers and

software as the best for graphic designers+ Competitor positioningEX: 7 UP called itself the Uncola+ Category positioningEX: Kodak means film; Xerox means copy machines

+ Quality/price positioningEX: Chanel No 5 is positioned as a very high-quality,

high-price perfume.



Choosing a specific positioning

Companies need to go beyond a broad positioning toexpress a more concrete benefit and reason to buy:

Best quality Best performance

Most reliable

Most durable

Safest Fastest

Best value of the money



Choosing a specific positioning

Least expensive

Most prestigious

Best designed or style

Easiest to use

Most convenient.



CHAPTER 6. PRICING DECISIONS

1. DETERMINANTS OF AN EXPORT PRICE

2. FUNDAMENTAL EXPORT PRICING

STRATEGY3. RELATION OF EXPORT TO DOMESTIC

POLICIES

4. CURRENCY ISSUES

5. SETTING UP EXPORT PRICE?

6. TRANFER PRICING



1. DETERMINANTS OF AN EXPORTPRICE

Costs

Market conditions (demand)

Competition

Legal/political influence

Environmental factors ( Exchange rate

fluctuations, inflation rates, price controls) Company policies

Marketing-mix



2. FUNDAMENTAL EXPORT PRICINGSTRATEGY

Skimming pricing

Penetration pricing

Extinction pricing

Marginal cost pricing



3.RELATION OF EXPORT TODOMESTIC POLICIES

Export prices lower than domestic

Export prices higher than domestic

Export prices on a par with domestic prices

EXPORT PRICE ESCALATION



EXPORT PRICE ESCALATION

Domestic Sale Export saleFactory Price $ 7.50 $ 7.50Domestic Freight .70 .70

8.20 8.20Export Documentation .50

8.70Ocean Freight & Insurance 1.20

9.90Import Duty (12% of landed cost) 1.19

11.09Wholesale Markup (15%) 1.23

9.43

Importer/Distributor Markup (22%) 2.4413.53

Retail Markup 50 % 4.72 6.7714.15 20.30

Final consumer Price $14.15 $20.30



4. The price quotation

There are two systems of definition that areused by exporters throughout the world:

+ INCOTERMS 2000

+ The revised American Foreign Trade

definitions -1941



Selection of trade terms

In deciding when to use each term exporters should consider thefollowing factors:

Whether shipment will be made on domestic or foreign carries.

Availability of insurance coverage Availability of information on costs Exporter’s need for cash ( reason against C&F and CFR/CPT) Needs of importers to have quotes from several suppliers that

can be readily compared ( reason for CIF and CIP) Currency convertibility problems. FOB vessel is often desirable

so that the buyer pays freight in his own currency. Of course,the carrier still has the convertibility problem, unless it is thebuyer’s country.

Requirements of the government of the importing nation.



How does an exporter prepare anaccurate quote?

Listed below are variables that should be considered while preparing the quote Packaging, marking and labeling costs Rates of interest at which export finance has been availed Costs of direct materials and labor for the production of the goods Factory overhead expenses Clearing and forwarding charges Port trust charges Insurance premium, export duties, warfare and portage Shipping charges Commission

Incentive available from government such as duty drawback After calculating to above mentioned expenditures, a reasonable profit margin maybe added to arrive at a final price. If there still other subsidiary expenditures, it’snecessary to add while making quotation.



STRUCTURE OF EXPORT PRICE

1. Base cost per unit2. Export packing, labeling, marking3. Product inspections charges4. Profit or mark-up

5. Inland freight to6. Unloading at port/air port7. Terminal charges8. Export duty (if any)9. Loading charges-----------------------------------

1-9 FOB10. Ocean/air freight to destination

-------------------------------------------1-10 CFR

11. Insurance--------------------------------------------

1-11 CIF



The choice of currency for export pricequotes

There are two basic alternatives available:The quote in U.S dollars, or quote in

customers’ currencies.

EX I thi l th d



EX: In this example the goods areplanned to be moved by sea and

shipment is not containerized.

Product charges and price ($)

Product cist: $10 per unitx100 units 1000

Target mark-up: 10% of product cost 100Oversea agent’s commissions: 5% 50

-------

1150

Financing costs on production: 8% 80

Export packing charges 100Labeling and marketing for 100 units 50

Other direct export costs 20

EXW price (ex factory) 1400

EX: In this example the goods are planned to bemoved by sea and shipment is not containerized.



moved by sea and shipment is not containerized.

Inland freight to port of shipment 100Unloading, other charges at port of shipment 100FAS price (port of shipment) 1600

Loading charges on ship 50Export documentation, clearance for export 30FOB Price (port of shipment) 1680Ocean freight to port of destination 300CFR price (product costs and freight/port of destination 1980Insurance coverage 20

CIF Price (product costs, insurance, freight/port of destination) 2000

Notice how the CIF price is double the initial product cost. This shows howimportant it is to work through these costing carefully.



5. TRANFER PRICING

Decentralization and profit centers

Transfer pricing to wholly-owned foreign

subsidiaries:+ The factor: Competitive market price

Cost

Legal restrictions+Transfer pricing to partially-owned foreignenterprises



CHAPTER 7. CHANNELS ANDDISTRIBUTION STRATEGIES

1. CHANNEL STRUCTURE

2. MANAGING THE DISTRIBUTION SYSTEM

3. GAINING ACCESS TO DISTRIBUTIONCHANNELS

4. GLOBAL TRENDS IN DISTRIBUTIONSYSTEM

5. INTERNATIONAL PHYSICALDITRIBUTION



1. CHANNEL STRUCTURE

1.1. Indirect export1.2. Direct export

+ Home country based department:1) Built-in department2) separate export department3) Export sales subsidiary

+ Foreign sales branch

+ Storage or warehousing facilities+ Traveling salesperson+Foreign based distributors and agents



2. MANAGING THE DISTRIBUTIONSYSTEM

2.1. Motivating channel participants

2.2.Controlling channel participants



2.1. Motivating channel participants

Financial incentives

Annual conferences

Help to the management of distributorship

Special programs



2.2.Controlling channel participants

Spell out the specific responsibilities

The awarding of exclusive distribution rights

3. GAINING ACCESS TO



DISTRIBUTION CHANNELS

3.1. The “locked-up” channel

3.2. Alternative entry approaches

+ Piggybacking

+ Joint ventures

+ Original equipment manufacturers (OEMs)

+ Acquisitions

+ Starting your ventures

4.GLOBAL TRENDS IN DISTRIBUTION



SYSTEM

Five major trends seem dominant throughoutthe world:

Large-scale retailers

International retailers

Direct marketing

Discounting Information technology

5. INTERNATIONAL PHYSICAL



DITRIBUTION

Export restrictions

Foreign market import restrictions

Export documentation

The foreign freight forwarder

Export packing



CHAPTER 8. PROMOTION ANDMARKETING COMMUNICATIONS

1.INTRODUCTION

2.INTERNATIONAL ADVERTISING

3. PUBLICITY AND PUBLIC RELATIONS4. PERSONAL SELLING

5. SALES PROMOTION

6. PROMOTIONAL PROGRAM ANDSTRATEGY

7. DIRECT MARKETING



1.Introduction

1.1. Promotion -mix

1.2. Communication barriers

1.3. Export marketing promotion andcommunication decisions



1.Introduction

1.1. PROMOTION-MIX

Advertising

Sales promotion

Publicity

Personal selling



1.2. Communication barriers

Communication barriers

+ Language differences

+ Government regulations

+ Media availability

+ Economic differences

+ Tastes and attitudes

+ Buying process



1.3. Export marketing promotion andcommunication decisions

What message?

What communications media?

How much effort or money to spend?



2.SALES PROMOTION

+ Foreign catalogs

+ Samples

+ House organ and company-publishedmagazines

+ Films, slides, and personal computers

+ Trade fairs and exhibitions+ Point-of-purchase materials

+ Consumer promotion materials

3 PUBLICITY AND PUBLIC



3. PUBLICITY AND PUBLICRELATIONS

3.2. Publicity: Any form of nonpaid,commercially significant news or editorial comment about ideas,products, or institution.



Uniform approach to advertising

+ There are no notable differences on customer’s productawareness.

+ Buying motives, purchase behaviour, and product usage are

identical or nearly so.+ Copy translation does not lead to obvious misunderstanding,

negative connotations or undesirable associations.

+ Product quality, design and package variations between marketsare non-existent or insignificant.

+ In general, it appears that successful standardization isdependent on a similarly of the motivations for purchase and asimilarity of use conditions

Ad ti d ti d ti i t



Adapting domestic advertising toforeign markets

Modification may be requires a company toadapt adverting strategy to current culture

variations and trends.Literacy rates and standards of education willhave a direct bearing on the amount of adaptation needed in advertising methods.



5. PERSONAL SELLING

One of the most expensive marketingcommunication tools is the company’s sales force,especially when out in the field, traveling a lot, andspending considerable time hunting for prospectsand keeping existing customers satisfied.

The salesperson sees the customer and can takehim to lunch, gauge his interest, answer questions

and objections, and close the sale. The morecomplex the product or service, the more necessaryit is to use salespeople.



PERSONAL SELLING

Today’s salespeople needs a laptop

computer, printer, copy machine, fax

machine, cellular phone, electronic mail,software, and so on.

With their laptop, they can access industry,product, and customer data, downloadbrochures, and print contracts.



PERSONAL SELLING

KEY ACCOUNT MANAGEMENT SYSTEM

An increasing number of company are setting up key

account management system. Companies know thata few customers account for large share of their sales and profits. The company appoints keyaccount managers to manage their more importantaccounts, thus increasing the likelihood thatimportant customers will be better served and willremain loyal.



6. Promotional program and strategy

This involves the following:

+ Setting promotional objectives;

+ Deciding on types of advertising andpromotional messages;

+ Selecting media;

+ determining how much time, effort, andmoney to spend.

7 DIRECT MARKETING



7.DIRECT MARKETING

Direct marketing includes a number of marketing approaches that involve direct

access to the customer. Direct mail, door-to-door selling and telemarketing are theprimary direct marketing tools used in somecountries.



7.DIRECT MARKETING

Many companies posses proprietary databasescomprising profiles on thousands or millions of

customers and prospects. Consider the following:+ General Motors has a database of 12,000,000 names

showing everything that these customers charged totheir GM credit cards.

+ Land’s End has a database of more than2,000,000names of people who bought one or more clothingitems from Land’s End.

CHAPTER 9. ORGANIZATION OFINTERNATIONAL MARKETING



INTERNATIONAL MARKETING

ACTIVITIES

1. Main considerations of being organizedinternationally

2. Organizational structures

1 Main considerations of being



1. Main considerations of beingorganized internationally

Definition of organizational subunits

Centralization vs. decentralization

Communication and control systems

2 Organizational structures



2. Organizational structures

2.1.Functional export department ( built-in or separateexport unit )

2.2.International division structure2.3.International organization structure based on

product

2.4.International organization structure based on

geographic area or customer groupings2.5.International mixed structure; the matrix

organization

58 58 international marketing chapter wise

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