pandiyan vadivelu @ victor, cmilt. course learning outcome 1. define different business scenarios in...

MARKETING IN SHIPPING – DSM 2307

Pandiyan Vadivelu @ Victor , CMILT

COURSE LEARNING OUTCOME

1. Define different business scenarios in the context of marketing in Shipping and Export Management

2. Demonstrate knowledge and rationale of Marketing in Shipping and Export Management

3. Define Market Segmentation and describe Export Market Expansion Strategies

4. Develop a Shipping Marketing Plan

5. Explain the socio, cultural and economic environment in the International Shipping Business Discuss Ethical Issues in international Ship Marketing

6. Discuss Ethical issues in Ship Marketing

COURSE OUTLINE

1. International Shipping and Exporting

2. Introduction to international shipping business environment

3. Bases of International Shipping Marketing

4. Export Market Selection – Definition & Strategies

5. Strategic Marketing Impact of Shipping Organisation

6. Shipping Marketing Plan

7. Ethics 

1. INTERNATIONAL SHIPPING AND EXPORTING

1.1 The nature of international marketing in shipping industry

1.2 Export marketing and business strategy in shipping

company

1.3 Ethical and moral issues in shipping business

1.4 Assessing foreign market opportunities: shipping

ventures and port business

1.1 The nature of international marketing in shipping industry

International marketing is the marketing of goods , services , and information across political boundaries .

Includes all the elements of domestic marketing :

Planning, promoting, distribution, pricing ,and support of goods and services , information to be provided to the ultimate customers

More complex than domestic marketing

Need to accommodate key differences between home countries’ domestic environment and environment of foreign market

Differences include culture, consumer needs and wants , economic levels and structures, market structures and channels available ,ways of doing business and laws and regulations

International marketing and export management 7th edition page 21

THE NATURE OF INTERNATIONAL MARKETING IN SHIPPING INDUSTRY

Any of the differences can make a company’s domestic approach to marketing ineffective, counter-productive or violation of law (page 21-24)

The marketing manager need to know the target market, the differences that exist, and what to be done to accommodate the differences. There is availability of information .

Time spent on obtaining information is less than correcting costly mistakes

THE NATURE OF INTERNATIONAL MARKETING IN SHIPPING INDUSTRY

Business activities need to be done to accommodate the differences:

The analysis of market and potential market

The planning and development of products and services that consumers want , clearly identified in a suitable package

The distribution of products through channels that provide the services or conveniences demanded by purchasers

THE NATURE OF INTERNATIONAL MARKETING IN SHIPPING INDUSTRY

The promotion of products through advertising and personal selling to inform and educate consumers

Price setting to reflect value for money for the product and satisfactory profit / ROI.

Technical and non technical support given to customers (before & after)

The organisation structure, management and remuneration of foreign employees.

Questions and Discussion

2.0 INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

2.1 Major characteristic of economic shipping forces in

industrialize nation

2.2 Exploration of socio cultural environment of international

shipping business

2.3 The nature of business competition in shipping industry

MAJOR CHARACTERISTIC OF ECONOMIC SHIPPING FORCES IN INDUSTRIALIZED NATION

Major characteristics of economic shipping forces; market development and newly industralized nations(NIC)

NICs are countries whose economies have not yet reached developed country status but have, in a macroeconomic sense, outpaced their developing counterparts

NIC- China, India, South Africa, Brazil, Malaysia,Philipines ,Thailand and Turkey

Exploration of socio cultural environment of international shipping business: Egalitarians, pragmatist and traditional shipping business

The nature of business competition in shipping industry

NEWLY INDUSTRIALIZED COUNTRIES

Newly industrialized countries

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

Economic forces are the factors that help to determine the competitiveness of the environment in

which the firm operates. These factors include:

Unemployment level

Inflation rate

Fiscal policies

Government changes etc.

These factors determine an enterprise’s volume of demand for its product and affect its marketing

strategies and activities.

The economic system is made up of three main steps. The first one being production, ad then there is

distribution of the produced goods and then the last step is consumption.

MAJOR CHARACTERISTIC OF ECONOMIC SHIPPING FORCES IN INDUSTRIALIZED NATION

PopulationIncome and wealth distribution

EXPORT MARKETING AND BUSINESS STRATEGY IN SHIPPING

Export marketing means exporting goods to other countries of the world. It involves lengthy procedure and formalities.

In export marketing, goods are sent abroad as per the procedures framed by the exporting country as well as by the importing country.

business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives

Strategy is management's game plan for strengthening the performance of the enterprise.

It states how business should be conduct to achieve the desired goals. Without a strategy management has no roadmap to guide them.

EXPORT MARKETING AND BUSINESS STRATEGY IN SHIPPING Strategy is important in shipping because : facilitates the identification of business opportunities gives an objective view to solve business problems provides a framework to improve internal and external collaboration

assists in controlling business activities, minimizes negative effects when threats arise helps make better decisions guides effective allocation of resources provides methods to manage changes nurtures consistency in the management of the shipping business.

EXPORT MARKETING AND BUSINESS STRATEGY IN SHIPPING

Shipping firms have a hierarchy of interrelated strategies, each formulated at a different level, which can be classified as corporate strategy, business strategy, and functional strategy.

Formulating and implementing shipping strategies involve answering many interrelated decisions: What to do? When to do it? How to do it? The development of shipping strategies involves the process of strategic analysis, formulating strategies, and implementation and control of strategies.

To seek business opportunities, a shipping firm needs to answer the question of how to structure the organization to sustain growth.

The structural options for shipping firms include organic growth, acquisitions, joint ventures, alliances, and networks.

ETHICAL AND MORAL ISSUES IN SHIPPING BUSINESS Ethical behavior is based on written and unwritten codes of principles and value held in

society. It serves as a guide to behaviors on a personal level, within professions, and at the collective organizational level.

Moral : relating to principles of rights and wrong in behavior /conform to a standards of right behavior

morals are values that we attribute to a system of beliefs, be they religious, political or philosophical, for example.

Ethics are how business owners apply those beliefs in their short and long-term business decisions.

As a result, these concepts inevitably are intertwined and must be applied carefully to maintain an image of professionalism and accountability.

ETHICAL AND MORAL ISSUES IN SHIPPING BUSINESS

Business Ethics – Issues

A business cannot claim to be ethical firm if it ignores unethical practices by its suppliers – e.g. Use of child labour and forced labour

Production in sweatshops

Violation of the basic rights of workers

Ignoring health, safety and environmental standards

An ethical business has to be concerned with the behavior of all businesses that operate in the supply chain – i.e.

Suppliers

Contractors

Distributors

Sales agents

ETHICAL AND MORAL ISSUES IN SHIPPING BUSINESS

Business conducted must moral and ethical weight. There are many behaviors that are unethical in business and

in life: Misleading people with inaccurate information Negligence in safety Financial misconduct Non-competitive practices like collusion Corruption and fraud Environmental damage/pollution

APPLICATION OF ETHICS IN BUSINESS

The product must be safe for use

Activities related to foreign market entry and expansion should not conflict with either home or local country values

Advertising and promotion should honestly represent product or service

Price should be set at reasonable level (Dumping and excessive pricing should be avoided)

Customers, employees, and suppliers should be treated in a equitable and proper manner

APPLICATION OF ETHICS IN BUSINESS

The product must be safe for use

Activities related to foreign market entry and expansion should not conflict with either home or local country values

Advertising and promotion should honestly represent product or service

Price should be set at reasonable level (Dumping and excessive pricing should be avoided)

Customers, employees, and suppliers should be treated in a equitable and proper manner

ASSESSING FOREIGN MARKET OPPORTUNITIES

A market opportunity product or a service, based on either one technology or several, fulfills the need(s) of a (preferably increasing) market better than the competition and better than substitution-technologies within the given environmental frame (e.g. society, politics, legislation, etc.).

ASSESSING FOREIGN MARKET OPPORTUNITIES

Assessing the market is an important part of the idea development process

Here are some common questions that should be answered as part of your assessment.

What problem will your company/product/service solve?

What value does your product/service/technology bring to the market?

Who is the expected market for these products and the market size?

What product or services will you take sales from?

Who will be your competitors or potential competitors?

3. BASES OF INTERNATIONAL SHIPPING MARKETING 

3.1 Potential benefits from export marketing and commercial

freight management

3.2 Introduction of International trade theories: freight rates,

broking and routes

3.4 The development of export in shipping companies

3.5 Exporting and network model in shipping industry

POTENTIAL BENEFITS OF EXPORTING

Profit to exporter (Direct) Profit to importer (Indirect) Determined by impact on consumption and production No country is self sufficient in every thing Contribution of international trade is to welfare of domestic

consumers Active trade relationship between countries Employment opportunities Source of purchasing power for both foreign and domestic goods

and services

3. BASES OF INTERNATIONAL SHIPPING MARKETING 

3.1 Potential benefits from export marketing and commercial

freight management

3.2 Introduction of International trade theories: freight rates,

broking and routes

3.4 The development of export in shipping companies

3.5 Exporting and network model in shipping industry

POTENTIAL BENEFITS FROM EXPORT MARKETING & COMMERCIAL FREIGHT MANAGEMENT

1 Potential benefits from export marketing and commercial

freight management

3.2 Introduction of International trade theories: freight rates,

broking and routes

3.4 The development of export in shipping companies

3.5 Exporting and network model in shipping industry

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT Major characteristics of economic shipping forces; market

development and newly industralized nations(NIC)

NICs are countries whose economies have not yet reached developed country status but have, in a macroeconomic sense, outpaced their developing counterparts

NIC- China, India, South Africa, Brazil, Malaysia,Philipines ,Thailand and Turkey

Exploration of socio cultural environment of international shipping business: Egalitarians, pragmatist and traditional shipping business

The nature of business competition in shipping industry

NEWLY INDUSTRIALIZED COUNTRIES

Newly industrialized countries

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

Economic forces are the factors that help to determine the

competitiveness of the environment in which the firm operates.

These factors include:

Unemployment level

Inflation rate

Fiscal policies

Government changes etc.

These factors determine an enterprise’s volume of demand for its

product and affect its marketing strategies and activities.

The economic system is made up of three main steps. The first one

being production, ad then there is distribution of the produced goods

and then the last step is consumption.

WEEK TWO

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

The category of newly industrialized country (NIC)

NICs are countries which have not yet reached developed country status but have, in a macroeconomic sense, outpaced their developing counterparts.

Another characterization of NICs is that of nations undergoing rapid economic growth (usually export oriented).

Incipient or ongoing industrialisation is an important indicator of a NIC.

INTRODUCTION TO INTERNATIONAL SHIPPING BUSINESS ENVIRONMENT

In many NICs, social upheaval can occur as primarily rural, or agricultural, populations migrate to the cities, where the growth of manufacturing concerns and factories can draw many thousands of laborers.

NICs usually share some other common features, including:

Increased social freedoms and civil rights

Strong political leaders.

A switch from agricultural to industrial economies, especially in the manufacturing.

An increasingly open-market economy allowing free trade with other nations in the world.

Large national corporations operating in several continents.

Strong capital investment from foreign countries.

Political leadership in their area of influence.

Rapid growth of urban centers and population.

SOCIO CULTURAL ENVIRONMENT OF INTERNATIONAL SHIPPING BUSINESS:

Egalitarians,

Pragmatist

Traditional shipping business

SOCIO CULTURAL ENVIRONMENT OF INTERNATIONAL SHIPPING BUSINESS:

Egalitarians

Affirming, promoting, or characterized by belief in equal political,

economic, social, and civil rights for all people.

Pragnatist

One who acts in a practical or straightforward manner; one who is

pragmatic; one who values practicality

Traditional

Based on customs usually handed down from a previous generation

CULTURAL AND SOCIAL ENVIRONMENT OF INTERNATIONAL SHIPPING

Socio cultural environment include: language Material culture Aesthetics Social organisation Religious beliefs Attitudes Values Space and time

http://www.exporthelp.co.za/modules/1_considering_exporting/env_sociocultural.html

NATURE OF BUSINESS COMPETITION IN SHIPPING

A competitive industry

Derived demand

Compete on price or no price

Liner shipping operates under oligopoly

Tramp shipping operates under perfect competition

Competition has led to rate wars and collapse of shipping

companies.

To restore order, consultation amongst shipping companies is

needed.

NATURE OF BUSINESS COMPETITION IN SHIPPING Oligopoly market characteristics

few sellers and inter-firm rivalry. Other characteristics of an oligopolistic industry include:

High entry barriers to new-comers due to huge capital investment.

Little difference in service.

A few carriers that account for the majority of total supply.

NATURE OF BUSINESS COMPETITION IN SHIPPING

Perfect competition (aka pure competition)

All firms sell an identical product.

All firms are price takers.

All firms have a relatively small market share.

Buyers know the nature of the product being sold and the prices

charged by each firm. The industry is characterized by freedom of entry and exit.

NATURE OF BUSINESS COMPETITION IN SHIPPING

Freedom to use highway

Initial investment is small

Greater mobility of ship

High proportion of fixed cost

Freedom of determination of rates

Competition in tramp services

Competition in liner services

PORTERS 5 COMPETITIVE FORCES AND SHIPPING SECTOR

Porter identified five factors that act together to determine the nature of competition within an industry.  These are the:

Threat of new entrants to a market Bargaining power of suppliers Bargaining power of customers (“buyers”) Threat of substitute products Degree of competitive rivalry

PORTER’S COMPETITION MODEL

4.0 EXPORT SELECTION : DEFINITION AND STRATEGIES

4.1 Market definition and segmentation

4.2 Export market expansion strategies

4.3 Foreign market portfolios: techniques and analysis

4.4 Assessing market potential: port development and freight

rates

5.0 STRATEGIC MARKETING IMPACT OF SHIPPING ORGANIZATION 

5.1 Issues in ethical marketing practices

5.2 Marketing and corporate planning

5.3 Forecasting

5.4 Sales promotion

5.5 Marketing research

5.6 The product life cycle

5.7 Pricing

6. 6.

6.0 SHIPPING MARKETING PLAN 

6.1 Marketing audit

6.2 SWOT analysis

6.3 Marketing objective

6.4 Marketing mix strategies

6.5 Measurement of progress

6.6 Contingency planning

6.7 Budget

6.8 The marketing planning process

6.9 The benefits of marketing planning

REFERENCES

1. Album,G. & Duerr,E. ( 2011 ) International Marketing and Export Management (Seventh Edition), Pearson Education Limited, UK

Thank You