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Export Marketing
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Export
Export is when you trade something out of thecountry.
In economics, an export is any good orcommodity, transported from one country toanother country in a legitimate fashion, typically
for use in trade.
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Export
The term "export" is derived from the conceptual meaningas to ship the goods and services out of the port of acountry. The seller of such goods and services is referred toas an "exporter" who is based in the country of export
whereas the overseas based buyer is referred to as an"importer".
In International Trade, "exports" refers to selling goods and
services produced in home country to other markets.
Export goods or services are provided to foreign consumersby domestic producers.
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Reasons to export
Reasons to export To serve markets where the firm has no or
limited production facilities
To satisfy a host governments requirementthat the local subsidiary have exports
To remain price-competitive in the homemarket
To test foreign markets and foreigncompetition inexpensively
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Reasons to export
To achieve additional sales
To extend a products life cycle
To respond strategically to foreigncompetitors
To improve the efficiency of manufacturingequipment
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Reasons not to Export
Reluctance to become involved in a new,unknown and therefore risky operation
Not active in international markets due to Lack of knowledge
Locating foreign markets
Payment and financing procedures Export procedures
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Export Marketing
Exporting is one of the Market Entry Strategies
Where as the options are Licensing
Franchising
Joint ventures
FDI
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Ownership and Control
Strategic Alliances
ManagementContractFranchisingLicensing
Equity Joint Venture
Owners
hip
Control0
0
100%
100%
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Export Decision Criteria
Export marketing is the integrated marketing ofgoods and services that are destined for thecustomers in international markets
Export marketing requires
An understanding of the target market environment
The use of marketing research and the identification of
market potential Decisions concerning product design, pricing, distribution
and channels, advertising and communications
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Export-Related Problems
Logistics Arranging transportation
Transport rate determination
Handling documentation Obtaining financial
information
Distribution coordination
Packaging
Obtaining insurance
Legal Procedures Government
Product liability
Licensing Duty
Sales Promotion Advertising
Sales force Marketing information
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Export-Related Problems
Servicing Exports Providing parts availability
Providing repair service
Providing technical advice Providing warehousing
Foreign MarketIntelligence Locating markets
Trade restrictions Competition overseas
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Export Costing & Pricing
Price is what an exporter offer to a customer onparticular products.
Cost is what an exporter pay for manufacturingthe same product
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Determining Export Pricing
Range of products offered.
Prompt deliveries and continuity in supply.
After-sales service in products like machine tools, consumer durables.
Product differentiation and brand image.
Frequency of purchase.
Relationship between quality and price.
Speciality value goods and gift items.
Credit offered.
Preference for products originating from a particular source. Aggressive marketing and sales promotion.
Prompt acceptance and settlement of claims.
Unique value goods and gift items.
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Factors for Export Costing
Product modification cost
Promotion cost
Packaging cost
After-sales service cost
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Pricing Strategies
High pricing strategy
Unique or new products
Brand name products: BMW, Rolex
High profit margin
Limits market to well-to-do customers
Attracts competition
Higher price at the beginning and lowerprice later
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Low pricing strategy To penetrate foreign markets
To increase market share
To dispose of excess or obsoleteinventory
To discourage new competition
Cannot be a long-term strategy
Pricing Strategies
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Moderate pricing strategy
Adequate profit margin
Can meet competition and maintain marketshares
Should be long-term strategy
Pricing Strategies
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Export Pricing Methods of
Manufacturer
Marginal Cost Pricing Method
Assumes that indirect fixed costs are fully recoveredfrom domestic sales
Cost for manufacturing additional unit for export and
exporting cost Includes direct cost of material and labor only
General & Administrative (G & A) expenses not included.
Floor price
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Cost-plus pricing method
Adding exporting costs to domestic
production cost Include G & A expenses
Too high to compete in internationalmarket
Export Pricing Methods of
Manufacturer
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Trade Policies in India
Exim Policies
Streamlined trade procedures
Liberalised import regime
Thrust on export orientation
Medium Term Export Strategy, 2002
1% share in global exports by 2007
Foreign Trade Policy 2004-2009
To double Indias share in global merchandise trade by2009
use trade expansion as an effective instrument of
economic growth and employment generation.
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Basic concepts and definitions
The foreign trade policy of a country refers to policiesand practices that affect and regulate import and exportoperations.
Foreign trade policy includes many laws, decrees,
regulations and procedures that are often adopted fordifferent purposes. Such policies will affect foreignexchange, imports, exports, foreign investment, andinternational relations.
A foreign trade policy should include trade promotionpolicy and lead to the design and implementation ofsuccessful trade promotion and developmentprogrammes.
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The trade promotion policy of a country is comprised ofprogrammes and measures that promote and develop tradewith other countries.
It includes all regulations and practices that will increaseexports.
Trade promotion policies are part of the overall foreign trade
policy, and cannot be considered alone.
The country's foreign trade policy must make it possible toachieve trade promotion policy objectives.
Basic concepts and definitions
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Aspects of foreign trade policy
Foreign Trade Policy
Trade Promotion
Export promotion
Import Regulation
Trade
Development
Infrastructure
International
Trade
Relations
Trade facilitationregulation
Trade finance
Trade enterprises
Bilateral relations
Internationaltrade forums
Regional trade
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Foreign Trade Policy 2004-2009
Agriculture and industry has shown remarkable resilience anddynamism in contributing to a healthy growth in exports
In the last five years our exports witnessed robust growth US$ 168billion in 2008-09 from US$ 63 billion in 2003-04.
Indias share of global merchandise trade was 0.83% in 2003; itrose to 1.45% in 2008 as per WTO estimates.
Indias share of global commercial services export was 1.4% in2003; it rose to 2.8% in 2008.
Indias total share in goods and services trade was 0.92% in 2003; it
increased to 1.64% in2008. On the employment front, studies have suggested that nearly 14
million jobs were created directly or indirectly as a result ofaugmented exports in the last five years.
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Foreign Trade Policy 2009-2014
The short term objective of the policy is to arrest andreverse the declining trend of exports and to provideadditional support especially to those sectors which havebeen hit badly by recession in the developed world.
To set a policy objective of achieving an annual exportgrowth of 15% with an annual export target of US$ 200billion by March 2011.
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Foreign Trade Policy 2009-2014
In the remaining three years of this Foreign Trade Policyi.e. upto 2014, the country should be able to come backon the high export growth path of around 25% perannum.
By 2014, to double Indias exports of goods andservices.
The long term policy objective for the Government is todouble Indias share in global trade by 2020.
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In order to meet these objectives, the Government would follow a mix of policy
measures including fiscal incentives, institutional
changes, procedural rationalization, enhanced marketaccess across the world and diversification of exportmarkets.
Improvement in infrastructure related to exports;
Bringing down transaction costs, and providing fullrefund of all indirect taxes and levies,
Foreign Trade Policy 2009-2014
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Terminology
Focus Product Scheme:
Objective is to incentivise export of such products, whichhave high employment intensity in rural and semi urbanareas, so as to offset infrastructure inefficiencies and other
associated costs involved in marketing of these products.
Focus Market Scheme:
Objective is to offset high freight cost and other externalities
to select international markets with a view to enhance ourexport competitiveness in these countries.
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Highlights of
FOREIGN TRADE POLICY 2009-2014
1. Higher Support for Market and Product
Diversification
26 new markets have been added under Focus
Market Scheme. These include 16 new markets inLatin America and 10 in Asia-Oceania.
The incentive available under Focus Market Scheme(FMS) has been raised from 2.5% to 3%.
The incentive available under Focus Product Scheme(FPS) has been raised from 1.25% to 2%.
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A large number of products from various sectors havebeen included for benefits under FPS. These include, Engineering products (agricultural machinery, parts of trailers,
sewing machines, hand tools, garden tools, musical instruments,
clocks and watches, railway locomotives etc.) Plastic (value added products),
Jute products
Green Technology products (wind mills, wind turbines, electricoperated vehicles etc.),
Project goods, vegetable textiles and certain Electronic items.
Highlights of
FOREIGN TRADE POLICY 2009-2014
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2. Technological Upgradation:
To aid technological upgradation of our export sector,EPCG Scheme at Zero Duty has been introduced.
This Scheme will be available for engineering & electronic
products, basic chemicals & pharmaceuticals, apparels &textiles, plastics, handicrafts, chemicals & allied productsand leather & leather products
The scheme shall be in operation till 31.3.2011.
Highlights of
FOREIGN TRADE POLICY 2009-2014
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Gems & Jewellery Sector
To neutralize duty incidence on gold Jewellery exports, ithas now been decided to allow Duty Drawback on suchexports.
A new facility to allow import on consignment basis of cut& polished diamonds for the purpose of grading/certification purposes has been introduced.
To promote export of Gems & Jewellery products, thevalue limits of personal carriage have been increased fromUS$ 2 million to US$ 5 million in case of participation inoverseas exhibitions.
Highlights of
FOREIGN TRADE POLICY 2009-2014
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Agriculture Sector
To reduce transaction and handling costs, a single windowsystem to facilitate export of perishable agriculturalproduce has been introduced.
EOUs
EOUs have been allowed to sell products manufactured by
them in DTA (Domestic Tariff Area)upto a limit of 90%
instead of existing 75%, EOUs will now be allowed to procure finished goods for
consolidation along with their manufactured goods, subjectto certain safeguards.
Highlights of
FOREIGN TRADE POLICY 2009-2014
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Waiver of Incentives Recovery, On RBISpecific Write off
RBI specifically writes off the export proceeds
realization, the incentives under the FTP shall nownot be recovered from the exporters subject to certainconditions.
Highlights of
FOREIGN TRADE POLICY 2009-2014
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Export Promotion Measures
International marketing is a much more complicatedprocess than marketing and selling in the domesticeconomy.
To encourage growth of exports, government step in andprovide business communities with needed support invarious ways.
Government have many different policies, programmesand activities to help develop competitive products andincrease export sales
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Trade Promotion Policy
The trade promotion policy of a country is comprisedof programmes and measures that promote anddevelop trade with other countries. It includes allregulations and practices that will increase exports.
Trade promotion policies are part of the overallforeign trade policy, and cannot be considered alone.
The country's foreign trade policy must make it
possible to achieve trade promotion policy objectives.
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Export Promotion
Export Promotion Government assist businesses in the private sector
with a wide range of services, from simply providinginformation about current opportunities in the worldmarket to giving specialized assistance to design andimplement marketing programmes and salescampaigns abroad.
The activities are usually carried out by atrade Promotion Organization (TPO).
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Objectives
Promoting export of the country's existingproduction.
To encourage increased sales of products that
are currently available for export. concentrate on product adaptation; that is, use
of existing production capacity to manufacturenew products when better markets are found forthose products than for traditional products
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Objectives
Most developing countries make exportpromotion and development a priority in order toachieve economic development goals.
Government expect that sustained exportpromotion and development efforts will help earnadditional foreign exchange needed to cover the
cost of imports, solve balance of paymentsproblems and create additional employment forpeople.
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Implementation of Export
Promotion Measures
The key to successful national export promotion aregovernment policy decisions that affect exporttrade.
Two sets of policies affect foreign trademanagement
Foreign trade policies and other policies with direct
influence on foreign trade, Policies that regulate other economic activities, but at the
same time influence the general performance of foreigntrade.
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Promotional measures and their
implementation
The range and intensity of a country'sexport promotion activities will depend on anumber of factors:
Human and financial resources,
The nature of products that can be exported,
the characteristics of foreign markets, the experience of organizations responsible for
implementing these activities.
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Export promotion strategies
Export promotion strategies are part of tradepromotion Enterprise Level
Industry Level National level
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Enterprise Level:
A limited number of commodities are available forexport, so export sectors depend on internationaldevelopments affecting the world market.
Industrial production of goods is limited by the lack ofdownstream activities, which does not allowenterprises to produce differentiated products forexport or provide some form of export diversification.
Export promotion strategies
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Enterprise Level: There is dependence on one or two key export
markets and supply sources, and this does not giveenterprises an opportunity to develop productsaccording to the standards of more developedmarkets. This also results in lack of knowledge aboutmarketing abroad.
Enterprises lack export readiness, which might be dueto unwillingness to venture overseas because thedomestic market offers comfort and security
Export promotion strategies
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Industry level:
Two kinds of export dimensions to consider
a)increasing the export of existing products
looking at what industries currently produce for exportto the world market
For many transitional and emerging economies,exports are mainly commodity and primary products.
Therefore an initial export strategy should focus onenhancing and consolidating the volume of export intoexisting markets as well as diversifying to otherexports markets.
Export promotion strategies
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Industry level:b) developing new exportable products,
dimension involves making an assessment of what newproducts could be developed for export markets.
These new products often originate from spin-offs ordownstream activities from existing core industries.
For example, the oil industry supports petrochemical industriesand oil equipment manufacturing.
Export promotion strategies
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Strategies should be based on comprehensive study of theexport potential for select products.
This will involve:
Clear identification of what is produced, planned productionin the near future and the most suitable markets for suchproducts;
Concurrent study of what is being purchased in foreignmarkets in order to suggest what could be produced in thecountry to satisfy the needs and opportunities of foreignmarkets;
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Clear indication of constraints or problems for exportsin terms of production or market conditions, whichshould lead to recommendations about how to solve
problems or counteract any constraints.
Export promotion strategies
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National level The government sets the overall economic direction
and trade development strategy.
Establishing the export dimension of this strategy interms of appropriate economic instruments andexport promotion measures is critical to nationalexport performance.
Therefore, the design of relevant trade policies is thekey to a successful national export promotionprogramme.
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Importance of export promotion and
development strategies
The national export strategy focuses on promoting anddeveloping those products and markets that offer the bestopportunities for a country.
Formulation and implementation of a national exportstrategy requires: A mechanism to co-ordinate policy formulation,
Active participation and a sense of responsibility by the various
bodies, institutions and officials involved, Persistent application of regulations, since frequent changes in
regulations can be the one factor that is most detrimental (injurious)to the success of export promotion and development programmes.
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The role of trade promotion organizations
in export promotion
Governments establish TPOs to develop and implement thecountry's export promotion and development programmes. To provide specialized support to the producers of products for export,
to serve as a catalyst for related services provided by other entities in thepublic and private sectors
TPO acts as an adviser to the government on foreign trade and related matters.
an effective bridge between the export community and the foreign
markets,
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Special Economic Zones (SEZ)
India was one of the first in Asia to recognize theeffectiveness of the Export Processing Zone (EPZ) model inpromoting exports, with Asia's first EPZ set up in Kandla in1965.
Special Economic Zones (SEZ) were set up by theGovernment of India to augment infrastructure facilities forexport production.
The Ministry of Commerce and Industry launched the SEZscheme in April 2000 to provide an internationallycompetitive and hassle free environment for export.
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SEZs are specifically represented for duty free enclavesand are deemed to be foreign territories for the purposesof trade operations, duties and tariffs
The main objectives of the SEZ Act are: generation of additional economic activity
promotion of exports of goods and services;
promotion of investment from domestic and foreign sources;
creation of employment opportunities; development of infrastructure facilities;
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INCENTIVE/ FACILITIES TO SEZ
100% Foreign Direct Investment (FDI) is allowed for townshipswith residential, educational, recreational facilities and franchisefor basic telephone service in SEZs.
Duty free import/domestic procurement of goods fordevelopment, operation and maintenance of SEZs.
Exemption from Service Tax and/or Central Sales Tax.
Income of an infrastructure capital fund/company frominvestment in a SEZ is exempt from Income tax.
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Generation, transmission and distribution of power inSEZs is allowed.
Full freedom in allocation of space and built up area forapproved SEZ units on commercial basis.
Authorization to provide and maintain services like water,electricity, security, restaurants, recreation centers, etcon commercial lines is allowed.
INCENTIVE/ FACILITIES TO SEZ
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Export Performances
Exports from the functioning SEZs during the last seven years
Year Value(Rs. Crore) Growth Rate (over previous year)
2003-2004 13,854 39%
2004-2005 18,314 32%
2005-2006 22,840 25%
2006-2007 34,615 52%
2007-2008 66,638 93%
2008-2009 99,689 50%
2009-2010 220,711.39 121.4%
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Advantages
The SEZ Act also provides a number of incentives to units proposedto be set up in SEZs. SEZ units may be set up for carrying onmanufacturing, trading or service activity.
A unit set up in SEZ has the following facilities and incentives:
15 year corporate tax holiday on export profit 100% for initial 5 years,50% for the next 5 years and up to 50% for the balance 5 yearsequivalent to profits
No licence required for import.
Duty free import/domestic procurement of goods for setting up of the
SEZ units.
Exemption from customs duty on import of capital goods, raw materials,consumables, spares, etc.
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Exemption from Central Excise duty on the procurement of capitalgoods, raw materials, consumable spares, etc. from the domesticmarket.
Exemption from payment of Central Sales Tax on the sale orpurchase of goods, provided that, the goods are meant for
undertaking authorized operations.
Exemption from payment of Service Tax.
The SEZ unit is permitted to realise and repatriate to India the fullexport value of goods or software within a period of twelve monthsfrom the date of export.
No routine examination by Customs officials of export and importcargo.
Advantages
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Disadvantages
Revenue losses because of the various tax exemptions.
Most players are interested in setting up SEZs with an eye on
the real estate bounty so that they can acquire at cheap ratesand create a land bank for themselves.
The number of units applying for setting up EOUs is not
commensurate to the number of applications for setting upSEZs leading to a belief that this project may not match up toexpectations.