Developing Export Marketing Plan

8/2/2019 Developing Export Marketing Plan

1/23

1

Developing Export Marketing Plan

Emerging Marketing Scenario

The foreign markets are highly competitive; there are too many goods chasing too fewcustomers. As a consequence, the buyers are becoming highly selective; the markets are

fast turning into the buyer's markets. In such a market scenario, it is obvious that some ofthe exporters will be the losers and some of them will be the winners at the market place.

The winners would be those who enter the market with something different, something

special or something unique. But those who enter the market with something routinewould find it very difficult to do business at the global market place. This underlines the

need for developing an offer for the buyer which would give him/her the maximum value

for money. Obviously, the exporter who makes the best 'value rich offer' would succeed

at the market place. This scenario has also been projected by none other than the greatmarketing guru, Professor Philip Kotlar. According to him, marketing in the year 2005

would be done in an environment where "virtually all the products are available withoutgoing to the market. The customer can access products on the internet, shop among the

online vendors on the best terms, and click order and payment. Most companies havebuilt proprietary data bases containing information on individual customer preferences

and use them to mass customize their offerings. Businesses are doing a better job of

retaining customers by finding imaginative ways to exceed customer expectations.Companies are focussing on building customer share rather than Market share. An

increasing amount of personal selling is occurring over electronic media, mass TV

advertising has greatly diminished. Companies are unable to sustain competitive

advantages and believe that their only sustainable advantage lies in an ability to learnfaster and change faster." Thus, the emerging marketing scenario would be characterized

by the following features:

i) Foreign markets would be essentially buyer's markets.ii) The focus of marketing would shift from generating customer satisfaction to

achieving customer's delight; this would be achieved by offering the buyer

more than what he/ she expects.

iii) The main focus of marketing would be to achieve greater customer sharerather than to market share. The marketing strategies would undergo complete

transformation.

iv) The competitive edge of a business firm would depend upon its ability to learnfaster an, change faster.

v) The electronic media particularly the internet would play the dominant role inthe marketing programmes of the business firms.


2/23

2

Definition of Marketing

In simple terms, marketing refers to the set of human activities aimed at consummating

the desire exchange of things of value for satisfying the needs / wants of the people. It has

also been defined as a social and managerial process by which individuals and groups

obtain what the need and want through creating and exchanging products and value withothers. Analysis of this definition of marketing brings out the following features of the

marketing process:

1. Exchange process is the very essence of all marketing.2. The party which seeks exchange is called the marketer and the party with whom

exchange is sought is called the prospect.

3. The exchange is about a thing of value, be it goods or services. If a certainproduct or the service does not have the utility to satisfy the needs of the people,

then it will not be exchanged and no market would exist for such a product orservice.

4. The exchange process can be initiated by either the exporter or the importer. Theexporter initiates the process by participating in the trade fair or giving

advertisement on a websites or approaching a buying agent in his/her country or

an overseas marketing agent. An importer may initiate the process by giving anadvertisement in the trade magazines or on the web site or by circulating the trade

enquiry through the trade promotion body in the overseas markets.

The Marketing System

The term market can be defined as a collection of buyers and sellers who transact over a

particular product. It has nothing to do with a physical place where the buyers and thesellers used to meet traditionally to exchange goods. The developments in the fields of

communications and information technology have made it possible for the buyers and the

sellers to exchange the goods without even coming face to face with each other. Themarketers view the sellers as constituting the industry and the buyers as constituting the

markets. Thus, market for a product exists if there is a buyer for it. The relationship

between the industry and the market defines the marketing system. This system has beenexplained in Figure 1.


3/23

3

Figure 1: The Marketing System

The above diagram shows that the sellers and the buyers are connected by four flows.

The sellers send goods and communications such as direct mail, advertisements, etc. tothe market; in return they receive money and information in terms of attitudes, sales data,

etc.

Selling and Marketing

Marketing is a wider term and includes selling. Marketing is to know and understand the

customer so well that the product or service fits him and sells itself. Ideally, marketingshould result in a customer who is ready to buy. Then what is needed is to make theproduct or service available. Selling is the act of exchange. It is only tip of the iceberg

called marketing.

Marketing Management

Marketing Management refers to the conscious effort to achieve desired exchangeoutcomes with the target markets. It can be defined as the process of planning and

executing the conception, pricing, promotion and distribution of ideas, goods, services to

create exchanges that satisfy individual and organizational goals.

It requires considerable amount of work and skill to manage the exchange process

implicit in marketing. Marketing management becomes relevant when the parties either

the exporter or the importer thinks of bringing about the desired exchange with the otherparty. Marketing management is in fact the art and science of choosing target market and

locating, retaining and growing customers through creating, delivering and

communicating superior customer value.


4/23

4

Since exchange is the very essence of marketing management, it is important that the

marketer understands what the market desires and accordingly supply the same.

Marketing Environment

The marketing environment is result of inter play of a variety of factors which should berecognised by the marketers before managing the exchange process. The marketing

environment comprises of the following:

1. Competitive Environment2. Task Environment3. Broad Environment

Competitive Environment

Competitive environment is characterized by the competition to the firm's offering from

the actual and potential rival products and substitutes that a buyer might consider. Thecompetition in the market may assume any of the following four forms depending on the

degree of substitutability of the firm's product. These are:

1. Brand competition2. Industry competition3. Form competition4. Generic competition

Brandcompetition is provided by other business films offering the similar products and

services to the same group of customers at similar prices.

Industry competition is created when all the business firms making the same product orclass of product compete for the given market share.

Form competition takes place when the business firms provide the products that supplythe same service.

Generic competition is provided when all the companies try for maximising the marketshare of the same target customer group.

Task Environment

It comprises of all those business firms which are engaged in production, diminution and

promotion of the given product or class of products. These firms are the exeunt firm

itself, suppliers, distributors, dealers and the target customers.


5/23

5

Broad Marketing Environment

It consists of six different components namely, demographic, economic, natural,

technological, political-legal, and socio-cultural environments. These forces have a major

impact on the functioning of the firms constituting the task environment. The firms must

pay close attention to the trends and developments in these environments and maketimely adjustments to their marketing strategies.

Marketing Mix

Given the marketing environment, the marketers use number of tools to achieve desired

exchange in the target markets for their products or services. These tools constitute themarketing mix. Thus, marketing mix is the set of marketing tools that the firm uses to

pursue its marketing objectives. McCarthy has classified these tools into four broad

groups which he referred to as the four Ps of marketing namely; product, price, place and

promotion.

These four Ps of marketing in fact, represent the four distinct areas of decision making

from sellers point of view to influence and achieve the desired exchange. The decisionareas under each of these Ps are depicted in the Figure 2 given below:

Figure 2: The Marketing Decisions: Marketing Mix


6/23

6

1. Product Decisions

These relate to the decisions regarding product variety, quality, design, specifications,

brand name, packaging, size range, services, warranties and possible returns from the

product to the prospective customer.

2. Price Decisions

These relate to the decisions with regard to list price, discount/allowances, credit termsand payment period allowed to the buyers.

3. Promotion Decisions

These relate to deciding about the market entry strategies namely, advertisements,

creating web site, participation in trade fairs, working through buying agents or overseas

marketing agents.

4. Place Decisions

These decisions relate to the decision regarding channel of distribution to be used for

distribution of the product to reach out to the target customers. The decision in this regard

would relate to identifying me chain of various links involved in the process ofdistribution of the firm's product in the target export market. The links in the chain-

intermediaries- are the import agents, distributors, wholesalers, independent large

retailers like super markets, mail order houses, departmental stores etc. and the retail

stores. The decision regarding the link is vital as it would influence the price decision andthe profitability of the firm.

It is important to understand that the marketing mix decisions are taken to influence the

trade channels and the final consumers. A business firm prepares an offering (mix ofproducts, senses, and prices) and utilises a promotion mix of sales promotion, advertising,

trade fair participation, sales force, public relations, direct mail, telemarketing, and

interact to reach the trade channels and the target customers.

The set of marketing decisions outlined above can also be looked at from the customer's

point of view and each one is designed to provide a customer benefit. According toRobert Lauterborn, the seller's four P's correspond to the customer's four C's. These are as

follows:


7/23

7

1. Customer solution signifies that the product offered by the firm must providesolution to the customer as regards satisfaction of his needs / requirements. Astudy of the needs / requirements of the target customers is the starting point of all

marketing programmes and leads to the product development.

2.

Customer cost refers to the price at which the customer would be willing topurchase the product. It is customer who sets the price for the product in the

market; the seller has to simply follow it. The seller has to take a decision whether

he can sell the product at the price considered suitable by the customer.

3. Convenience: This relates to the most convenient way for the customer so buythe product. It represents the decision regarding the channel of distribution as setforth by the buyer by expressing his/her preference for a particular link in the

chain of distribution for procuring the product.

4. Communication: This highlights the fact that the communication with thecustomer should not be in the traditional sense of promotion of the product. Thecustomer should be treated as partner in business and the communication with

him/her should be planned accordingly. This brings into sharper focus the needfor developing the long term relationships with the customers. This would mean a

shift from transactions-oriented business to the relations-oriented business

policies and practices.

In view of the intense competition in the foreign markets, the exporters should take the

marketing decisions as described by four P's with the customer orientation as

characterised by the four C's. The successful business firms will be those which can meetcustomer needs economically and with effective communication.

The Marketing Concept

As explained earlier, exchange is the very essence of marketing. The business firm has to

plan for achieving this exchange. The effectiveness or otherwise of this exchange process

would depend upon the concept of marketing used by the firm, i.e., the focus of thisexchange process. Traditionally, the focus of this process was on the needs of the seller

and it was known as the Selling Concept. The primary concern of the seller was to sell

whatever had been produced. This made advertising, personal selling, branding andpackaging as important sales promotion tools. But over the years, the focus has shifted to

the needs of the customer and the concept has come to be known as the Marketing

Concept.


8/23

8

The marketing concept holds that a business firm can achieve its goals by determining the

needs and wants of the people in the target markets and delivering the desiredsatisfactions more effectively and efficiently than the competitors. The following

statements bring out clearly the focus of the marketing concept:

(i) "Make what will sell instead of trying to sell what you can make."(ii) "Love the customer and not the product."(iii) "Find wants and fill them."(iv) "Puffing people first."

The marketing concept rests on four main pillars, namely, target market, customer needs,integrated marketing and profitability as illustrated in Figure 3.

Figure 3: Marketing Concept

Target Market

The business firm cannot operate in every market and as such must identify the targetmarket and accordingly prepare its marketing programme.

Customer Needs

A business firm can define its market carefully and still fail at customer oriented

thinking. The latter requires the firm to carefully define customer needs from the

customer point of view, not from its own point of view. Every product involves trade-

offs, and management cannot know what these are without talking to and researchingcustomers. It is important to satisfy the customer because the sales turnover of a business

firm comes from two groups of customers: new customers and repeat customers.

According to an estimate, attracting a new customer can cost five times as much aspleasing an existing one. It might cost sixteen times as much to bring the new customer to

the same level of profitability as the lost customer. Customer retention is thus, more

important than customer attraction. A key to customer retention is customer satisfaction.A satisfied customer


9/23

9

1. buys again2. talks favourably to others about the business firm3. pays less attention to competing brands and advertising4. buys other products that the business firm later adds to its line.

Japanese businessmen say: "Our aim goes beyond satisfying the customer. Our aim is todelight the customer". In fact, this is a higher standard and a deeper quest and may be the

secret of the great marketers. They go beyond meeting the mere expectations of the

customer. When they delight a customer, the customer talks to even more acquaintancesabout the products of the business firm. The delighted customers are most effective

advertisers than advertisements placed in the media.

Integrated Marketing

Integrated marketing involves all the departments of the business firm working together

to serve the interests of the customer. This involves two things, one, the various

marketing functions sales force, advertisement, marketing research, etc. must becoordinated among themselves. Too often the sales force is mad at the marketing people

for setting "too high a price" or "too high a quota", or the advertising director and a brandmanager cannot agree on the best advertising campaign for the brand. These marketing

functions must be coordinated from the customer point of view. The other point is that

marketing must be well coordinated with the other departments of business firm; theymust "think customer". This means that each and every business firm manager/executive

should take decisions on the basis of their impact on the customer satisfaction. If their

decision would promote customer satisfaction then they should take it and otherwise they

should not go ahead with their decision. Marketing does not work when it is merely adepartment; it only works when all the employees appreciate how they can exert impact

on customer satisfaction.

Profitability

The purpose of marketing concept is to enable the business firm to achieve their objective

of earning profits by generating larger sales volumes through customer satisfaction.

Need for Export Marketing Plan

Export marketing plan is a part of the overall business plan of a firm. Every business plan

should start with firm's vision. Vision refers to the personal values and the core purposes

which are sought to be achieved through business. It is important that the owner of a firm

recognises his personal values and core purposes in the way the firm is conducting itsbusiness. It is a proper way of transferring his personal ambition to his business. This

makes for 90% of the success of the business firm.


10/23

10

The vision should be given concrete shape in the form of business plans. The

transformation of a vision - a dream into concrete plans- is called a strategy. The visioncould be "being the best" or "being the biggest". This vision should be reflected in

functional plans drawn for various functional areas of production, finance, research,

human resources and marketing. Export marketing plan is the most interesting part of

export business plan. A good product can be completely spoiled by bad marketing(particularly, the promotion). It is thus, important that when a business firm has decided

to start its export business then it must formulate an export strategy, i.e., a blue print for

competing with the firm's competitors in the target export market. In the development ofsuch an export strategy, import regulations and other trade barriers must be taken into

consideration as they have a critical impact on the outcome of the export venture.

Marketing Strategy

Strategy formulation is the core of any business activity. Marketing strategy is often

defined as the selection of a target market and the determination of the product, price,

promotion and distribution policies that the enterprise must implement. The marketingstrategy is in effect a blueprint for competing on target export markets. An explicit export

marketing strategy would provide a unified sense of purpose to the export firm. Anexport marketing plan is required to implement the marketing strategy.

Export Marketing Plan Defined

An export marketing plan is step-by-step guide to strategy implementation. It addresses

strategic issues and outlines the corresponding operational actions to be taken. It specifies

targets for each step. The plan should answer all questions on how the export firm'smarketing strategy is to be implemented and direct the enterprise in attaining the strategic

objective.

A business firm's marketing plan and its export marketing strategy are therefore, closelyinter-related. As the various steps in the plan are put into action, interaction between the

two should be continuous.

The development of an export marketing plan requires decisions on the role that

exporting is to play in the firm's growth, the scope and nature of the firm's product lines

and markets abroad, precise export performance goals and the level of managementcommitment to the export venture.

A plan is only as good as the quality of the basic data gathered and the analysis

undertaken during the planning process. It is important to involve all levels ofmanagement in this process and to ensure their total commitment for the successful

implementation of the export plan.


11/23

11

Contents of Export Marketing Plan

A typical export marketing plan focuses on the following aspects:

1. Marketing objectives2.

Market segmentation and positioning,3. Market research,

4. Characteristics of the product line,5. Export pricing,6. Distribution channels and7. Promotional strategies.

The plan should outline flee actions required in sufficient details: it should set out export

targets, budgets and activity schedules as well as assign responsibilities for its

implementation.

1. Marketing Objectives

The first step in developing an export marketing plan is to establish export marketingobjectives. These objectives should be attainable, realistic and clear and should be

communicated throughout the business firm. Since they will determine the business

firm's direction-and its activities, management will have to devote considerable time andeffort to setting them.

An analysis of the business firm is strengths, weaknesses, opportunities and threats, or a

"SWOT' analysis for short, can provide a guide to management for developing effectiveand realistic objectives. A SWOT analysis reveals the competitive advantages of the

business firm as well as its prospects for sales and profitability. It is usually based on an

evaluation on facts and assumptions about the business firm and on market research.

A business firm's strengths are its competitive advantages that will give it an edge in

export markets. Its weakness are its constraints, which may inhibit marketing activities in

certain direction. For example, a business firm having shortage of readily available fundscannot undertake a larva scale promotional campaign.

The assessment of a business firm's strengths and weaknesses in relation to thecompetition is essential for competitive positioning. This assessment from the point of

view of the competition should consider:

(a) technology in use(b)design styling and trademarks(c)product quality, quality control and products life cycle(d)completeness of the product line(e)customer 's service(f) raw material supplies(g)distribution structure and cost.


12/23

12

The review of opportunities and threats in the market should complement the analysis of

the business firm's strengths and weaknesses. The aim is to identify the best businessopportunities and directions of growth. A business firm's opportunities on possible

markets can be evaluated in terms of firm's customers, competing products, the market

structure and competing suppliers. Such an evaluation may reveal complementarily

between the business firm is strengths and market opportunities.

Finally management should examine the so called marketing threats on the market being

considered. These should include import rules and regulations relating to tariffs, quotas,non tariff measures and so on. Management should also determine whether the markets

under assessments are mature markets, that is, these are already well supplied and do not

therefore, provide a readily identifiable niche for the business firm's products.

2. Market Segmentation

An export marketing plan is not complete until the business firm has identified its target

segment in the export market. Any large market would have different market segmentsthat differ substantially from each other. Different consumer groups exist according to

income levels, age, lifestyle, occupation and education. A crucial element of the exportmarketing plan is to identify the segment of the customers that the business firm intends

to reach.

In making this choice, the business firm should answer the following questions; Who will

buy its products in the export market? Why will they buy these products? Where are

these customers located? What are their characteristics?

In this exercise it will be helpful to concentrate on within-segment similarities and

between segment differences. The business firm should choose the segment with the

requirements that fit its product specifications best. For example, if it produces high-

quality premium priced porcelain ware, its target segment is likely to be high-income,well educated young consumers.

A target market segment should be large enough to be profitable. An assessment of thesize of the segment should, therefore, be made before a final decision is taken to include

it in the marketing plan.

3. Market Research

To succeed in export trade, a business firm must identify attractive export markets and

estimate the export potential for its products in them as accurately as possible. Marketresearch and forecasting are therefore, of great importance. Factors to be evaluated

include the size of the market, the characteristics of demand, consumer requirements,

trade channels and the cultural and social differences that may affect the firm's way ofdoing business with the market.


13/23

13

A small producer contemplating entering export trade may not be willing or able to

allocate resources to expensive data collection methods. Firms in that situation can usepublished data to assess the market. They should, however, first evaluate the data for

reliability and accuracy.

4. Product Characteristics

The business firm should next consider the products that it has to offer. An analysis

should be made of any modifications required in the products, packaging changes needed,labeling requirements, brand name and after sales services expected.

Many products must undergo significant modifications if they are to satisfy consumer andmarket requirements abroad. Other products require changes at the discretion of the

producer only to enhance their appeal on export markets.

5. Export Pricing

In setting an export price, the business firm should consider additional costs that do not

enter into pricing for the domestic market. These include such items as internationalfreight and insurance charges, product adaptation costs, import duties, commissions for

import agents and foreign exchange risk coverage.

Export pricing analysis should begin with these questions: What value does the target

market segment place on the business firm's product? How do differences in this product

add to, or detract from, its market value?

In practice, these are difficult questions to research, but analysing the prices and product

characteristics of existing competitive products may reveal critical information. The

analysis may show that it is not the cost of materials that determines the product's value,

but rather the customer's perception of that value.

6. Distribution Channels

The potential exporter should consider the following distribution options:

a. Exporting through a domestic exporting firm that will take over full responsibilityfor finding sales outlets abroad.

b. Setting up its own export organization.c. Selling through representatives abroad.d. Using warehouses abroad.e. Establishing a wholly owned sales subsidiary.


14/23

14

The choice of distribution channel will depend on the business firm's export strategy and

the export market. An export strategy is a blueprint for selling on target markets. If thefirm intends to export a product that has a specific feature mat should be a good selling

point, to a market segment that is already well supplied, it may need to create greater

awareness of the product through an appropriate promotional strategy. In this case, it may

be better to appoint an agent who does not handle many products and can allocate thetime needed to promote that product.

Distribution channels should be chosen carefully and efforts should be made to maintaingood relations between the parties concerned.

7. Promotion

The export marketing plan should provide details on the following aspects of the

promotional strategy: publicity methods; advertising (who will be responsible for it, and

how much the firm can allocate to it): trade missions: buyers' visits; other promotional

activities (which methods to use, how much to allocate); and local export assistance.

It is important to emphasise that the success of export marketing plan would depend uponadequate customer support and detailed time table for its implementation.

Customer Support

An export effort will be successful to the extent that the firm provides effective customer

support. An exporter should remember that even the best product may fail without the

customer support to trade intermediaries and the end user. In addition, customer supportcreates goodwill and loyalty to the exporter.

Timetables

A budget must be established for the export marketing plan. This should cover such basic

aspects as sources of financing, use of the financial resources and a forecast of the export

venture's financial position after three to five years. A detailed timetable of activitiesmust also be drawn up.


15/23

15

Developing Export Marketing Plan: Some Practical Suggestions

The following practical suggestions should be kept in view while developing the export

marketing plan:

1. Exporters should be innovative

That is to say, the exporters should innovate new product designs, strategies and

promotional policies to improve the level of exports. This helps them to make 'value richoffers' that are better than the best.

2. Market niching may be the exporter's best option

Developing country exporters of manufactured products rarely occupy a dominant

position on international markets. The exporter should therefore, aim at a market niche

rather than at the mass market. One advantage of market niching is that it does not

require elaborate and expensive market investigations before market entry. A simplestudy of potential customer groups may be adequate.

3. Exporters should seek value-adding product strategies

Another implication of market niching is that attempting to achieve price leadership maynot be the exporter's best option. Product differentiation, branding, distinctive styling,

durable packaging, outstanding customer service, etc. could provide comparative

advantages on the export market and, therefore, eliminate the need to compete solely on

the basis of price.

4. Exporters should know the key buyers in the target market

Successful exporting often results from establishing strong relations with a keyintermediary with access to distribution channels in the export market. This intermediary

may be an importer, broker, trading business firm, or the business firm's distributor/agent.

Forming a business alliance with a reputable partner that can channel export products toappropriate distribution points is one of the most important tasks in exporting. Such a

task would fall under what is termed a "push" strategy. A contrast is provided by a "pull"

strategy which requires the exporter to be in direct contact with end-users or consumers.The latter is frequently a costly strategy and is therefore not feasible for the small and

medium-sized enterprise.

5. Exporters should choose their markets carefully

The choice of market can make the difference between success and failure in exporting.


16/23

16

6. Exporters should clarify their motives for exporting and set their objectives at the

outset.

They should know why they want to export and set their goals. Hopefully, the export

venture will contribute to both their profit-seeking and market expansion objectives.

7. Exporters should consider export market development a long-term investment.

Managers learn the tasks of exporting gradually, familiarity with export markets is gainedover time and business relationships evolve and are strengthened over a period of time.

Sustained efforts are therefore, essential in export marketing.

8. Planning and strategy development are essential for success in the long-run in

export trade.

9. Exporting requires technical expertise

The export Inn should have the requisite technical expertise, in addition to careful

planning and suitable products. Managers sometimes underestimate the complexity ofexporting tasks, the risks involved and the consequences of failure. A realistic

understanding of the commitment required to succeed in an export venture is essential.

10. No enterprise should seek entry into an export market until it is ready

Any attempt at exporting without experience in domestic marketing is bound to fail.

Research suggests that enterprises gain important skills, knowledge and confidence athome which often prove beneficial in the export markets as well.

11. The responsibility for the export effort should be assigned to a key staff member,

usually known-as Export Manager

Experience suggests that an export venture is more likely to succeed when a key person

in the enterprise is assigned the export task. This person can play a combination of rolesas change agent, motivator, resource person, organizer and so on.

Starting Export Business: Tips for Export Marketing

Export markets are different from domestic markets. These markets have different socio-

cultural environment; different legal system; different styles of negotiation; different

requirements for buying; different regulations governing imports; owning and disposingof property; a different currency that might fluctuate in value; conditions of corruption or

political favouritism and so on. It is thus, very important that the business firm should

keep in view these special characteristics of export markets while taking decision toestablish export business. An entrepreneur should consider the following useful tips while

deciding to establish export business:


17/23

17

1. Select the product and the target market on the basis of desk research even beforeconsidering to export.

2. Once a market has been decided upon, the entrepreneur should catty out in-depthstudy of the target market.

3. The aim of the first visit to the foreign market should not be to do business orlooking for orders. Rather, the first visit should be used to improve the

preparation for entering the market.

4. Evaluate all the information collected and then formulate a marketing strategy anddevelop a marketing plan.

5. Gaining foothold in foreign markets can only be effective on a long term basis.Thus, the entrepreneur should have the strong financial base.

6. The foreign buyers cannot afford to lose face and credibility by deterioration inquality or alternatives to price and/ or late deliveries. It is important to understand

the requirements of the foreign buyer before making commitments.

7. In exports, consumers are quality and price conscious in a market which enjoyslarge and varied supplies. Success or failure in business will depend upon

understanding this sensitivity of the foreign buyer. The entrepreneur should adopta consumer oriented approach to manufacturing and selling.

8. International markets are trend sensitive. Designs frequently change and theproducts may not remain in demand. It is therefore, necessary to be aware of thistrend and efforts should be made to keep up-to-date with the market trends.

9. Foreign markets, particularly in the developed countries, are often highlysegmented into different age and income groups. The exporter should select the

right market segment and accordingly position the product in the market.

Cultural Aspects of Export Business

In export business, it is very essential to understand the behaviour pattern of the foreign

consumers and buyers. The behaviour of people in any country is mainly influenced bytheir culture. A clear understanding the consumer behaviour helps in development of the

items for the purpose of exports. On the other hand, understanding the business behaviour

and practices of foreign buyers provides a vital input for formulation of a competitive

marketing strategy. Promotion of exports depends to a great extent on the marketingstrategy. There is thus, a need to study the culture of people in foreign markets and their

impact on the business behaviour of the foreign buyers.


18/23

18

Every country, every community has a culture of their own. Culture is defined as the sum

total of the values, customs, practices and taboos observed by the people of acountry/community. The culture of a nation or community affects the way we live, the

way we die, the way we organise and the way we perceive. It is a normal behaviour to

say that what is like our own culture is normal and 'good' and what is different from our

own culture is abnormal and 'bad'. The culture is learnt: not inherited. Culture of a nationis generally very stable.

The culture of a nation affects the way the people behave in business, i.e., businesspractices, values, etc. While planning for export business the managers and entrepreneurs

should understand the business culture of the prospective market. That is to say, they

should understand the following in particular:

1. The way the foreign customers think about and use certain products.2. The business behaviour of import firms.3. Business etiquette.

Use of Products

The following examples illustrate the way foreign customers think about and use certain

products:

1. The German and the French people eat more packaged food than the Italians.2. The average French man uses almost twice as many cosmetics and beauty aids as

does his wife.

3. Phillips succeeded in marketing coffee makers and shavers in Japan only after ithad reduced the size of its coffee makers to fit into smaller Japanese kitchens andits shavers to fit smaller Japanese hands.

4. General Foods Tang initially failed in France because it was positioned as asubstitute for orange juice at breakfast. The French drink little orange juice and

almost none at breakfast.

5. P&G's Crest toothpaste initially failed in Mexico when it used the U.S. campaign.Mexicans did not care as much for the decay-prevention benefit, nor did

scientifically oriented advertising appeal to them.

6. S.C. Johnson's wax floor polish initially failed in Japan. The wax made the floorstoo slippery, and Johnson had overlooked the fact that Japanese do not wear shoes

in their homes.


19/23

19

Business Behaviour

The exporters should respect the culture and traditions of the country with which they

want to do business. Since every society has its own norms for doing business, the

exporters should be fully aware of the customs and practices of doing business in the

foreign markets. This should cover the following aspects:

1. Punctuality2. How to address the individuals?3. How to dress up?4. Greeting practices5. Conversation with the buyers6. Fraternizing7. Negotiating styles

The following examples would illustrate the above points and their variations from onemarket to another:

1. Visiting exporters should value the time of their business partners and shouldalways arrive on time to business discussions. They should do this even if the

other party is not known for punctuality.

2. Different countries have different practices for addressing people in somecountries, one can come down to first names right away: in others, one will have

to be more formal and even use titles as a matter of course. There may also bespecial rules about addressing women. It is desirable that we address males as

Mr... and a woman as Madam... in business meetings.

3. In some countries, the dress code is formal; in others, it is informal or casual. Arethere any special conventions for women on matters of dress? Sometimes formal

discussions are followed by informal dinners or get-togethers. Here again,

customs differ on the dress code, going from formal to casual.

4. Different forms of greetings are used in different places. Shake hands may beaccepted in one country, but frowned upon in another; bowing may be the formalgreeting in some. Exporters should be sure that they know what the correct

practice is for greeting women. In some countries one may not shake hands with

them.

5. The negotiating styles and the practices for the conduct of business are differentin different countries. The following examples will illustrate these varying

practices.


20/23

20

a.) In face-to-face communications, Japanese businessmen rarely say 'No' to theother party and as a result, the other party is confused and may not knowwhere does it stand.

The Japanese do not hold negotiations individually; they would always come

in a group of two or more. They would not reveal their mind duringnegotiations because no individual takes the final decision in business matters.

The Japanese always take business decisions in group on the basis of

consensus.

The negotiations are long drawn with Japanese as they start business

negotiations only after there is a consensus in the business firm that theyshould proceeds to conduct the business with the foreign exporter. Once this

decision is taken than the Japanese businessman would like to ensure whether

it is possible to establish a long term relationship of trust with the foreign

exporter. If this condition is satisfied after holding general discussion with the

foreign exporter, then the Japanese businessman would hold businessnegotiations. Exporters should recognise this very important cultural

dimension of the behaviour of Japanese businessman and act accordingly.

b.) The Americans come to the point quickly whereas Japanese may find thisbehaviour offensive as they take time to reach the stage of business negotiations.

When American executives exchange business cards, each usually gives the

other's card a cursory glance and stuffs it in a pocket for later reference. In Japan,

however, executives dutifully study each other's cards during a greeting, carefullynoting business firm affiliation and rank. They give their card to the most

important person first.

c.) In France, wholesalers do not want to promote a product; they depend on retailersfor this purpose. Thus, any strategy to promote a product around wholesalers will

fail. It is interesting to note business people in France prefer top down and

autocratic decision making and so it is essential for a visiting business executiveto focus his attention on the top person in the organization.

d.) In Germany, the chief executive officer does not hold direct negotiations. Hewould first ask his deputy to discuss matters at the preliminary level and then

bring them to him for decisions.

e.) Business confidentiality can be problem during negotiations in Italy as theyseldom maintain privacy of the negotiations within the firm.

Italians prefer formal clothing in business to exteriorise the feeling of confidenceduring business discussions. There is little delegation of authority or effective

communications between different levels of managers in most Italian firms.

Employees have little say in decision-making; managers at the top level take the


21/23

21

decisions. They are not used to delivery of goods on time. They are also very

argumentative.

Italians are more concerned with aesthetics of presentation - clear and exact

during presentation. They prefer good faith in bargaining - polish and elegance

count for a great deal in business negotiations.

Italians prefer to look each other in the- face. They read opponent's expression to

gauge his/her position and can thus, decide when to increase demands or when toretreat. They have cultivated the art of appearing rich, even when they are not.

They would buy very costly things to create a spectacle of illusion.

Business Etiquette

The visiting exporters from India should understand the etiquette for doing business in

foreign markets. It is quite natural what is considered polite in India may be regarded asrude elsewhere. Such embarrassing situations in business can be avoided if the visiting

exporter from India is aware of the etiquette for doing business in the foreign market. Theprospective buyer will be highly impressed if the exporter reflects in his behaviour the

understanding of culture of the foreign buyer's country. It needs to be understood that the

personal image of the exporter created through his/her conduct has a direct bearing on the

image of his/her business firm. The golden rule of business etiquette is to be open-minded, nonjudgmental and flexible. While travailing abroad, exporters should keep the

following points in mind:

1. They should be more formal than they are in India.2. They should show full respect of their host when making introduction about

themselves or their team members.

3. They should never call individuals by their first name unless invited to do so.4. They should always use correct pronunciation5. It is discourteous to say 'No' to the invitation of the foreign buyer for lunch or

dinner.

6. It is desirable to carry a bouquet of flowers particularly if the host is a Germanbuyer.

7. Exporters should carry with them a few gifts while going abroad for businessmeetings. It is a good practice to give gifts in return to the hosts.


22/23

22

8. Business cards should be viewed as a statement about the status of a person. Assuch it should be given due respect. It is considered highly undesirable to bend,write on or put away the business cards while in the business firm of the person

who presented the card.

9. The exporter should bear in mind that there are different types of hand-shakes anddegrees of bowing.10.If you don't speak French, apologize for your lack of knowledge. The French are

quite proud of their language and believe that everyone should be able to speak it.

11.Germans are also sticklers for titles. Try to introduce people using their full,correct title, no matter how long it is. Also, Germans shake hands at both thebeginning and the end of business meetings.

12.Most Japanese businesspeople know what will be discussed at a meeting, howeveryone feels about it, and how it will affect their business before they even getthere. The purpose of a meeting is to reach consensus. A flexible agenda is

necessary so that discussions flow more freely. Foreigners should not try toadhere religiously to a set agenda.

13.While doing business with Koreans, Americans need to be sensitive to Korea'shistorical relationship with Japan, which made a virtual colony of the Koreanpeninsula. Koreans do not like foreigners to assume that their culture is the same

as Japan's. However, Koreans do have great respect for Japanese business

acumen, and like the Japanese they still observe Confucian ethics based onrespect for authority and the primacy of the group over the individual.

14.Although individual Latin American countries may vary in terms of businessprotocol, there are some commonalities. In Latin America, it's de rigueur to makeinitial face-to-face contact through an outside liaison who knows the customer's

business firm well. The liaison, or enchufe, introduces the salepeople or business

representatives to key players.

An exporter can contact embassies or High Commissions for any country-specific

information required on business etiquette.


23/23

23

Business Women and Conduct of Business

Businesswomen all over the world may face problems and prejudices in a business

scenario still dominated by men, particularly in access to finance. However, business is

business and if a good business plan is developed for discussion with prospective partners

in target countries, presentation by a woman should in principle raise no problems. Oneshould nevertheless know that women often have to perform better in order to obtain the

same results as businessman.

Regardless of the country in which a woman may choose to conduct business, certainrules of thumb apply:

(a)Dress conservatively.(b)Do not be coy or flirtatious.(c)Be careful and cautious when dining alone.(d)Do not give business gifts unless they can be used by the recipient's

family.

(e)Offer but do not insist on the other side joining during business lunch ordinners.

Documents

Developing Export Marketing Plan