Export Marketing1

7/29/2019 Export Marketing1

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EXPORT MARKETING


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INTRODUCTION

Export marketing means exporting goods to other

countries of the world. In export marketing, goods

are sent abroad as per the procedures framed by

the exporting country as well as by the importing

country.

Export marketing is more complicated to domestic

marketing due to international restrictions, global

competition, lengthy procedures and formalities and

so on.


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DEFINITIONOF EXPORT MARKETING

According to B. S. Rathor

Export marketing includes the management of

marketing activities for products which cross the

national boundaries of a country.

Export marketing means marketing of goods and

services beyond the national boundaries.


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IMPORTANCE OF EXPORT MARKETING

Earning foreign exchange

Exports bring valuable foreign exchange to theexporting country, which is mainly required to pay forimport of capital goods, raw materials, spares and

components as well as importing advance technicalknowledge.

International Relations

One way to maintain political and cultural ties with

other countries is through international trade. Balance of payment

Large scale exports solve balance of paymentsproblem and enable countries to have favourablebalance of payment position.


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CONTD..

Reputation in the world

For example, Japan commands internationalreputation due to its high quality products in theexport markets.

Employment Opportunities

More production opens the doors for moreemployment. Opportunities, not only in export sectorbut also in allied sector like banking, insurance etc.

Promoting economic development

Exports are needed for promoting economic andindustrial development. Large-scale exports bringrapid economic development of a nation.


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Optimum Utilization of Resources

There can be optimum use of resources. For example, thesupply of oil and petroleum products in Gulf countries is inexcess of home demand. So the excess production isexported, thereby making optimum use of available

resources. Spread Effect

Because of the export industry, other sectors also expandsuch as banking, transport, insurance etc. and at the sametime number of ancillary industries comes into existence tosupport the export sector.

Higher standard of Living

Export trade calls for more productions, which in turnincrease employment opportunities. More employmentmeans more purchasing power, which in turn improvesstandard of living of the people.


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STRATEGIESFOR ENTERINGFOREIGNMARKET:

-- It refers to the different routes that is undertaken toenter a foreign market

OR

-- The Modes of Entry

OR

-- Stages of Foreign Market entry


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Different routes to enter a foreign marketare the following:

1. EXPORTING A. Indirect Exporting-- B. Direct Exporting

2. FOREIGN PRODUCTION-- A. Licensing-- B. Contract

Manufacturing/ManagementContract

-- C. Local Assembly/Investment


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Indirect Exporting is one when a third party

arranges the documentation, shipping and selling of

an organizations goods abroad.

-- Refers to the lowest level of commitment to

international marketing

(The third party refers to independent middlemen of

four types )


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Indirect Export through four routes:

1. Domestic-based export merchanthere

the middlemen buys the manufacturers

products and sells them abroad on its ownaccount.

2. Domestic-based export agenthere the

agent seeks and negotiates foreign

purchases for a commission. Agents can

be in the form of individuals or a group of

people involved or trading companies


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3. Co-operative Organization exporting on behalf

of several producers and is partly under

administrative controls.

4. Export Management Company manages export

for its client for a fee.


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Advantages of Indirect Export :

1. Involves less investment

2. No spending on export department

3. No foreign/overseas sales force required4. No foreign contacts required

5. Less risk

6. First hand knowledge of the foreignmarket, through the middlemen

7. Fewer mistake by the seller.


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Direct Export:

As foreign sales grow, an organization often beginsto make a limited commitment, frequently

documenting itself/ deciding to handle their own

exports.


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Methods of Direct Export :

1. Domestic based export department.

2. Setting up an overseas sales branch

office/depot/subsidiary.3. Appointing and utilizing the service of export

sales representatives.

4. Foreign brand distributors or agent


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Foreign Production:

A. Licensingrepresents a simple way for amanufacturer to become involved in

international marketing. Here the licensorlicenses a foreign company to use amanufacturing process, trademark, patent,trade secret, or other item of value for a feeor royalty.The licensor gains entry into theforeign market at little risk; the licenseegains production expertise or a well-known

product or name without having to start fromscratch.


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B. Management Contract -- A company can enter a

particular foreign market through the management

contract route. Here a company can sell a

management contract to a party to manage a

foreign business such as hotel, hospital etc for afee. It is a low-risk method of getting into a foreign

market, since it yields income from the beginning.


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C. Contract Manufacturing :An entry

method, where the firm engages local

manufacturers to produce the product.

Contract manufacturings disadvantage is thatthere is less control over the manufacturing

process. Finally it offers the company a

chance to start faster, with less risk, and

with the opportunity to form a partnership orbuy out the local manufacturer later.


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D. Joint Ventures: Joint ventures are a part offoreign investment. It represents an extensive formof participation and commitment towardsinternational marketing.

Here foreign investors may join with local investorsto create a joint venture in which they shareownership and control.

Forming a joint venture might be necessary ordesirable for economic or political reasons. The

foreign firm might lack the financial, physical, ormanagerial resources to undertake the venturealone or the particular foreign government mightrequire joint ownership as a condition for entry.


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E. Direct Investment --(Ownership and Control/Manufacturing Facilities)

The foreign investment is another route throughownership or through a manufacturing facilitiespresence. The foreign company can buy part or full

interest in a local company or build its own facilities. As a company gains experience in export, and if theforeign market appears large enough, foreignproduction facilities offer distinct advantages- bysecuring cost economies, gaining a better image inthe host country, developing deeper relationship

with the government, customers, local suppliers etc. Foreign investments are undertaken in the l ightof long term strategic goals and ambit ions ofthe company.


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FOREIGN MARKET PRICING

Determined By Corporate Objectives.

Costs.

Consumer Behavior and Market Conditions. Market Structure.

Environmental Constraints.


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INTERNATIONAL MARKETING MIX: PRICE

Price discrimination: demand elasticity

Charging different prices in different markets

based on the elasticity of demand

More prices in case of inelastic demand of

product


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Strategic pricing

Predatory (quick share-of-market focus):

lower prices to drive competitors out, thenraise prices

Multipoint pricing:

pricing in one market may have an impact inanother market; subsidize low pricing inone market from profits in another

Regulatory issues: antidumping, monopoly restriction


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EXPORT PRICING

STRATEGIES

Standard worldwide pricing is based on

average unit costs of fixed, variable, and

export-related costs.Dual pricing differentiates between

domestic and export prices.

Market-differentiated pricing is based ondemand-oriented strategy making it more

consistent with the marketing concept.


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DUMPING

Dumping takes place when a firm or an industrysells products in the world market at prices belowthe cost of production.

REASONS

Generally a company dumps when it wants todominate a world market. After the lower pricesof the dumped goods have succeeded in driving

out all the competition, the dumping companycan exploit its position by raising the prices of itsproduct.


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Important: Whatever the motivation for dumping may be

A. Disposal of surplus stock or

B. Penetration of markets etc.

Dumping is basically an unfair trading practice underWTOregulations. Hence the governments of affectedcountries are allowed to impose special import taxeson offending products.


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GRAY MARKET

Impo rtant character ist ics-- Gray market channels refer to the legal export / import

transactions involving genuine products into a country byintermediaries other than the authorized distributors.

-- From the importers side it is known as ParallelImports.

-- Distr ibu tors , who lesalers and retai lers in a foreignmarket obtain the exporters product from otherbusiness enti ty. Thus the exporters legit imatedistr ibuto rs and dealers face compet it ion from otherswho sell the product at reduced p r ices in that foreignmarket.


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Conditions necessary for Gray Market:

Three Conditions are required:

1. Products must be available in other markets.

2. Trade barriers such as tariff, transportationcosts and legal restrictions must be lowenough for parallel importers to move theproducts from one market to another.

3. Price differentials among various markets mustbe great enough to provide the basicmotivation forgray markets.


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EXPORTMARKETING - DISTRIBUTION

Marketing through distributor in foreign market

Marketing through firms own presence

Component of physical distribution


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INTRODUCTION

DISTRIBUTION

Channels /Supply chain Physical distributionAgents / Logistics

Wholesalers

Retailers

= intermediariesTargetTarget

MarketMarket

Product Place

PromotionPrice

TargetTarget

MarketMarket

Product Place

PromotionPrice

TargetTarget

MarketMarket

Product Place

PromotionPrice


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DEFINITION Physical distribution :

Activities used to move products from producersto consumers and other end users

Goal Of Physical Distribution

Right Goods

Right Place

Right Time

Right Quantity

Right Support Services


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MARKETINGTHROUGHDISTRIBUTORIN

FOREIGNMARKET

Initial distributor selection

Distributor agreement

Financial and pricing considerations

Marketing support considerations

Communication


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NIKESDOITYOURSELF

1970s independent distributors

successful brand at home

1980s established ownsubsidiaries overseas

Now controls most subsidiaries

even bought some distributors


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MARKETINGTHROUGHFIRMSOWNPRESENCE

Firm has its own staff in market

Still deal with existing wholesale, retail , transportsystem

1 .Wholesaling in foreign marketDue to differences in the economy , level of

development, and its infrastructure so varying indegree of efficiency

size

service

pull strategy (heavy consumer advertising)


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2. Retailing in foreign market

Greater number , smaller size

Retailing service like carrying inventory , product

display

promotion of product etc.


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GLOBAL RETAILING

Department stores

Specialty retailers

Supermarkets

Convenience stores Discount stores and

warehouse clubs

Hypermarkets

Supercenters

Outlet stores


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GLOBAL RETAILING STRATEGIES

Organic

Company uses its own resources to open a store on a

green field site or acquire one or more existing retail

facilities

Franchise Appropriate strategy when barriers to entry are low yet

the market is culturally distant in terms of consumer

behavior or retailing structures


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GLOBAL RETAILING STRATEGIES

Chain Acquisition

A market entry strategy that entails purchasing a

company with multiple existing outlets in a foreign

country

Joint Venture This strategy is advisable when culturally distant,

difficult-to-enter markets are targeted

Documents

Export Marketing1