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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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CONTINUED..
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTINUED
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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CONTD..
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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CONTINUED
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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CONTD
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
Recommended