Intl Mktg Notes

8/18/2019 Intl Mktg Notes

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Syllabus for International Marketing

Unit I Introduction :nature scope & challenges in international marketing, difference between domestic and international marketing strategies for internationalmarketing global marketing.

Unit II International Marketing Environment- Economic, Social, ultural, !olitical &"egal Environment, #echnological $actors %ffecting International MarketingEnvironment.

Unit III International Marketing Strategies-, !roduct Strateg, !ricing Strateg, !romotionStrateg & 'istribution Strateg. Methods to enter into I.Markets

Unit IV E(port !rocedure & 'ocumentation in detail, International EconomicInstitutions

Unit V E(port )isks $inance in I. M, E(port redit & *urantee orporation, E(im +ank

IM$, orld +ank, orld #rade rganiation /#0, EE /European Economicommunit0

Suggested Readings:

1. Mishra M. 2. -International Marketing Management, (ford & I+3 !ublishing, 14456. 7arshne ).". & +hattachara +., 8International Marketing Management9, Sultan

hand & Sons, 14445. herunilam $rancis, 8*lobal Econom and +usiness Environment9, 3imalaa

!ublishing, 61;. +ennett )oger,


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International Marketing Management

UNIT I

Introduction

International marketing consists of certain special features, which make it ?uite distinctive todomestic marketing. Marketing denotes the concept of marketing management whereb prices, product, promotion, phsical distribution and packaging are to be managed keeping inview the international environment.

Meaning and Concepts

International marketing is the marketing carried on across national boundaries. !hilip=otler has defined marketing as


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#he differences between domestic and international marketing are entirel because of thedifferences in national environments, differences in the organisation and programme. #heinternational marketing is found in the diversit of problems and the variet of strategies.International trade agreements ma cause further distortions. #he international marketinginvolves different tpes of languages, culture and traditions. #he domestic marketing workswithin a few languages, culture and traditions. !atriotism does not help in international

marketing but it is, ver helpful to domestic marketing. #he domestic market is much morehomogeneous than that of international marketing. 'omestic marketing deals with onecurrenc whereas international marketing deals with several currencies. 'omestic marketinghas uniform economic climate while international marketing has varied economic climates.!olitical factors and government interferences are least in domestic markets but the countma(imum in the international markets. onsiderable financial and non-financial risks are

present in international markets. #ransport cost influences marketing decision to a greate(tent.

International marketing generall has been divided into foreign marketing andmultinational marketing. $oreign marketing is marketing in environment different from thatof the home or domestic environment. Multinational marketing is world oriented. It has twoor more national markets across the national boundaries. It arises because a compan issimultaneousl marketing its products in more than one national environment.

INTERNTI!N" MR%ETIN& VS# INTERNTI!N" TR$E

International marketing and international trade are interchangeable. +ut the are not thesame in real sense. #he international trade is primaril related to e(ports and imports. It takes

place when buers find foreign markets cheaper and sellers find them more profitable todispose them of. #he comparative cost and natural resources have been the basis of international trade.

#he international marketing is a wider connotation. It is confined not onl to sale and purchase and depending on the international trade theories, but it is a new discipline andstrateg to e(port for survival and widening of the e(isting markets for growth. hileinternational trade is primaril concerned with balance of trade and pament problems, #he

International marketing aims to e(pand the e(isting markets in foreign countries and penetrating new markets b appling various strategies of marketing management.International marketing is the means of achieving the profit b selling or persuading a

potential customer to bu the product. #he needs, wants and preferences of the customers arethe determinants not onl of product characteristics but also of pricing, distribution,advertising, promotion and services. #he total set of marketing activities known, as themarketing mi( is the components of international marketing. n the other hand, internationaltrade is least concerned with these individual activities.

International trade has been developed as a result of government@s efforts. #he countr as awhole bothers about the international trade whereas individual marketers devote their effortsto achieve profits in the international market. #he international trade views the profit as afunction of sales and the international marketing view the profit as a function of providing

customer benefits.'arriers to International Marketing

International marketing as discussed above is not free from difficulties and barriers. #hemarketer has to follow time-consuming procedures and meet the trade regulations. #he tariffsand ta(es increase the prices of goods to be marketed. It creates tough competition with thedomestic goods. #he trade restrictions also influence the volume of goods to be e(ported. Itindicates that there are several barriers to international marketing. *enerall these barriers aredivided into two parts:

/i0 #ariff barriers and

/ii0 2on-tariff barriers.


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(i) TRI** 'RRIERS

#he tariff barriers are the barriers of ta(es imposed on the e(port and import of goods.'uring the period of laisse faire, such barriers were ver nominal. Even toda, countriesadopting bilateral or multilateral agreements lessen such barriers. riginall the tariffs wereimposed to meet the revenue re?uirements of the countr. #he government is in a comfortable

position to impose ta(es to meet the e(penses of securit, defense and administration of foreign trade. *raduall the tariffs became a successful instrument to protect indigenousindustries against the competition from the foreign products.#he tariff makes the imported product costlier and the product of indigenous industries

become cheaper. #he import duties collected are used to subsidies the costs of production ofindigenous industries. #he tariffs or duties ma be levied as a fi(ed percentage of the value ofimported goods. $i(ed sum of mone ma be charged upon the commodit. % modified valueadded method is being used to bu ta(es on import and e(port. #ariff barriers ma be e(portduties, import duties, transit duties, subsidies duties and anti-dumping duties.

(ii) N!N+TRI** 'RRIERS

2on-tariff barriers create difficulties in e(porting of goods. #hese non-tariff barriers aregenerall rules, regulations and restrictions.#hese are not the duties or levies. #he ma be ?uantitative restrictions, foreign e(changeregulations, technical and administrative regulations: health and safet regulations, priorimport duties, legal formalities, state trading and procurements.

UNIT II

International Marketing En,ironment

International marketers are facing a diversit of marketing environment in which the have tooperate their business. #he international marketing decisions are constrained with theenvironments. #hese factors influence the marketing sstem. #he environment has beenvaring from countr to countr making it difficult for the marketer to cope with differentsituations of different nations. )ealisation and understanding of different culture, tradition,

political Sstems, and other factors of all countries. #here are several factors influencingmarketing decisions. #he ma be termed as controllable and uncontrollable factors. #hecontrollable factors are product, price, promotion and distribution. #hese are also known asinternal factors or marketing mi(. #hese are called controllable factors because the marketer can e(ercise some sort of control over these factors. #he factors which are uncontrollable areknown as environment or e(ternal factors which shape the market mi( decisions of theinternational marketer. #he environment ma be economic, social and cultural, political,regional and legal. #hese are analsed in the present chapter.

Economic En,ironment

#he economic differences of various countries influence the market significantl. #he

economic capacit of a countr has direct impact on the pattern of buing and selling b the people. #he differences in the standard of living have relevant bearings on the marketsstems. #he per capita income is the basis of a particular standard of living. #he per capitaincome has been used to classif the world econom into developed and developing economthe developing countries, sa countries having per capita income less than C6> are havingsimple market. Income#he income of people is a more valuable economic variable to decide the pattern and structureof international marketing. !opulation of the countr cannot be ignored because it is

population after all which has to purchase particular goods or services. #he per capita incomehas been therefore used to decide the level of living standard and purchasing behaviour. neshould not be misguided b the gross national income. #he disposable personal income per

population is a deciding factor to determine international marketing mi(. #he householdhabits are simultaneousl decided b the marketer to assess the pattern and trend of market.


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Population!opulation is an important factor to determine market potential. It was observed that about

D per cent of the world market was accounted b 1 most populous countries. #he worldtrade and population increased simultaneousl. 'uring the second half of the centur world

population increased at a higher rate. onse?uentl, the world market also increasedsignificantl. It is natural because the demand for food, clothing, shelter, education, etc.

increase as per number of consumers increases. 3owever, the market does not increase at par with increase in income. #he developing countries with ma(imum population have differentmarket patterns. #he developed countries have low population. #he basic necessities are the

predominant needs of the developing countries whereas the developed countries re?uire thelatest and sophisticated articles.

Age and Education#he number of inhabitants is the guiding factor to decide the market pattern. #he

demographic features are similarl more important to decide the market potential and trend of the market. orking force ma need different tpes of commodities and services whereas thedependents need basic articles for their growth and survival. 'eveloping countries have alarger number of dependent populations whereas developed countries have less number of dependents. #he market is wide and varied for educated population whereas the needs of non-

educated population are ver simple and do not re?uire much of technical comple(ities.Trade Pattern#he trade pattern also influences the marketing structure. #he raw materials and other

resources are being e(ported b the developing countries to the developed countries whereasthe industrial products are being e(ported from the industrialised countries to the developingcountries. It has been observed from the data of International #rade published b *%## thatthe industrialised countries have accounted more than D> per cent of world trade whereasdeveloping countries accounted about 6 per cent of world trade of which 1> per cent wasshared b oil e(porting developing countries. #he eastern trading countries took about 1 per cent of the world trade. % maAor portion of e(port of the industrialised countries was e(portedto other industrialised countries. #hus the competitors of industrialised countries are also bestcustomers. 'eveloping countries were also e(porting a maAor share of their e(port to theindustrialised countries. Eastern trading countries have e(ported maAor share of their e(port

to eastern trading countries. #he highest e(porting countries have been the S%, esternEurope, Bapan and anada which accounted for more than F per cent of the world trade. #hema(imum importing countries have also been these countries.Consumption Pattern

Income is the guiding factor to determine consumption pattern and the relationship between income level and consumption pattern is known as per Engel@s law. %fter knowingthe consumption pattern, the market structure can be decided. #herefore, income is used todefine market segmentation, Ernst Engel has pointed out that when income grew above acertain level, e(penditure on food as percentage to total income decreases although theabsolute amount of e(penditure on food-articles ma remain the same or ma increase. It isalso revealed in term of developing and developed countries. #here is inverse correlation

between *2! per capita and income elasticit of demand for food. #he income andconsumptionGpattern have important influence on the market. $or e(ample, the sale of air conditioners will not be popular in less developed countries whatsoever ma be the level of hot climate. +ut, people of developed countries in north most regions ma not re?uire air-cooler. #he allied products@ sale is also decided accordingl.

Social En,ironment

#he social environment shapes the international marketing in different manner. onsumer- behaviour and purchasers@ practices are greatl influenced b the sstem of societ, socialattitude and behaviour, social institutions and other social environment of the customer countries. #he international marketing manager should adapt his business practices as per social environment of the buing countries. #he marketing mi( is decided as per socialenvironment. #he primitive social sstem has progressed into proliferation of organisation.#he government tries to serve the interests of societ b controlling business sstem and the

marketing manager should understand clearl the marketing sstems of various societies. #heeducation religion and famil sstem are the important components of social sstem and these


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sub-parts should be clearl understood b the manager. 3e should know how phsical goodsenter in a particular societ and more from one societ to another societ. 3e must haveknowledge how various components of social environment influence the marketing process.#he marketing implications in the different social components should be properl assessedand evaluated to form proper marketing mi(.3uman bahaviour in groups and social settings are guidelines to formulate laws and

generalisations about human nature, Social interaction and social organisation. #heindividuals who compose each social class are not identical even though the are of e?ualstatus. !eople of the same social class generall live in the similar kind of houses, havesimilar food habits, dress the same kind of clothes, have similar tastes, literature andinteractions. #he marketing manager having deeper knowledge of these things can succeedand attain the obAectives of sales and profit.

Cultural En,ironment

ulture environment is another important e(ternal factor, which mould the internationalmarketing culture, and is a part of human environment. It is a sub-total of mankind@sknowledge, beliefs, morals, customs and habits of the societ. It has become a pertinent stud

of international marketing. #he marketing manager when designing the marketing mi( e.g. production, promotion, prices and phsical distribution must consider the culture of thecustomer countries. #he marketing mi( should be culturall acceptable. #he@ marketingmanager@s efforts acceptable as per culture will decide the degree of success. 3e should beculturall sensitive so that he can evaluate, appreciate and adAust his marketing decision as per attune of the nuances of culture. #he success of marketing operations abroad depends on anawareness and understanding of the basic differences in culture of his countr and of customer countries.

E"EMENTS !* CU"TURE

ulture includes all parts of life. Specificall the ma includethe following elements:

a. Material Culturei0 #echnologH

ii0 Econom.

b. Social Institutionsi0 Social rganisation and $amil sstemH

ii0 EducationHiii0 !olitical Structures.

c. Belief of People

d. Aestheticsi0 )eligionH

ii0 %rtH iii0 $olkloreH iv0 Music.e. Language.

a) Material Culture

#he material culture is related to the economic and commercial attitude of the populationHthe affect favourabl to increase the marketing opportunities. #he material culture has beendivided into technological and economic culture.

i) Technological culture: #he technological culture is related to the technical know-how possessed b the people of societ. It affects the means of production adopted for the purpose of getting different tpes of production. In a poor countr, hightechnolog is considered a waste and is undesirable. #he national income can be used

in a better manner for construction of houses, clothing and food. #he sophisticatedtechnolog is, much prevalent in developed countries. #he technological culture is


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INTERNTI!N" ".S

International laws are those rules and principles of states, which are binding upon themselves.#he laws ma belong to one countr or to more than one countr pertaining to propert, trade,immigration etc. "aws not mutuall agreed upon cannot be binding to the countries. If one

nation refuses to submit to arbitration or does not recognie unfavourable Budgement, theother nation can do nothing. #hus, there is need of mutuall agreed international laws.!reviousl laws were decided on state-b-state basis. #he common laws governing the +ritish'omain were applicable to all the colonies and allies of *reat +ritain. #he )oman laws werealso used for the purpose of civil, commercial and criminal laws. #he commercial laws havetheir own administrative structure, propert rights and other formal laws. #he common lawswere based on previous rulings and traditions. #he propert laws were based on ownership.International laws were used for preventing war or dealing with problems of war. #he have

been related with the actions of sovereign states and were not related to individuals.

*actors ffecting International Marketing

International marketer has to face different challenges and problems. #hese challenges are

known as environments, which ma be controllable as well as uncontrollable factors. #heaffect the marketing decision.

INTERN" C!NTR!""'"E *CT!RS

ontrollable factors are those factors, which can be influenced b the marketing managers.

#he internal controllable factors are product, price, promotion and distribution. #he internal

factors can be managed b the marketing manager. #hese factors are also known as marketingmi(. It should be noticed that these factors are not perfectl controllable because the market

situation and behaviour are not within the decision limit of the firm. ne individual firm can

modif and manage its product, price, promotion and distribution according to internal and

e(ternal environments.

INTERN" UNC!NTR!""'"E *CT!RS

#he environments of the countr wherein the marketing activities are decided and governed

are not controllable. #he ma be socioeconomic climate, political forces and competitive

structure of the market within the countr. #he culture of the countr shapes the sie and

structure of the international marketing. ulture is the pattern of learned behaviour vi.,

language, habits, religious and moral beliefs, knowledge, attitudes, values and other

behaviours of the maAorit of the population. !schological and sociological behaviours of the

population of the countr influence the marketing decisions to enter in the international

market.

$ig. 1.1. $actors affecting international marketing


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E/TERN" UNC!NTR!""'"E *CT!RS

#he marketing manager has to face e(ternal uncontrollable factors while taking his marketingdecision. #hese factors ma be government regulations, political forces, social and culturalforces, economic forces, competition, level of technolog, geograph, and distribution

patterns. #he domestic base of international marketing tries to forecast the environmental

conditions and adAust the marketing mi( accordingl. #here ma be severe difficulties inadAusting the decisions as per e(treme conditions of political environments, socio-economicand cultural climates. #hese are the main challenges to which the international marketing hasto cope with in designing the programme. #he assessing and forecasting of international

business climate are difficult tasks. #he alien status makes the tasks of international marketingmore difficult. !olitical ramifications and other conditions make the problem comple( toconfront. hange of governments in international markets becomes ver critical, because itma result in e(propriation, e(pulsion and restrictions on the operations. #he uncertaint of consumers@ behaviour in foreign market ma re?uire close stud of operating environment.Strateg of marketing in one countr ma not be successful in another countr.

UNIT III

INTERNTI!N" MR%ETIN& STRTE&IES

-R!$UCT STRTE&0

'eveloping international marketing involves planning and development of markets. #hemarketing program decides what products are to be sold, how to be sold and where to besoldJ #he product planning is adapted as per changing desires and needs of customers. #he

product planning is adapted based on domesticall successful products. #he developinginternational marketing includes: /10 'eveloping onsumer !roducts for $oreign Markets, /60Marketing Industrial !roducts and Services and /50 International !romotion Strategies.

1# $e,eloping Consumer -roducts

#he consumers@ desire and needs are constantl changing. #he marketing plans andorganisation have to be aware of the changing pattern of consumers. #he selling and

producing of consumers@ goods basing on domestic pattern are not ver desirable strateg of marketing development. #he differences between domestic market and international markethave to be observed to find out a successful wa of international marketing. It is wronglassumed that the patterns of consumers desires and needs at the domestic market will alsoremain the same in the foreign market. #he Self-)eference riterion /S)0 can be successfulonl with certain modifications. #he national, regional and international plans should bedeveloped to meet the re?uirements of different markets. #here is need of deciding productstandardisation, product line product adaptation, product diffusion, product innovation andconsumerism for planning and developing consumer products for international markets.

-R!$UCT STN$R$ISTI!N

#he uniformit of product or product standardisation offers a number of advantages.Economies of scale or cost savings are significant advantages of standardisation because itdelimits a number of models and variant products. 3enr $ord demonstrated these advantages

b adopting standardied products. #he cost saving is achieved in production techni?ues,!ackaging, advertising and distribution. #here is saving of cost in research development.Standardied product provides more mobile consumption worldwide. onsumers can developstandardied programme in their operations. #he image making is possible with standardised

production. Image of a product ma create pschological favour in the international markets.#he technological improvement tends to favour standardisation. #he @standardisation have

been proved ver successful in international marketingH but it has certain limitations.#he standardisation ma impose several obstacles in international marketing. #he


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culturall uni?ue markets ma re?uire different tpes of products. Since the worldwidemarkets have different cultural and economic patterns, onl different tpes of products canmeet their respective re?uirements. Standardisation is less costl and more rigid to penetratein world-markets. #he cost saving in standardisation and benefits of differentiated productsshould be compared to decide the product specifications. It is well-settled polic that slightmodifications in the standardised products should be made to meet the varing re?uirements

of the consumers.

-R!$UCT "INE

International marketing planners should consider the product line to meet the differingre?uirements of consumers in different countries. #he ?ualit, ?uantit, prices and promotion

planning have to be adapted as per needs and desires of the varing consumers. #he marketer ma decide either to sell the same product throughout the world without an distinction or modification or adapt the product as per tastes and needs of the consumers. hen theadaptation in the e(isting product does not serve the purpose of the consumers, new productcan be developed to meet their re?uirements.

#he same product but differing promotional media can meet the re?uirements of the people

having different cultures and tastes. #he same product and the same promotional media can be another strateg to meet the re?uirements of the consumers. $or e(ample oco-cola havethe same product line and promotion polic worldwide and have proved successful in mancountries. #he inspecting cars of developed countries ma be used as ta(i-vehicle indeveloping countries, which re?uires different promotion polic for the same product. #hethird strateg ma be adopting new phsical products with the same promotion polic as usedin the domestic markets. $ruit powder ma be consumed b mi(ing with water or milk depending upon the habits of the consumers of different countries. #he new product with milk is arrived at although the promotion strateg is the same. #he fourth strateg of product line isto change the product as well as the promotion-polic. It meets the different re?uirements of the consumers at different culture. hanging the design and sie of clothes with changed

promotional-message can meet the re?uirements of clothes of different consumers in severalcountries. #he fifth strateg of product line is to develop product altogether with the changed

promotion-polic. #he tractor needs of farmers in developed countries are totall differentfrom the tractor-needs of the developing countries. #he operation, the utiliation andmaintenance re?uire different advertising messages to educate people of these countries to usethe different sie, shape and power of tractor. #he si(th strateg of product line ismodification of product with the same strateg. !roducts are adapted for countr to countrwith the same promotional measure. #he product is adapted as per culture and economiclevels of the consumers using the same promotion-polic.

-R!$UCT $-TTI!N

% product ma be suitable in one market but ma not be suitable in another market. #he producer has to modif the product to meet the re?uirements of different markets. $unctional

re?uirements var from market to market. #he products are used for different purposes andthe man facets of product have to be e(posed to meet the diversified needs of the consumers.It should be noted that the product is not the abstract commodit to satisf wants but is thevirtue and tenets of the products to satisf different wants of the consumers. Since there aredifferent needs and desires of several consumers, the product is modified to meet their respective demands. ulture is woven to shape the demands besides the economiccharacteristics. #he product adaptation ma take the form of phsical adaptation and culturaladaptation.

a0 Physical Adaptation: !roducts are modified to meet the different needs of foreign markets.#he electrical appliance of 220 volts ma not be suitable to Bapanese markets as the use 11volts electrical art can interrupt the agreement. #he barter sstem although full of disadvantages has been used b man barter houses who help development of world market. .


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-RICIN& STRTE&0

#he marketing manager has to fi( appropriate price for international marketing so that pricing polic is fi(ed within the range of prices governed b competition, market situations,government regulations and economic factors. #he prices formulated are administered indifferent manners in different countries. #he pricing concepts, obAectives, factors, strategies

and administration are discussed under international pricing @polic. -ricing Concept

!rice is defined, as e(change value of goods and services and it is a measure of what onecan e(change in order to obtain a particular commodit. 'emand, cost and competition arethe important factors to determine the price. #he marketers are faced with governmentregulations and ta(es. #he high transportation costs, middlemen@s role, channels of distribution and multinationals@ role greatl influence the pricing polic. #he pricing polic isinfluenced b political, cultural and socio-economic conditions of the manufacturer@s countrand of the customers@ countries. #he pricing strategies are decided on the comple( marketsituations. Some marketers ma use the pricing as a tool to beat the competition. 'ifferentmarketing situation forces the manufacturer to use fle(ible pricing policies. Sometimes, pricesare fi(ed at lower level in one market and at higher level in another market. !rice escalation,

price skimming etc. are used to administer the pricing policies. #he international marketershave to review the pricing policies form time to time to make more effective pricing in thegiven situation, intracompan competition, national and international laws, international@competitions, tpe of product etc.

-ricing !b2ecti,es

!ricing obAectives are established considering various social obligations such as

consumers, emploees, shareholders, and public interest apart from the marketing and

corporate considerations. #he pricing obAectives ma be divided into three categoriesH

profitabilit obAectives volume obAectives and others.

#he profitabilit obAective is related to ma(imiation of profit and profitabilit. #he profitma(imisation is considered as business bAective. It aims to ma(imise the sale. #he marketer tries to ma(imise the market@s share in the market abroad. #his obAective is used onl for those international marketers who have small business and do not believe in marketing mi( asinstrument for increasing sale, and in that case price is not ver useful instrument to ma(imisesale. #he volume obAectives or the marketing obAectives have been the main obAectives of thecompan whereb the prices are considered to be instrumental to increase volume of sale or market share. #he compan can tr to influence the prices at the final consumption level. #he

prices are considered along with the important marketing mi( for e(pansion of the market.#he total prices paid b the consumers minus distribution prices are considered the mill net

pricing which are received b the manufacturer. Marketing has considered pricing aKH verimportant instrument for penetrating and preserving the market. #he competition in eachcountr has maAor share in finalising the prices.

ther obAectives have included intra compan obAectives and socioeconomic obAectivewhich are related to minimisation of ta( burdens duties, profit balancing, repatriation of

profit, continuing growth and proliferation of marketing activities. #hese factors are takeninto account to determine optimal prices.

#he cost, market and competition situations are important factors to be considered for aiming certain obAectives. Sales at prices over and above fi(ed and variable costs are knownas bonus sale which add to net profit and can be used to recompensate the loss on account of sale at price commensurate onl with the variable cost #he full pricing theor ma notachieve the market-obAectives but variable cost pricing ma be the case of dumping whichma attract ahtidumping laws. #herefore the manufacturer has to be ver cautious to fi( tbe

prices at appropriate level.

-ricing Strategies

#he manufacturer emplos several strategies to counteract the price-problems. 3e maadopt lowere price to penetrate new markets and higher price to crack foreign markets. ith


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the given obAectives of market and business, the pricing strategies ma be price listing,geographical pricing, pschological pricing, skimming pricing, penetration pricing, pricefle(ibilit, line pricing, promotional prices transfer pricing and price escalation.

-RICE "ISTIN&

"isting of prices on cost and other bases assures the customers about the reliabilit of the price and the product. In absence of declared prices, the distributors ma manoeuvre the prices for their self benefits ignoring the interests of the manufacturer. #his list prices are the basis for determining the practical prices to be charged from the consumers. #he list prices arelevelled on the products and circulated with booklet and leaflets. #hese prices are determinedon the basis of demand, cost, competition and distribution strategies. #he market prices arearrived at discounting the prices listed and this discount ma be cash discount, ?uantitdiscount and trade discounts. ash discount is given for repament of the credit within aspecific period or at the cash down purchase. #he tradition cash discount "e. 6-1 net 5 isver well known among the merchandise. It means if the cash is repaid within 1 das of the

purchase, 6 per cent discount is allowable on invoice price. #he ma(imum period of credit is5 das. #he ?uantit discount is granted because of large purchases made b the middlemenor consumers. #he trade discount is paid because of some marketing functiol1s being

performed b the buer or middlemen. It is also known as functional discount. #hemanufacturer ma grant certain percentage of invoice value to the wholesalers and retailersfor performing marketing functions, particularl distribution functions. Similarl, themanufacturer ma offer promotion allowances, brokerage allowances and other allowancesfor enhancing the market share.

&E!&R-3IC" -RICIN&

*eographical pricing is determined on the areas basis and logistics. #he $ree on +oard/E.+.0H ost, Insurance and $reight /."$.0, +asing !oints and Lone pricing are the severalforms of geographical pricing. #he E.+. refers to the price whereb the buers pa thefreight charges. #he owner@s title and responsibilities pass to the importers immediatel after

loading the products on the ship or carrier. ost, insurance and freight /."$0 refer to the price whereb the cost, insurance and freight charges are paid b the e(porters. #he basing point pricing designates some place as base for charging the freight cost to the place of consumers. Lone pricing is fi(ed as per one. #he geographical pricing is used to impresscustomers.

-S0C3!"!&IC" -RICIN&

!schological pricing is based upon the assumption that certain price-range is moreappealing to consumers. !rices ending with odd number are preferred b man consumers.$or e(ample, the ma prefer )s. 1>.4> to )s. 1D.. Some consumers ma prefer unit

pricing i.e. e(pressed in terms of some recognied unit of measurement. !ricing based on wellformulated polic is known as creative pricing which are recognised b man managers.

S%IMMIN& -RICIN&Market skimming is a deliberate attempt to reach a segment of the market who are willing

to pa higher price because the product has high value to them. Man estern companies puthigh price for getting the benefits of sophisticated people. #he manufacturer is in a position torecover sunk costs from the surplus of gain based on the skimming pricing. #he loss indumping is recouped b the surplus of skimming pricing. ne of the several purposes ofskimming pricing is to ma(imise the revenue received from the sale of new product beforegetting an competition. %t a later stage, the prices are reduced to get the benefits of lower

prices in competition.

-ENETRTI!N -RICIN&

!enetration pricing believes in lower prices to enter in the market. onsumer goods aregenerall demonstrated higher sale at penetration pricing. #he new competition does not enter


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in the market because of fear of loss at lower prices. +rand popularit is increased throughlower prices. #he penetration pricing is used for innovative product hoping to with the desireof a large number of consumersH prices ma fall further as the scale of operation e(pands.#his strateg is used where the market is highl sensitive to prices and reduction in cost of

production is e(pected in future. It discourages present and potential competition.

-RICE *"E/I'I"IT0!rice fle(ibilit assumes that the market can be attracted at different price-level and

variable pricing is more suitable where individual bargaining is involved and one pricestrateg ma suit the re?uirement of mass selling. #he variable pricing has the advantages of selling to different consumers. It has significant edge over the competitors@ prices.

-RICE "IVIN&!rice living is the practice of marketing merchandise at a limited number of prices. $ew

prices are determined and the consumers are free to select an price fi( and not between thetwo price-lines. #he price lines are indicative of ?ualit. Each product line has separate price.

-R!M!TI!N" -RICIN&

#he promotional prices are the ingredient of selling strategies. #he manufacturer can offer man pries, additional products and other facilities. #he prices ma var from place to place,customer to customer. ompetitive bidding ma be involved for promotional purposes. #heseasonal prices and off-season discounts attract more customers. ash rebates ma also attractmore consumers to the product. Several other pricing methods have been emploed to

promote the sale.

TRANSFER -RICIN&#ransfer pricing is the pricing pattern for sending goods from one branch of a compan to

another branch of the compan. #he manufacturer performs the task of marketing ondecentralised basis in man cases. )aw materials work in progress and inventor ma betransferred from one branch or office of the manufacturer to other branches or offices of manufacturer in other countries. #he ?uestion lies how much pricing sstem should be takeninto account for transfer of these goods. #he manufacturer ma transfer the products and rawmaterials at direct cost or at direct cost plus overhead e(penses or at price prevailing in themarket depending upon the situations and re?uirements of the transfer or and transfereeoffices.

-RICE ESC"TI!N!rice escalation is the remarkable increase of the imported products@ price. #he escalation

is done to set off the e(penses incurred b the importer for transportation, dut ta(es andmargins. #he manufacturer can search the international manufacturing sstem to have lowcost based merchandise to avoid price escalation@s adverse impact on the sale and thedistribution cost has to be mitigated to bring the total price at competitive level. #hemanufacturer can start production in the customers@ countries if the price escalation become

prohibitive. #he manufacturer has to evaluate different alternatives of the price escalation toadopt the best alternative.

-R!M!TI!N STRTE&0

!lanning for international promotion has important effect on the marketing mi(.'evelopment of a suitable promotion-strateg depends on the appropriate planning. #he

potential market can be e(ploited onl at the effective planning and strategies of developing promotional media. % promotion mi( includes advertising, sales promotion, per sonal sellingand personnel of sales force. #he development of promotional strateg for the success ininternational marketing involves determining the promotional mi(, standardisation,developing effective massage, selecting appropriate media and developing worldwidemarketing obAectives. #he development of international promotion polic faces the cultural

variations which have direct impact on the markets. #he international promotion strateg isdiscussed under advertising, sales promotion, personal selling and managing sales-force.


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$VERTISIN&#he advertising has been considered an effective tool of sales promotion in national as well

as in international markets. 'ifferent media of advertising have been used in differentcountries depending upon their acceptabilit b the potential consumers. #he advertisemente(penditure have been increasing in all the countries. #he advertisement educates people

about the uses of new commodities. It changes the e(isting patterns of culture and customs.Ever countr tries to create demand through advertisement for e(pansion of market. #headvertising brings together the product alread made or would be made with the present and

potential consumers. ith the improvements of the communication sstem, the advertising isgetting more popularit amongst the marketers. #he advertising can be analsed under organisation challenges and media selection.

i) Organisation: #he advertisement can be made b independent agencies or b the companitself. #he compan can avail the services of independent agencies which ma be either domestic agenc, foreign agenc, multinationals and coordinating agencies. #he domesticagenc provides local e(pertise. #here ma be several advertising agencies in a countr. #hemarketer has to select anone or man of them. #he international agencies have less cost

because of foreign approaches. Multinational agencies will be again cheaper because of their

worldwide network. #he coordinating agencies have no wide-spread branches of their own but have the facilities of coordinating activities of other agencies. =ickbacks are prevalent inman developing countries for the agenc commission. #he self-advertisement is not vereffective sstem of advertisement because of lack of e(pertise in these areas. 3igh leveltalents in advertising man have to be emploed b the compan, which would prove costlier.oncentration on advertisement will be not relief funds for other purposes. #here are severalother problems of self-advertisement

#he advertisement re?uires effective communication which ma change from time to time, product to product and countr to countr. #he basic strateg of advertising is to useinternational communication media, determine use of local marketing and creative talents,encourage creative people, measure creativit and identif common-factors and differences. .

#he costs and benefits analsis of the advertisement is done to decide its effectiveness. It

can be used onl when it can contribute economicall and effectivel to the compan. #headvertising budgets and sales thereon are compared to decide the role of advertising.

ii) Challenges: %dvertising is a creative strateg. It has to face the creative challenges of law,language, culture, media, production and compan polic. %ll the advertisers have to resort

basic advertising policies of procedures, media and research. Ever advertiser createsdifferent campaigns for each countr. #he basic purpose is to motivate people to purchase theadvertised products. #he advertising has legal restrictions almost in all countries. #here arecertain limitations on e(penditures of advertisement, the media of advertisement, tpe of

product, price of advertised products and other aspects of advertisement. #he advertisementma be challenged in a court of law if other competitors consider the claims of the advertisersas false or based on wrong notions. #he advertisement e(penditure ma be ta(ed. #heMonopol )estrictive #rade !ractices %ct imposes certain restrictions on e(penditure on

advertisement. #he legal and ta( regulations are not uniform in all the countries and the varfrom countr to countr.

International polic of advertising faces another problem of language. 'ifferent languagesare used in different countries. #he linguistic nuances and vernaculars are different in thedifferent markets of the world. #he local dialect ma have ?uite opposite meaning of thestatement. #he illiterac or low level of education ma be another bloc of print media. #heuse of verbal media is desirable there. In Indian conditions, the verbal mode of advertisementwill be more effective. #he multiple languages in India have made advertisement moredifficult. #he language translation will not be ver effective because idiomatic and figure of speeches. #he advertising language re?uires some specific words and phrases which areselected after a proper understanding of the language-culture. #he communication involvesthe cultural heritage and social inheritance. #he advertiser of the local language can use the

word and writing ver effectivel reveal how far the advertisement be resisted if thegovernment or people are of the view that it has harmed the consumers@ interest. #he


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advertisers have to consider these challenges in proper perspective.

iii) Media Selection: Selection of advertising media is another problem of advertising planning. #he advertisers are facing numerous problems in selecting media of advertisement because of non-availabilit, higher cost and less-coverage of particular media. #he advertisers should be aware of the media-restrictions, media-convenience and

specialied media of advertisement. Man countries have ver few media of advertisement. Some of them are too costl to be availed b an average advertiser. Somemedia do not commonl approach the people. Magaine, Aournals and newspaper media arenot ver useful in India because of high illiterac figure. )adio and television ma beeffective media of advertisement in such countries. n the other hand, radio and televisionare ver costl. *overnment has restricted fre?uent uses of radio and television for advertisement. nl permitted messages and visual designs can be broadcasted andtelecasted b these media.

#he coverage of advertisement will reveal how far a particular media of advertisementma work in a particular societ. #he media, massage and cost are important factors todecide the acceptabilit of the advertisement. % large number of media should reach themaAorit of the world population. #he cost factor in broadening the coverage should betaken into account to reach even to neglected areas. #he lack of data ma not substantiate

the advertising polic. It re?uires data on income, age, education and other market potentials. #he advertisers can var their advertising policies and procedures as per needsof advertisements.

SE"ECTI!N !* $VERTISIN& ME$I

Selection of advertising media is a difficult problem. #here ma be different

advertising media in particular countries having their respective scope and limitations. In

Indian conditions, several thousands, magaines and Aournals in different languages are

available. Innovative media ma benefit the advertisers ma(imum while ignoring the

drawbacks of traditional media. #he econom moves up graduall in ever countr and it

changes the needs of the people. #herefore, the marketing ma re?uire new media of

advertisement. 2ot onl the media but the specific message and presentations of the media

are undergoing drastic changes as per economic development. #elevision has taken lead inthis direction. It has much more impact on the consumers. ther media of advertisement

are getting less share of advertising. #he international marketers have to consider the

changing patterns of media of advertisement. #he specific attributes of newspaper

magaine, radio, television and other media are discussed for the purpose of selection. .

a) Newspapers: 2ewspapers have been traditional medium of advertisement. It contributedsignificantl in market e(pansion and had remained a prominent medium of advertisement.#here are lakhs of newspapers throughout the world. Selection of some specific newspapersdepends on various factors such as market potential, culture, language, economic status of theconsumers, rules and regulations of advertisement. #he newspapers charge ver high pricessometimes, for advertising. #he authentic and more popular newspapers charge ver high

rates. #he cost ma var from time to time and da to da. #he advertisers have to be verselective in such process. #he scarcit of space ma re?uire pre-booking for advertisement.#he lack of newsprint has added to the problems. If the newspapers are ver popular, the costof advertisement will be ver high. #he services of advertising agencies ma be availed for

booking advertisement in good newspapers although there are ver few advertising agenciesin India and Middle East. #here are some advertising policies adopted b the newspapers todelimit the space for advertisement. #0le international newspapers have been used for advertising international products. %ll the principles of selecting newspapers for advertisement are taken into consideration for international marketing.

b) Magazines: Magaines are selected after proper scrutin because some magaines havewide circulations, some have specific readers, some are totall unsuitable for the specificmessages. #echnical magaines are used for industrial products whereas house magaines are

suitable for consumers goods. #here are space and cost restrictions. #he effectiveness of advertisement in a particular magaine is studied and evaluated before its selection for the


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purpose. International magaines ma include advertisement of international markets. #helocal magaines are also suitable for the international markets provided the messages arecarried in local languages. If technical magaines are not available for the technical products,the advertisement in common Aournals ma be done. In India, technical magaines are scarceHthe advertisers, therefore, adopt common magaines for the purpose. #he advertisement inmagaines must mention the distribution channel to have effective impacts on marketing.

c) Radio: )adio has become ver common medium of advertisement in almost all thecountries because of its popularit and cheaper cost per unit of audience. Even illiterate

people can get the message of advertisement through radio. In developing countries, the radiohas proved a ver good media of advertisement. Some countries have speciall earmarkedcommercial radio stations for advertisement. #here ma be some restrictions on the radio

broadcasting of commercial nature. *overnment-owned radio has specific announcements.#he advertisement is not free and frank although advertisement b such radio stations havemuch more effects on the population because it has become a rare and selectiveadvertisement. #he non-government radio channels ma permit free competition inadvertisement. Since the television telecasting is costlier in man countries, the radio

broadcasting has become popular in these countries. #he contents and audiences of the radioadvertisements are suitabl selected to give more fruitful results. #he alcohol and drug

industries cannot avail the radio advertisement because of their impact on societ in generaland children in particular. Some international broadcasting institutes are functioning in theinternational markets although their time and cost are prohibitive to be adopted b advertisers.#he commercial radio stations are becoming selective in broadcasting because of competitiveattitudes developed after their broadcasting. .

d) Teleision: #elevision has become a maAor media of advertising. #elevision in developedcountries is more popular. It reaches a larger number of populations. In developing countries,it has not been so popular. Man audiences do not view television regularl. #he televisionadvertisement has to be ver selective to telecast the messages onl when a larger populationview the television. In India, more than per cent of the population viewed television onSunda to view the telecast of )amaan and Mahabharat serials. It was considered verappropriate time of advertisement. #herefore 1> minutes advertisement was permitted b the

'oordarshan 'epartment. Sunda evening moveies have second place of attracting audiencefor television advertising. Man governments have permitted use of television for commercialadvertisement whereas other countries such as India and hina have restricted use of television for commercial advertisement. #he time of television advertisements is limited inman countries. #he audiencemeasurement is essential before restoring television advertisement because viewers of television are limited in@ man countries. #he view television onl at a specific time and theserials. #he costs and benefits of television advertisement should be compared to take adecision for television advertisement.

e) Other Media: #here are other media of advertisement which can be used for internationalmarketing. #he ma be cinema, direct mail, posters, e(hibitions, fairs, etc. for advertisingthe product, messages to local population. #he international marketers can hire local

advertising agents or appoint international advertising agencies to conve the messages of new products. inema hacH become powerful media of advertisement in developing countries

because a larger population view the movies in absence of ade?uate facilities of television andvideos. 'irect mails are effectivel used in developed countries. #he cost of direct mailingma be high but the addressee ma feel it ver much personal. #he communication is made assurprise and onl to those who are related to the products. $or e(ample, man international

publishers directl mail the booklets mentioning the subAect-matter of the books published tothe teachers concerned of the subAect. niversit 'irector provides the addresses of theteachers emploed in various universities. Similarl industrial products are alsocommunicated to the persons concerned.

)oadside posters are used to demonstrate the ?ualit of the product, speciall, transport- products. E(hibitions and fairs have been used to popularise the goods and services. % largenumber of e(hibitions, fairs and demonstrations are made b Indian producers in England,.S.%., .S.S.)., Bapan, est *erman and other countries. #hese media of advertising areselected after e(amining their effectiveness, cost and appropriateness to the concerned


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products.#he communication principles should be taken into consideration for affecting an

advertising media. #he information process involves seven steps: information source,encoding, message channel, decoding, receiver and feedback and noise. #he socio-culturalinfluences are taken into consideration for devising the advertising media #he process isinterrupted b noise at ever step. #he language, culture and social sstems ma disturb the

process. #he international marketers, therefore, use the process with precautions and inconsistent with the marketing environment.

S"ES -R!M!TI!N%ll activities which stimulate consumer purchases are known as sales promotion. In the

wider sense all functions such as advertising, personal selling and sales force managementma be termed as sales promotionH but in stricter sense, it relates to discounts, samples,coupons, awards, pries, free-distribution, public-competition, public entertainment and soman other activities which directl motivate the buers to purchase the products. %dvertising

personal selling and sales force are not directl influencing the buers to purchase the products. #he sales promotions are specific and short-term.

Sales promotions are directed towards consumers@ satisfaction through product

introduction, product-trial, displas and personal efforts. #he consumers are provided achance to e(amine the product attributes and be satisfied with the attributes. Such trials andattempts help the customers to purchase the product. *roup demonstration of use methods of the new product helps incre.:@1se the sale of the product. #he promotion-methods differ fromarea to area. In rural areas different methods of sales promotion have been used. #he vehiclesand other promotion-vans are carried to rural areas to demonstrate the utilities of the product.Sales-depots in hill regions have facilitated the use of the product. In absence of distributionchannel, no promotion is possible in interior rural areas. #he retailers are given some facilitiesto distribute the goods.

#he local facilities b international marketers ma enhance the marketing opportunities. Itre?uires appointment of local people for the purpose. #he distribution vans have increased themarket. !rag Milk distributors have purchased several milk vans to distribute the milk ininterior areas of cities. #hese vans procure milk from rural areas and process them in thefactor before distribution. It has increased suppl of milk and milk-products. #he oca-olaand !epsi ola have several vans in the same manner, which distribute the bottles of softdrink to retailers. #he empt bottles are also collected b the vans. #his has facilitated supplof the soft drink even b multinationals into interior rural areas. #hese sales promotionalactivities have increased markets faster than those of the advertising media. 2o one methodcan be said the most effective tool of market-e(pansion. #he international marketer shoulduse all the techni?ues of market e(pansion.

-ERS!N" SE""IN&#he third method of international marketing promotion is selling of the products b

persons of the companies. #he persons ma be emploees, representatives, agents anddeputed persons of the companies. #he take responsibilities of selling the products. #he

emploees in foreign markets deal directl with the middlemen consumers there. #he sales-force ma be appointed from the domestic countr as well as from foreign countries whereinthe marketing activities are being performed. It is advisable to appoint persons from theforeign countries. #he sales-force is divided into three categoriesH vi., e(patriate salesperson,foreign salesperson and cosmopolitan salesperson.

i) E!patriate Salesperson: #he e(patriate salespersons are those who are working in foreigncountries other than their own countries. #hese persons are moving in the countr or in morethan one countr to find potential consumers. #he are e(perts in the selling methods andhave ac?uired ade?uate training, knowledge and e(pertise. #he provide a platform for themarketers to increase their businesses. Since the foreigners in other countries are considered asmbol of high reputation, the get more business in foreign markets. #he are technicalle(perts and have necessar calibre of business-promotion, the should be encouraged to

dispose of industrial products.#he can be appointed for foreign assignments for varing periods. #he ma be


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temporaril appointed for a particular period depending upon the nature and re?uirements of the companies. #he return back to ponent compan after the e(pir of the period. #hee(patriate ma also be appointed for life in a particular countr. #his gives him permanentunderstanding of the local culture, political situations and other environmental conditions of the countr. #he marketing potential can be e(ploited in more effective manner be(patriates. #he onl problem is of cost. #he charge higher wages than the foreign nationals

because the local people are available at lower cost. #he also suffer from legal barriers andunwillingness of the sales force to live abroad. #he cannot contribute significantl if the areawa from their families. #hus, the e(patriate salespersons are being replaced b foreignnationals for e(pansion of market.

ii) "oreign National: #he services of foreign nationals are used for marketing purposes because the are e(pert in local culture and tradition. #he know better how to use themarketing techni?ues to influence consumers because of intimate knowledge of theconsumer@s behaviour. #he cost of services of foreign nationals is lower than that of other salespersons. 'omestic knowledge provides them ade?uate platform for training. #he foreignnationals can ac?uire knowledge

$ISTRI'UTI!N STRTE&01# $istribution !b2ecti,es

#he international marketers decide the obAectives in specific terms to achieve the missionof international marketing. #he broader obAective or the corporate obAective helps formulationof long-term policies and plans whereas the targets are decided for the short-tern proceduresand programme. #he targets and goals for each countr should be specificall decided so thatthe marketing personnel of the related countries can understand their respectiveresponsibilities. #he task assigned to each and ever marketing e(ecutive should be neither too much nor too little. #he targets and task mast be scientificall evaluated and properldistributed to the concerned personnel. #he obAectives of the compan must be properldefined and mentioned for the benefits of the e(ecutives. #he formulation of obAectivesinvolves consideration of customer characteristics, product characteristics, environments andmiddlemen.i) Customer characteristics: #he distribution obAectives are decided on the basis of customers@ characteristics vi., income, habits, distribution pattern, and reaction to sellingmethods. 'ifferent distribution channels are used for meeting varing characteristics of thecustomers. #he distribution channels are widened if the number of customers is large. #hemanufacturer ma contact the customers directl if the are ver few. If the are large, thedistribution is made via wholesalers and if the number is larger enough, the producer ma ask the wholesaler to contact the retailer for prompt suppl of the goods to the consumers.

ii) Product Characteristics: #he product characteristics such as perish abilitH servicere?uirements, unit price and designs are used for considering the distribution channels. #hedistribution cost adds to the total price. If the production cost is high and the distribution cost

is also highH the total price will be e(cessivel high. #herefore, the producers tr to abolish or lessen the distribution cost to bring the total price at competitive-level. #he e(pensive,complicated and sophisticated goods have special distribution obAective. E(perienced andtrained salesmen can deal with such products effectivel. rdinar retailer cannot besuccessful middleman for the purpose. !erishable commodities re?uire direct e(porting sothat these articles can reach to the consumers in time and the consumers can get fresh articles.If it is not sold directl, the producers have enough control on the sales force so that theconsumers ma get fresh and ?ualitative articles within the limited time. %ll the productcharacteristics are analsed, therefore, to formulate feasible and correct obAectives.

iii) Enironments: Environmental characteristics are properl evaluated for determining thedistribution-obAectives. #he environmental characteristics ma be economic, social, politicaNand legal conditions in different countries. #hese environments influence the international

markets differentN in differnet countries. #he economic states influence the marketssignificantl at different time in a countr. #he sociocultural conditions influence the marketsin their respective patterns. Super market and multiple@ stores have been used b higher-


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income level consumers. #he have capacit to store and income to purchase goods in bulk and since the are bus with other activities, the like to purchase goods in sufficient ?uantitto meet the re?uirements of a specific period. n the other hand, small income groupconsumers purchase their consumption goods almost ever da.

#he economic and social environments have much influence on the marketing pattern.#herefore, the obAectives of the distribution sstem should be moulded to meet their

re?uirements. "ow income and sociall backward people have dail purchasing habits. InEastern Europe, India and %frican countries, such practices are more common. n the other hand, high-income societ owns storage facilities, refrigerators and other facilities. #herefore,the purchase onl once or twice in a month. #he international marketers, therefore, adoptstrategies suitabl to meet the re?uirements of different environments.

i,) Middlemen Characteristics: #he middlemen desire to increase their respective profitabilit and not that of manufacturer. If an new products are manufactured, the re?uire big push from the wholesalers and retailers. #he manufacturer b providing a higher rate of commission stimulates the middlemen to push up the sale of his product. #he manufacturer ma sometimes arrange direct selling to avoid the costlier middlemen. hen themanufacturer has gained in the market, the middlemen can approach even at a liberal term of sale. #he ma adopt more direct distribution sstem if such salesmen are not available. #he

distribution obAectives are decided considering these characteristics of the middlemen.4# $ISTRI'UTI!N STRTE&IES

#he marketing manager confronts a variet of distribution strategies in the international

markets. #he strategies are varied because of different patterns and alternatives of

distribution-channel in the host countries. +esides the variations in marketing channel, some

basic policies are formulated. #he are broad and fle(ible to adopt the market situations in

different countries. #he distribution strategies include basic polic, considerations of cost,

capital, control, coverage, and character and continuit of channels.

'SIC -!"IC0

#he marketers decide the basic polic for distribution of goods and services on the basis of terms of sale, channel-length, margins and control. #he basic polic is established consideringthe developing international distribution, rate of return on the distribution-pattern, specificmarketing goals and other marketing phenomena. #he basic policies are divided into long-runand short-run policies. #he policies are fi(ed and confirmed so far as their basic foundationsare concerned, but are changeable as per local conditions and marketing re?uirements. #hefle(ibilit and adaptabilit are the important considerations of the basic polic.C!ST

#he cost is important factor to decide the distribution channels. ost involves channel-cost, capital cost of evolving distribution channel and maintenance cost of the channel. #hecosts ma be in the form of commission to various middlemen, margin and markup. #hedistribution cost should be minimised to the possible e(tent. It is the difference between the

total price paable b the consumers and the cost of manufacturing. Sometimes, it becomesdifficult to forecast the distribution cost because of changes in the channels or interruption of the pipeline. #he minimising of distribution cost is ver essential to compete in the marketsH

but, it does not mean that the middlemen and other persons mobilising the distribution should be discarded because the have their important contribution to the international marketing.'irect selling becomes more costl in man cases than involving of middlemen. #he real testof cost-strategies is to e(amine the cost involved in distribution and additional revenuederived from the distribution channel.

C-IT"apital re?uirements and cash flow are taken into account while deciding distribution

strategies. #he direct e(porting ma involve huge mone for establishment and distributionchannels. #he capital for appointing middlemen ma re?uire mone onl for inventor, loan

and other facilities to middlemen. %gent middlemen ma re?uire less investment. n theother hand, the direct selling ma provide immediate cash flow. #he middlemen ma also


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give immediate cash to the producers if the have such terms of saleH but, man distributorssell the goods to the middlemen on credit-term. #he well established companies have constantcash inflow from the distribution-channel.

C!NTR!"ontrol on distribution channel becomes essential to have effective result thereon. #he

direct selling has more control on the distribution and compared to the middlemen. #hemiddlemen ma not take deep interest in prompt selling of the goods. #he are biased btheir attitude and margins. Each channel arrangement has different levels of susceptibilit tocontrol. #he manufacturer must e(ercise control over the price, ?uantit, methods and formsof distribution channels. If the manufacturer does not have an control on these factors, themiddlemen ma manoeuvre the distribution against the interests of the producer. #he control

pattern is dependent upon the nature and character of the middlemen. % sound and reputedmiddlemen ma tr to give more margins to the producer. #he provide more marketfamiliarities and better understanding of the market. #he have full commitment and maAor contracts with other distributors. %ppointment of such honest and sincere middlemen ma

provide desired control on the distribution b the producer.

C!VER&E#he distribution strategies must aim to ma(imie the coverage. % broader distributionchannel would have wide coverage. Man companies ma be interested to penetrate in themaAor populated areas rather than wide coverage even in less populated areas. #heconcentration of selling in a thickl populated area ma be more useful than selling in wideldistributed population. #he producer ma like to concentrate on distribution at lucrativemarkets and neglect nonprofit able markets. #he purposes of coverage strategies are, gainingthe optimum volume of Oale, securing a reasonable market share and attaining ade?uatesuccess in each market. #he coverage is difficult in competitive markets. #he producers haveto e(ercise ingenuit to penetrate into new markets for increasing the distribution-coverage.

C3RCTER #he character of the product and of markets decide the distribution strategies. #he perish

abilit, bulk, comple(it, sales services and the value of product are considered for the purpose. #he evaluation of character is ver difficult. #he compan@s standards should betaken into account for deciding the strategies. 'istributors, wholesalers and retailers are the

points of distribution channels which decide the strategies.

C!NTINUIT0#he distribution channel should continue for a longer period. #he middlemen and agents

often discontinue their contracts and so producers should appoint those distributors whoremain almost constant. #he middlemen maintain loalt with the producers. #he channelstrategies should balance the cost, capital, control, coverage, character and continuit for deciding the distribution strategies. #he gravit, push and pull strategies are adopted for channel strategies. #he gravit strategies assume that the manufacturer depends mainl on

the middlemen whereas the push strategies believe in direct controlling and motivating theconsumers. #he pull strategies re?uire intensive advertisement and image building and suchstrategies are adopted as per needs of the markets and environments.

UNIT IV

E/-!RT -R!CE$URE

#he e(port procedure starts from the date of registration of the e(porter. #he e(port procedure in India involves the following steps:

1. E(port fficer and )eceipt of Indent6. %rranging the *oods

5. Shipping %rrangement ;. !reparations for E(port

>. ustoms and E(change $ormalitiesD. !lacing the goods on boards


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F. Mate )eceipt. Effecting Marine Insurance4. +ill of lading

1. ther Shipping 'ocuments11. Securing !ament16. btaining E(port Incentives

#here is no definite se?uence of the procedure in some cases although the above se?uencesare maintained in man cases.

E/-!RT !**ER N$ RECEI-T !* IN$ENT#he e(porter offers sale to the foreign buers which ma be in the form of proforma

Invoice or Puotation. #he Puotation contains the name and address of the buer, descriptionof goods to be sold, prices, conditions of sale and other provisions vi., deliver schedule

pament terms, contingenc clause, arbitration clause, escalation clause etc. #heresponsibilities of the e(porters are also described. E(-factor price is ?uoted in domesticcurrenc. #he importer ma like the ?uoted prices up to his warehouse. It facilitates theimporter to import the goods easil. 3e can compare the price with local competitors. #hee(porter has to ?uote this price known as frame price at competitive level. #here are two other

forms of price ? uotation, vi., $ree on +oard /E.+.0 and ost, Insurance and $reight /e"$.0.nder $ree on +oard /E.+.0 ?uotation, all e(penses upto deliver of goods on board the shipare borne b the e(porter. #he importer takes the responsibilities of paing subse?uente(penses of freight, insurance and other e(penses. nder ost, Insurance and $reight /."$.0,the e(porter pas all the e(penses of freight, insurance, cost and transportation up to port. #heimporter pas the e(penses after arrival of the goods at his port. #he ?uotation includes?uantit, ?ualit, prices, terms of pament, discounts etc.

#he e(porter receives the order or indent from the importer or his agent which contains allimportant particulars of the transactions e.g. price, packing, marketing, insurance, pament-techni?ue. #he foreign order is called indentH the importer prepares ; copies ofthe order or indent. #wo copies of the indent are sent to the e(porter. hen the proforma invoice sent bthe e(porter to importeris accepted b the importer, it becomes a confirmed order. #heduplicate cop of the proforma invoice is dul signed b the importer and the conditions

accepted b him are informed to the e(porter. In some cases the importer sends the confirmed proforma invoice and also a letter of order to the e(porter. #he order received b the e(porter is registered wi th an authorised dealer in foreign e(change. #he government orders take theform of contract and the e(porter has to be ver cautious about the terms and conditions of sale.RRN&IN& T3E &!!$S

#he e(porter scrutinises the e(port order with reference to the terms and conditions of proforma invoice and letter of order.#he manufacturer e(porter arranges the goods through production or procurement. #he e(porter raises an internal indent on the productiondepartment. 3e sends a deliver note to the orks Manager or the $actor Manager, whichcontains the description of the goods as per e(port order, the date b which the goods are to

be manufactured and other formalities to be completed. #hemerchant e(porter obtains the

re?uired goods from the market or from other manufactures. #he e(port houses performs the Aob of marking up, packing and marking ofgoods as per instructions of importer.

S3I--IN& RRN&EMENT#he ?ualit control inspection is done before shipment. #he e(porter invites the inspector

to e(amine the goods being manufactured or procured for shipment. 3e has to arrangeadvance booking of space in the ship and this Aob is done b the shipper or broker who

possesses full knowledge of the various shipping. #he shipping compan iss ues a shi ppingorder to the e(porter to carr the e(porter@s goods. #he shipping order is a documentcontaining instructions to accept the goods on board the ship.

-RE-RTI!NS *!R E/-!RT#he preparation of e(port re?uires appointment of forwarding agent who is a person or

firm concerned with collecting goods from a factor or warehouse and delivering them to a port of shipment or airport for onward transmission of the goods to the destination. 3e is


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specialised in procuring goods, attending to customs formalities booking, procuring effectingmarine insurance and other formalities. n the reverse the clearing agents are emploed for import purposes. #he manufacturer-e(porter gives instructions to the forwarding agent for shipment to be consigned. 3e is specialised person to complete all the formalities of e(portand advises his principal on specific points. hen the forwarding agents are not appointed,the e(porter has to appoint his own specialist for e(port. 3owever, it has been observed that

the forwarding agents are appointed in most cases. #he perform several functions, vi.,negotiating of shipping contracts, customs formalities, packing, marking, insurance, loadingof goods etc.

#he packing is done b the manufacturer or ma be entrusted to the packing agent. !ackingis a specialised work to protect the goods, to suit the re?uirements of the importer. #heforwarding agents are e(perienced in general routine of packaging. #he packages are markedwith the name of importer, destination of port, gross weight and net weight.

#he e(porter issues instructions to the forwarding agents with the necessar documents of e(port for finalising the e(port formalities. #hese documents ma be %.). 4A.!."4 inoriginal and duplicate, packing list one cop, e(cise gate pass in original, commercial invoicein two copies, *.).B. form in triplicate, customs invoice, original letter of credit, declarationform in triplicate, purchase memo, railwa receipt and ins pection certificate.

CUST!MS N$ E/C3N&E *!RM"ITIESustoms and e(change formalities inclu,de shipping bills, e(port permission form, customs

house e(port licence and so on. #he shipping bills or custom challan describes the goods,?uantit, ?ualit, value, marks measurements, the port of destination and the name of the ship.#he e(port permission form is filled in duplicate. #he e(porter submits four copies of shipping bill and two copies of application to e(port. #he shipping office collects shippingdues or chargeS and returns one cop of the application and three copies of shipping bills.#hese documents are sent to the customs house. #he dut differs from commodit tocommodit. #he customs house will register details of e(port in its books. #he original andduplicate cop of the shipping bills are returned to the e(porter. #he customs house issues

pass in favour of the e(porter. #he forwarding agent or the e(porter is re?uired to procuree(port licence from the controller of E(ports, nder $oreign E(change )egulation %ct, thee(porter has to fill up four copies of *.). forms. ne copy of the *.). is given to thecustoms house at the time of shipment, three copies of *.). and one cop of invoice and other shipping documents are given to the e(change dealer who procures permission from the)eserve +ank of India.-"CIN& T3E &!!$S !N '!R$

#he forwarding agent takes the deliver from the railwa station and arranges their storagein the warehouse. 3e arranges to get clearance from customs authorities, which is given onthe shipping bill b endorsement. #he !ort #rust copy of the shipping bill is presented to theShed Superintendent at the pon. #he goods are brought for phsical e(amination b the 'ock Supervsior who also e(amines the commercial invoice, packing list, %)-;% form andShipping +ill. #he 'ock supervisor records his report, endorses the words @out of charge@ onthe duplicate cop of the Shipping +ill. #his certificate is given to the forwarding agent who

presents these documents to the !reventive fficer of the ustoms 'epartment. #he!reventive fficer makes an endorsement @"et Ship@ on the duplicate cop of the Shipping+ill which is given to the forwarding agent for the loading of the goods on the ship. #heshipper makes arrangements to place the goods on board of the ship. hile the goods arehanded over to the people at board, one copy of the Shipping +ill is handed over to thecaptain of the Ship, who issues a receipt known as Mate )eceipt.

MTE5S RECEI-T#he forwarding agent pas the port charges and obtains the Mate )eciept. #he Mate is the

%ssistant aptain who allows the loading of the goods onl when the shipper presents a copof the Shipping +ill and Shipping rder. #he Mate issues a receipt after e(amining the

packing and counting the packages. #his receipt is known as the Mate@s receipt. #he receipt

without an adverse remark is a clean Mate@s )eceipt. hen the Mate is not satisfied with thedocuments and goods, he makes certain remarks. #hen, it is known as foul receipt. If the packing is properl done and the Mate is satisfied with the packages etc., he will issuse clean


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receipt. #he remarks of Mate @ s receipt are also made on the +ill of "ading which is issued bShipping ompan on receiving the Mate@s receipt. %fter receiving the +ill of "ading fromthe Shipping ompan, the forwarding agent sends the relevant documents to the e(porter.#hese documents are full set of


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of hpothecation is also handed over to the bank which on dishonour of the 'G% bill gets the pament b disposing of the goods under his possession. #he banks generall ask for hpothecation for discounting of bill. #he e(porter dose not like to discount his 'G% bills indoubtful cases because it will result in loss in case the importer does not honour the bills.

c) #ocumentar$ Credit: #he importer gets a letter of credit from a bank which promises to

pa the bill of e(change. #he 'G% and %IP bills can be drawn on the bank as per letter of credit. #he e(porter on receipt ofthe letter of credit, despatches the documents to the bank which accepts the bill of e(change if it is %IP bills. #he bank issuing the letter of creditguarantees the pament of 'G % when the maturit arises for pament. #he banks areconsidered more liable for pament than the individual importers. #herefore, the documentarcredit letters are more common in international marketing for receiving pament.

d) Other Pa$ment Methods: #he importer can pa off his dues b telegraphic transfer /#.#.0

of his cash to the e(porter through his banks and the banks will immediatel debit the account

of the importers and credit the e(porter@s account. #his information ma be sent b airmail to

paoff the dues. #he bank draft mabe prepared b the importer to paoff the dues. #he bank

draft ma be. presented at the time of receiving the documents or after the e(pir of the period or at some later date. #here ma be pament b che?ues and mone-order too for

small amounts.

E/-!RT INCENTIV*S#he e(porter ma appl for getting e(port incentives under e(port promotion policies of

*ovemment. #he incentives ma be dut drawback, e(cise dut refund, import replenishmentlicence, cash compensator allowance etc. #he E(port !romotion ouncils are approached for the purpose.

E/-!RT $!CUMENTTI!N

E(port documentation includes a large number of documents to be filled in b thee(porter or e(port agent. #he documents ma be trade<


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mentioned in the letter of credit. #he letters of credit ma be clean letter of credit, revocableand irrevocable letters of credit, confirmed and unconfirmed letters of credit, transferable andnontransferable letters of credit and so on. It has better terms of trade whereb the importer agrees to pa the dues within the specified period. #he e(porter can secure loans from his

bank on the securit of the letter of credit. #he utilities of the letter of credit have beendescribed in the chapter of e(port financing.

'I"" !* E/C3N&E

#he bill of e(change is a popular document in international marketing. It is a negotiableinstrument of credit. #here are a large number of discounting and rediscounting houses in theworld. )eputed bilis of e(change are discounted b the )eserve +ank of India andommercial +anks. #he 'ocuments against %cceptance /'G%0 and the 'ocuments against!ament $%IP& are the two important tpes of bills of e(change. #he documents against ac-acceptance bills are discounted through banks. @#he bills of e(change are accompanied withthe several documents such as commercial invoice, bill of lading, customs bill etc.

R# *!RM

$oreign E(change )egulations %ct, 14F5 re?uires the e(porter to ensure that the full valueof the goods e(ported b him is remitted to India. #his declaration is made in the prescribedform known as *.). $orm. #he *.). $orm is prepared in duplicate to be submitted to thecustoms aurhorities. #he customs authorities verif the value declared b the e(porter andrecord the assessed value on the *.) . $ornI. #he original cop is retained b the )eserve+ank of India and the duplicate copy is submitted to the commercial bank for realisation of the foreign e(change. #he e(porter can retain the proceeds of his e(ports b submitting *.).-5 $orm which is prepared in triplicate. #he original cop is sent to the )eserve +ank of Indiathrough customs authorities and the other two copies are dealt with as per instructions of the)+I. #he parcel post is declared on!!$orm. #he *.). $orm is different fordifferentpurposes.*)I form is the popular form of dt:elaration of receipt of foreign e(change. #he *.).Q. $ormis used for the receipt in advance. It is rare phenomenon because advance pament in e(po-rtis not received in India.

S3I--IN& 'I""

#he shipping bill is a customs document which ma be of three tpes, vi., shipping billfor goods e(empted from customs duties, shipping bill for dutiable goods and shipping billfor the refund duties paid. #he shipping bill is different from bill of lading. #he shipping billis not title documentH it is merel a custom document.

MRINE INSURNCE -!"IC0

Marine insurance polic is an evidence of agreement between the insurer and the assuredfor getting compensation from the former in case the latter suffers loss on account of insured

perils. #he insurance becomes essential in international marketing because of e(pose of

several risks. #he insurance polic should be as per terms and conditions ofletter of credit andtrade transactions.

'I"" !* "$IN&

+ill of "ading /+I"0 is the document issued b the shipping compan acknowledgingthat the goods mentioned therein have been shipped on the board of the ship. It is undertakingthat the goods mentioned therein will be delivered to the consignee provided the freight is

paid. It is a title of goods, a receipt of goods received b the shipping compan and anevidence of the contract to carr the goods safel to the destination in e(change of thespecified freight. #he bill oflading givOs details of the goods, carring vessel, port of shipment, destination consignee and the e(porter and the importer. #he bill of lading ma be

foul or clean. #he foul bill of lading has certain conditions or preimposed clauses. #he clean


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bill of lading has no conditions orclauses. It demonstrates that the goods des patched are properl packed under ?ualit control certificate.

UNIT V

IM*

#he IM$ is an international organiation of 1; member countries. It was established to promote international monetar cooperation, e(change stabilit, and orderl e(changearrangementsH to foster economic growth and high levels of emplomentH and to providetemporar financial assistance to countries to help ease balance of paments adAustment.Since the IM$ was established its purposes have remained unchanged but its operations R which involve surveillance, financial assistance, and technical assistance R have developedto meet the changing needs of its member countries in an evolving world econom.

&ro6t7 in IM* Members7ip8 19; + 4

8/18/2019 I

Intl Mktg Notes

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Transcript of Intl Mktg Notes