Professional Documents
Culture Documents
Chapter 9
(IK)
Co-production Agreements
Management Contracts
Exporting
Export management companies (EMCs) Domestic firms that perform international marketing services as commission representatives or distributors for other firms. Two primary forms of operation Take title to goods and operate internationally. Perform services as agents.
Exporting
Trading companies
The most famous trading companies are the sogoshosha of Japan. Reasons for the success of the Japanese sogoshosha: gather, evaluate, and translate market information into business opportunities. Their vast transaction volume provides them with cost advantages. serve large markets around the world and have transaction advantages. access to capital, both within Japan and in the international capital markets.
Exporting
Export trading companies Act (ETCs)
Designed to improve the export performance of small- and medium-sized firms. Permits bank participation in trading companies to allow better access to capital. Reduces the antitrust threat to joint export efforts to enable firms to share the cost of international market entry. Must balance the demands of the market and the supply of the members to be successful.
Trading companies
Independent distributors that match up buyers and sellers. Do not represent a manufacturer but find many who can supply a buyer.
Most major trading companies are the sogoshosha of Japan. Reasons for the success of the Japanese sogoshosha: Are organized to gather, evaluate, and translate market information into business opportunities. Cost advantages because of vast transaction volume Serve large markets around the world and have transaction advantages. Have access to capital, both within Japan and in the international capital markets.
Going International
E-commerce: Offering goods and services over the
Web: Corporate websites. B-to-C and C-to-B forums. Firms must: Provide 24-hour order taking and customer support service (often outsourced) Have the regulatory and customs-handling expertise to deliver internationally. Understand global marketing environments for further development of business relationships.
Chapter 10 Chapter 10
Product Adaptation
Product Adaptation
Product Variables
Products can be differentiated by their composition, country of origin, tangible features such as packaging or quality, or augmented features such as warranty.
TM 89
Nature of Product Technology Differences Weights & Measures Physical Environment Cost/Benefit Relationship Legal Requirements Competition Support Systems Cultural differences Market Conditions
Customer Variables
Customer characteristics, expectations, and preferences Physical size, local behaviors, tastes, attitudes, and traditions. Consumption patterns, psychosocial characteristics, general cultural criteria Product positioning - Consumers perception of a brand as compared with that of competitors brands.
Economic Conditions
Economic development
Affects demand characteristics and helps determine potentials for selling certain kinds of products and services. Backward innovation of the product may be required to meet local requirements.
Competition, Environment
Competitive offerings - Monitoring competitors product features is critical in adjusting the product for competitive advantage. Climate and geography influence core product; tangible elements (mainly packaging); and the augmented features.
Packaging Considerations
three major functions: protection, promotion, user convenience. Materials: vary by transportation mode, transit conditions, storage, display, length of time in transit, regulations... The promotional aspect of packaging relates mostly to labeling. User convenience. Containers must withstand logistics challenge, and yet must be easy for customers to open. Package aesthetics: prudent choice of colors and package shapes. Package size: varies by purchasing patterns and market conditions.
Product Counterfeiting
Counterfeit goods Goods bearing an unauthorized representation of a trademark, patented invention, or copyrighted work that is legally protected in the country where it is marketed. The European Union estimates that trade in counterfeit goods accounts for 2 percent of total world trade. The largest number of counterfeit goods are sourced from China, Brazil, Taiwan, Korea, and India.
Combating Counterfeiting
Some acts, agreements, and alliances that help combat counterfeiting include: The Omnibus Tariff and Trade Act of 1984 The Trademark Counterfeiting Act of 1984 The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement The International Anti-Counterfeiting Coalition (1978) Counterfeit Intelligence and Investigating Bureau
Chapter 11
Chapter 11
Export Pricing
Export Pricing
Price Dynamics
The alternatives strategies for first-time pricing: Skimming - Achieve the highest possible contribution in a short initial time period, and then gradually lower the price as more segments are targeted and more products are available. Market pricing Determined based on competitive prices; production and marketing is adjusted to the price. Penetration pricing Offer products at a low price to generate volume sales and achieve high market share, to compensate for lower per unit return.
Domestic: - Shipping and insurance - wholesaler margin - retailer margin Exported: - higher shipping & insurance costs - Tariff - Importer, wholesaler and jobbers margins - VAT at each value-added level If manufacturers price is $6.00 then domestic customers price may be $12.00 to $14.00 and foreign customers price may be anywhere from $20.00 to $45.00
Terms of Payment
Cash in advance
Relieves the exporter of all risks and allows for immediate use of the money. Used for first time transactions or situations where the exporter doubts the importers solvency.
Terms of Payment
Letter of credit (lc) (Opener, Issuer, Beneficiary)
An instrument issued by the bank at the request of the buyer. The bank promises to pay money on presentation of specified documents like the bill of lading, consular invoice, and description of the goods. Classified as irrevocable versus revocable, confirmed versus unconfirmed, and revolving versus nonrevolving.
Terms of Payment
Drafts (Drawer, Drawee, Payee) Similar to personal check; an order by one party to pay another. Buyer must obtain shipping documents before obtaining possession of the goods involved in the transaction. Documentary collection The seller ships the goods, and the shipping documents and the draft are presented to the importer through banks acting as the sellers agent. The draft , also known as the bill of exchange, may be either a sight draft, time draft or arrival draft.
Terms of Payment
Bankers acceptance - A time draft drawn on and accepted by a bank; it is sold in the short-term money market. Discounting - Selling a draft to the bank at a discount from face value; it can be with recourse or without recourse. Open account - The normal manner of doing business in the domestic market; also known as open terms. Consignment selling Allows the importer to defer payment until goods are actually sold.
Payment Risks
Commercial risk Refers to the insolvency of, or protracted payment default by, an overseas buyer. Results from deterioration of conditions in the buyers market, fluctuations in demand, unanticipated competition, or technological changes. Political risk Can neither be controlled by the buyer nor the seller.
Forward exchange market The exporter gets the bank to agree to a rate at which it will buy the foreign currency the exporter receives when the importer makes payment. The rate is either a premium or a discount on the current spot rate.
Price Negotiations
Pricing is the most sensitive issue in business negotiations; the exporter should discuss it as part of a comprehensive package and should avoid price concessions early on in the negotiations. Carefully consider concessions that reduce price or profitability; example: discounts, payment terms, product features. Revisit competitive prices to ascertain that the price reflects market conditions accurately. Focus negotiations first on substantive issues (quality and delivery), then on price.
Leasing
Trade liberalization has benefitted lessors both through expected growth in target economies and eradication of country laws and regulations hampering outside lessors. Allows market penetration for the firms products, when outright sale is not possible. Total net income from leasing is often higher than it would be if the unit was sold.
Dumping
Selling goods overseas at a price lower than in the exporters home market or below the cost of production, or both. Ranges of dumping Predatory dumping Intentionally selling at a loss in another country in order to increase its market share at the expense of domestic producers. Unintentional dumping - Result of time lags between the dates of sales transaction, shipment, and arrival.
Demand and market factors: Price elasticity, customer perception of the product Market structure and competition: Distribution structure, trade discounts, etc. Environmental constraints: Government policies. Try non-price measures, emphasize other marketing mix elements
Countertrade
Countertrade is a sale that encompasses an exchange of goods, services, or ideas for other goods, services, or ideas instead (or in addition to) money. Conditions that support countertrade are lack of money, lack of value of money, lack of acceptability of money as an exchange medium, or greater ease of transaction by using goods.
Forms of Countertrade.
Straight barter Counterpurchase agreement (with the government, smaller deals) Offset (with the government, larger, longer-term deals) Buyback (from plant output) Triangular Compensation {A (goods) B (goods) C (cash) A} Clearing agreements (Accounts cleared periodically) Switch trading (one company sells to another its obligation to
make a purchase in a given country)
Limitations:
Requires that accounts be settled on a country-bycountry or even transaction-by-transaction basis. Valuation of goods received in exchange can be difficult
Chapter 16 Chapter 16 Global Logistics and Global Logistics and Materials Management
Materials Management
Trading regions such as the European Union have greatly simplified their documentation requirements.
Customer Requirements Shipper Requirements Distributor Requirements Climate Customs and traditions Government Requirements Cost (shipping, insurance, pilferage) Physical hazards (acceleration, deceleration, dropping, pitching, rolling, vibrations, etc.)
Companies using e-commerce need to be prepared for 24-hour order-taking and customer service.
International Negotiations
The two biggest dangers faced in international negotiations:
Parochialism - The misleading perception that the world of business is becoming ever more American and that everyone will behave accordingly. Stereotyping - Generalizations about any given group, both positive and negative.
Informal meetings
To discuss the terms and get acquainted. It may be necessary to utilize facilitators (such as consultants or agents) to establish the contact.
Strategy formulation
Review and assess all factors to be negotiated, and Prepare for actual give-and-take of the negotiation.
International Negotiations
Negotiations details
Two approaches are used: competitive and collaborative. Depend on the cultural background and business traditions prevailing in different countries.
Outcomes
The choice of location for the negotiations and the negotiator characteristics play a role in the outcome.
Patience
Holistic view (concessions should come at the end of bargaining The meaning of agreements (written, legal contracts may not
be needed or even be negative)
The choice of tools leads to either a push or a pull emphasis in marketing communications.
Direct marketing
Establishes relationship with a customer in order to initiate immediate and measurable responses. Accomplished through direct-response advertising (direct mail literature and catalogs), telemarketing (telephone via call centers), and direct selling (database marketing to create individual relationships with each customer). All can be highly personalized tools if the target audience can be identified and defined narrowly.
Other promotional events that the exporter can use are trade missions, seminar missions, solo exhibitions, virtual trade shows, etc.
Personal selling
Involves high costs per contact. Provides immediate feedback on customer reaction as well as information on markets. Can be used for consumer selling in low-wage markets
Channel Structure
From direct (producer-to-consumer types) to elaborate (multilevel channels using many types of intermediaries). Channel configurations for the same product will vary within industries, even within the same firm, because national markets quite often have unique features. Channel structures are designed to manage multidirectional connections for: Physical movement of goods and services. Transactional title flows. Information communications flows.
Foreign Wholesaling
1. Smaller 2. More numerous 3. More services, especially financing 4. Higher margins cf. U.S. wholesalers 5. Operate in permanent wholesale markets, fewer trade shows
IK
Foreign Retailing
1. Much smaller 2. Fewer/smaller chains 3. Varied operating hours 4. Limited offerings 5. Nomenclature differences 6. Government regulations 7. Service level varies by country 8. Less self-service
IK
Channel Strategies
The general distribution systems used by companies include:
Direct sales to customers through a firms own field sales force or through electronic commerce. Indirect sales through independent intermediaries at the local level. Indirect sales through an outside distribution system having a regional or global coverage.
Cost: of maintaining a channel Coverage: intensive, selective, exclusive Control: depends on company plans for the future Continuity: expressed thru visible market commitment Communication: for channel coordination
Selection of Intermediaries
Two basic decisions:
Determining the type of intermediary relationship
Distributorship Agency relationship
Gray Markets
Gray markets (parallel importation)
Authentic and legitimately manufactured trademark items that are produced and purchased abroad but imported or diverted to the market by bypassing designated channels. Fuelled by price segmentation and exchange rate fluctuation. They under-cut local marketing plans, erode longterm brand images, eat up costly promotion funds, and sour manufacturerintermediary relations.
Gray Markets
Arguments for gray markets:
The right to free trade. Consumers benefit from lower prices. Discount distributors find a profitable market niche.
Gray Markets
Arguments against gray markets:
Hurts the legitimate owners of trademarks. Reduces incentive among trademark owners to undertake product development. Take unfair advantage of the trademark owners marketing and promotional activities. Can deceive consumers by not meeting product standards or their normal expectations of aftersale service.
Gray Markets
Solutions to the gray market problem:
A contractual relationship that ties businesses together. A one-price policy. Producing different versions of products for different markets. Conducting educational and promotional campaigns.
Chapter 14
Chapter 14
Companies increase communication and exchange of personnel to reduce language and cultural barriers among R&D teams. R&D consortia have been established provide the benefits and face the challenges of any strategic alliance.
Branding Policies
Three choices of branding:
Use of the corporate name. Use family brands for a wide product line. Use individual brands for each item in the product line. Global brands are a key way of creating consistency and impact. May be completely standardized or some elements of the product may be adapted to local conditions. Characteristics of global brands
Carry a strong quality signal and compete on emotion. Cater to the need of feeling cosmopolitan. Reflect the professional and personal status of the user. Use their monetary and human resources to benefit society
Branding Policies
Private branding
The intermediaries own branded products or store brands. Methods used for private branding:
Umbrella branding with the intermediarys name. Separate brand names for individual products or product lines.
Private brand goods have achieved a significant penetration in many countries due to increase in price sensitivity and decrease in brand loyalty.