Export Mktg

8/8/2019 Export Mktg

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Export Marketing


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Export

Export is when you trade something out of thecountry.

In economics, an export is any good orcommodity, transported from one country toanother country in a legitimate fashion, typically

for use in trade.


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Export

The term "export" is derived from the conceptual meaningas to ship the goods and services out of the port of acountry. The seller of such goods and services is referred toas an "exporter" who is based in the country of export

whereas the overseas based buyer is referred to as an"importer".

In International Trade, "exports" refers to selling goods and

services produced in home country to other markets.

Export goods or services are provided to foreign consumersby domestic producers.


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Reasons to export

Reasons to export To serve markets where the firm has no or

limited production facilities

To satisfy a host governments requirementthat the local subsidiary have exports

To remain price-competitive in the homemarket

To test foreign markets and foreigncompetition inexpensively


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Reasons to export

To achieve additional sales

To extend a products life cycle

To respond strategically to foreigncompetitors

To improve the efficiency of manufacturingequipment


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Reasons not to Export

Reluctance to become involved in a new,unknown and therefore risky operation

Not active in international markets due to Lack of knowledge

Locating foreign markets

Payment and financing procedures Export procedures


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Export Marketing

Exporting is one of the Market Entry Strategies

Where as the options are Licensing

Franchising

Joint ventures

FDI


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Ownership and Control

Strategic Alliances

ManagementContractFranchisingLicensing

Equity Joint Venture

Owners

hip

Control0

0

100%

100%


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Export Decision Criteria

Export marketing is the integrated marketing ofgoods and services that are destined for thecustomers in international markets

Export marketing requires

An understanding of the target market environment

The use of marketing research and the identification of

market potential Decisions concerning product design, pricing, distribution

and channels, advertising and communications


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Export-Related Problems

Logistics Arranging transportation

Transport rate determination

Handling documentation Obtaining financial

information

Distribution coordination

Packaging

Obtaining insurance

Legal Procedures Government

Product liability

Licensing Duty

Sales Promotion Advertising

Sales force Marketing information


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Export-Related Problems

Servicing Exports Providing parts availability

Providing repair service

Providing technical advice Providing warehousing

Foreign MarketIntelligence Locating markets

Trade restrictions Competition overseas


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Export Costing & Pricing

Price is what an exporter offer to a customer onparticular products.

Cost is what an exporter pay for manufacturingthe same product


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Determining Export Pricing

Range of products offered.

Prompt deliveries and continuity in supply.

After-sales service in products like machine tools, consumer durables.

Product differentiation and brand image.

Frequency of purchase.

Relationship between quality and price.

Speciality value goods and gift items.

Credit offered.

Preference for products originating from a particular source. Aggressive marketing and sales promotion.

Prompt acceptance and settlement of claims.

Unique value goods and gift items.


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Factors for Export Costing

Product modification cost

Promotion cost

Packaging cost

After-sales service cost


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Pricing Strategies

High pricing strategy

Unique or new products

Brand name products: BMW, Rolex

High profit margin

Limits market to well-to-do customers

Attracts competition

Higher price at the beginning and lowerprice later


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Low pricing strategy To penetrate foreign markets

To increase market share

To dispose of excess or obsoleteinventory

To discourage new competition

Cannot be a long-term strategy

Pricing Strategies


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Moderate pricing strategy

Adequate profit margin

Can meet competition and maintain marketshares

Should be long-term strategy

Pricing Strategies


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Export Pricing Methods of

Manufacturer

Marginal Cost Pricing Method

Assumes that indirect fixed costs are fully recoveredfrom domestic sales

Cost for manufacturing additional unit for export and

exporting cost Includes direct cost of material and labor only

General & Administrative (G & A) expenses not included.

Floor price


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Cost-plus pricing method

Adding exporting costs to domestic

production cost Include G & A expenses

Too high to compete in internationalmarket

Export Pricing Methods of

Manufacturer


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Trade Policies in India

Exim Policies

Streamlined trade procedures

Liberalised import regime

Thrust on export orientation

Medium Term Export Strategy, 2002

1% share in global exports by 2007

Foreign Trade Policy 2004-2009

To double Indias share in global merchandise trade by2009

use trade expansion as an effective instrument of

economic growth and employment generation.


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Basic concepts and definitions

The foreign trade policy of a country refers to policiesand practices that affect and regulate import and exportoperations.

Foreign trade policy includes many laws, decrees,

regulations and procedures that are often adopted fordifferent purposes. Such policies will affect foreignexchange, imports, exports, foreign investment, andinternational relations.

A foreign trade policy should include trade promotionpolicy and lead to the design and implementation ofsuccessful trade promotion and developmentprogrammes.


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The trade promotion policy of a country is comprised ofprogrammes and measures that promote and develop tradewith other countries.

It includes all regulations and practices that will increaseexports.

Trade promotion policies are part of the overall foreign trade

policy, and cannot be considered alone.

The country's foreign trade policy must make it possible toachieve trade promotion policy objectives.

Basic concepts and definitions


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Aspects of foreign trade policy

Foreign Trade Policy

Trade Promotion

Export promotion

Import Regulation

Trade

Development

Infrastructure

International

Trade

Relations

Trade facilitationregulation

Trade finance

Trade enterprises

Bilateral relations

Internationaltrade forums

Regional trade


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Agriculture and industry has shown remarkable resilience anddynamism in contributing to a healthy growth in exports

In the last five years our exports witnessed robust growth US$ 168billion in 2008-09 from US$ 63 billion in 2003-04.

Indias share of global merchandise trade was 0.83% in 2003; itrose to 1.45% in 2008 as per WTO estimates.

Indias share of global commercial services export was 1.4% in2003; it rose to 2.8% in 2008.

Indias total share in goods and services trade was 0.92% in 2003; it

increased to 1.64% in2008. On the employment front, studies have suggested that nearly 14

million jobs were created directly or indirectly as a result ofaugmented exports in the last five years.


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The short term objective of the policy is to arrest andreverse the declining trend of exports and to provideadditional support especially to those sectors which havebeen hit badly by recession in the developed world.

To set a policy objective of achieving an annual exportgrowth of 15% with an annual export target of US$ 200billion by March 2011.


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In the remaining three years of this Foreign Trade Policyi.e. upto 2014, the country should be able to come backon the high export growth path of around 25% perannum.

By 2014, to double Indias exports of goods andservices.

The long term policy objective for the Government is todouble Indias share in global trade by 2020.


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In order to meet these objectives, the Government would follow a mix of policy

measures including fiscal incentives, institutional

changes, procedural rationalization, enhanced marketaccess across the world and diversification of exportmarkets.

Improvement in infrastructure related to exports;

Bringing down transaction costs, and providing fullrefund of all indirect taxes and levies,



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Terminology

Focus Product Scheme:

Objective is to incentivise export of such products, whichhave high employment intensity in rural and semi urbanareas, so as to offset infrastructure inefficiencies and other

associated costs involved in marketing of these products.

Focus Market Scheme:

Objective is to offset high freight cost and other externalities

to select international markets with a view to enhance ourexport competitiveness in these countries.


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Highlights of

FOREIGN TRADE POLICY 2009-2014

1. Higher Support for Market and Product

Diversification

26 new markets have been added under Focus

Market Scheme. These include 16 new markets inLatin America and 10 in Asia-Oceania.

The incentive available under Focus Market Scheme(FMS) has been raised from 2.5% to 3%.

The incentive available under Focus Product Scheme(FPS) has been raised from 1.25% to 2%.


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A large number of products from various sectors havebeen included for benefits under FPS. These include, Engineering products (agricultural machinery, parts of trailers,

sewing machines, hand tools, garden tools, musical instruments,

clocks and watches, railway locomotives etc.) Plastic (value added products),

Jute products

Green Technology products (wind mills, wind turbines, electricoperated vehicles etc.),

Project goods, vegetable textiles and certain Electronic items.

Highlights of



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2. Technological Upgradation:

To aid technological upgradation of our export sector,EPCG Scheme at Zero Duty has been introduced.

This Scheme will be available for engineering & electronic

products, basic chemicals & pharmaceuticals, apparels &textiles, plastics, handicrafts, chemicals & allied productsand leather & leather products

The scheme shall be in operation till 31.3.2011.

Highlights of



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Gems & Jewellery Sector

To neutralize duty incidence on gold Jewellery exports, ithas now been decided to allow Duty Drawback on suchexports.

A new facility to allow import on consignment basis of cut& polished diamonds for the purpose of grading/certification purposes has been introduced.

To promote export of Gems & Jewellery products, thevalue limits of personal carriage have been increased fromUS$ 2 million to US$ 5 million in case of participation inoverseas exhibitions.

Highlights of



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Agriculture Sector

To reduce transaction and handling costs, a single windowsystem to facilitate export of perishable agriculturalproduce has been introduced.

EOUs

EOUs have been allowed to sell products manufactured by

them in DTA (Domestic Tariff Area)upto a limit of 90%

instead of existing 75%, EOUs will now be allowed to procure finished goods for

consolidation along with their manufactured goods, subjectto certain safeguards.

Highlights of



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Waiver of Incentives Recovery, On RBISpecific Write off

RBI specifically writes off the export proceeds

realization, the incentives under the FTP shall nownot be recovered from the exporters subject to certainconditions.

Highlights of



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Export Promotion Measures

International marketing is a much more complicatedprocess than marketing and selling in the domesticeconomy.

To encourage growth of exports, government step in andprovide business communities with needed support invarious ways.

Government have many different policies, programmesand activities to help develop competitive products andincrease export sales


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Trade Promotion Policy

The trade promotion policy of a country is comprisedof programmes and measures that promote anddevelop trade with other countries. It includes allregulations and practices that will increase exports.

Trade promotion policies are part of the overallforeign trade policy, and cannot be considered alone.

The country's foreign trade policy must make it

possible to achieve trade promotion policy objectives.


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Export Promotion

Export Promotion Government assist businesses in the private sector

with a wide range of services, from simply providinginformation about current opportunities in the worldmarket to giving specialized assistance to design andimplement marketing programmes and salescampaigns abroad.

The activities are usually carried out by atrade Promotion Organization (TPO).


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Objectives

Promoting export of the country's existingproduction.

To encourage increased sales of products that

are currently available for export. concentrate on product adaptation; that is, use

of existing production capacity to manufacturenew products when better markets are found forthose products than for traditional products


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Objectives

Most developing countries make exportpromotion and development a priority in order toachieve economic development goals.

Government expect that sustained exportpromotion and development efforts will help earnadditional foreign exchange needed to cover the

cost of imports, solve balance of paymentsproblems and create additional employment forpeople.


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Implementation of Export

Promotion Measures

The key to successful national export promotion aregovernment policy decisions that affect exporttrade.

Two sets of policies affect foreign trademanagement

Foreign trade policies and other policies with direct

influence on foreign trade, Policies that regulate other economic activities, but at the

same time influence the general performance of foreigntrade.


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Promotional measures and their

implementation

The range and intensity of a country'sexport promotion activities will depend on anumber of factors:

Human and financial resources,

The nature of products that can be exported,

the characteristics of foreign markets, the experience of organizations responsible for

implementing these activities.


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Export promotion strategies

Export promotion strategies are part of tradepromotion Enterprise Level

Industry Level National level


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Enterprise Level:

A limited number of commodities are available forexport, so export sectors depend on internationaldevelopments affecting the world market.

Industrial production of goods is limited by the lack ofdownstream activities, which does not allowenterprises to produce differentiated products forexport or provide some form of export diversification.



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Enterprise Level: There is dependence on one or two key export

markets and supply sources, and this does not giveenterprises an opportunity to develop productsaccording to the standards of more developedmarkets. This also results in lack of knowledge aboutmarketing abroad.

Enterprises lack export readiness, which might be dueto unwillingness to venture overseas because thedomestic market offers comfort and security



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Industry level:

Two kinds of export dimensions to consider

a)increasing the export of existing products

looking at what industries currently produce for exportto the world market

For many transitional and emerging economies,exports are mainly commodity and primary products.

Therefore an initial export strategy should focus onenhancing and consolidating the volume of export intoexisting markets as well as diversifying to otherexports markets.



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Industry level:b) developing new exportable products,

dimension involves making an assessment of what newproducts could be developed for export markets.

These new products often originate from spin-offs ordownstream activities from existing core industries.

For example, the oil industry supports petrochemical industriesand oil equipment manufacturing.



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Strategies should be based on comprehensive study of theexport potential for select products.

This will involve:

Clear identification of what is produced, planned productionin the near future and the most suitable markets for suchproducts;

Concurrent study of what is being purchased in foreignmarkets in order to suggest what could be produced in thecountry to satisfy the needs and opportunities of foreignmarkets;


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Clear indication of constraints or problems for exportsin terms of production or market conditions, whichshould lead to recommendations about how to solve

problems or counteract any constraints.



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National level The government sets the overall economic direction

and trade development strategy.

Establishing the export dimension of this strategy interms of appropriate economic instruments andexport promotion measures is critical to nationalexport performance.

Therefore, the design of relevant trade policies is thekey to a successful national export promotionprogramme.


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Importance of export promotion and

development strategies

The national export strategy focuses on promoting anddeveloping those products and markets that offer the bestopportunities for a country.

Formulation and implementation of a national exportstrategy requires: A mechanism to co-ordinate policy formulation,

Active participation and a sense of responsibility by the various

bodies, institutions and officials involved, Persistent application of regulations, since frequent changes in

regulations can be the one factor that is most detrimental (injurious)to the success of export promotion and development programmes.


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The role of trade promotion organizations

in export promotion

Governments establish TPOs to develop and implement thecountry's export promotion and development programmes. To provide specialized support to the producers of products for export,

to serve as a catalyst for related services provided by other entities in thepublic and private sectors

TPO acts as an adviser to the government on foreign trade and related matters.

an effective bridge between the export community and the foreign

markets,


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Special Economic Zones (SEZ)

India was one of the first in Asia to recognize theeffectiveness of the Export Processing Zone (EPZ) model inpromoting exports, with Asia's first EPZ set up in Kandla in1965.

Special Economic Zones (SEZ) were set up by theGovernment of India to augment infrastructure facilities forexport production.

The Ministry of Commerce and Industry launched the SEZscheme in April 2000 to provide an internationallycompetitive and hassle free environment for export.


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SEZs are specifically represented for duty free enclavesand are deemed to be foreign territories for the purposesof trade operations, duties and tariffs

The main objectives of the SEZ Act are: generation of additional economic activity

promotion of exports of goods and services;

promotion of investment from domestic and foreign sources;

creation of employment opportunities; development of infrastructure facilities;


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INCENTIVE/ FACILITIES TO SEZ

100% Foreign Direct Investment (FDI) is allowed for townshipswith residential, educational, recreational facilities and franchisefor basic telephone service in SEZs.

Duty free import/domestic procurement of goods fordevelopment, operation and maintenance of SEZs.

Exemption from Service Tax and/or Central Sales Tax.

Income of an infrastructure capital fund/company frominvestment in a SEZ is exempt from Income tax.


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Generation, transmission and distribution of power inSEZs is allowed.

Full freedom in allocation of space and built up area forapproved SEZ units on commercial basis.

Authorization to provide and maintain services like water,electricity, security, restaurants, recreation centers, etcon commercial lines is allowed.

INCENTIVE/ FACILITIES TO SEZ


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Export Performances

Exports from the functioning SEZs during the last seven years

Year Value(Rs. Crore) Growth Rate (over previous year)

2003-2004 13,854 39%

2004-2005 18,314 32%

2005-2006 22,840 25%

2006-2007 34,615 52%

2007-2008 66,638 93%

2008-2009 99,689 50%

2009-2010 220,711.39 121.4%


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Advantages

The SEZ Act also provides a number of incentives to units proposedto be set up in SEZs. SEZ units may be set up for carrying onmanufacturing, trading or service activity.

A unit set up in SEZ has the following facilities and incentives:

15 year corporate tax holiday on export profit 100% for initial 5 years,50% for the next 5 years and up to 50% for the balance 5 yearsequivalent to profits

No licence required for import.

Duty free import/domestic procurement of goods for setting up of the

SEZ units.

Exemption from customs duty on import of capital goods, raw materials,consumables, spares, etc.


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Exemption from Central Excise duty on the procurement of capitalgoods, raw materials, consumable spares, etc. from the domesticmarket.

Exemption from payment of Central Sales Tax on the sale orpurchase of goods, provided that, the goods are meant for

undertaking authorized operations.

Exemption from payment of Service Tax.

The SEZ unit is permitted to realise and repatriate to India the fullexport value of goods or software within a period of twelve monthsfrom the date of export.

No routine examination by Customs officials of export and importcargo.

Advantages


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Disadvantages

Revenue losses because of the various tax exemptions.

Most players are interested in setting up SEZs with an eye on

the real estate bounty so that they can acquire at cheap ratesand create a land bank for themselves.

The number of units applying for setting up EOUs is not

commensurate to the number of applications for setting upSEZs leading to a belief that this project may not match up toexpectations.

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