Export-Import Marketing Final Review
Export-Import Marketing Final Review INBS 347
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This 10 page Study Guide was uploaded by Maria Notetaker on Wednesday September 21, 2016. The Study Guide belongs to INBS 347 at Montclair State University taught by Carrino in Fall 2015. Since its upload, it has received 9 views. For similar materials see Export-Import Marketing in International Business at Montclair State University.
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Date Created: 09/21/16
FINAL Wednesday, December 2, 2015 11:16 AM 30 T/F 20 MC 2 essays (interaction of 4 P's pricing, product, promotion) Understand definitions: what's a draft/bill of exchange (list of items on slide) Bill of exchange Draft drawn on an importer Draft type of check drawn on the importer by the exporter specifying that a sum of money is to be paid to the exporter When used with a letter of credit the draft is drawn on a bank Joint ventures A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task Collaborations in general/ strategic alliances Collaboration is a strategic alliance typically between two firms with the goal of providing mutual benefit for each firm o 1. Joint Ventures o 2. Outsourcing agreements o 3. Product Licensing o 4. Cooperative research Meaning of transfer pricing Price quoted to wholly or partially owned foreign subsidiaries Bill of lading Document that is the contract of carriage between the shipper and the transportation carrier; a receipt for the goods issued by the carrier General discussions on physical distribution and logistics The movement and handling of products outward from the exporting country to points of consumption or use Management of relationships, decisions, and activities among production, storage, and physical distribution Letter of credit Commercial credit established through a bank by the buyer that specifies the conditions under which payment is to be made to the beneficiary (the exporter). It is a type of credit with the backing of a bank or banks Making product changes associated with cultural or legal issues what kind of changes What happens when there is currency devaluation (Russia, Venezuela) why do people devalue currency The price of a national currency in terms of another is lowered either by market forces or by government decision Exporters from countries with lowered currency valuations can lower prices to increase market share or maintain prices and reap more profits Organizational structures (matrix) A mixed structure that combines two or more competencies on a worldwide basis Total quality management program Managing for quality in which companies strive to get products to a market faster, with fewer defects and at a lower cost Terms of pricing/ price differential Relationship of prices for products in a product line. Also used for relationship of pries for a single product in different markets Ch. 9 What is the WTO (their purpose) A multinational, supranational organization providing a forum for negotiating, a national government level, issues affecting international business. Includes a mechanism for resolving disputes What is FDI Investment in ownership in firms in foreign countries with the object of gaining some degree of control Greenfield (go through power points) Foreign direct investment in a manufacturing facility that 'starts from scratch' Licensing A strategic alliance in which a company in one country gives the right to use something it owns (technology, trademark, etc.) to a company or person in another country Franchising Type of licensing where the company giving the right to use something supplies an important ingredient (parts, materials, and so on) for the finished product Ch. 10 What is a product? (more than what you see, trademark, brand name, service, etc.) Sum of all the physical and psychological satisfactions that the buyer or user receives as a result of the purchase and/or use of a product Product planning and development 4 forms of product development (export domestic products, acquire a firm, copy products developed by others, internal product development) o New product development or addition o Changes in existing products o Finding new uses for existing products o Product elimination Product development cycle (figure 10.2) Idea generation > initial screening > business analysis > develop the product > market testing = commercialization or drop from further consideration Where do concepts come from Understand what ISO 9000 is Minimum standards set by the International Organization for Standardization (ISO) that specifies design, manufacturing, logistics, and other controls associated with producing quality products and services Ch. 11 When doing pricing: look at all partners in the country; o Consumers or industrial users o Wholesalers, distributors or other importing agencies o Partners in strategic alliances o Licenses o Subsidiaries and joint ventures you don't want to create a problem (too low hurts everyone in marketplace) How do you determine an export price? Costs Market conditions and customer behavior (demand or value) Competition Legal and political issues General company policies (financial matters, production, organization structure, marketing activities, etc.) Cost floor and demand ceiling ; gap depends upon such factors as the nature and type of listed above ^ to determine price Need to know cost (consideration) Consider the added cost in exporting and differing costs in producing abroad (investment, additional paperwork and transformation, legal requirements) Understand issues (figure 11.2) FOB Exporter's liability, costs and responsibility FOB free on board a transportation carrier at some named point What's market skimming? Deliberate attempt to reach a segment that is willing to pay a premium price Goal is to maximize revenue on limited volume and reinforce customer's perception of high product value Often used in introductory phase of product life cycle What's market penetration? Percentage of a target market that consumes a product or service Pricing sets a low initial price for a product o Goal to quickly attract new customers based on the low cost What's market holding? Dictates that sourcecountry currency appreciation will not be automatically passed on in the form of higher prices May accept lower margins May have to shift production to other countries or licensing Cost plus (a lot of times it is commercial products, not retail) Setting the price for goods and services Add together the direct material cost, direct labor cost and overhead costs for a product and add it to a markup percentage in order to derive the price of the product (to create a profit margin) Sliding down the demand curve (ex. Apple with iPods and iPads) Skimming strategy but company reduces prices faster and further in order to establish itself in the market Normally occurs with a company that has continuous introductions of new products Preemptive pricing Discourage potential competitors with aggressive pricing entering a market Taking advantage of experience curves (cost base related to being efficient at the manufacturing level) Extinction pricing (dumping shows up with this pricing decision) Goal is to eliminate existing competitors May involve dumping legal problems (when a co exports a product at a price lower than the price it nomally charges in its own home market) Incoterms (table 11.4) p 708 EXW (ex works) point of origin FCA (free carrier) FAS (free alongside) seller must provide for delivery of the goods free alongside, but not on board FOB (free on board) CIF (cost, insurance and freight) CFR (cost and freight) DAT/DAP (delivered at terminal/delivered at place) Transfer pricing Pricing transactions between buyers and sellers that belong to the same corporation The approach used will vary with the nature of the firm Ch. 12 Consignment Payment is made against clean draft (no documents attached), usually after goods are sold by the importer Open account (common in Europe and US) Payment is made against clean drafts or against statements of balance Factors may be willing to purchase accounts receivable, with or without recourse To get paid, you need documents Documentary collections Documents against payment (D/A) Documents that importer needs to obtain the merchandise are attached to a draft sent through a bank Letter of credits Commercial credit established through a bank by the buyer that specifies the conditions under which payment is to be made to the beneficiary (the exporter) Type of credit with the backing of a bank or banks Different kinds o Revocable can be revoked any time before payment is made ; less safe for the exporter ; recommended is revocable ; clean = no paper work with it o Confirmed and unconfirmed confirmed includes agreement by exporter's bank to pay when conditions are met o Clean and documentary clean will pay against draft (demand for payment) with no documents attached ; documentary has documents (required to obtain merchandise) attached o Transferrable and nontransferable transferable allows part or all of proceeds to be assigned by the beneficiary to a third party ; nontransferable does not (stay away from transferrable because someone can change the #s) o Revolving used where transactions are more or less continuous ; may limit amount outstanding at any one time or to be paid in a given time period COD (cash on delivery) first order Payment is to be made in cash when the shipment is delivered to the buyer Cash with order Payment in whole or in part for an order is to be made at the time of the order (also known as cash in advance) Bill of exchange / draft (figure 11.9) what it looks like (a check) Bill of exchange Draft drawn on an importer Draft type of check drawn on the importer by the exporter specifying that a sum of money is to be paid to the exporter When used with a letter of credit the draft is drawn on a bank Types of draft Clean or documentary with or without documents attached Sight drafts to be paid when first seen by the drawee Usance drafts to be paid at some time in the future Drafts can be with or without recourse o Without recourse bank purchases draft o factor financial intermediary that buys receivables ; takes a risk Export credit insurance Insurance from a government or private insurer that covers nonpayment by importers due to political risk, nonconvertibility of currency and commercial risk Countertrade (a lot of barter going on) Link sales contract to a purchase contract in addition to, or in place of financial settlements Seller provides a buyer with products/services and agrees to a reciprocal purchasing obligation with the buyer Pure barter goods and services in exchange for goods and services Offsets Seller assists in or arranges marketing or provides some other benefit to buyer o Such as agreement to buy parts which will be used in product sold to buyer Ch. 13 Things you can do (overview slide) Advertising Public relations and publicity Personal selling Sales promotion Direct marketing Trade shows and exhibitions Sponsorship promotion Dimensions for climate for advertising (issues) Underlying economic, social, and cultural factors: o Economic system o Social structure o Cultural background o Religious climate Underlying legal and political factors: o State monopoly o Censorship o Restrictions on advertising Understand difference of global advertising and branding (why would you adapt/how do you adapt) Global advertising use of the same advertising appeals, messages, art copy, stories, etc. in multiple country markets o Improves access to distribution channels; offers economies of scale in advertising Branding distinguishing goods or services from others o Help to build long term product identities; offer significant savings in production costs Needs to take care of cultural diversity, media limitations, legal differences, etc. Pay attention to interaction of elements of the communication mix Certain that the right message is being communicated and received by prospective consumers Approaches (Japan and America) Japan o Connectors bonds between brand & consumer o Product pushers focus on product strength o Ubiquity seekers desire to win awards o Cutthrough celebrities & memorable associations o Entertainers entertaining or newsworthy America o Economics o Status o Fear o Sex o Emotions o Family Public Relations A nonpaid form of communication What countries accept in terms of advertising Onpack price reductions Extra product Moneyoff vouchers (not legal Germany) Free prize contest (not legal Germany, Netherlands, Belgium) Inpack gift Trade shows and exhibits An inexpensive way to get in front of people Identify & recruit importers/exporters Make contact with foreign governments Sponsorship (in sports) Increase awareness & esteem, build brand identity, enhance brand's positioning Ch. 14 Ch. 15
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