International Marketing Notes

INTERNATIONAL INSTI. OF PLANNING & MANAGEMENT, AHMEDABAD.Saturday,18th OCT.,08 IM-7 * Global Advertising & Promotion Systems / Pricing strategies for International Markets

Dr. PRADIP DESAI B.E. ,M.B.A. (I.I.F.T.), LL.B., Ph.D.(Management-U.S.A.),CMC CERTIFIED MANAGEMENT CONSULTANT ( C.M.C.) CHAIRMAN & C.E.O.

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PRODUCT PROMOTION 1. PERSONAL SELLING : American Marketing Association(AMA)def.: Oral presentation in a conversation with one or more Prospective Purchasers for the Purpose of making sales. * Commonly Called Salesmanship in India. 2. PUBLICITY is the non-personal stimulation of Demand that is NOT PAID for by the sponsor ( Free Publicity) that has released News to the media. 3. ADVERRTISING : is the PAID ad.campaign designed to attract customers’ attention to generate awarenes about Products & Services with a view to generate Demand for Products & Services formthe targetMarket Moun Marketing Consultants

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Global ADVERTISING(GA) Def : GA is the practice of Advertising in the foreign media when the advertising is planned,directly/ indirectly by an advertiser from another country. *Media Planning: 1. TV: USA spends about US$140 bn.in TV commercial whereas EU spend 25% of US 2. FM Radio emerged as media when AM radio was down after the arrival of colour TVs in India 3.Magazines:Fashion/Women/Children Specific Segments 4. Newspapers:English/Regional languages e.g. Redership 5. Direct Mail 6.Internet/E- commerce: US.amazon.com 6. Tele Marketing :BPO & customer service functions 7. Outdoor Advtg:Hoardings/Bill boards/electronic /Neon Moun Marketing Consultants

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Decision making criterion for advertising/Promotion Abroad 1. Identification:does Target Buyer Group(TBG) have unique & measurable characteristics ? 2. Selectivity: Can this group be reached thro’ available media with min.waste ? 3. Response: Will the group Respond Favourably to this particular Mktg.Mix(ad.campaign) ? 4. Size:Is TBG big enough to justify a special ad. campaign?*TRP Rating=TV Viewership Pointer 5. Cost/Benefit analysis:Will extra cost incurred for Moun Marketing Consultants the ad.be justified with extra profit expected? 4

PRICING STRATEGIES • Price is an integral pat of the Product-A product can not exist without a price–tag attached. • Prices are determined by the supply/demand in the free market economy.More the price lesser will be demand & vice-versa. This is called `Elasticity of Demand’ in economics Exception: OPEC cartel-Oil Price hike in 1973 since oil has no substitute& produ.is controlled byOPEC 2 nd Exception is Perfumes or Fashion accessorieshigher the price more notional `snob value’attached 5 Moun Marketing Consultants

Pricing Strategies ….cont. 2 methods of Pricing in International Markets: 2. Cost-Plus (Full cost): All direct/variable cost of product e.g.raw materials,packing & Indirect/Fixed cost-Sales & Advtg.,engg, R&D., Quality assurance costs & selling overhead cost. For exports extra costs are:Export–worthy packing, Inspection charges,Local freight/OceanFreight/C&Fagent cost, Insurance charges & Overseas Customs duty to add. 7. Marginal cost:Direct cost is covered & even if there is marginal contribution in FIXED COST from exports then it is advisable to increase production & export. 8. Incremental COST Pricing:Extra cost incurred in marketing products abroad is added to cost. Moun Marketing Consultants 6 9. Exchange rate gain/loss to be considered for export

DUMPING PRICES • Dumping by an exporting country/co.occurs when in order to grab larger share of market products are sold at less than Domestic Prices or are heavily subsidised by the exporting country. • Importing country after investigation of dumping charges can introduce Anti-dumping duties on import of specific product /co./ import of a particular product from a specific country. • Complaint can also be lodged with WTO against a member country for re-dressal of any willful trade violations occuring. Moun Marketing Consultants

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TRNASFER PRICING(T.P.) •

T.P.is the amount of price charged by the MNC Parent co. to subsidiary or vice-versa. • Intra-firm trading of goods & services among MNCs has more than doubled in last dacade as per U.N.World Investment Report • 4-types of Transfer Pricing mechanism: 4. Direct mfg.cost 2. Direct mfg.cost+mark-up 5. Market based T.P. 4. Arm’s length price i.e. Price which un-affiliated trader would pay. Moun Marketing Consultants

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Export Price & Terms of delilvery • Ex.works(EXW):local freight to pay by buyers • FAS(free along side ship):does’nt include cost of loading charges in the ship at port of origin • FOB(free-on-board):does’nt include freight/insu. • C & F(cost & freight):does’nt include insurance. • CIF(cost-insurance-freight):all 3 cost by exporter • Ex.dock/quay/ship(EXQ/EXS): upto port of discharge abroad & import duty paid by exporter • DDP(delilvery duty paid):all costs inclu. Import duty & upto warehouse of the importer Moun Marketing Consultants

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