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Marketing (1): the process of focusing the resources & objectives of an organization on environmental opportunities & needs Marketing (2): a set of concepts, tools, theories, practices, procedures, & experiences Although marketing is a universal discipline, marketing practice varies from country to country
1990s:
Focus on customer in the context of the broader external environment
Competition, government policy & regulation
Shift towards
Focus on managing strategic partnerships Positioning of firm in value chain to optimize value creation
Domestic market constraints Competition Government policies and regulations Monopoly power Growth opportunities
Better market share Better profits Creation of wealth
Other Driving Forces / challenges Affecting International Marketing Technology Regional Economic Agreements Market Needs & Wants Transportation & Communication Improvements Product Development Costs Quality World Economic Trends Leverage The Global/ Transnational Corporation
Exporting
When a product begins to reach a saturation point in its home market and cant grow faster than the population, may move outside. Management tries to introduce new products at home or expand into foreign markets. Other reasons for going abroad include:
Market potential for products exists in other countries, Mergers and acquisitions with foreign businesses, Preempting competitive development.
Exporting
Exporting a Product Requires Placing the Product in the Distribution System of Another Country.
Appoint a Distributor or Importer Who Markets in the New Country. Exporting is the First Step in International Marketing. Many Service Providers Also Market Internationally.
Once Exporter Becomes Nationalized, Company Often Once Exporter Becomes Nationalized, Company Often Establishes an Office and Transfers Responsibilities. Establishes an Office and Transfers Responsibilities.
Driving forces
Liberalisation MNCs Technology Transportation and communication revolution Product development costs and efforts Quality and cost Rising aspirations and wants Competition World economic trends Regional integration Leverages
Experience transfers, scale economies, resource utilization, global strategy,
Different Management Orientations in the Global Arena EPRG Framework Polycentric Ethnocentric Regiocentric Geocentric
Ethnocentric Orientation:
Characteristic of domestic & international companies Opportunities outside the home market are pursued by extending various elements of the marketing mix
Polycentric Orientation
Characteristic of multinational companies Marketing mix is adapted by autonomous country managers
While firm managers may try to employ the same basic marketing strategies used in the domestic market when promoting products in international locations, those strategies may not be appropriate or effective.
differences across borders, Nation-states generally have unique government systems, laws and regulations, taxes and duties, different cultures and practices. Region, orientation, politics, currency, language, infrastructure, trade practices.
un controllable factors
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Controllable factors
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un controllable factors
Most external factors
Political Economic Social Legal Demographic Cultural
Controllable factors
All internal factors
Technology in use Resources
Manpower
International Marketing
Look at the international marketing environment Decide whether to enter Decide which markets to enter Decide how to enter Plan marketing programs Plan marketing organization .the real issue here is what role national boundaries play in a firms strategic planning process.
Physical Environment
Climate, topography, resources
US has big products
Economic Environment
Population, industry structure, stage of development
Lack of wholesalers in developing countries, Infrastructure, planned developmental process
unwelcome regulations or interference in operations. uncertainty about the likelihood of government activity occurring. The degree of political risk is not solely a function of the country, but depends on the company and its activities as wella risky country for one company may be relatively safe for another Firms naturally prefer countries that are stable and that present little political risk, but the returns need to be weighed against the risks, and firms often do business in countries where the risk is relatively high. Firms seek to manage the perceived risk through insurance, ownership and management choices, supply and market control, financing arrangements
Political and legal differences Cultural differences Economic differences Differences in currency unit Differences in language Differences in marketing infrastructure Trade restrictions High cost of distance Differences in trade practices
International Marketing
What influences the decision to enter?
Stability of government Stability of currency Tariffs/non-tariff barriers Crime/corruption Protection of property rights/technology
International Marketing
Which markets?
Current market potential Future market potential versus risk
Russia, Iran, Iraq, UAE, GB/UK, East Timor, Fiji .?
Marketing Plan
Standardize versus adapt for each market
International Marketing
Marketing Organization
Based on entry strategy Requirement for in-country participation
Balance of Payments
A record of all economic transactions between residents of a country & the rest of the world Capital Account records
Long-term direct investment, Portfolio investment, Other short & long-term capital flows
The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the bulk of the world's trading nations and ratified in their parliaments.[3]
Most of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round, and earlier negotiations under the GATT. The organization is currently the host to new negotiations, under the Doha Development Agenda (DDA) launched in 2001.[4]
The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters are in Geneva, Switzerland. Among the various functions of the WTO, these are regarded by analysts as the most important:
It oversees the implementation, administration and operation of the covered agreements. It provides a forum for negotiations and for settling disputes.
1. 2. 3. 4. 5.
The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: Non-Discrimination. Reciprocity. Binding and enforceable commitments. Transparency. Safety valves.
It reflects both a desire to limit the scope of freeriding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets.
A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialize.[35]
The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedules (list) of concessions. These schedules establish "ceiling bindings":
a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.
These internal transparency requirements are supplemented and facilitated by periodic country-specific reports
Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.[34]
In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction:
articles allowing for the use of trade measures to attain non economical objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons.
GATT Vs WTO
1.
2.
3. 4.
5.
The GATT was a set of rules for conducting international trade with no solid institutional basis (only an ad-hoc provisional secretariat). Although it was in place for over forty years, the GATT was a provisional agreement from a legal point of view. The GATT dealt only with trade in goods. A large number of agreements adopted under the GATT were "plurilateral", and therefore selective agreements. Another major difference is the dispute settlement system, which is slower and more bureaucratic than in the old GATT system. Its rulings cannot be blocked.
1. 2. 3.
4. 5.
The WTO is an intergovernmental organization, and has its own secretariat The WTO and its agreements are mandatory and permanent The WTO covers trade in services (under the General Agreement on Trade of Services, GATS), trade related aspects of intellectual property (under the TRIPS) and continues dealing with trade in goods through the so called "GATT 1994" which is an updated version of the old text "GATT 1947". The Agreement on Trade Related Investment Measures (TRIMs) But WTO agreements are multilateral and all member states are concerned Another major difference is the dispute settlement system, which is faster and more automatic than in the old GATT system. Its rulings cannot be blocked.
Customs union
Mauritius
Common market
Singapore
The European Union, - The European Free Trade Association (EFTA), - The North American Free Trade Agreement (NAFTA),
LAFTA 1961(area), CACM (central American common market)
EFTA 1960 ,
- The Southern Common Market (MERCOSUR), - The Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), and - The Common Market of Eastern and Southern Africa (COMESA). Indo- Lankan free trade agreement SAPTA- SAARC preferential trading agreement GAAT >>>>> WTO
Additional three Ps
People, process, Physical evidence
Some more Ps
Personalization, participation, Peer-to-peer, Predictive modeling
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Marketing research links the consumer, customer, and public to the marketer through information Information is used to ...
identify & define marketing opportunities & problems generate, refine & evaluate marketing actions monitor marketing performance improve understanding of marketing as a process.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Inadequate International Marketing Research Can Cause Costly Mistakes Kellogg's corn flakes The Dvorak keyboard, a "superior" alternative to our current QWERTY standard. The Betamax video cassette format, which lost out to VHS in the consumer market. The Macintosh operating system, supposedly preferable to the dominant Windows platform.
In international marketing, information is critical in developing effective marketing strategies!
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Religion, culture,
An issue of a religious nature arose in the UK when BK introduced a new prepackaged ice cream product; the label of the product included a silhouette of the ice cream that when rotated on its side bore a resemblance to the Islamic inscription for God. Several local Muslim groups pointed out the issue of the possible interpretation and Burger King voluntarily recalled the product and reissued it with a new label.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Secondary data
Data from sources that already exist they have not been gathered for the specific research project Therefore: Minimal effort and cost Possible problems
accuracy availability timeliness costs and comparability of data
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Examples
Demand pattern analysis, Income elasticity measurements, Market estimation by analogy, Comparative analysis, Cluster analysis
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
National markets have different definitions It is essential that data have the same meaning & the same level of accuracy, precision of measurement & reliability
This aspect must cover all stages of marketing research from problem definition to data analysis
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Information is one of the most important assets in international marketing Among the idiosyncrasies of global marketing research are the complexity of factors to be considered and the lack of research infrastructure Comparability and equivalence in an international context is essential; i.e. the data must have the same meaning and the same level of accuracy, precision of measurement and reliability
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Exporting
Low investment Low control of promotion
Licensing
Low investment Low control of promotion, positioning, and quality Able to benefit from existing distribution and market knowledge
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Joint venture
Considerable investment More control Able to benefit from partners experience Must work with partner
Direct investment
Large investment Risky Greater control May lack knowledge of market
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
NEXT 15 slides
Global Brand
A symbol about which customer have beliefs & perceptions Same name or same meaning in another language Similar image & position Guided by same strategic principles Marketing mix may vary from country to country
Products That Solve a Common Problem Global Village Products Products That Use Universal Themes
Many factors determine a product`s market potential Product saturation level increases as national income per capita increases The presence or absence of a particular companion product can be significant
Stereotyped attitudes toward foreign products & services can favour or hinder marketing efforts If the quality is perceived to be low
Foreign origin of the product can be disguised Foreign identification of the product can be continued & consumer attitudes towards the product can be changed
In some market segments foreign products have a substantial advantage because they are foreign
Communications
Same Same
Product
Different edlich
Global Product Planning: Strategic Alternatives for Expanding into Global Markets
Company sells exactly the same product or service with the same advertising as used in the home country Company assumes that all markets are alike Does not work in all markets Often used because it saves costs Example: Campbell Soup
If the product serves different needs in various countries, only marketing communication may have to be adapted Adaptation can happen by design or accident Cheap implementation because product does not change Example: Motor scooters
Product is adapted to the new market, but basic home market communication strategy remains unchanged Product is adapted to the environment and the preferences of the consumers in the new market Example: Exxon
Using Dual Adaptation the company must adapt the product or service as well as the marketing communication to the foreign market Example: Unilever fabric softener
3 Stages Cave Dweller primary motivation is to dispose of excess capacity Nave Nationalist Sees adaptation as the only alternative Globally Sensitive- Evaluated across countries with some standardization & some differentiation
New to consumer & company ( Product or service innovation) New to consumer but not new to company (Product/service or line extension) Not new to consumer but new to company (New product or service duplication)
The international new-product department Testing new products & services in national markets
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Next 15 slides
Psychographic Segmentation
... is based on attitudes, values and lifestyle ... is measured through extensive item batteries which cover activities, interests and opinions (AIO-studies) lifestyle surveys,
Description
Driven and ambitious; care about power and control; expect to be noticed Old money; a careven an expensive oneis just a car, not an extension of ones personality Ownership is what counts; a car is a trophy, a reward for working hard; being noticed doesnt matter Cosmopolitan jet setters and thrill seekers; car heightens excitement Car represents a form of escape; dont care about impressing others; may even feel guilty about owning car
Source: ALEX III Taylor, Porsche Slices up its Buyers, Fortune, 16 January 1995, p. 24
5 global psychographic segments represent 95% of the adult populations in the countries surveyed.
Behaviour segmentation
Focus on whether & how much people buy or use a product; usage rates: heavy , medium, light users, nonusers user status: potential users, nonusers, ex-users, regulars, first timers & users of competitors products
Benefit segmentation
Today, consumers basic needs are fulfilled. Therefore, consumers seek additional value from purchase decisions
Global Targeting
After markets have been segmented, targeting aims at evaluating and comparing the indentified segments in order to select one or more as prospect(s) with the highest potential.
is the location of a product in the mind of the consumer is partly controlled by the marketer (marketing mix) and partly not! is visualised by a positioning map
2 dimensions or multidimensional (MDS)
Source: adapted from James H. Myers, Segmentation and Positioning for Strategic Marketing Decisions (American Marketing Association, Chicago, 1996), S. 187
High-Tech Positioning
Positioning stragtegy for products which are purchased on concrete product features; buyers typically already possess or wish to acquire considerable technical information Suitable for
technical products, such as computers or chemicals, special-interest products, such as sporting goods
High-Touch Positioning
The emphasis lies more on the products image; specialised information appears of minor relevance Suitable for
products that solve a common problem: soft drinks global village products: cosmetics or fashion products that use universal themes
Summary
Before a company expands to foreign markets it must analyse the global environment. Global market segmentation aims at identifying similarities and differences of potential customers. Global targeting: The market segments are evaluated and compared and an appropriate targeting strategy is developed. To reach the targeted market segment(s) a positioning strategy must be chosen; in a global context high-tech or high-touch positioning are promising.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Packaging
is the enclosing of a physical object, typically a product that will be offered for sale. It is the process of preparing items of equipment for transportation and storage and which embraces preservation, identification and packaging of products.
Packing
is recognized as an integral part of modern marketing operation, which embraces all phases of activities involved in the transfer of goods and services from the manufacturer to the consumer. Packaging is an important part of branding process as it plays a role in communicating the image and identity of a company.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Kotler defines packaging as "all the activities of designing and producing the container for a product." Packaging can be defined as the wrapping material around a consumer item that serves to contain, identify, describe, protect, display, promote, and otherwise make the product marketable and keep it clean.
is the outer wrapping of a product. It is the intended purpose of the packaging to make a product readily sellable as well as to protect it against damage and prevent it from deterioration while storing. Furthermore the packaging is often the most relevant element of a trademark and conduces to advertising or communication.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Material cost Storage and handling cost of empty packages Packaging operation costs: Storage of filled packages Transportation cost of filled packages Loss and Damage cost Insurance cost Effect of packages on sales Obsolescence Cost Package developmental cost
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Needs to take care of cultural diversity, media limitations, legal differences, etc.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
Global campaigns
help to build long-term product identities offer significant savings in production costs
Global advertising
offers companies economies of scale in advertising improves access to distribution channels
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
The international product life cycle can be defined as market life span stages the product goes through in international markets sequentially, simultaneously or asynchronously.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
The sequential stages are introduction, growth, maturity, decline and extinction in the international markets.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
When a product is positioned in different international markets at the same time and is going through similar life cycle stages, the cycle process is simultaneous.
International marketing research and information system Foreign market entry strategies International product development International market segmentation and product positioning Packaging and branding decisions International PLC
The life cycle stages are asynchronous when the product is in different stages in different international markets at the same time. The life cycle stage in which a product can be positioned is influenced by macro variables indigenous to country markets.
Stanton and others cite examples of this phenomenon. Steel-belted auto radial tires had reached the saturation level in Western Europe when they were being discovered by the U.S. market. Thus it was in the maturity stage in Western Europe and introductory stage in the United States
Channel Objectives
Create utility of place, time & information Can be a source of competitive advantage Important because of number & nature of relationships Must analyze each market Must fit overall marketing objectives of company
Two forms of channel strategy direct involvement Own sales force, retail stores, etc. indirect involvement Independent agents, distributors, wholesalers
Summary
Channel decisions are difficult to manage globally A global marketer must
tailor the marketing program to different types of channels or introduce new retail concepts
Advertising
May be defined as any sponsored, paid message placed in a mass medium (or)
Paid form of non personal communication by an identified sponsor
Global advertising refers to the use of the same advertising appeals, messages, art, copy, photographs, stories, and video segments in multiple-country markets
Needs to take care of cultural diversity, media limitations, legal differences, etc.
Global campaigns
help to build long-term product identities offer significant savings in production costs
Global advertising
offers companies economies of scale in advertising improves access to distribution channels
Automotive Personal care Food Entertainment Drugs Soft Drinks Electronics Cleaners
Fast Food 10. Computers 11. Beer, wine & liquor 12. Toys 13. Retail 14. Cigarettes 15. Cell Phones
9.
message may not get through to intended recipient message may reach target audience but may not be understood or may even be misunderstood message may reach target audience & may be understood but still not induce the recipient to take the action desired by the sender effectiveness of the message can be impaired by noise
Two positions
one world, one voice approach localized approach
Creating Advertising
Art Direction Copy Cultural considerations values & motives advertising form execution of the advertising
Benefits of branding
provides a marketing edge to the brands so as to
maintain their prices at relatively higher levels than the competitors secure better margins facilitate coping with market competition increase the life of a product serve as an important tool in international marketing as the image of the brand crosses national boundaries facilitates the forging of an emotional relationship between consumers and products
67.4 61.4
60.0
53.8
50.0
33.5
30.0
27.1
25.0
24.0
22.7
22.1
20.0
10.0
0.0 IBM GE McDonald's Disney Nokia Intel Coca-Cola Microsoft Marlboro Toyota
Brands
Build Category
dnar B t ne m o eve D pl xe dn I
Maintain leadership
Secure trial
Low
Low
Options:
create ads in-house use an outside agency combine both strategies
In selecting an advertising agency, the following issues should be considered: Company organization National responsiveness Area coverage Buyer perception
Media decisions
Availability varies around the world Government regulations Censorship
Media expenditures
Largest per capita advertising expenditures occurred in highly developed countries Basis of compensation
Summary
Marketing communications includes advertising, public relations, sales promotion, and personal selling Selecting an advertising agency is difficult Either local adaptation or distinct local campaigns may be required Media usage varies around the world
Commercial documents
commercial invoice is a document of content that provides: - identification of shipment - detailed description of goods - description of quantity a packing list provides details of how the goods are packed, the contents of different boxes, cartons, or bales, and details of the weights and measurement of each package in the consignment transport documents documents that evidence shipment of goods, such as bill of lading, combined transport document, waybill, or consignment note
Bill of lading
marine bill of lading (B/L)
- a transport document issued by the shipping company to the shipper for accepting the goods for the carriage of merchandise airway bill (AWB) - issued by the carrier as an evidence of contract of carriage
received for shipment bill of lading clean bill of lading dirty (clause) bill of lading stale bill of lading through bill of lading trans-shipment bill of lading
used as an evidence of the origin of goods in the importing country includes the details of the goods covered and the country where the goods are grown, produced or manufactured
Certificate of origin
Regulatory documents
shipping bill / bill of export is the principal
document required by customs authority mentioning details of shipment for exports bill of entry is a document needed for customs clearance of imported cargo
waybill
A waybill is a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods.
Typically it will show
the names of the consignor and consignee The point of origin of the consignment its destination Route method of shipment the amount charged for carriage.
Unlike a bill of lading, which includes much of the same information, a waybill is not a document of title
at internationally competitive rates, banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest
credit in either foreign currency or domestic currency post-shipment credit has to be in foreign currency if the pre-shipment credit has already been availed of in foreign currency in order to liquidate the pre-shipment credit the scheme covers bills with usance period upto 180 days
Factoring
purchase of receivables by the factor at a discounted price benefits
- facilitates expansion of sales in international markets by offering prospective customers the same terms and conditions as local competitors
- facilitates immediate payment against receivables and increases working capital - credit investigations, collection of account receivables from the importer, and other bookkeeping services are carried out by the factors - in the event of buyers default or refusal to pay, factors assume credit risk
Forfaiting
a mechanism for financing exports forfaiting discounts receivables by negotiating bills drawn under a letter of credit or co-accepted bills of exchange
benefits
- by discounting export receivables evidenced by bills of exchange or promissory notes - on a fixed rate basis (discount) - without recourse to the exporter - carrying medium to long-term maturities (usually over 120 days) - up to 100% of the contract value
overseas buyer enabling him to pay for machinery or equipment that he may be importing from India for a specific project line of credit is extended by a bank in India to an overseas organization for facilitating imports from India
economic risks
- import restrictions - local content requirements - exchange controls - foreign exchange risk
transit risks
- maritime - extraneous - war - strike
partial loss
Module - IV
Insurance
Insurance is a contract between two parties by which one of them (Underwriter or the insurer) agrees for a consideration called premium to indemnify the other (insured) on the happening of some event.
All insurance contracts are contracts of indemnity
Insurance - RISK
Insurance removes the hindrance of risk The different risks
Life
Death Survival
General insurance
Loss, theft, damage, fire, natural calamities, accidents etc,.
The insured must be subject to risk The time and occurrence of the event must be uncertain Both the insured and insurer should not have any control over the happening of the event The risk insured should not be a very minor one
Cost of insurance may be uneconomical
The cost of insurance should not be prohibitive The risk must be capable of approximate mathematical estimation
PRINCIPLES
Insurable interest
Must have insurable interest and it must be of a pecuniary nature
Indemnity
Get you back to the same state in which you were in before the occurrence of the event (indemnify the loss)
Subrogation
Insurer gets all the rights of the insured after compensating the insured. Recovery from a third party in case of accident
classification
Life
Term Insurance Policy Whole Life Policy Endowment Policy Money Back Policy Annuities and Pension
Non-life
Marine, fire and miscellaneous
IRDA
Mission
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
Authority
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) a Chairman; (b) five whole-time members; (c) four part-time members. (all appointed by the Government of India)
a. b.
c. d. e. f. g.
h.
issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; specifying the code of conduct for surveyors and loss assessors; promoting efficiency in the conduct of insurance business; promoting and regulating professional organisations connected with the insurance and re-insurance business; levying fees and other charges for carrying out the purposes of this Act;
calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;
control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; regulating investment of funds by insurance companies; regulating maintenance of margin of solvency; adjudication of disputes between insurers and intermediaries or insurance intermediaries; supervising the functioning of the Tariff Advisory Committee; specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f); specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and exercising such other powers as may be prescribed
Insurance Act 1938 Provides the broad frame work for the insurance sector/industry/services in the country.
iv. A body corporate other than a private company incorporated in any country outside India
(After the enactment of IRDA act, 1999, only Indian Insurance companies are permitted to carry out any class of insurance business ) 26% of Paid up capital by a foreign company
Before 1999
LIC
Currently 18 insurance companies are functioning
Bajaj Allianz Life Insurance Company Limited . Birla Sun Life Insurance Co. Ltd HDFC Standard Life Insurance Co. Ltd ICICI Prudential Life Insurance Co. Ltd ING Vysya Life Insurance Company Ltd. Life Insurance Corporation of India Max New York Life Insurance Co. Ltd Met Life I
GIC
Currently 18 insurance companies are functioning
Bajaj Allianz General Insurance Co. Ltd. , ICICI Lombard General Insurance Co. Ltd. , IFFCO Tokio General Insurance Co. Ltd., National Insurance Co.Ltd., The New India Assurance Co. Ltd. Ltd., Co.Ltd., The Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd, Ltd. Ltd, Tata AIG General Insurance Co. Ltd., United India Insurance Co. Ltd., Cholamandalam MS General Insurance Co. Ltd., Ltd. HDFC General Insurance Co. Ltd. Export Credit Guarantee Corporation of India Ltd. Agriculture Insurance Co. of India Ltd. Star Health and Allied Insurance Company Limited Apollo DKV Insurance Company Limited, Future Generali India Insurance Company Limited, Universal Sompo General Insurance Co. Ltd.
Reinsurance
Actuary: is a business professional who deals with the financial impact of risk and uncertainty. They evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events Agent: Life insurance agent, General insurance agent or Composite insurance agent
Composite agent is an insurance agent who holds a licence to act as an insurance agent for a life insurer and a general insurer;
Surveyors and Loss assessors are independent professionals appointed by an insurance company to assess the loss or damage, when a claim is notified under a policy issued by them.
An insurance surveyor must be duly licensed by the Insurance regulatory and development authority. Licenses are issued to technically qualified people who are qualified in insurance subjects and are Fellows or Associates of the Insurance Institutes of India or Chartered Insurance Institute of London or any other technically qualified like Engineering graduates or diploma holders in any discipline, Chartered Accountants, Graduates in Medical Sciences. A surveyor after obtaining the license, may be empanelled by any or all of the insurance companies in India
Types
all industry rate: average industry drawback rates
fixed by Ministry of Finance from time to time
Chennai, Vishakhapatnam
Software Technology Parks (STPs)/electronic Hardware Technology Parks (EHTPs) facilitate exportoriented production of computer software, hardware, and
electronic hardware
give recognition to the established exporters and large export houses to build up the marketing infrastructure and expertise required for export promotion benefits - license/certificate/permission and customs
clearances for both imports and exports on selfdeclaration basis - fixation of input / output norms on a priority bias - priority finance or medium and long-term capital requirement as per conditions notified by the RBI - enhancement in normal repatriation period from 180-360 days
at internationally competitive rates, banks (authorized dealers) also extend credit in foreign currency at LIBOR/ EURO Libor / EURIBOR related rates of interest
credit in either foreign currency or domestic currency post-shipment credit has to be in foreign currency if the pre-shipment credit has already been availed of in foreign currency in order to liquidate the pre-shipment credit the scheme covers bills with usance period upto 180 days
Factoring
purchase of receivables by the factor at a discounted price benefits
- facilitates expansion of sales in international markets by offering prospective customers the same terms and conditions as local competitors
- facilitates immediate payment against receivables and increases working capital - credit investigations, collection of account receivables from the importer, and other bookkeeping services are carried out by the factors - in the event of buyers default or refusal to pay, factors assume credit risk
Forfaiting
a mechanism for financing exports forfaiting discounts receivables by negotiating bills drawn under a letter of credit or co-accepted bills of exchange
benefits
- by discounting export receivables evidenced by bills of exchange or promissory notes - on a fixed rate basis (discount) - without recourse to the exporter - carrying medium to long-term maturities (usually over 120 days) - up to 100% of the contract value
overseas buyer enabling him to pay for machinery or equipment that he may be importing from India for a specific project line of credit is extended by a bank in India to an overseas organization for facilitating imports from India
economic risks
- import restrictions - local content requirements - exchange controls - foreign exchange risk
transit risks
- maritime - extraneous - war - strike
partial loss
Commercial documents
commercial invoice is a document of content that provides: - identification of shipment - detailed description of goods - description of quantity a packing list provides details of how the goods are packed, the contents of different boxes, cartons, or bales, and details of the weights and measurement of each package in the consignment transport documents documents that evidence shipment of goods, such as bill of lading, combined transport document, waybill, or consignment note
Bill of lading
marine bill of lading (B/L)
- a transport document issued by the shipping company to the shipper for accepting the goods for the carriage of merchandise airway bill (AWB) - issued by the carrier as an evidence of contract of carriage
received for shipment bill of lading clean bill of lading dirty (clause) bill of lading stale bill of lading through bill of lading trans-shipment bill of lading
used as an evidence of the origin of goods in the importing country includes the details of the goods covered and the country where the goods are grown, produced or manufactured
Certificate of origin
Regulatory documents
shipping bill / bill of export is the principal
document required by customs authority mentioning details of shipment for exports bill of entry is a document needed for customs clearance of imported cargo
Export promotion
public policy measures which actually on potentially enhance exporting activity at the company, industry, or national level
growth and market expansion to reduce and remove barriers to exporting to create promotional incentives to provide various forms of assistance to potential and actual exporters
Bodies
Advisory Bodies
Responsibilities
coordinating discussion between industry & govt. for bringing in required changes
Commodity Organisations assist the export effort of a specific product group Service Organisations Government Trading Organisations State Export Promotion Agencies facilitate and assist exporters to expand markets handle export import of specific commodity facilitate export promotion from the states
Department of Commerce
the primary government agency responsible for evolving and directing foreign trade policy and programmes, maintaining commercial relations with other countries, and developing and regulating export-oriented industries
Advisory bodies
provide an effective mechanism for continued interaction with trade and industry and increased coordination among various departments and ministries concerned with export promotion Board of trade Export promotion board
Commodity organizations
these organisations look at sector-specific exports and perform a wide range of functions right from product development to export marketing
- offer professional advice to the members in areas such as technology upgradation, quality and design improvement, standards and specifications, product development, innovation, etc. - organize visits of delegations of its members abroad to explore overseas market opportunities - organize participation in trade fairs, exhibitions, and buyer-seller meets in Indian and abroad
Commodity boards
Tea Board Coffee Board Coir Board Central Silk Board All-India Handlooms and Handicraft Board Rubber Board Cardamom Board Tobacco Board Spices Board
Autonomous bodies
Agriculture and Processed Food Products Export Development Authority (APEDA) Marine Products Export Development Authority (MPEDA)
Service institutions
Indian Institute of Foreign Trade Indian Council of Arbitration India Trade Promotion Organization National Centre for Trade Information Export Credit Guarantee Corporation Export-Import Bank of India Indian Institute of Packaging Federation of Indian Export Organizations (FIEO)
Chapter 17
Emerging Issues
emerging new marketing barriers emergence of global customer segment product proliferation and shortening product life cycles growing strength of retailers emergence of knowledge economy increasing customer sophistication market beyond the urban middle class
Global e-marketing
physical marketplace to virtual market space
- problem recognition - information search - evaluation of alternatives - purchase decision - post purchase behaviour
reverse marketing
- reverse promotion - reverse advertising - reverse pricing - reverse product design - reverse segmentation
10 8 6 4 2 0
Score
3 .7 4 2 .6 1
South Africa
India
Denmark
Germany
C o u n try
Russia
m-marketing
the conduct of marketing activities through the use of mobile technology such as mobile phones, personal digital assistant (PDA), and telematics facilitates customers interaction with locationspecific context and worldwide web enables marketing communication through mobile devices and text applications such as SMS
graduates India has the second best developed entrepreneurial culture in the world 10% of researchers and 15% of scientists engaged in the pharma/biotech R&D in the US are of Indian origin one third of the start-ups in silicon valley are by Indians India is among the select group of six nations with satellite launch capabilities 3500 firms operating in 39 software parks export over US$ 8 billion worth of IT products and services over 70 MNCs have set up R&D facilities in India in the past five years
Services
Indias strategic strength in offering services to international markets lies both in individual and corporate services major potential for remote servicing to individual customers lies in telemedicine, e-learning, record keeping, and tax advisory services tourism, education, and health and nursing are the services targeted mainly at individual customers
2.03
2.5
Capital movements are driving force Production is uncoupled from employment Macroeconomics of individual countries no longer control economic outcomes
Economic Systems
Three types of economic systems:
Capitalist Socialist Mixed
Elements of marketing mix are not used as strategic variables Countries that relied upon command allocation systems for decades: China, former USSR, India
Economic Systems
Index of Economic Freedom (Source: Heritage Foundation)
Free:
Hong Kong, Singapore, New Zealand, , Bahrain, Luxembourg, US,
Mostly Free
Canada, Chile, El Salvador, Taiwan
Mostly Unfree
Cambodia. Mexico, Slovak Rep., Slovenia, Swaziland
Repressed
North Korea, Iraq, Libya, Somalia, Cuba
Top 10 GNP
(in millions)
United States Japan Germany France United Kingdom China Italy Brazil Canada Spain
$8,259,358 4,427,104 2,127,086 1,446,515 1,359,764 1,179,345 1,168,771 850,852 602,158 544,944
A country with economic, social & political problems that are so serious they make the country unattractive for investment and operations Low-income, no-growth countries (E.g.. Ethiopia)
One-time growing & successful countries that have become divided by political struggles
Summary
Economic environment is major determinant of global market potential & opportunity World economies can be categorized into market allocation systems, command allocation systems, & mixed systems For many products, most important indicator of market potential is income