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International marketing or import export business is ever escalating in importance. As the organizations establish and expand their businesses domestically, they start looking for profitable opportunities abroad. International marketing involves four basic steps, refer figure.

STEPS IN INTERNATIONAL MARKETING

Deciding whether to go abroad --- 2 Deciding which market to enter
Deciding mode of entry --- 4 Formulating a marketing program


DECIDING WHETHER TO GO ABROAD:

Most companies would prefer to remain in domestic business, if their domestic market were large enough. For setting up export offices abroad, managers have to learn another country’s language, culture and laws, adapt their products to strange customers needs and wants, their culture, deal with volatile currencies, face legal-political uncertainties and harassments, and so forth. Some countries impose high tariffs, quotas and other trade barriers to restrict imports from other countries. However, the benefit of going abroad is to sell the surplus and explore new profitable markets.

DECIDING WHICH MARKET TO ENTER:

A company can start exporting from few selected countries that offer high profit opportunities and fewer barriers to trade. On the other hand, companies like etc provide assistance to buy or sell goods and services internationally. In Pakistan, Trade Development Authority of Pakistan (TDAP), branches of chamber of commerce and some other organizations offer completely free technical assistance to exporters in particular and importers in general on procedures, formats, documentation, clearing and shipping matters, etc. In addition to importing or exporting goods, services are also marketed or traded internationally, such as travel and tourism services, recruiting services, consultancy services, maintenance and repair contracts, etc. The labor force that perform services abroad and send remittances to home country is engaged in services exports, which is called ‘invisible trade’, and goods trade is ‘visible trade’.

A financial analysis tends to be essential when deciding to have a direct presence abroad. This involves estimating the current market potential (it total demand), forecast of future market potential and risk, competitors’ prices and marketing-mix sales forecast, estimating costs and profits, and return on investment.

DECIDING MODE OF ENTRY:

It offers a broad list of choices each with its own list of merits and demerits.

INDIRECT EXPORT through an agent, broker, or another exporter is done at an initial stage of export.

DIRECT EXPORT can be done by opening an export department or an autonomous export division; hiring foreign-based distributors or agents; sending export sales reps abroad; and opening overseas sales branch or subsidiary company.

LICENSING OR FRANCHISING is an agreement between a manufactures or seller and buyer for the manufacturing, or manufacturing and marketing, or wholesaling, or retailing the seller’s brands against a royalty fee and any other fees. Coca-Cola carries its international marketing by licensing bottlers around the world and supply them the syrup concentrate and training to produce, distribute, and sell the product. The licensee/franchisee has the right to enjoy licensor/ franchisor’s process, trade mark, patent, trade secret, and corporate goodwill to maximize his/ her profits. The licensor/ franchisor ensures control by supplying proprietary ingredients (such as syrup of Coca-Cola) or other components needed in the product; keep launching innovated brands and advertising them at large scale; and keep monitoring the performance of the licensees/franchisees so that they remain dependant on him.

JOINT VENTURES are partnerships between foreign investors and local investors, in which they share ownership and control. Joint ventures are sometimes advantageous because the knowledge, expertise, and contacts of local partners are shared. Joint ownership has certain drawbacks, such as conflicts on the issues of decision making and policy making about investment, withdrawals of profit, marketing programs, etc. Joint venture is necessary in some countries where the governments do not permit import of certain goods nor allow direct investment but only allow joint ventures.

DIRECT INVESTMENT has its distinct advantages especially in the countries where a firm can enjoy low cost of capital or interest on loans, cheap raw materials and labor, foreign government’s investment and tax incentives, freight saving, and so on. The firm also establishes productive relation with the government, customers, suppliers, but direct investment may involve risks of legal-political uncertainty, changes in government policies, corruption, increase in cost of doing business, and so on.

FORMULATING A MARKETING PROGRAM The challenge here is whether to sell a standard size product world wide or adapt the product in compliance with local laws on product, its ingredients, features, warranty services, packaging; adapt the local price, promotion-al offers and advertising, keeping in view the regulations and competitors and distribution channels and above all, to meet the needs and wants of the customers of target countries. Many countries impose many restrictions on the product quality, warranty, maximum prices, etc. Customers’ choice of colors, designs, and packing also differ in many countries. This is why, many companies have gone Gloco local i.e. globally local, global with some modifications at local levels.

GLOBAL ORGANIZATION A multinational organization has utmost benefits of global operations. Management is recruited from many countries; components and supplies are purchased from the countries where they are the cheapest; investments are made where the anticipated returns are the greatest.

IMPORT EXPORT DOCUMENTS & SHIPPING & PAYMENT TERMS Upon inquiry, the exporter/seller mails, faxes, or emails the importer/buyer a quotation (of price) of certain products; upon acceptance, the exporter sends a sample of the product along with pictures and brochures. If the importer approves the sample, then requests the exporter to send a sample of commercial invoice (so called Performa invoice-PI) and a packing list. The payment and shipment terms, delivery schedule, and quality and packing specifications are also agreed before raising the invoice. The payment terms may be cash in advance, through telegraphic transfer (TT), wire transfer, letter of credit (LC), 50% advance, 50% LC, on account i.e. payment after sale. For more details, refer Inco Terms published by TDAP.
The most commonly used payment and shipping terms are ex factory, FOB price, CNF, CIF, and LC.

EX FACTORY PRICE The seller makes the goods available at the factory warehouse and transportation or supply of goods is the responsibility and expense of the buyer.

FREE ON BOARD (FOB) The seller makes the goods available at the board of the ship and further transportation or supply of goods is the responsibility and expense of the buyer.

COST AND FREIGHT (CNF/ CFR) The seller sends the goods to the buyer’s country up to a specified port at his expense and clearance of goods from customs authorities, payment of certain taxes, further transportation or supply of goods is the responsibility and expense of the buyer. The seller adds transportation cost in the invoice but the buyer is aware of the freight cost and saves his time in booking of goods at the vessel.

COST, FREIGHT AND INSURANCE (CIF) This is the same as CNF but the seller makes the consignment/ shipment/ container insured to protect the goods from any damages during the journey and adds the cost in the invoice.

LETTER OF CREDIT (LC) It’s an agreement between the buyer and seller involving the assurance by both parties’ banks about a confirm payment on a certain period under specific conditions. Suppose, party A gets opened LC at RBS bank in Singapore to import goods from party B in Pakistan; RBS will confirm payment on a certain period under specific conditions to party B’s bank, UBL. If the LC is Irrevocable LC at Sight, when the goods reach at Singapore’s port, upon receipt of shipping documents (invoice, packing list, shipping line/ vessel’s bill, called bill of lading, goods hygienic certificates, etc), RBS will call the party A to pay the invoice amount and party A will get the goods cleared from customs authorities upon further payment of some taxes and duties, such as advance income tax, sales tax, excise tax, port handling charges, etc. LC has many forms. The maximum terms of credit under LC are 30 to 180 days.

THE LIST OF IMPORTABLE ITEMS Not every item is importable from all countries. In Pakistan, there is a ban on import of arms and ammunition, narcotic drugs, alcoholic drugs unless prior approval of concerned government department. There is ban on importing any item from Israel due to worse diplomatic relations and there is a list of importable items from India. The importers/ exporters should check such lists before importing or exporting such things in different countries.

CONTROLLING MARKETING PROGRAMS
After implementing an entire marketing program, a company must monitor and evaluate (or control) its operations and activities, note the deviation of results and take corrective actions to meet its goals, objectives, and performance benchmarks. On annual basis, many companies perform controlling activities, also called quality audit to measure results. Companies compare the marketing objectives with actual results, for example, number of new products launched in a year should be 10, making at least 5 products the hit products, annually 15% sales growth, attaining 40% market share, reaching annual sales target of Rs100 million, equipping marketing team and sales reps with latest training tools, and so on. Finally, the managers can measure the difference between the actual versus planned results and trace out the causes for deviation and solutions for the future planning.