Bontimel, bernadette joy s. international marketing (1)

Bicol University Tabaco campus
Tayhi, Tabaco City

Power Point
Presentation in
International
Marketing
Bernadette Joy S.
Bontimel
BS Entrepreneurship II

International marketing (IM) or global
marketing refers to marketing carried out by
companies overseas or across national borderlines.
This strategy uses an extension of the techniques
used in the home country of a firm. It refers to the
firm-level marketing practices across the border
including
market
identification
and
targeting, entry mode selection, marketing
mix, and strategic decisions to compete in
international markets.

International
marketing
is
the
multinational process of planning and executing the
conception, pricing, promotion and distribution of
ideas, goods, and services to create exchanges that
satisfy individual and organizational objectives.
It is the performance of business activities
designed to plan, price, promote and direct the flow
of a company‟s goods and services to consumers or
users in more than one nation for a profit.

Controllable
Definition
Elements
1. Price
Is the quantity of
payment or
compensation given
by one party to
another in return of
goods or services
2. Product An item that ideally
satisfies a market‟s want
or need

Examples
Philippines imported
products
which are of lower price
compared to other
countries.
Avon cosmetics are of
great
quality compared to
other
cosmetics so buyers will
patronize products
which are
well-known.

3.

4.

Promotion It‟s the communication link Companies promote
between sellers and buyers
products
for the purpose of
through advertisements
influencing, informing, or
in order to
persuading a potential
be recognize by
buyer‟s purchasing decision
individuals.

Channel of It is the transport of goods
distribution
or services in a
particular place

Company A exports
their products
in other countries
through channel
of distributions.

Domestic and
foreignenvironment

Definition

Examples

(Uncontrollable
Elements)

1. Political and
legal Forces

Forces in the
marketing
environment that are
shaped by
government laws
affecting business.
These are very similar
to political forces.
Once laws are
enacted they are
usually very difficult
to change.

The Coca-Cola Company
wants to extend their
business ventures in
India but the
government of India
made them two choices
whether to give them the
secret formula of coke or
to leave the country. But
the company chose to
leave the country.

2.

Economic
climate

Pertains to the
regulation of the
household affairs.

Company considered
the country who has a
great number of people
living there as well as
the status of living they
have. China is the most
populous country in the
world so some
countries want to put
business in China.

3. Competitive
Structure

Encompasses the
notion of individuals
and firms striving for
a greater share of a
market to sell or buy
goods and services.

For example, Apple
Computer has been
known to make
innovative products
that are very stylish,
although somewhat
more expensive than
other computer
manufactures. They
have a successful niche
in the computer and
electronic gadget
market.

4. Level of
technology

Defined as the
capacity of
technology in its
usage.

Japan is well-known
as industrial country
because of the level of
technology they used.
Some modernized
countries like America
will not permit Japan to
put business in their
country that will affect
some of their business
engaging in industrial
exports.

5. Cultural
forces

That complex whole
which includes
knowledge, belief,
art, morals, custom,
and any other
capabilities and
habits acquired by
man person as a
member of society.

Red symbolizes luck in
China while in the
Philippines it
symbolizes war.

6. Geography
and
infrastructure

Refers to the
physical structures
or features.

China put up business
in some of the
neighboring countries
to avoid difficulties in
distributing the
products they have
produced.

Adaptation is a conscious effort on the part
of the International Marketing to anticipate the
influences of both foreign and domestic
uncontrollable factors on a marketing Mix and then
to adjust the marketing mix to minimize the effects.
To adjust and adapt the marketing program
to foreign market, marketers must be able to
interpret effectively the influence and impact of each
of the uncontrollable environmental elements on the
marketing plan for each for each foreign market.

Why Do Companies Go International?

Companies go international for a variety of
reasons, but the goal is typically company growth or
expansion. Whether a company hires international
employees or searches for new markets abroad, an
international strategy can help diversify and expand a
business.

Growth

Many companies look to international
markets for growth. Introducing new products
internationally can expand a company's customer base,
sales and revenue. For example, after Coca-Cola
dominated the U.S. market, it expanded their business
globally starting in 1926 to increase sales and profits.
Employees

Companies go international to find alternative
sources of labor. Some companies look to international
countries for lower-cost manufacturing, technology
assistance and other services in order to maintain a
competitive advantage.

Resources

Some companies go international to locate
resources that are difficult to obtain in their home
markets, or that can be obtained at a better price
internationally.
Ideas

Companies go international to broaden their
work force and obtain new ideas. A work force
comprised of different backgrounds and cultural
differences can bring fresh ideas and concepts to help
a company grow.

Diversification

Some companies go international to diversify. Selling
products and services in multiple countries reduces
the company's exposure to possible economic and
political instability in a single country.

Domestic Market Extension Concept

This orientation is illustrated by the
domestic company seeking sales extension of its
domestic products into foreign markets. The firms
orientation is to market to foreign customers in
the same manner the company markets to
domestic customers. It seeks markets where
demand is similar to the home market and its
domestic product will be acceptable.

Multi-domestic Market Concept

A company guided by this concept has a strong
sense that country markets are vastly
different(and they may be ,depending on the
product) and that market success requires an
almost independent program for each country.
Firms with this orientation market on a countryby-country basis, with separate marketing
strategies for each country.

Global Marketing Concept

A company guided by this orientation or
philosophy is generally referred to as a global
company, its marketing activity is global
marketing, and its market coverage is the
world. Its concept views an entire set of
country markets identifying groups of
prospective buyers with similar needs and
desires.

The global business environment can be
defined as the environment in different sovereign
countries, with factors exogenous to the home
environment of the organization, influencing
decision making on resource use and capabilities.
The global business environment can be classified
into the external environment and the internal
environment . The external environment includes the
social, political, economic, regulatory, tax, cultural,
legal,
and
technological
environments.

To function effectively and efficiently,
companies
operating
internationally
must
understand the social environment of the host
country they are operating in. Today there are
thousands of MNCs which operate in many parts of
the globe. Such companies should acquaint
themselves with the language and culture of the
country in which they are operating.

Balance of payments (BoP) accounts are an
accounting record of all monetary transactions
between a country and the rest of the world. These
transactions include payments for the country's
exports and imports of goods services, financial
capital and financial transfer. The BoP accounts
summarize international transactions for a specific
period, usually a year, and are prepared in a single
currency, typically the domestic currency for the
country concerned. Sources of funds for a nation,
such as exports or the receipts of loans and
investments, are recorded as positive or surplus items.

Balance of Payments Statement Three(3)
Accounts:
1. Current Account
2. Capital account/Financial account
3. Official reserves account

The Current Account
The current account is used to mark the inflow and
outflow of goods and services into a country. Earnings on
investments, both public and private, are also put into
the
current
account.

The Capital Account
The capital account is where all international capital
transfers are recorded. This refers to the acquisition or
disposal of non-financial assets (for example, a physical
asset such as land) and non-produced assets, which are
needed for production but have not been produced, like
a mine used for the extraction of diamonds.

The Financial Account
In the financial account, international monetary flows
related to investment in business, real estate, bonds
and
stocks
are
documented.
Also included are government-owned assets such as
foreign reserves, gold, special drawing rights (SDRs)
held with the International Monetary Fund, private
assets held abroad, and direct foreign investment.
Assets owned by foreigners, private and official, are
also
recorded
in
the
financial
account.

Policy of protecting domestic industries
against
foreign
competition
by
means
of tariffs, subsidies, import quotas, or other
handicaps placed on imports. The chief
protectionist measures, government-levied tariffs,
raise the price of imported articles, making them
less attractive to consumers than cheaper domestic
products. Import quotas, which limit the quantities
of goods that can be imported, are another
protectionist device. Wars and economic
depressions historically have resulted in increases
in protectionism, while peace and prosperity have
tended to encourage free trade.

Protectionist policies

Tariffs are imposed on imported goods.
Tariff rates usually vary according to the type of
goods imported. Import tariffs will increase the cost
to importers, and increase the price of imported
goods in the local markets, thus lowering the
quantity of goods imported, to favor local

Import quotas
To reduce the quantity and therefore increase
the market price of imported goods. The economic
effects of an import quota is similar to that of a tariff,
except that the tax revenue gain from a tariff will instead
be distributed to those who receive import licenses
Administrative barriers
Countries are sometimes accused of using
their various administrative rules (e.g. regarding food
safety environmental standards, electrical safety, etc.) as
a way to introduce barriers to imports.

Direct subsidies:
Government subsidies are sometimes given
to local firms that cannot compete well against
imports. These subsidies are purported to "protect"
local jobs, and to help local firms adjust to the world
markets.
Export subsidies:
Export subsidies are often used by
governments to increase exports. Export subsidies are
the opposite of export tariffs, exporters are paid a
percentage of the value of their exports. Export
subsidies increase the amount of trade, and in a
country with floating exchange rates, have effects
similar to import subsidies.

Exchange rate manipulation:
A government may intervene in
the foreign exchange market to lower the value of
its currency by selling its currency in the foreign
exchange market. Doing so will raise the cost of
imports and lower the cost of exports, leading to an
improvement in its trade balance.
International patent systems:
There is an argument for viewing national
patent systems as a cloak for protectionist trade
policies at a national level

Functions:
To shield a country‟s markets from intrusion by
foreign competition and imports.
To ensure that foreign nations do not subsidize
exports.
To guarantee that foreign firms do not dump their
exports in a predatory fashion.

Countless reasons to maintain government
restrictions on trade are espoused by protectionists,
but essentially all arguments can be classified as
follows: (1) protection of an infant industry, (2)
protection of the home market, (3) need to keep
money at home, (4) encouragement of capital
accumulation, (5) maintenance of the standard of
living and real wages, (6) conservation of natural
resources, (7) industrialization of a low wage
nation, (8) maintenance of employment and
reduction of unemployment, (9) national defense,
(10) increase of business size, and (11) retaliation
and bargaining.

Arguments for Protectionism include:
1. Maintain employment and reduce unemployment
2. Increase of business size
3. Retaliation and bargaining
4. Protection of the home market
5. Need to keep money at home
6. Encouragement of capital accumulation
7. Maintenance of the standard of living and real
wages
8. Conservation of natural resources
9. Protection of an infant industry
10. Industrialization of a low-wage nation
11. National defense

In general, protectionism contributes to
industrial inefficiency and makes a
nation uncompetitive
Protectionism is implemented through the
imposition of trade barriers, which
include tariff barriers and non-tariff
barriers

Trade Barrier is an artificial restriction on the trade
of goods and/or services between two countries. It
is the result of protectionism. However, the term is
controversial because what one part may see as a
trade restriction another may see as a way to
protect consumers from inferior, harmful or
dangerous products. For instance Germany
required the production of beer to adhere to its
purity law.

Government
imposed
restriction
on
the free international exchange of goods or servic
es
They are a way for a government to protect it's
nation's industries and businesses. The goal of
trade barriers is to put a limit on how much of a
certain good or service that can be imported into a
country so that the local firms have a opportunity
to compete in that market, even though the local
firms may not be as apt to compete if the market
were
open
to
all
competitors.

Classified as:
1) import policies reflected in tariffs and other
import charges, quotas, import
licensing, customs practices
2) standards, testing, labeling, and various
types of certification
3) direct procurement by government
4) subsidies for local exporters
5) lack of copyright protection
6) restrictions on franchising, licensing, technology
transfer
7) restrictions on foreign direct investment, etc.

Types Of Trade Barriers
1.

Tariffs

2. Import Quotas

1. Tariffs is a tax on imported goods. This increases the
cost of imports in the domestic market, making
domestic production relatively less costly than it would
be without the tariff. This will decrease imports
and increase domestic production in a protected
industry. The existence of imports in an industry is an
indication that at the current level of domestic demand,
foreign production is more efficient than
domestic production. With a tariff restricting imports,
the domestic consumer will have to pay a higher
price, and receive a smaller level of output. The
domestic producers in the protected industry will gain
from a tariff because it will allow them to increase
prices
and
output.

2. Import Quotas- Import quotas restrict the amount of
imports to a specific level. Once that level is reached,
additional
domestic demand will have to be met by domestic
producers. This will mean that if demand increases,
domestic consumers will not have the benefit of the
cheaper world price (the world price would be
cheaper for an import quota to be effective). All of
the additional production to meet an increase in
demand will be met by domestic producers.
Winners and losers with import quotas are similar to
the situation with tariffs, except that import quotas
do not provide revenue for the government.

Trade restrictions generally refer to the various
barriers to free trade
(imports and exports) imposed by governments.
they are an artificial restriction on the trade of
goods and/or services between two countries. It is
the result of protectionism. However, the term is
controversial because what one part may see as a
trade restriction another may see as a way to
protect consumers from inferior, harmful or
dangerous products. For instance Germany
required the production of beer to adhere to its
purity law.

Reasons For
Restricting Trade

1. National Security
Governments often determine that restricting
the export or import of specific products is in the
national best interest. A nation that produces
weapons systems may want to prohibit those
systems from being sold to potential enemies of the
state. Some products may be deemed to be vital to
the well-being of the country.
The
government doesn't want to rely on imports for a
significant
portion
of
the
nation's
supply, even if imports are less expensive than
domestic production.

2. Infant Industry
Sometimes governments believe that specific
industries which are less efficient than
foreign competition would become more efficient if
given time to develop without being undermined
by cheaper foreign prices. This is based on the idea
that new industries tend to have high startup costs,
but the costs will decrease if the industry has time
to develop. Without restrictions, these companies
cannot survive long enough to realize such cost
savings.

3. Retaliation
The argument for this is that "if they impose restrictions on
us, we should impose
restrictions on them in order to level the playing field, in
order to make trade more fair".

4. Protecting Jobs
If jobs are "shipped overseas", then domestic
unemployment increases. Evidence
shows that trade restrictions to protect jobs can increase
employment in protected industries, but will
not increase employment in the overall economy. The job
gains in the protected industries would be
offset by job losses in perhaps more efficient industries
(specialization & trade).

5. Low Foreign Wages
Countries with a lower standard of living tend to pay
lower wages. This is often
true when comparing developing nations with established
industrialized nations. Some countries have few laws to
protect workers, such as minimum wage, working
conditions, and child labor laws. With
lower labor costs, businesses, especially manufacturing
businesses, will be able to produce more
efficiently if they produce in a foreign country. One
offsetting argument to this is that efficiency may not
be real if the foreign workers are less productive than the
domestic workers, who may be more
educated, better trained, etc.

6. Politics
Politicians may find it desirable to bow to
pressure from special interests, and protect
specific
industries located in their districts. This
protection wouldn't necessarily be based on
national security,
infant industry, or other arguments. It would,
however, give special treatment to specific
industries
over other industries.

General Agreement on Tariffs and Trade
It is an activities made by United States and 22 other
countries to reduce tariffs and created an agency to
serve as watchdog over world trade.
It is the first multilateral, legally enforceable
agreement covering trade and investment in the service
sector.

BASIC ELEMENT THAT COVERS
AGREEMENT
a.) trade shall be conducted on a
nondiscriminatory basis
b.) protection shall be afforded domestic
industries through customs tariffs, not through
such commercial measures as import quota‟s.
c.) consultation shall be primarily method
used to solve global trade problems.

World Trade Organization
This is an institution that will set the rules governing
trade between it‟s 117 countries member, provide a
panel to hear and rule on trade disputes between
members.
The goal is to help producers of goods and services,
exporters, and importers conduct their business. It‟s
an organization for liberalizing trade.
It‟s a forum for governments to negotiate trade
agreements. It‟s a place for them to settle trade
disputes. It operates a system of trade rules.

PRINCIPLE OF TRADING SYSTEM

-Trade without discrimination
-Freer trade: gradually, through negotiation
-Predictability: through binding and
transparency
-Promoting fair competition
-Encouraging development and economic
reform

C. International Monetary Fund
This was formed among it‟s objective was the
stabilization of foreign exchange rates and the
establishment of freely convertible currencies.
The IMF's fundamental mission is to help ensure stability
in the international system. It does so in three ways:
1. keeping track of the global economy and the
economies of member countries;
2. lending to countries with balance of
payments difficulties; and
3. Giving practical help to members.

A. Global versus International Marketing
Management
The only distinction between global marketing
management and international marketing
management is orientation.

Global marketing management is guided by the global
marketing concept which views the world as one market
and is based on identifying and targeting cross-cultural
similarities in contrary international marketing
management is based on the promise of cross-cultural
differences and is guided by the belief that each foreign
market requires its own culturally adapted marketing
strategy. There are at least three points that help define a
global approach to international marketing:
(1) the world is viewed as the market;
(2) homogenous market segments are sought across
country market sets;
(3) standardization of the marketing mix is sought
wherever possible but adapted whenever culturally
necessary.

THE SIMILARITIES AND DIFFERENCES BETWEEN
INTERNATIONAL MARKETING AND GLOBAL MARKETING
SYSTEM

SIMILARITIES

International Marketing 1. Create exchanges
and Global
that satisfy individual
Marketing
and Organizational
Objective.
2. Marketing focuses
upon leveraging a
company’s assets,
experience and
product globally.

DIFFERENCES

1. The performance of
business activities that
flow of a goods and
services to consumers
or users in more than
one nation for a profit.
2. In International
Marketing, they know

3. Companies want to
sees what is the need of
the people, in order to
increase their marketing
sales.
4. Marketing goes
beyond the export
Marketer and becomes
more involved in
marketing environment
in the countries.

what the need of the
people in one
country is. While in
the global marketing,
Utilize a country-bycountry multi
domestic strategy.
3. They
conceptualize and
conveying a final
product or services
worldwide.
4. International
Marketing focuses upon
the need of its own
country while Global

5. Country sees the
world to its market
place.

Marketing focuses not
only in one country but
also in other countries.
5. Creates different
strategies to increase
the demand of the
product.

B. ALTERNATIVE MARKET-ENTRY
STRATEGIES
1.
2.
3.
4.
5.
6.
7.
8.
9.

Exporting
The Internet
Direct Sales
Contractual Agreement
Licensing
Joint Ventures
Franchising
Consortia
Manufacturing

Exporting
To carry or send, as goods or raw materials, to other
countries for sale or trade.
A company might decide to enter the international
arena by exporting from the home country this mean that
a company may transport goods or materials in order to
transact business activities outside their country.
Exporting can be either direct or indirect.
Direct exporting the company sells to a customer in
another country.
Indirect exporting usually means that the company sells
to buyer in the home country, which in turn exports the
product.

The Internet
The internet is becoming increasingly important as a
foreign market entry method it focused on domestic sales.
How ever, a surprisingly large number of companies
started receiving orders from customer in other countries
resulting in the concept

Direct Sales
Establishing an office with local and/ or expatriate
managers and staff, depending of course on the size of the
market and potential sales revenues.

Contractual Agreement
Are long term, non equity associations between a
company and another in a foreign market. It generally
involve the transfer of technology, processes, trademarks
and/or human skills. In short, they serve as a means of
transfer of knowledge rather than equity.
Licensing
A legal basis or permit to operate a business transaction
outside or inside the country, it is also the rights to use for
the company to protect patents and trademarks against
cancellation of the business contract a company has
agreed upon in there meetings.

JOINT VENTURES
A joint venture can be attractive to an international
marketer.
1.When it enables a company to utilize the
specialized skills of a local partner.
2.When it allows the marketer to gain access to a
partner‟s local distribution system.
3.When a company seeks to enter a market where
wholly-owned activities are prohibited.
4.When it provides access to markets protected by
tariffs or quotas.
5.When the firm lacks the or personnel capabilities to
expand its international activities.

FRANCHISING
Rapidly growing form of licensing in which the
franchiser provides a standard package of products,
systems, and management services, and the
franchisee provides market knowledge, capital, and
personal involvement in management.
The combination of skills permits flexibility in
dealing with local market conditions and yet provides
the parent firm with a reasonable degree of control.

CONSORTIA
The consortium and syndicate are similar to the joint
venture could be classified as such except for two unique
characteristics:
1.They typically involve a large number of
participants, and
2.They frequently operate in country or market in which
none of the participants is currently active.
Often , huge construction projects are built under a
consortium arrangement in which major contractors with
different specialties form a separate company
specifically to negotiate for and produce one job.

MANUFACTURING

A company may manufacture locally to capitalize on
low-cost labor, to avoid high import taxes, to reduce
the high costs of transportation to market, to gain
access to raw materials, and or as a means of
gaining market entry. A hallmark of global
companies today is the establishment of
manufacturing operations throughout the world.

Regulations of Exporting & Importing
Export Regulations -can be designed to conserve
scarce goods for home consumption or to control
the flow of strategic goods to actual or potential
enemies.
Import regulations -may be imposed to protect
health, conserve foreign exchange, serve as
economic repricals, protect home industry, or
provide revenue in the form of tariffs.

Types of Licenses
General Licenses- permits exportation of certain
commodities with nothing more than a
declaration of the type of product, its value
and its destination.
Validated License-issued only on formal
application.
Formal Application- is a specific document
authorizing exportation within specific
limitations.

Commerce Control List -classifies the product
according to availability for export.
Other Documents - in addition to a
validated license & anti-diversion clause, certain
shipments must be supported by documents
supplied by the prospective purchaser or the
government of the country of destination.
International Import Certificate certifies that the exported products will be
disposed of responsibly in the designated country.

Statement of
Ultimate Consignee
a
Purchaser -written assurance that the foreign
purchaser of the goods will not resell or dispose
of the goods in a manner contrary to the terms
of the export license under which the goods
were originally exported.

To acquire Export License:
ELAIN(Export license Application &
Information Network) : if once exporters
have authorization, they will be able to
submit license applications electronically to
ELAIN.
STELA(System for Tracking Export License
Application) : provides exporters instant
status updates on
export license
applications by use of a touch-tone
telephone.

Import Restrictions
1.
2.
3.
4.
5.
6.

Tariffs
Quotas
Import license
Packaging and Shipping
Boycott
The proper packaging of
Standards
products is vitally important,
Other Restrictions
particularly when shipments
are bound for ports with
inadequate handling and
storage facilities.
Export

Import Restrictions
1.
2.
3.
4.
5.
6.

Tariffs
Quotas
Import license
Boycott
Standards
Other Restrictions

Customs-Privileged Facilities
Products are brought into an in-bond area,
manipulated(processed, repackaged, assembled),
and re-exported to country where products
originated
Low tariffs assessed only on value-added processing
that took place in the zone
Limits on products imported to encourage re-exporting

Customs- privileged areas- Areas where goods can be
imported for storage and/or processing with tariffs
& quota limits postponed until the products leave
the designated areas.
Types of Customs-Privileged Facilities
1.
Foreign trade zones/ free-trade zones
2.
Free ports
3.
In-bond arrangements
Foreign-Trade zones- The number of countries with
foreign trade zones (FTZ’s) has increased as trade
liberalization has spread through Africa, Latin America,
Eastern Europe, & other parts of Europe & Asia. Most
FTZ’s function in a similar manner regardless of the
host country.

Benefits for companies Utilizing FTZ’s

•

•
•
•
•

Import Restrictions
Lower insurance costs due to the greater security
required in FTZ‟s.
1. More working capital since duties are deferred
Tariffs
2.until goods leave the zone.
Quotas
3. Import license
The opportunity to stockpile products when quotas
4. Boycott
are filled or while waiting for ideal market
5. Standards
6.conditions.
Other Restrictions
Significant savings on goods or materials rejected,
damaged, or scrapped for which no duties are
assessed.
exemption from paying duties on labor &
overhead costs incurred in an FTZ‟s which are
excluded in determining the value of the goods.

EXPORT
DOCUMENTS

DEFINITION

EXPORT
DECLARATION

-customs form
completed and
submitted by an
exporter at the port of
export
-includes information
about the shipping
company and the
receiving company
-explains the
commodity, nature,
weight and value of the
shipped goods

PURPOSE
-to provide
information on
amount, nature and
value of exports to
the statistical office
for compilation of
foreign trade data
-to serve as an
export control
document

OF -is a contract to carry
the goods to the said
destination based on
which seller can claim
consideration
and
buyer can take delivery
of the goods

-as a contract for
shipment between the
carrier and shipper
-as a receipt from the
carrier for shipment
-as a certificate of
ownership or title to
the goods

COMMERCIAL -a bill of statement for
INVOICE
the goods sold
-is used as a customs
declaration provided by
the person or corporation
that is exporting an item
across
international
orders

-some
countries
require a copy for
customs clearance
-one of the financial
documents required in
international
commercial payments

BILL
LADING

INSURANCE -is a contract between
POLICY
or the insurer and the
CERTIFICATE insured, known as the
policy holder, which
determines the claims
which the insurer is
legally required to pay

-to meet specific
needs and thus have
many features not
found in many other
types of contracts

-are the responsibility of
LICENSES
IMPORT the importer and vary
LICENSE depending
upon
destination and product
-is
a
government
EXPORT document that authorizes
LICENSE the export of specific
goods
in
specific
quantities to a particular
destination

-are the responsibility
of the importer and
vary depending upon
destination
and
product
-is a government
document
that
authorizes the export
of specific goods in
specific quantities to
a
particular
destination

INSURANCE -is a contract between -to meet specific
POLICY
or the insurer and the needs and thus have
CERTIFICATE Benefits for companies Utilizingmany features not
insured, known as the FTZ’s
Import Restrictions
•
Lowerpolicy holder, due to the found in many other
insurance costs which greater security
determines
required in FTZ‟s. the claims types of contracts
Tariffs
• 1. More which the insurer duties are deferred
working capital since is
2.until goods leave the zone. pay
Quotas
legally required to
3. Import license
•
-are the to stockpile products when quotas
LICENSES The opportunityresponsibility of -are the responsibility
4. Boycott
are
waiting for the market
the
IMPORT filled or while and vary ofideal importer and
5. Standards importer
LICENSE depending
upon vary depending upon
6.conditions.
Other Restrictions
•
Significant savings on product materials rejected, and
destination and goods or destination
damaged, or scrapped for whichproduct
-is
a
government no duties are
assessed.
EXPORT document that authorizes -is a government
•
exemption from of specific
on labor
LICENSE the export paying duties document & that
overhead costs incurred specificFTZ‟s which the export
in an authorizes are
goods
in
excluded in determiningparticular of the goods. goods in
quantities to a the value of specific
destination
a
particular
destination

Domestic trade
Delivery and payment
between a buyer and seller.

term

agreed

International trade
These are terms that set out the rights and
obligations of buyers and sellers as applicable in
the transportation of goods.

TERMS OF
SALE
C&F
(cost and
freight)

DESCRIPTION

PURPOSE

To named overseas
port. The price
includes the cost of
the goods and
transportation cost
to the named place
of debarkation. The
cost of insurance is
borne by the buyer.

Maritime
transport
only
and insurance for
the goods are not
included.
Insurance is at
the cost of the
buyer.

CIF
(cost,
insurance,
freight)

To a named overseas
port of import. A CIF
quote
is
more
meaningful to the
overseas
buyer
because it includes
the cost of gods,
insurance and all the
transportation
and
miscellaneous
charges to the named
of debarkation

Exactly the same
as C & F except
that the seller
must in addition
procure and play
for the buyer.
Maritime
transport only

FOB
At a named inland
(free on board) point of origin; at
a name port of
exportation; or a
named vessel and
port of export.
The price includes
the cost of goods
and deliver to the
place named

Maritime export
only but not for
multimodal sea
transport
in
containers.

FAS
(Free
alongside
ship)

At the named US
port of export. The
price includes cost
of
goods
and
charges for delivery
of the vessel. The
buyer is responsible
for the cost of
loading onto the
vessel,
transportation and
insurance.

Suitable only for
maritime
transport only
but
not
for
multimodal see
transport
in
containers. This
term is typically
used for heavy
lift or bulk cargo.

INSURANCE -is a contract between -to meet specific
POLICY
or the insurer and the needs and thus have
CERTIFICATE Benefits for companies Utilizingmany features not
insured, known as This FTZ’s
EX
The price quoted the trade terms
Importcosts which greater greatest
•
Lowerpolicy holder,only to the found in many other
insurancecosts due places the security
(named port
covers Restrictions
determines the claims types of
required in FTZ‟s. point of responsibility contracts
of origin) Tariffs at the
on the
is
1. More which the insurer duties are deferred
•
working capital since
2.until goods leave the zone. pay
Quotasorigin. All other buyer and minimum
legally required to
3. Import charger are the
license
•
-are the to stockpile products when responsibility
of -are the quotas
LICENSES The opportunityresponsibilityobligations on the
4. Boycott
buyer’s concern
seller. the market
are
waiting for It s often used
the
IMPORT filled or while and vary ofideal importer and
5. Standards importer
LICENSE depending
upon vary depending upon
when making an
6.conditions.
Other Restrictions
•
Significant savings on product materials rejected, and
or
destination and goods initialdestination for
quotation
damaged, or scrapped for whichproduct
no
-is
a
government sale duties are
the
of goods
assessed.
EXPORT document that authorizes -is a government
without any cost
•
exemption from of specific
on labor
LICENSE the export paying duties document & that
included
overhead costs incurred specificFTZ‟s which the export
in an authorizes are
goods
in
excluded in determiningparticular of the goods. goods in
quantities to a the value of specific
destination
a
particular
destination

Differences of Export Shipping from Import Shipping:

a. Goods can be out of the shipper‟s
control for a longer period of time.
b. More shipping and collections
documents are required.
c. Packing must be suitable.
d. Shipping Insurance coverage is
more extensive.

Different Shipping or Transportation Modes:

1. Ocean Shipping
2. Air Freight and Air Express
3. Parcel Post

Freight Forwarders
The details of export shipping are often handled by a
„freight forwarder,‟ who acts as an exporter‟s agent
when shipping goods overseas.
Carriers
Three types of ocean carriers ship products overseas.
The first are conference lines which consist of an
association of ocean carriers providing common rates
and services. Individual conference carriers may take
independent action and offer shippers lower rates.
The second type of carriers are the independents.
Independent rates may be higher than other carriers,

but they may also be lower when in direct
competition with conference carriers.
The third type of carrier is the tramp vessel. These
carriers generally handle only bulk cargo and are
not on regular schedules or trade routes.
Terminals
Transporting lumber and other forest products
through general cargo terminals can be very
expensive.
Transportation
costs
can
be
significantly reduced by using specialized forest
products handling facilities at the ports of export
and destination, which will result in lower freight
rates and landed costs.

Logistics

Distribution process including all activities involved
in physically moving raw material, in-process
inventory, & finished goods inventory from the point
of origin to the point of use or consumption.
Interdependence of Physical Distribution System.

Distribution of goods also includes location
of plants warehousing, transportation mode,
inventory quantities, & packing.
The interdependence of the various
activities in the physical distribution mix & total
cost.

Benefits of Physical Distribution System

 Optimal inventory levels

 Optimal production capacity
 Better delivery service to the market
 Readily assessment of operating cost

Benefits for companies Utilizing FTZ’s

•

•
•
•
•

Import Restrictions
Lower insurance costs due to the greater security
required in FTZ‟s.
1. More working capital since duties are deferred
Tariffs
2.until goods leave the zone.
Quotas
3. Import license
The opportunity to stockpile products when quotas
4. Boycott
are filled or while waiting for ideal market
5. Standards
6.conditions.
Other Restrictions
Significant savings on goods or materials
rejected, damaged, or scrapped for which no duties
are assessed.
exemption from paying duties on labor &
overhead costs incurred in an FTZ‟s which are
excluded in determining the value of the goods.

• provides information & advice on routing and
scheduling, rates, & related charges, consular and
licensing requirements & export restrictions.
• they are independent business that dispatches or
transmit shipments & transact exporter for fee.
• It guides you in exporting shipments, or products.
• Their charges are smaller for the work they do &
guidance to the shipments or product extend to you.

Functions and Structure of International
Distribution System

TYPES OF
CHARACTERI FUNCTIONS
DISTRIBUTION
STICS
CHANNELS
LONG
DISTRIBUTION
CHAIN

There are many
parties or when
there is very
little known
about the market
and presence is
much
consolidated.

In the initial
phase of
market
introduction,
this solution is
more
convenience to
exporter.

SHORT
DISTRIBUTION
CHAIN

There is one of
intermediaries. It
distribute directly to
wholesaler or
purchasing centers,
the role played by a
retailer.

The advantages
gained are
reduction in
intermediary
commercial margins
and closer to the
client.

DIRECT
DISTRIBUTION
CHAIN

The exporters dealing The avoidance of
directly with the end unnecessary
clients.
intermediaries
making the product
more expensive and
gives absolute control
of marketing.

TYPES OF
MIDDLEMEN

DESCRIPTION

ADVANTAGES

1.External Middlemen

Differentiated on
whether or not they
take title to the
goods.

Elasticity of demand,
factors of production,
separation of power,
scope of work.

Represent the
principal rather than
themselves.
Work on commission
and arrange sales in
the foreign country
but do not
take title to the
merchandise.

Maintains the right to
establish policy
guidelines and prices The manufacturer assumes
and to require its
trading risks.
agents provide sales
record and costumer
information.

Take title to the
goods and buy and
sell on their own
account. Provide a
variety of import and
export wholesaling
functions involved in
purchasing for their
own account and
selling in other

Ease of contact,
minimized credit risk
and elimination of all
merchandise
handling outside the
U.S.

Agent Middlemen

Merchant Middlemen

DISADVANTAGES

Assume the trading risk and
tend to be less controllable.

2.Home Country
Middlemen

Located in the
producing firm’s
country, provide
marketing services
from a domestic base.
Most likely to be used
when the marketer is
uncertain and/or
desire to minimize
financial and
management
investment.

Those inexperienced
with foreign markets,
those not wanting to
become immediately
involved with the
complexities of
international
marketing and those
wanting to sell
abroad with
minimum financial
and management
commitment.

Export Management
Companies

May take full or
partial responsibility
for promotion on the
goods credit
arrangement, physical
handling, market
research and
information on
financial patent and
licensing matters,

Minimum investment
on the part of the
company to get into
international
markets. No company
personnel or major
expenditure of
managerial effort.

Can seldom afford to
make the kind of
market investment
needed to establish
deep distribution for
product because they
must have immediate
sales payout to
survive.

Variety of agent
middlemen maybe
classified simply as
buyers for export.
Buying Offices

Several types of
arrangements have
been developed in
which various
manufacturers or
producers.
Selling Groups

Export Sales

A sales corporation
set up in a foreign
country for U.S.
possessions that can
obtain a corporate tax
exemption on a
portion of the
earnings generated by

Their common
denominator is a
primary function of
seeking merchandise
on request from
principals.

Cooperate in a joint
attempt to sell their
merchandise abroad.

They do not provide a
selling service.

Export merchants

Export Jobbers

Are essentially
domestic merchants
operating in foreign
market.

Deal mostly in
commodities.

An individual agent
Manufacturers Export middleman or an
Agent
agent middlemen
firm providing a
selling service for
manufacturers.

More on domestic
wholesaler and take
full responsibility for
their marketing.
More on commodities
and they work on a
They do not take
job basis.
physical possession of
goods but assume
responsibility for
transporting.
More on selling
service.
They take risk by
doing business on
their own names
rather than in the
name of their client.

FOREIGN COUNTRY
MIDDLEMEN

DESCRIPTION

ADVANTAGES

-Can provide excellent market
coverage for the manufacturer in
a certain circumstances

-Do not arrange for shipping or
for handling and usually do not
take physical possession

*MANUFACTURERS
REPRESENTATIVES

-Agent middlemen who take
responsibility for a producers
goods in a city, regional market
area, entire country or several
adjacent countries.

-An agent who sell goods
especially wholesale.

-Has exclusive sales rights in a
specific country and works in
close cooperation with the
manufacturer.-Permits the
manufacturer a reasonable
degree of control over prices,
promotional effort, inventory and
servicing.

-Has a relatively high degree of
dependence on the supplier
companies and the arrangement
are likely to be on a long run,
continuous basis.

*DISTRIBUTORS

DISADVANTAGES

-Has strength in having good
continuing relationship with
customers and providing speedy
market coverage at a low cost.

-Deals only on the commodities
and food products.

-Conduct business within a
foreign nation under an exclusive
contract arrangement with the
parent company. Invest in the
operation and in most instances
operates under a contract with
the parent company.

-Provides all types of
manufactured goods to foreign
country.

-Invest in the operation and in
most instances operates under a
contract with the parent
company.

-An agent who sell industrial
goods direct to customer.

-They derive a large portion of
their sales volume from the
products of a single supplies firm.
-Has a continuity relationship
with a supplier in buying and
selling goods.

-An independent merchant
middlemen but sometimes the
supplier company has an equity
in its dealers.

-An agent who negotiates
contracts of purchase and sale.

*FOREIGN COUNTRY
BROKERS

*MANAGING AGENTS @
COMPRADORS

*DEALERS

*IMPORT JOBBERS,
WHOLESALERS, @
RETAILERS

GOVERNMENTAFFILIATED
MIDDLEMEN

*GOVERNMENT
PURCHASING
OFFICES

-Purchase goods
directly from the
manufacturers and
sell to wholesalers
and retailers and to
industrial customers.

-Engage in direct
importing for their
own outlets and for
distribution to
smaller middlemen.

-Difficult to find a
large retailers
especially in local
shops and dealers.

DESCRIPTION

ADVANTAGES

DISADVANTAGES

-Deals with
governments in every
country of the world.

-They procure
products, services
and commodities for
the government own
use.
-Work at federal,
regional and local
levels.

-The arrangements
offer are little
control over the
selling effort and are
generally
unsatisfactory.

The international marketer needs a clear
understanding of market characteristics and must
have established operating policies before beginning
the selection of channel middlemen. The following
points should be addressed prior to the selection
process:
1.) Identify specific target markets within and
across
countries.
2.) Specify marketing goals in terms of volume,
market share, and profit margin requirements.
3.) Specify financial and personnel commitments to
the development of international distribution.
4.) Identify control, length of channels terms of sale,
and channel ownership.

THE SIX C’s OF CHANNEL STRATEGY
•The purpose of this is to build an economically
effective distribution organization, the following must
be examined:
•Cost
•Capital Requirement
•Control
•Coverage
•Character
•Continuity

SIX C’s OF CHANNEL STRATEGY

DEFINITION

HOW DID THIS AFFECT THE CHANNEL
DISTRIBUTION

1. COST

It accrues when transporting a product
from its place of manufacture to its final
destination, the customer. It is the total
money, time, and resources associated
with a purchase or activity.

A marketer needs a higher cost to
maintain its channel. But some marketers
found that they can reduce cost by using
shorter channels.

2. CAPITAL REQUIREMENTS

Cash or goods used to generate income
either by investing in a business or a
different income property. It is also the
money, property, and other valuables
which collectivity represents the wealth
of an individual or business.

Maximum investment is usually required
when a company establishes its own
internal channels, that is, its own sales
force. Using of dealers may lessen the
cash investment.

3. CONTROL

Device or mechanism installed or
instituted to guide or regulate the
activities or operation of an apparatus,
machine, person, or system.

Companies own sales afford the most
control but often at a cost that is not
practical. If a company can sell directly to
the user, an important middleman should
be the marketer can maintain.

4. COVERAGE

Estimated number of customers or prospects
of a brand or product reached by an
advertisement or commercial.

It is difficult to develop both in highly
develop areas and in sparse market because
of heavy competition and inadequate
channels.

5. CHARACTER

The combination of qualities or features that
distinguishes one person, group or thing from
another.

The channel of distribution selected must fit
the character of the company. They cannot
assume that once a channel has been
developed to fit the character of the company.

6. CONTINUITY

The state or quality of being continuous;
connectedness; coherence.

When one individual retires or move out of a
line of business, the company may find it has
lost its distribution in that area.

TERMS

FACTORS AFFECTING LOCATING
MIDDLEMEN

Locating Middlemen

Things to look for: Financial stability, managerial
stability, productivity, reputation, etc.
Sources to use: Dept. of Commerce, foreign
consulates, commercially published directories

Selecting Middlemen

1.Screening based on the following criteria:
a. reputation
b. creditworthiness
c. markets served
d. products carried
e. number of stores
f. store size
2. Developing the “Agreement”
The agreement that details terms of the contract
and the functions to be performed on behalf of the
foreign manufacturer.

Motivating Middlemen

There is clear correlation between the
middleman’s motivation and sales volume.
Motivational techniques may be grouped into
5 categories:
1. financial rewards
2. psychological rewards
3. communications
4. company support
5. corporate rapport

Terminating Middlemen

Must consider things such as:
1. legal protection
2. control over middlemen

Controlling Middlemen

Control over the system (distribution network)
Control over the middlemen
-Volume of sales, market coverage, services
offered, pricing, advertisement, payment of bills
and profitability

TERMS
Locating
Middlemen

Selecting
Middlemen

FACTORS
MIDDLEMEN

AFFECTING

LOCATING

Things to look for: Financial stability,
managerial
stability,
productivity,
reputation, etc.
Sources to use: Dept. of Commerce,
foreign consulates, commercially published
directories
1.Screening based on the following criteria:
A.
B.
C.
D.
E.
F.

reputation
creditworthiness
markets served
products carried
number of stores
store size

2. Developing the “Agreement”
- The agreement that details terms of the
contract and the functions to be performed on
behalf of the foreign manufacturer.

Stability: Changes in regime, violence and cultural
divisions based on language or other factors can lead to
a very uncertain environment in which to conduct
business.

International manager need to understand the significance
of political decision-making in the host country that may
severely influence its overseas operations. They could beInternational Political Systems And Ideologies
Trade embargos and Sanctions
Bureaucracy
Terrorism, crime and violence

Four Main Areas Of Governmental Activities That Affect Foreign
Investments And Stability

1. Embargoes or Trade Sanctions
2. Export Controls
3. Import Controls
4. Regulations of international business behavior
• Boycotts
•Anti trust laws
•Bribery and Corruption

If expropriation is a real possibility then the
investor should seek to minimize risk by:

•relatively rapid depreciation of assets and
repatriation of funds by manipulated transfer
prices
• establish a local supply infrastructure so that
any adverse action damages the host economy
• raise as much investment capital in the
country as possible
•retain control of critical inputs and minimise
local stocks of these.

Domestication- taking steps of host country to transfer
foreign investments to national control and ownership.
Ultimate Goal of Domestication:
To force foreign investors to share more of the
ownership and management with nationals.
Privatization- transfer of any government function to a
private sector.
Economic Risk- danger that the economy could turn
against your investment.

Products appear are more politically vulnerable than
others, in that they receive more government attention,
in which this special attention may result in positive or
negative actions toward the company.
When examining the potential of a foreign market, the
marketer should assess the ff:

Politically Sensitive Products
Products that have an effect upon the environment
exchange rates, national, and economic security, and the
welfare of the people including those that are publicly
visible or subject to public debate.

REDUCING POLITICAL VULNERABILITY
Good Corporate Citizenship
A company can reduce its political vulnerability by being
a corporate citizen, with the ff. qualities.
*Realize & act as if you were a guest in the
country.
*Distribute some of the profits back to the
foreign market.
*Do not try to Americanize the market.
*Try to do business in the mother language.
*Should try to develop some worthwhile public
projects.
*Executives should respect the foreign culture.
*Staff foreign offices w/competent nationals
rather than all US Citizens.

Strategies to Lessen Political Risk
•Joint Ventures
•Expanding the Investment Base
•Control Marketing & Distribution
•Licensing
•Planned Domestication
• Political Payoffs
-Pay people in power to intervene on your behalf.
-Make sure you spread the money out to all major
parties, not just the one currently in power.

What It Brings?
1.
create employment
2.
transfer of technology
3.
generate export sales
4.
stimulate growth and development
of local industry
5.
conserve foreign exchange as
requirement for market concessions

1. No single, uniform
international commercial
law governing foreign
business transactions
exists.

2.

International
marketers must
comply with the
laws of each
country within
which they
operate.

3.

4.

It is best to get
expert legal
advice when
doing business in
another country.

The legal systems of
different countries
are so disparate and
complex.

The bases for the majority of the legal systems of the
world include:
1) Common law, derived from English law and found in
England, the United States, Canada, and other countries
once under English influence.
2) Civil or code law, derived from Roman law and found
in Germany, Japan, France, and in non-Islamic and non-Marxist countries.
3) Islamic law, derived from the interpretation of the
Koran and found in Pakistan, Iran, Saudi Arabia, and other
Islamic states.
4) Marxist-Socialist tenets found in the Marxist-socialist
economies of Russia and the republics of the former
Soviet Union, Eastern Europe, China, whose legal system
is based on the economic, political, and social policies of
the state.

Determining whose legal system has jurisdiction
when a commercial dispute arises is another
problem of international marketing.
The World Court at The Hague and the
International Court of Justice resolve international
disputes between sovereign nations of the world
rather than between private citizens.
Legal Disputes Can Arise In Three Situations:

(1) between governments;
(2) between a company and a government;
(3) between two companies.

The World Court can adjudicate disputes between
governments, but disputes in situations 2 and 3
must be handled in the courts of the country of
one of the parties involved or through arbitration.
When international commercial disputes must be
settled under the laws of one of the countries
concerned, the paramount question in a dispute is:
Which law governs?

Jurisdiction is Generally Determined In One Of
Three Ways:

(1) on the basis of jurisdictional clauses included
in contracts;
(2) on the basis of where a contract was entered
into, or;
(3) on the basis of where the provisions of the
contract were performed;

International disputes can be resolved by:
Conciliation (also known as mediation) is a nonbinding
agreement between parties to resolve disputes by asking
a third party to mediate differences.
Arbitration calls for the parties involved to select a
disinterested and informed party or parties as referee to
determine the merits of the case and make a judgment
that both parties agree to honor.
Litigation deals with filing a lawsuit to settle
commercial disputes.

Commercial law is vague! Derived from the practices
of traders.
Scholars define it as "body of legal rules that apply to
commerce, commercial transactions, and organises
merchants' profession."
It regulates relations arising from explicit business actions
and behaviour.
Commercial law is the branch of private law, which applies
to business transactions, and to a certain category of
people, merchants.
Commercial transaction is the core of the legal rules
governing business dealings.
The most common types of commercial transactions is
sale of goods.
All commercial transactions have one thing in common:
they serve to transmit economic values.

Modern Concept of Commercial Law
Modern trends in commercial law (reconsider the
provisions of commercial law. )
Commercial law is the law of economic or business.
This concept, would (cover all topics involve
economic activities under commercial law )
Rules of commercial law ( constant evolution )
(changing rapidly )
Progress in the field of industry, trade (new
products, markets, tools ) ( new legal versions
Commercial law evolves more rapidly than any
other branches of law

A country‟s political stability, cultural attributes
and geographical characteristics are some of the
kinds of information not ordinarily gathered by
domestic marketing research departments but
which are required for a sound assessment of a
foreign market. This broader scope of
international marketing research is reflected in
Unisys Corporation‟s planning steps, which call
for collecting and assessing the following types
of information:

Economic
General data on growth of the economy, inflation,
business cycle trends, and the like profitability analysis
for the division‟s products; specific industry economic
studies, analysis of overseas economies; and key
economic indicators for the United States and major
foreign countries.

Cultural, sociological, and political climate
A general non-economic review of conditions affecting
the division‟s business. In addition to the more obvious
subjects, it covers ecology, safety, and leisure time and
their potential impact on the division‟s business.

Overview Of Market Conditions

A detailed analysis of market conditions that the division
faces, by market segment, including international.
Summary Of The Technological Environment

A summary of the state of the art technology as it relates
to the division‟s business, carefully broken down by
product segments.
Competitive Situation

A review of competitors‟ sales revenues methods of market
segmentation, products, and apparent strategies on an
international scope.

Such in depth information is necessary for sound
marketing decisions. For the domestic marketer most such
information has been acquired after years of experience
with a single market but in foreign markets this
information must be gathered for each new market.
There is a basic difference between information ideally
needed and that which is collectible or used. Many firms
engaged in foreign marketing do not make decisions with
the benefit of the information listed. Cost, time, and human
elements are critical variables. Some firms have neither the
appreciation for information nor adequate time or money
for implementing of research. As a firm becomes more
committed to foreign marketing and the cost of possible
failure increases, however, greater emphasis is placed on
research. Indeed marketing research expenditures reflect
the size and growth of markets around the world.

The research process should follow these steps:
1. Define the research problem and establish
research objectives
2. Determine the sources of information to fulfill the
research objectives
3. Consider the costs and benefits of the research
effort
4. Gather the relevant data from secondary or
primary sources, or both
5. Analyze, interpret, and summarize the results
6. Effectively communicate the results to decision
makers
Although the steps in a research program are similar for all
countries, variations and problems in implementation
occur because of differences in cultural and economic
development.

•Availability of data
•Most countries simply do not have governmental
agencies that collect on a regular basis the kinds of
secondary data readily available in the U.S.
•Researchers‟ language skills
•Reliability of data
•Official statistics are sometimes too optimistic,
reflecting national pride rather than practical reality,
while tax structures and fear of the tax collector often
adversely affect data.
•Comparability of data
•In other countries, especially those less developed,
data can be many years out of date as well as having
been collected on an infrequent and unpredictable
schedule.
•Too frequently, data are reported in different
categories or in categories much too broad to be of
specific value.

Validating secondary data
Questions should be asked to effectively judge the
reliability of secondary data sources:
Who collected the data? Would there be any
reason for purposely misrepresenting the facts?
For what purposes were the data collected?
How were the data collected?
Are the data internally consistent and logical in
light of known data sources or market factors?

Checking the consistency of one set of secondary data
with other data of known validity is an effective and
often-used way of judging validity.
The availability and accuracy of recorded secondary
data increase as the level of economic development
increases.

Primary data – Data collected specifically for the particular
research project at hand.
Quantitative research – Usually a large number of
respondents are asked to reply either verbally or in writing to
structured questions using a specific response format (such as
yes/no) or to select a response from a set of choices.
Toto in Japan
Qualitative research – If questions are asked, they are
almost always open-ended or in-depth, and unstructured
responses that reflect the person‟s thoughts and feelings on
the subject are sought.
Qualitative research seeks to interpret what the people in the
sample are like.
Qualitative research is helpful in revealing the impact of
sociocultural factors on behavior patterns and in developing
research hypotheses.

Accepting information at face value in foreign
markets is imprudent.
The foreign market researcher must posses three
talents to generate meaningful marketing
information.
First, the researcher must posses a high degree
of cultural understanding of the market in
which research is being conducted.
Second, a creative talent for adapting research
methods is necessary.
Third, a skeptical attitude in handling both
primary and secondary data is helpful.

Analyzing survey data is an important and exciting
step in the survey process. It is the time that you
may reveal important facts about your customers,
uncover trends that you might not otherwise have
known existed, or provide irrefutable facts to
support your plans. By doing in-depth data
comparisons, you can begin to identify relationships
between various data that will help you understand
more about your respondents, and guide you
towards better decisions.

Although data analysis is the wrong time to try
and rewrite your survey instrument, it is important
to remember the scope of your project and stick to
it. Many first time surveyors attempt to read
"between the lines" while analyzing data. They
attempt to answer questions that were not asked
by making inferences and assumptions from those
that were asked. Doing so amounts to nothing
more than guesswork. To avoid this temptation,
remember this simple rule:

Rule 1: If you did not ask you do not
know.

Another common mistake that many first time
surveyors make is to attempt to change data to
compensate for poor question design. For example, if
a question asked a respondent to indicate his total
household income using a scale of values, a mean and
median cannot be calculated. Many people try to get
around this by assigning each response a value
representing the range. Even if the adjustment is made
consistently across all responses, the resulting
calculations will be wrong. Similarly, trying to
analyze a multiple-choice question as if it was a
single-select question will often provide erroneous
information. In order to avoid this pitfall, remember
this simple rule:

Rule 2: Do not alter data to compensate
for bad survey design.

A second mistake inexperienced surveyors make is to
project the findings to an audience that was not either
part of the survey population or not adequately
represented. For example, if an HR manager conducts a
benefits survey and invites all employees to participate,
most people would assume that the results represent all
employees since everyone had an opportunity to
participate. Provided that enough employees participate,
the data might be statistically valid, but is it really
representative of all employees? The answer is, it
depends. If the survey collected data about employee
demographics that could be compared to what is known
about the company, then the results do reflect the
company as a whole. To avoid this temptation, remember
this simple rule:

Rule 3: Do not project your data to people that did
not respond.

The earlier you recognize flaws in your survey
design and data collection, the more time you
will save during analysis. If you questions do not
provide the data you need to meet your survey
objectives, you'll have to start over. If your
questions are vague or ambiguous, you'll have to
throw them out. If you do not have an adequate
number of responses, you'll have to get more.

Data Cleaning - Data often arrives in a messy, disorganized
fashion. Data points may be duplicated or improperly entered.
It may need to be collated and prepared for entry into a
database.
Quality of Data Audit - The quality of your data is important
if you want to ensure results you can use to better understand
your business model.
Analysis of Missing Observations - determine what variables
may be missing from your data, why they are missing and what
effect they might have on the integrity of the analysis.
Analysis of Extreme Observations - Outlying data points are
important in many ways and they are not ignored when
performing analysis of your data.
Analysis of Homogeneity - provide comprehensive analysis of
data points to find common threads that can help you
determine where best to move assets and how best to make key
business decisions.

•A set of methods and techniques used to
obtain information and insights from data
•Helps avoid erroneous judgments and
conclusions
•Can constructively influence the research
objectives and the research design

•Data editing
•Coding
•Statistically adjusting the data

Data Editing
•Identifies omissions, ambiguities, and errors in responses
•Conducted in the field by interviewer and field
supervisor and by the analyst prior to data analysis
Problems Identified With Data Editing
•Interviewer Error
•Omissions
•Ambiguity
•Inconsistencies
•Lack of Cooperation
•Ineligible Respondent

Coding
•Coding closed-ended questions
involves specifying how the responses
are to be entered
•Open-ended questions are difficult to
code
•Lengthy list of possible
responses is generated

Statistically Adjusting the Data + Weighting
•Each response is assigned a number according to a prespecified rule
•Makes sample data more representative of target
population on specific characteristics
•Modifies number of cases in the sample that possess
certain characteristics
•Adjusts the sample so that greater importance is
attached to respondents with certain characteristics

Statistically Adjusting the Data + Variable Re-specification

•Existing data is modified to create new variables
•Large number of variables collapsed into fewer
variables
•Creates variables that are consistent with study
objectives
•Dummy variables are used (binary, dichotomous,
instrumental, quantitative variables)
•Use (d-1) dummy variables to specify (d) levels of
qualitative variable

Statistically Adjusting the Data + Scale
Transformation
•Scale values are manipulated to ensure comparability
with other scales
•Standardization allows the researcher to compare
variables that have been measured using different
types of scales
•Variables are forced to have a mean of zero and a
standard deviation of one
•Can be done only on interval or ratio scaled data

Simple Tabulation
• Consists of counting the number of cases that fall into
various categories

Use of Simple Tabulation
• Determine empirical distribution (frequency
distribution) of the variable in question
• Calculate summary statistics, particularly the mean or
percentages
• Aid in "data cleaning" aspects

Marketing Research 8th Edition
Aaker, Kumar, Day

Frequency Distribution
• Reports the number of responses that each question
received
• Organizes data into classes or groups of values
• Shows number of observations that fall into each class
• Can be illustrated simply as a number or as a
percentage or histogram
• Response categories may be combined for many
questions
• Should result in categories with worthwhile number of
respondents

Aaker, Kumar, Day

Descriptive Statistics
• Statistics normally associated with a frequency
distribution to help summarize information in the
frequency table
• Measures of central tendency mean, median and
mode
• Measures of dispersion (range, standard deviation,
and coefficient of variation)
• Measures of shape (skewness and kurtosis)

Aaker, Kumar, Day

Analysis for Various Population Subgroups
• Differences between means or percentages of two
subgroup responses can provide insights
• Difference between means is concerned with the
association between two questions
• Question upon which means are based are intervally
scaled

Aaker, Kumar, Day

Cross Tabulations
• Statistical analysis technique to study the
relationships among and between variables

• Sample is divided to learn how the dependent
variable varies from subgroup to subgroup
• Frequency distribution for each subgroup is
compared to the frequency distribution for the total
sample
• The two variables that are analyzed must be
nominally scaled

Aaker, Kumar, Day

Factors Influencing the Choice of Statistical Technique

Type of Data
– Classification of data involves nominal, ordinal,
interval and ratio scales of measurement
– Nominal scaling is restricted to the mode as the
only measure of central tendency
– Both median and mode can be used for ordinal
scale
– Non-parametric tests can only be run on ordinal
data
– Mean, median and mode can all be used to
measure central tendency for interval and ratio
scaled data

Aaker, Kumar, Day

Research Design
– Dependency of observations
– Number of observations per object
– Number of groups being analyzed
– Control exercised over variable of interest

Assumptions Underlying the Test Statistic
– If assumptions on which a statistical test is based
are violated, the test will provide meaningless
results

Aaker, Kumar, Day

Univariate Techniques
• Appropriate when there is a single measurement of
each of the 'n' sample objects or there are several
measurements of each of the `n' observations but each
variable is analyzed in isolation
• Nonmetric - measured on nominal or ordinal scale
• Metric-measured on interval or ratio scale
• Determine whether single or multiple samples are
involved
• For multiple samples, choice of statistical test
depends on whether the samples are independent or
dependent

Aaker, Kumar, Day

Multivariate Techniques
• A collection of procedures for analyzing association
between two or more sets of measurements that have
been made on each object in one or more samples of
objects
• Dependence or interdependence techniques
 Dependence Techniques
• One or more variables can be identified as dependent
variables and the remaining as independent variables
• Choice of dependence technique depends on the
number of dependent variables involved in analysis

Aaker, Kumar, Day

Multivariate Techniques (Contd.)
Interdependence Techniques
• Whole set of interdependent relationships is
examined
• Further classified as having focus on variable or
objects
Why Use Multivariate Analysis?
• To group variables or people or objects
• To improve the ability to predict variables (such as
usage)
• To understand relationships between variables (such
as advertising and sales)

Aaker, Kumar, Day

Data summarization
The process of describing a data matrix by computing a
small number of measures that characterize the data
set
Four functions of data summarization:
– Summarizes the data
– Applies understandable conceptualizations
– Communicates underlying patterns
– Generalizes sample findings to the population

Ch 15

201

Why is Statistical Analysis Used?
• Why Use Statistical Analysis?
– To summarize data
– To show basic patterns in the data
– To interpret these patterns
– To generalize the patterns to the population

Ch 15

202

Statistical Analysis

Ch 15

203

Five Types of Statistical Analysis:
1. Descriptive analysis: used to describe the data
set
2. Inferential analysis: used to generate
conclusions
about
the
population‟s
characteristics based on the sample data
3.
Differences analysis: used to compare the
mean of the responses of one group to that of
another group
4.
Associative analysis: determines the strength
and direction of relationships between two or
more variables
5.
Predictive analysis: allows one to make
forecasts for future events

Ch 15

204

Two sets of descriptive measures:
• Measures of central tendency: used to report
a single piece of information that describes the
most typical response to a question
• Measures of variability: used to reveal the
typical difference between the values in a set
of values

Ch 15

206

Measures of Central Tendency
– Mode: the value in a string of numbers that
occurs most often
– Median: the value whose occurrence lies in the
middle of a set of ordered values
– Mean: sometimes referred to as the “arithmetic
mean”; the average value characterizing a set of
numbers

Ch 15

207

Measures of Variability
• Frequency distribution reveals the number (percent)
of occurrences of each number or set of numbers
• Range identifies the maximum and minimum values in
a set of numbers
• Standard deviation indicates the degree of variation
in a way that can be translated into a bell-shaped
curve distribution

Ch 15

208

After analyzing your survey data, it is time to create a report of
your findings. The complexity and detail need to support you
conclusions, along with your intended audience, will dictate the
format of your report. CEO's require a different level of detail
than line managers, so for maximum results consider who is
going to receive your report and tailor it to meet their unique
needs.
Visual reports, such as an HTML document or Microsoft
PowerPoint presentation, are best suited for simple findings.
These graphical reports are best when they are light on text and
heavy on graphs and charts. They are reviewed quickly rather
than studied at length, and most conclusions are obvious, so
detailed explanations are seldom required. For more complex
topics, a detailed report created in Microsoft Word or Adobe
Acrobat is often required. Reports created using Word often
include much more detailed information, report findings that
require significant explanation, are extremely text heavy, and
are often studied at great length and in significant detail.

Survey analysis is not as easy as downloading
results and printing a chart or report. In this
report we have learned that good analysis begins
with good questions, representative participation,
and careful interpretation of the data, in order to
produce actionable results. Techniques such as
charting, filtering, cross tabulation, and
regression analysis all help you spot trends and
patterns within your data while helping you meet
your survey objective.

Two Methods From Forecasting Demand Are
Particularly Suitable For International Marketers
Expert Opinion And Analogy
Expert Opinion
For many market estimation problems,
particularly in foreign countries that are new to the
marketer expert opinion is advisable. In this method,
experts are polled for their opinions about market size and
growth rates. Such experts may be companies own sales
managers or outside consultants and government officials.
The key in using opinion to help in forecasting demand is
triangulation that is, comparing estimates produced by
different sources. One of the tricky parts is how best to
combine the different opinions.

All the methods for market demand
estimation described are no substitute for
original market research when it is
economically feasible and time permits.

Bontimel, bernadette joy s. international marketing (1)

Bontimel, bernadette joy s. international marketing (1)

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