Author: indiafreenotes

“Coastal goods” means goods, other than imported goods, transported in a vessel from one port in India to another [Section 2(7)];

“Dutiable goods” means any goods which are chargeable to duty and on which duty has not been paid [Section 2(14)];

“entry” in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes the entry made under the regulations made under section 84; [Section 2(16)];

“Export”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India [Section 2(18)];

“Export goods” means any goods which are to be taken out of India to a place outside India [Section 2(19)];

“Foreign-going vessel or aircraft” means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes –

(i) Any naval vessel of a foreign Government taking part in any naval exercises;

(ii) Any vessel engaged in fishing or any other operations outside the territorial waters of India;

(iii) Any vessel or aircraft proceeding to a place outside India for any purpose whatsoever [Section 2(21)];

“Goods” includes:

(a) Vessels, aircrafts and vehicles;

(b) Stores;

(c) Baggage;

(d) Currency and negotiable instruments; and

(e) Any other kind of movable property [Section 2(22)].

“Prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with [Section 2(33)];

“Stores” means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting; [Section 2(38)];

Levy and Collection of Customs duty

There are four stages in any tax structure, viz., levy, assessment, collection and postponement. The basis of levy of tax is specified in Section 12, charging section of the Customs Act. It identifies the person or properties in respect of which tax or duty is to be levied or charged. Under assessment, the liability for payment of duty is quantified and the last stage is the collection of duty which is may be postponed for administrative convenience.

As per Section 12, customs duty is imposed on goods imported into or exported out of India as per the rates specified under the Customs Tariff Act, 1975 or any other law. On analysis of Section 12, we derive the following points:

(i) Customs duty is imposed on goods when such goods are imported into or exported out of India;

(ii) The levy is subject to other provisions of this Act or any other law;

(iii) The rates of Basic Custom Duty are as specified under the Tariff Act, 1975 or any other law;

(iv) Even goods belonging to Government are subject to levy, though they may be exempted by notification(s) under Section 25.

Custom Tariff Act, 1975 has two schedules. Schedule I prescribes tariff rates for imported goods, known as Import Tariff‖ and Schedule II contains tariff for export goods known as Export Tariff.

Sample size Variables Based on Target Population

Before you can calculate a sample size, you need to determine a few things about the target population and the sample you need:

Population Size: How many total people fit your demographic? For instance, if you want to know about mothers living in the US, your population size would be the total number of mothers living in the US. Not all populations’ sizes need to be this large. Even if your population size is small, just know who fits into your demographics. Don’t worry if you are unsure about this exact number. It is common for the population to be unknown or approximated between two educated guesses.

Margin of Error (Confidence Interval): No sample will be perfect, so you must decide how much error to allow. The confidence interval determines how much higher or lower than the population mean you are willing to let your sample mean fall. If you’ve ever seen a political poll on the news, you’ve seen a confidence interval. For example, it will look something like this: “68% of voters said yes to Proposition Z, with a margin of error of +/- 5%.”

Confidence Level: How confident do you want to be that the actual mean falls within your confidence interval? The most common confidence intervals are 90% confident, 95% confident, and 99% confident.

Standard of Deviation: How much variance do you expect in your responses? Since we haven’t actually administered our survey yet, the safe decision is to use .5; This is the most forgiving number and ensures that your sample will be large enough.

Calculating Sample Size

Okay, now that we have these values defined, we can calculate our needed sample size. This can be done using an online sample size calculator or with paper and pencil.

Your confidence level corresponds to a Z-score. This is a constant value needed for this equation. Here are the z-scores for the most common confidence levels:

90% – Z Score = 1.645

95% – Z Score = 1.96

99% – Z Score = 2.576

If you choose a different confidence level, use this Z-score table* to find your score.

Next, plug in your Z-score, Standard of Deviation, and confidence interval into the sample size calculator or into this equation:**

Necessary Sample Size = (Z-score)2 * StdDev*(1-StdDev) / (margin of error)2

Here is an example of how the math works assuming you chose a 95% confidence level, .5 standard deviation, and a margin of error (confidence interval) of +/- 5%.

((1.96)2 x .5(.5)) / (.05)2

(3.8416 x .25) / .0025

.9604 / .0025

384.16

385 respondents are needed

The potential for international marketing is enormous for Indian firms. The fast expansion of the international business, as indicated by the current statistics available from appropriate sources is an indication of this. The scope of international business for developing countries is amply demonstrated by the rapid strides made by several developing countries like South Korea, Taiwan, Hong Kong, Singapore and Peoples Republic of China. Indias performance, in comparison with these countries has been very poor. Developing countries like South Korea with very good economic performance has such well known multinationals like Hyundai, Daewoo, Samsung, LG, which are making inroads into India whereas India with its massive size and diverse resource base and which has a longer history of industrialization can hardly boast anything of that sort.

The rapid strides made by several other developing countries in the international market, and trends of the growing economic power of the developing countries described earlier are indication of the enormous global business opportunities which Indian firms could exploit.

A look at some of the successful Indian example, covering products ranging from bullock cart technology to high-tech would indicate the strategies Indian firms may employ to seize the various opportunities.

Product modification to suit the requirements of the foreign markets will enable international marketing of many products by Indian firms. Examples include TI cycles. Hero cycles, TTK pressure cookers etc.

Another international marketing opportunity which a number of Indian firms may avail of is the one provided by the vocation of certain industries / segments of the market in the developed countries by the large players as they become unattractive for them. For example, several dominant firms have vacated the ply tire segment in the developed markets as this segment has shrunk due to the popularity of radial tires. Similarly developed country firms have given up several chemical products due to various reasons.

Indian firms with products of acceptable quality may explore the foreign markets. The Pricol, supplier of dashboard instruments to Maruti, thus entered the US market in a small way and today it is an international player. The Sundaram Fastners, which was adjudged as one of the 20 best Asian companies, is a highly reputed global supplier of automobile parts like radiator caps to dominant players like General Motors. There is enormous opportunity to take advantage of the growing global sourcing. The growing foreign investment in India and development of quality consciousness in Indian firms will encourage the growth of an ancillary sector of quality products and thus enlarge the Indian base for global sourcing.

Firms which are suppliers to foreign firms or whose products are sold under foreign brand names may explore the possibility of selling their own products under their own brand names.

There are a number of products in which the developing countries have advantage like textiles, leather, gems, and jewellery, seafood etc. Although these are among Indians important export items, the nation has not been very successful, when compared with several other developing countries, in exploiting these opportunities.

Many products, which become off patent, provide international marketing opportunities for firms of developing countries like India because of the low cost advantage. A number of them pose technical challenges. The Technocrat Industries, an Indian firm set up in 1972 by two fresh graduates from IIT, succeeded in mastering the technology of drum closures, precision products used to seal drums in which oil and chemicals are stored, competed with the MNC in the Indian market and entered foreign markets . Several Indian pharmaceutical firms are globalizing using generics and bulk drugs as their mainstay.

India is an important exporter of many products like spices and seafood. They are, however, mostly commodity exports. A lot of potential exists for developing their value added exports. There is also considerable scope for quality improvement, product development and value addition in respect of several other categories like leather, textiles, etc.

There can be a temptation to go too broad

Linked to this, sometimes when companies set out on international marketing research projects, they make the mistake of going too broad and trying to understand a region as a whole. Another error we see is firms commissioning research to target one market and then using this as a jumping off point into others with “similar” attributes. This inevitably leads in costly mistakes as brands map their assumptions about one market onto another.

To avoid this, be clear on the emphasis of your research. Where are you looking to focus? Why? Looking too broadly across a region of different markets, or exploring how an entire product range might perform, can cloud the picture.

International markets are incredibly diverse

Some business fails to appreciate the diversity within a region or indeed a country. Only by rooting out the nuances of different geographical areas, cultures and consumers, can you get an accurate picture of what people value and whether your products and services might succeed.

Customer Understanding

In particular trying to understand the customer or the consumers in an international market. Often, we have to conduct international marketing research. That does come with some specific challenges or hurdles that we have to overcome.

Language Issues

One language issue is translating our materials. Whether it’s a survey or interview questions or even an advertisement, translating those things into the native language in another country can prove really challenging. Often, things just don’t translate literally. So, we have to translate and then back translate to make sure that the meaning doesn’t change. That can be really critical to getting our message across.

Cultural Issues

Another issue that we have to consider are just broad cultural issues. People from certain cultures are going to be much more willing to engage in discussions with us about our product or our brand or other marketing issues than certain people from other cultures. That is, some cultures are reluctant to answer fully or tell you what you want to hear.

Finding the right research partner

The next big question is whether you have the research capabilities to conduct meaningful projects internationally. Most brands and their research partners can run domestic research projects with ease. But if you’re in the UK, say, even going as far afield as France or Germany requires different sensibilities and capabilities. The more international you get, the harder you need to look for that kind of experience and expertise.

Technical Issues

We don’t have the same levels of technology everywhere in the world. While that level of technology is probably rising almost everywhere, we’re not all starting from the same place.

So, if we plan to use any real level of technology in conducting our marketing research, we’d better make sure that that level of technology is supported in the market that we’re going into.

Ensuring that the project is realistic from the outset

This is where all the other challenges in international marketing research come together: which markets, what purpose, the capabilities available, and the effectiveness of the output all within a budget that makes sense. There are always going to be limits to what’s practical and the last thing any client needs is to be spending large sums testing international markets to no effect.

Bringing together local and global expertise

This is one of the biggest challenges in international marketing research and there has to be a collaborative effort and a shared understanding of the mission, the methodology and the insights to overcome this. A research team at HQ might work with a local marketing team to understand how to position a product for success in an emerging market. But if the teams are siloed and don’t have a consistent understanding of the brief, their approach to researching the market and their findings might not actually help deliver on the challenge at hand.

Faced by research:

Problems with secondary data:

Secondary data are not available in adequate volume. Further, the secondary data collected are unreliable. They suffer from lack of comparability of data.

Multiplicity of markets:

Problems of numerous markets are always experienced in overseas market research. Research project covers a number of foreign markets. This ultimately augments the costs and problems involved in overseas market research.

Problems of communication:

Different countries have different languages. They create problems of translation and communication. Consumer market research is met with more communication problems than industrial market research, because of the fact that industrial market research focuses on technical factors alone. But consumer market research takes care of every pertinent detail related to market conditions.

Problems in collecting primary data:

Buyer behavior of customers varies from country to country. As people behave differently, collecting primary data from them is comparatively difficult.

Pricing and costing are two different things and an exporter should not confuse between the two. Price is what an exporter offer to a customer on particular products while cost is what an exporter pay for manufacturing the same product.

Export pricing is the most important factor in for promoting export and facing international trade competition. It is important for the exporter to keep the prices down keeping in mind all export benefits and expenses. However, there is no fixed formula for successful export pricing and is differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalising agency.

Export Pricing can be determined by the following factors:

• Prompt deliveries and continuity in supply.
• After-sales service in products like machine tools, consumer durables.
• Product differentiation and brand image.
• Frequency of purchase.
• Range of products offered.
• Specialty value goods and gift items.
• Credit offered.
• Preference or prejudice for products originating from a particular source.
• Aggressive marketing and sales promotion.
• Presumed relationship between quality and price.
• Prompt acceptance and settlement of claims.
• Unique value goods and gift items.

Export Costing

Export Costing is basically Cost Accountant’s job. It consists of fixed cost and variable cost comprising various elements. It is advisable to prepare an export costing sheet for every export product.

As regards quoting the prices to the overseas buyer, the same are quoted in the following internationally accepted terms which are commonly known as Incoterm.

The following players are part of distribution channels:

A producer: Can be any company working with a primary product, such as agricultural products, to a manufacturer making products from (primary) materials, for instance a garment manufacturer using organic cotton, yarn, buttons and other accessories.

A specialised exporter: May export the goods, if the producer does not do it by his/herself. The exporter takes care of logistical arrangements and ships the products to his/her counterpart in the target market, the importer.

The importer: Receives and puts the products on the target market.

Agents or Distributors: Can help put the product on the target market, if not done without intermediators. In fact, the importer may also be a retailer, in which case the importer is the final step before the end consumer. More commonly, however, the importer/distributor transfers the product to a retailer, for instance in the case of final products where no further processing is needed.

The Retailer: Sells products to end consumers.

Wholesalers: May be an extra stop between retailer and importer, as wholesalers supply several businesses.

The processing industry: Is a player if the product is used in its production, such as ingredients used in bakery products (chocolate in energy bars for instance), bulk foodstuff repacked in consumer packaging (seeds and nuts for example) or fabrics used for textile products made in the target market.

Packaging:

Language

A package does promotion functions too. The literature printed on the package material must be in local language. Then only a majority of the users can understand the product information the package label bears. Thus, language is one of the important considerations to be borne in mind while designing export packaging.

Buyer’s specifications

Sometimes, buyers specify their requirements with regard to packaging. They may like to purchase the product in a specific form which may be convenient to them. When the package is in the form of a tube rather than a jar, it would be easy for the buyers to handle the package of the product till it is used up.

Regulations in the foreign countries

Packaging is subject to government regulations in foreign countries. Packaging standards are specified for certain commodities. If packaging does not comply with foreign regulations, it may attract punitive action.

Length of the distribution channel

Channel distribution is the pathway of reaching goods to the ultimate consumers. A lengthy distribution channel involves too many middlemen taking a longer time between production and final consumption. Then the package must endure the rigors of travel and handling in the long distribution channel. Stronger packaging is preferred in such cases.

Depending upon the time factor involved in the distribution channel, packaging must be designed. A package should be capable of withstanding the stresses of handling in transport and storage.

Disposability of packages

Generally, consumers in developed countries prefer disposable containers. If the package is disposable immediately after use, then due care must be given to the package material. The package material should not cause environmental hazards. It would be better if the material could be recycled.

Environmental factors

Environmental factors like weather and climatic conditions greatly influence the package design. A tropical country requires different packaging than for a country with cold climate.

Size of package

The size of the package is one of the important considerations in designing packages. It depends upon the buying characteristics of consumers. If buyers purchase regularly at short intervals, then the size of the package can be small. On the other hand, buyers with freezers at home may prefer big packages.

Identification and selection of markets is the first stage in international marketing. Before making an entry in the international market, a firm has to identify those markets in which it can sell its products easily. To take this decision, firm has to analyse the potentials of various foreign markets and their respective marketing environments. Some markets may not be potentially good, and the firm’s objectives and resources may not allow it to operate in some other markets.

Therefore, a proper analysis is necessary for selecting the proper and appropriate foreign market. One market differs from another but still in one respect or the other, they can be grouped in different segments. It is important for the firm entering the world market to segment them in such a way that it is able to effectively meet their requirements. No matter how much attempt is made, the firm will not succeed unless it is marketing right product in the right market.

It costs lot of time and money to find out a suitable foreign market for a product. No firm has unlimited resources. Proper selection of markets would avoid waste of time and effort. One product may be more acceptable in some countries than in others. It would, therefore, be better to concentrate on a few markets than in more markets.

Key Factors in Product Selection

• If possible, avoid products which are monopoly of one or few suppliers. If you are the manufacturer make sure sufficient capacity is available in-house or you have the wherewithal to outsource it at short notice. Timely supply is a key success factor in export business.
• The product should be manufactured or sourced with consistent standard quality, comparable to your competitors. ISO or equivalent certification helps in selling the product in the international market.
• The price of the exported product should not fluctuate very often threatening profitability to the export business.
• Carefully study the various government incentive schemes and tax exemption like duty drawback and DEPB.
• Import regulation in overseas markets, especially tariff and non-tariff barriers. Though a major non-tariff barrier (textile quota) has been abolished – there are still other tariff and non-tariff barriers. If your product attracts higher duty in target country – demand obviously falls.
• Strictly check the government policies related to the export of a particular product. Though there are very few restrictions in export it is better to check regulatory status of your selected product.
• Registration/Special provision for your products in importing country. This is especially applicable for processed food and beverages, drugs and chemicals.
• Seasonal vagaries of selected products as some products sell in summer, while others in winter. Festive season is also important factor, for example certain products are more sellable only during Christmas.
• Keep in mind special packaging and labelling requirements of perishable products like processed food and dairy products.
• Special measures are required for transportation of certain products, which may be bulky or fragile or hazardous or perishable.

Pricing can be the most challenging due to different market forces and pricing structures around the world.

The pricing is based on estimation, evaluation, size and standard. The price in the market is the exchange value of goods and services expressed in terms of currency. Accordingly, pricing simply means determining the price for a good or service. It is an activity that needs to be repeated and is a continuous process. This continuity is due to environmental changes and the lack of stability in market conditions, which justifies the need to repeat this process.

Although price competition is one of the major issues that companies face it in international markets, but many companies cannot solve this problem efficiently. Price is one of the most important and effective factors that helps companies to attract customers and keep up their loyalty and satisfaction because the quality of the goods and services from different companies is booming, and the competition among different companies are intensifying.

Pricing on global markets is more difficult than pricing in domestic markets. In the domestic market, the manager knows the effects of the cultural and economic environment on pricing policies. But in the international markets, due to the lack of familiarity with foreign markets and the variety of those markets, it is not easy to decide on pricing policy.

In international markets there are fierce problems in pricing: the difference in customer response to pricing strategies by commodity in different markets, the limits imposed by governments on the level of profits and prices, the competition that determines price changes in the market, and the existence of different rules. But despite these problems, a company that wants to compete effectively and reach its goals in terms of sales and profits should consider pricing, local conditions and coordination with other elements of marketing mix. In international pricing, in addition to factors affecting domestic pricing, other factors should be considered, such as exchange rate fluctuations, currency with which prices are announced, government control over tariffs, and a group of economic and cultural factors that are found in different markets and differ with each other.

Pricing Considerations 

• What type of market positioning (i.e., customer perception) does your company want to convey from its pricing structure?
• Does the export price reflect your product’s quality?
• Is the price competitive?
• What type of discount (e.g., trade, cash, quantity) and allowances (e.g., advertising, trade-offs) should your company offer its foreign customers?
• Should prices differ by market segment?
• What should your company do about product-line pricing?
• What pricing options are available if your company’s costs increase or decrease?
• Is the demand in the foreign market elastic or inelastic?
• Is the foreign government going to view your prices as reasonable or exploitative?
• Do the foreign country’s antidumping laws pose a problem?

7 C’s of International Pricing Strategy

Pricing strategy brand depends on three primary factors: your cost to offer the product to consumers, competitors’ products and pricing, and the perceived value that consumers place on your brand and product vis-a-vis the cost. These three factors can be referred to as the 3 C’s of Pricing Strategy and are relevant both domestically and internationally.:

Competitors: Comprehensive and up-to-date analysis of your competitors’ in the international marketplace competing products, brand, and prices as well as where your brand is positioned relative to those competitors.

Costs: Comprehensive understanding of all costs related to offering the product, including development, creative, production, distribution, storage, advertising, manpower, and so on. International transportation and related costs like freight, insurance & handling lead to increase in costs. And then there is TAX.  There could be custom duty and turnover tax like the local GST or VAT which could result in an escalating price.

Customers: Customers overseas will have a different perception of the value of the product as compared to domestic markets due to many differential cultural and other factors. It should also be noted that customers today are able to instantly compare their prices with domestic prices on the internet.

Besides the primary factors (3 c’s) that determine international pricing there are a range of secondary factors which are unique to each international market. These make the pricing decision much more complex in international marketing.  When a firm crosses its domestic borders and enters a foreign country it encounters many unique international dimensions. These factors affect the pricing decision and consequently in case of international pricing we have expanded the 3 C’s of pricing to 7 C’s of International Pricing by adding the following additional 4 C’s:

Channels of Distribution: Lengthening channels of distribution means that more people are going to be handling your product including importers and wholesalers which causes not just cost escalation but increases distribution complexities.

Cultural Differences: The international pricing decision requires a comprehensive understanding of the overseas markets culture as well as the wants and needs of its inhabitants, including their perceptions of the value of your brand and products and your competitors’ brands and products.

Currency Rates: The complexities of multiple currencies which are subject to exchange rate fluctuations plus conversion costs.

Control by Government: Governmental and bureaucratic controls and regulations can be onerous and complex, like in China and even some European countries. Some countries have price control over some products like pharmaceuticals, fuel and food.

A key factor in any export business is clear understanding and detail knowledge of products to be exported. The selected product must be in demand in the countries where it is to be exported. Before making any selection, one should also consider the various government policies associated with the export of a particular product.

Whether companies are exporting first time or have been in export trade for a long time – it is better for both the groups to be methodical and systematic in identifying a right product. It’s not sufficient to have all necessary data ‘in your mind’ – but equally important to put everything on paper and in a structured manner. Once this job is done, it becomes easier to find the gaps in the collected information and take necessary corrective actions.

There are products that sell more often than other product in international market. It is not very difficult to find them from various market research tools. However, such products will invariably have more sellers and consequently more competition and fewer margins. On the other hand a niche product may have less competition and higher margin – but there will be far less buyers.

Fact of the matter is all products sell, though in varying degrees and there are positive as well as flip sides in whatever decision you take popular or niche product.

Factors in Product Selection

• The product should be manufactured or sourced with consistent standard quality, comparable to your competitors. ISO or equivalent certification helps in selling the product in the international market.
• If possible, avoid products which are monopoly of one or few suppliers. If you are the manufacturer make sure sufficient capacity is available in-house or you have the wherewithal to outsource it at short notice. Timely supply is a key success factor in export business
• The price of the exported product should not fluctuate very often – threatening profitability to the export business.
• Strictly check the government policies related to the export of a particular product. Though there are very few restrictions in export it is better to check regulatory status of your selected product.
• Carefully study the various government incentive schemes and tax exemption like duty drawback and DEPB.
• Import regulation in overseas markets, specially tariff and non-tariff barriers. Though a major non-tariff barrier (textile quota) has been abolished – there are still other tariff and non-tariff barriers. If your product attracts higher duty in target country demand obviously falls.
• Registration/Special provision for your products in importing country. This is specially applicable for processed food and beverages, drugs and chemicals.
• Seasonal vagaries of selected products as some products sell in summer, while others in winter. Festive season is also important factor, for example certain products are more sellable only during Christmas.
• Keep in mind special packaging and labeling requirements of perishable products like processed food and dairy products.
• Special measures are required for transportation of certain products, which may be bulky or fragile or hazardous or perishable.

Some factors to consider include:

1. Geographical Factors
   • Country, state, region,
   • Time zones,
   • Urban/rural location logistical considerations e.g. freight and distribution channels
2. Economic, Political, and Legal Environmental Factors
   • Regulations including quarantine,
   • Labelling standards,
   • Standards and consumer protection rules,
   • Duties and taxes
3. Demographic Factors
   • Age and gender,
   • Income and family structure,
   • Occupation,
   • Cultural beliefs,
   • Major competitors,
   • Similar products,
   • Key brands.
4. Market Characteristics
   • Market size,
   • Availability of domestic manufacturers,
   • Agents, distributors and suppliers.

Pricing on global markets is more difficult than pricing in domestic markets. In the domestic market, the manager knows the effects of the cultural and economic environment on pricing policies. But in the international markets, due to the lack of familiarity with foreign markets and the variety of those markets, it is not easy to decide on pricing policy.

In international markets there are fierce problems in pricing: the difference in customer response to pricing strategies by commodity in different markets, the limits imposed by governments on the level of profits and prices, the competition that determines price changes in the market, and the existence of different rules. But despite these problems, a company that wants to compete effectively and reach its goals in terms of sales and profits should consider pricing, local conditions and coordination with other elements of marketing mix. In international pricing, in addition to factors affecting domestic pricing, other factors should be considered, such as exchange rate fluctuations, currency with which prices are announced, government control over tariffs, and a group of economic and cultural factors that are found in different markets and differ with each other.

A company must have a clear understanding of the international marketing environment before deciding to expand its activities abroad. In an international pricing strategy, managers generally face a wide range of external and internal factors, and the main concern is how the managers come to terms with these factors and determine their final effect. Additionally, they should consider the political, cultural, linguistic, economic and legal differences in each market in global environment.

Penetration pricing in the International market

 Penetration pricing is the opposite of skimming in that the initial price is set very low to get the largest international market share. Internationally penetration pricing can allow profitable companies to gain access to market share in foreign countries. However, the trade policies of the foreign government would need to be considered as they might deem the low-priced products to be dumping or anti-competitive and in breach of their local legislation. As opposed to Apple, most manufactures of Android phones have a strategy of penetrating the International market.

Pre-emptive and extinction pricing strategies

Preemptive and extinction strategies are similar to penetration pricing policies in that they set the price very low in order to fight competition. Pre-emptive international pricing strategy sets the price very low so that new entrants to the international market find it uneconomical to enter that market. The example of Nintendo Wii which was first to enter the gaming market, intentionally set a low price to capture the market as a pre-emptive strategy against Sony which was to launch its Playstation. Extinction international pricing strategy is a strategy of driving away existing competitors by setting a low price that makes the business of competitors unviable. This could lead to a price war and is a risky strategy it could also lead to breaching of ‘anti-dumping or fair competition’ legislation in some countries.

Differential Pricing in International markets

As discussed above, customers in different international markets have differing value perceptions of a product as well as differing purchasing power. Besides this there could be other local factors discussed above which could affect the pricing of a product. A differential pricing strategy is a ‘horses for course’ approach allowing the firm to charge different prices across different international segments.

Differential pricing can be used by a multinational firm where it wants to pursue different pricing strategies in different markets. For example, a firm using differential pricing may pursue skimming in one geographical market and penetration pricing in another.

Components:

Costs 

The actual cost of producing a product and bringing it to market is key to determining if exporting is financially viable. 

Cost-plus method is when the exporter starts with the domestic manufacturing cost and adds administration, research and development, overhead, freight forwarding, distributor margins, customs charges, and profit. However, the effect of this pricing approach may be that the export price escalates into an uncompetitive range once exporting costs have been included. 

Marginal cost pricing is a more competitive method of pricing a product for market entry. This method considers the direct out-of-pocket expenses of producing and selling products for export as a floor beneath which prices cannot be set without incurring a loss. For example, additional costs may occur because of product modification for the export market. Costs may decrease, however, if the export products are stripped-down versions or made without increasing the fixed costs of domestic production.

Other costs should be assessed for domestic and export products according to how much benefit each product receives from such expenditures, and may include:

• Fees for market research and credit checks 
• Business travel expenses 
• International postage and telephone rates 
• Translation costs 
• Commissions, training charges, and other costs associated with foreign representatives 
• Consultant and freight forwarder fees 
• Product modification and special packaging costs 

After the actual cost of the export product has been calculated, you should formulate an approximate consumer price for the foreign market. 

Market Demand

For most consumer goods, per capita income is a good gauge of a market’s ability to pay. Some products (for example, popular U.S. fashion labels) create such a strong demand that even low per capita income will not affect their selling price. Simplifying the product to reduce its selling price may be an answer for your company in markets with low per capita income. Your company must also keep in mind that currency fluctuations may alter the affordability of its goods.  

Competition

In the domestic market, U.S. companies carefully evaluate their competitors’ pricing policies. You will also need to evaluate competitor’s prices in each potential export market. If there are many competitors within the foreign market, you may have to match the market price or even underprice the product or service for the sake of establishing a market share. If the product or service is new to a particular foreign market, however, it may actually be possible to set a higher price than is feasible in the domestic market.

Pricing Summary

It’s important to remember several key points when determining your product’s price: 

• Determine the objective in the foreign market.
• Compute the actual cost of the export product.
• Compute the final consumer price.
• Evaluate market demand and competition.
• Consider modifying the product to reduce the export price.
• Include “non-market” costs, such as tariffs and customs fees.
• Exclude cost elements that provide no benefit to the export function, such as domestic advertising.

International communication consists of those activities which are used by the marketer to inform and persuade the consumer to buy. A well-designed promotion mix includes advertising, sales promotions, personal selling, and public relations which are mutually reinforcing and focused on a common objective.

Developing an international communication strategy involves five steps:

1. Determining the promotional mix (the blend of advertising, personal selling, and sales promotions) by national markets.
2. Determining the extent of worldwide standardization.
3. Developing the most effective messages.
4. Selecting effective media.
5. Establishing the necessary controls to assist in achieving worldwide marketing objectives.

Communication is the side of international marketing with the greatest similarities throughout the world. Paradoxically, it may also have the distinction of involving the greatest number of unique culturally related problems. Adapting promotional strategy to cultural peculiarities which exist among the world’s markets is the challenge confronting the international market.

Advertising is usually the most visible component of communication, but it is not the only component of communication. To communicate with and influence customers, several promotional tools are available. Marketers have at their disposal the major methods of promotion i.e. advertising, sales promotion, publicity, pubic relation, personal selling and word of mouth.

Taken together these comprise the promotion mix. But in the present scenario, the promotional tools have widened their scope and number of types. There are many other promotional tools also which are considered under the promotion mix such as e- commerce/internet marketing, sponsorship, exhibitions, packaging, point-of-purchase displays, corporate communications/ identity, event marketing, trade shows, and customer service.

When these tools are integrated in a harmonious manner to reach and exceed the promotion objective, the outcome is called Integrated Marketing Communication (IMC). IMC has been adopted as the best possible way to promote one’s offering according to the situation.

Export

An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an exporter; the foreign buyer is an importer. Services that figure in international trade include financial, accounting and other professional services, tourism, education as well as intellectual property rights. Exportation of goods often requires the involvement of customs authorities.

International agreements limit trade-in and the transfer of certain types of goods and information, e.g., goods associated with weapons of mass destruction, advanced telecommunications, arms and torture and also some art and archaeological artefacts:

• Nuclear Suppliers Group limits trade in nuclear weapons and associated goods (45 countries participate).
• The Australia Group limits trade in chemical and biological weapons and associated goods (39 countries).
• Missile Technology Control Regime limits trade in the means of delivering weapons of mass destruction (35 countries).
• The Wassenaar Arrangement limits trade in conventional arms and technological developments (40 countries).

Promotion

Using various online and offline outlets, sales promotion creates limited time deals or promotions on products or services in order to increase short-term sales. It can include sales, coupons, contests, freebies, prizes and product samples.

When conducting a sales promotion, it’s important to consider:

• how much it costs and whether the volume of sales will make up for the lost revenue
• whether it will build loyalty or just attract one-off purchasers
• if the promotion fits with the brand’s image

Organization trade Fair

A trade fair, also known as trade show, trade exhibition, or trade exposition, is an exhibition organized so that companies in a specific industry can showcase and demonstrate their latest products and services, meet with industry partners and customers, study activities of rivals, and examine recent market trends and opportunities.

In contrast to consumer fairs, only some trade fairs are open to the public, while others can only be attended by company representatives (members of the trade, e.g. professionals) and members of the press, therefore trade shows are classified as either “public” or “trade only”. A few fairs are hybrids of the two; one example is the Frankfurt Book Fair, which is trade only for its first three days and opens to the general public on its final two days. They are held on a continuing basis in virtually all markets and normally attract companies from around the globe.

The India International Trade Fair, ever since its inception in 1980, has evolved as a major event for the business community. It is a premier event organized by the India Trade Promotion Organization, the nodal trade promotion agency of the Government of India. The event is held between 14 and 27 November every year at Pragati Maidan, New Delhi, India.

The Theme of IITF 2020 was  Aatmanirbhar Bharat

Significance

IITF is a major tourist attraction and lakhs of people visit the fair every year. This annual event provides a common platform for the manufacturers, traders, exporters and importers. The fair displays comprises a wide range of products and services including automobiles, coir products, jute, textiles, garments, household appliances, kitchen appliances, processed food, beverages, confectionery, pharmaceuticals, chemicals, cosmetics, bodycare & health care products, telecommunication, power sector, electronic sector, furniture, home furnishings, sporting goods, toys, and engineering goods.

The participation figures verify the huge worldwide response of IITF. The 26th edition of IITF (2006) had around 7500 national and 350 international exhibiting companies. The fair attracted a huge audience of more than 3 million general visitors & 2,75,000 business visitors including 91 delegations from 53 countries. In fact, all business avenues will be encouraged to participate, to represent India in its totality and open fresh avenues for major business expansion.

IITF 2019 included 8800 exhibitors displayed in an area of 94,300 square metres (1,015,000 sq ft). (gross) with 30 States and Union Territories participated in as exclusive pavilions. In this edition 299 foreign companies from 25 foreign countries displayed their products. Around 40,000 domestic business visitors and foreign trade delegations from Afghanistan, Angola, Australia, Bangladesh, Brunei, Burkina Faso, Canada, China, Costa Rica, France, Germany, Ghana, Hong Kong, Iran, Indonesia, Japan, Kenya, Lesotho, Malawi, Malaysia, Mexico, Nepal, Nigeria, Oman had visited the fair. Over one million general visitors visited the fair.

Exhibitions

An exhibition, in the most general sense, is an organized presentation and display of a selection of items. In practice, exhibitions usually occur within a cultural or educational setting such as a museum, art gallery, park, library, exhibition hall, or World’s fairs. Exhibitions can include many things such as art in major museums and smaller galleries, interpretive exhibitions, natural history museums and history museums, and also varieties such as more commercially focused exhibitions and trade fairs.

In British English the word “exhibition” is used for a collection of items placed on display and the event as a whole, which in American English is usually an “exhibit“. In both varieties of English each object being shown within an exhibition is an “exhibit“. In common usage, “exhibitions” are considered temporary and usually scheduled to open and close on specific dates. While many exhibitions are shown in just one venue, some exhibitions are shown in multiple locations and are called travelling exhibitions, and some are online exhibitions. Exhibitions featuring especially fragile or valuable objects, or live animals may be shown only during a formal presentation, under the close supervision of attendant or educator. Temporary exhibits that are transported from institution to institution are travelling exhibits.

Though exhibitions are common events, the concept of an exhibition is quite wide and encompasses many variables. Exhibitions range from an extraordinarily large event such as a World’s fair exposition to small one-artist solo shows or a display of just one item. Often a team of specialists is required to assemble and execute an exhibition; these specialists vary depending on the type of said exhibit. Curators are sometimes involved as the people who select the items in an exhibition. Writers and editors are sometimes needed to write text, labels and accompanying printed material such as catalogs and books. Architects, exhibition designers, graphic designers and other designers may be needed to shape the exhibition space and give form to the editorial content. Organizing and holding exhibitions also requires effective event planning, management, and logistics.