International Marketing - Lecture 5

LECTURE 5
INTERNATIONAL MARKET RESEARCH

• Market Research is the gathering, recording and analyzing data to

provide information useful in making Marketing Decisions
• Market Research is the gathering, recording and analyzing data to

provide information useful in making Marketing Decisions
• Domestic Market Research and International Market Research are

basically the same, i. e. the same rules apply whether the research
is done for markets in Salem - Tamilnadu or Cairo – Egypt or
Winston Salem – North Carolina.
SCOPE OF INTERNATIONAL MARKET

RESEARCH

RESEARCH
• General information about the country, area and/or market


RESEARCH
• Specific information needed to make price, promotion, distribution

and product decisions

RESEARCH
• Specific information needed to make price, promotion, distribution

and product decisions
• Information needed to forecast future marketing requirements by

anticipating social, economic and consumer trends within specific
target markets
MARKET RESEARCH PLANNING STEPS

• Unysis Corporation has successfully incorporated a three

stage market research planning process:

– Environmental: including economic/socio-political

climate/overview of market conditions – technological environs
– competitor’s market shares


climate/overview of market conditions – technological environs
– competitor’s market shares
– Divisional assessment of the above conditions



climate/overview of market conditions – technological environs –
competitor’s market shares
– Divisional assessment of the above conditions
– Review of strategies developed from the above assessment,

and choosing the optimal assessment
THE RESEARCH PROCESS

• The Market Research Process is always a compromise

dictated by limits of time, cost and the present state of the
art. The research process should, however, follow the steps
given below to have a good probability of success:
• The Market Research Process is always a compromise

dictated by limits of time, cost and the present state of the
art. The research process should, however, follow the steps
given below to have a good probability of success:
– Define the research problem and establish the research

objectives
• The Market Research Process is always a compromise dictated by

limits of time, cost and the present state of the art. The research
process should, however, follow the steps given below to have a
good probability of success:
– Define the research problem and establish the research objectives
– Determine the sources of information to fulfill the research objectives

• The Market Research Process is always a compromise dictated by

limits of time, cost and the present state of the art. The research
process should, however, follow the steps given below to have a
good probability of success:
– Define the research problem and establish the research objectives
– Determine the sources of information to fulfill the research objectives
– Analyze, interpret and present the results

PROBLEMS IN AVAILABILITY AND
RELIABILITY OF DATA
PROBLEMS IN AVAILABILITY AND
RELIABILITY OF DATA
The breadth of foreign marketing studies and the

marketer’s lack of familiarity with the host
country’s basic socio-economic and cultural data
result in considerable demand for information
available from secondary sources in the home
country. However, the following problems present
themselves:
PROBLEMS IN AVAILABILITY AND RELIABILITY OF
DATA
The breadth of foreign marketing studies and the

marketer’s lack of familiarity with the host country’s
basic socio-economic and cultural data result in
considerable demand for information available from
secondary sources in the home country. However, the
following problems present themselves:
Availability of data
– Reliability of data
– Comparability of data
PROBLEMS IN AVAILABILITY AND RELIABILITY OF DATA
The breadth of foreign marketing studies and the marketer’s

lack of familiarity with the host country’s basic socio-economic
and cultural data result in considerable demand for information
available from secondary sources in the home country.
However, the following problems present themselves:
Availability of data
– Reliability of data
– Comparability of data
• Therefore, it is imperative that the data should be validated by

empirical or statistical means prior to putting a strategy into full
force
MULTINATIONAL MARKETING INFORMATION
SYSTEMS
• A company shift from decisions involving market entry to those involved in

managing and controlling a number of growing foreign markets requires
greater emphasis on a continuous system designed to generate, store,
catalog, and analyse information from sources within the firm and external
to the firm for use as the basis of worldwide and country-oriented decision
making. In short, companies have a need for a Multinational Marketing
Information System (MMIS) (see next slide)

SYSTEMS
Corporate MMIS
Country (A)
CMIS
Instruction
Information Country (B)
CMIS
Country (C)
(etc) CMIS

SYSTEMS
As global competition becomes more fierce, industrial marketers

should place a top priority on centrally managing the orderly
gathering and analysis of market intelligence
SOURCES OF SECONDARY DATA
US Government sources freely available to all:
• Foreign Trade Report (FT 410)

• International Economic Indicators
• Market Share Reports
• International Marketing Information Series
• Global market surveys
• Country market sectoral surveys
• Overseas Business Reports
• Business America (formerly Commerce America)
• Trade Opportunities Program
• Commercial Information Management System
International Organizations:
A number of International Organizations provide information and

statistics on international markets. The Statistical Yearbook, an
annual publication of the United Nations, provides comprehensive
social and economic data for more than 250 countries around the
world. Many regional organizations, like the Organization of
Economic Cooperation and Development (OECD), Pan American
Union, and the European Community publish information
statistics and market studies relating to their respective regions.
Chambers of Commerce
Trade, Business and service Organizations
National Trade Data Bank (NTDB), which resulted from the

mandate, Omnibus Trade and Competitiveness Act of 1988, is
designed to bring over 1,00,000 different documents – the
equivalent of three complete sets of the Encyclopedia Britannica
– to the user. Updated monthly, it is available in CD read only
memory, which contains information from several Government
agencies
PRICING FOR INTERNATIONAL
MARKETS
MARKETS
When selling to a variety of markets, the International

Marketer is faced with new sets of variables to
consider, like differences in tariff, costs, attitudes,
competition, currency fluctuations, methods of price
quotations, and marketing strategy of the firm.
MARKETS
Pricing Objective
MARKETS
Pricing Objective
Price decisions can be an active instrumentation

of achieving market objectives, or a strategic
element in a business decision. Companies
involved in international business consider,
among others, the following four factors as
important to their pricing decisions:
MARKETS
Pricing Objective
Price decisions can be an active instrumentation of

achieving market objectives, or a strategic element
in a business decision. Companies involved in
international business consider, among others, the
following four factors as important to their pricing
decisions:
– Total Profits
– Return on investments
– Achieving a certain market share
– Total Sales Volume
MARKETS
Pricing Objective

decisions:
– Total Profits
The broader the product line and larger the market

base, the more complex is the price control and
management exercise.
MARKETS
Pricing Objective

decisions:
– Total Profits
The broader the product line and larger the market

base, the more complex is the price control and
management exercise.
MARKETS
Parallel Imports
MARKETS
Parallel Imports
This is a form of Cannibalizing, occurring when importers

buy products from distributors from one country and sell
them to another. A case in point is the sale of finished
pharmaceutical formulations to third countries from India
with bulk drugs imported from the West.
MARKETS
Parallel Imports
This is a form of Cannibalizing, occurring when importers

buy products from distributors from one country and sell
them to another. A case in point is the sale of finished
pharmaceutical formulations to third countries from India
with bulk drugs imported from the West.
Administered Pricing
MARKETS
Parallel Imports
This is a form of Cannibalizing, occurring when importers buy

products from distributors from one country and sell them to
another. A case in point is the sale of finished pharmaceutical
formulations to third countries from India with bulk drugs
imported from the West.
Administered Pricing
Administered pricing relates to attempts to establish prices for

an entire market. Such prices may be arranged through the
cooperation of competitors, through national, state, or local
Governments, or by international agreement. The legality of
administered pricing arrangements of various kinds differs from
country to country and from time to time. A country may
condone price fixing for foreign markets but condemn it for the
local market.
MARKETS
Price Setting by Industry Groups
• Licensing Agreements
• Cartels
• Trade Associations
MARKETS
Countertrade as a Pricing Tool
MARKETS
The challenges of Countertrade must be viewed from

the same position as all other variations in
International Trade. Marketers must be aware which
markets will likely require countertrade just as they
must be aware of social customs and legal
requirements. Assessing this factor along with all other
market factors will enhance a marketer’s competitive
position.
MARKETS
The challenges of Countertrade must be viewed from the

same position as all other variations in International
Trade. Marketers must be aware which markets will likely
require countertrade just as they must be aware of social
customs and legal requirements. Assessing this factor
along with all other market factors will enhance a
marketer’s competitive position.
Types of Countertrade
– Barter
– Compensation deals
– Counterpurchase or Offset Deals
– Product Buy Back arrangements
MARKETS
Full Cost versus Variable Cost Pricing
MARKETS
Full Cost versus Variable Cost Pricing
Firms employing cost oriented pricing structures resort to

variable cost pricing to achieve full utilization of product
capacity, where local market only covers a portion of the
production and the balance would otherwise remain
unutilized.
An international firm that utilizes variable cost pricing in

some markets must ultimately decide whether it is a
marketer exporting from one country to another, or if it is
a global player. If it regards itself as a global marketer, it
is more likely to think in terms of full cost pricing to ALL
markets.
MARKETS
Skimming versus Penetration Pricing
Firms must decide on which policy to follow, depending

on the level of competition, the innovativeness of
product, and the market characteristics.
MARKETS
Firms must decide on which policy to follow, depending

on the level of competition, the innovativeness of
product, and the market characteristics.
Escalation of International Pricing
A pricing exercise is done here showing HOW price

“escalates” because of “exportation components” in
costs!
MARKETS
Firms must decide on which policy to follow, depending on

the level of competition, the innovativeness of product, and
the market characteristics.
Escalation of International Pricing
A pricing exercise is done here showing HOW price

“escalates” because of “exportation components” in costs!
Case: A shipment of 1,900 cases of assorted industrial

goods manufactured in Patna, Bihar, is transported by truck
to Kolkata Port, then by Sea Freight to Dar es Salaam,
Tanzania. The total weight of the shipment is 18,000 Kg. and
its volume is 40 Cubic Feet.
MARKETS
Escalation of International Pricing (contd.)
Transit time is 14 weeks {1 week from Patna to Kolkata, 1 week at the
Kolkata Port, 7 weeks at High Seas between Kolkata and Dar es Salaam
(including trans-shipment at Colombo), 3 weeks at the Dar Port, and 2
weeks in transit from the port to store in Tanzania}
FOB Patna price: Rs. 4,40,000 $10,000
Freight to Kolkata: (Rs. 4500) $ 100
Sea Freight to Dar: $ 1,897
Special Invoices: $ 21
Port and Fwd Fees: $ 19
Inse. (valued at $20,000): $ 395
Port Charges: $ 587
Total Shipping Charges: $ 3,019 $ 3,019
CIF Value: $13,019
Duty (20% of CIF Value): $ 2,604
Mark Ups (10% Dist, 20% Dealer) $ 4,687
Retail Price in Tanzania: $20310
MARKETS
Escalation of International Pricing (Contd.)
While this is a fictitious exercise, it demonstrates how a price

balloons from the source to the final destination. The escalations
are even more magnified where Import Duties are higher, as In
India!
Summarizing, the various International Pricing

Strategies are:
– Full Cost versus Variable Cost Pricing Strategies

– Skimming versus Penetration Pricing Strategies
– Prices to tackle Parallel Imports
– Transfer Pricing (especially applicable to MNCs)
EXPORT
PROCEDURES/DOCUMENTATION
The Terms of Delivery
Pricing decisions of exports depend on the Terms of

Delivery. These are the terms on which the goods are
delivered to overseas buyers. There are several such
terms and the International Chamber of Commerce
(ICC) has attempted to establish a set of Terms. These
are known as the INCO Terms, various parameters of
which are given below:
EXPORT
The Terms of Delivery
Pricing decisions of exports depend on the Terms of Delivery. These

are the terms on which the goods are delivered to overseas buyers.
There are several such terms and the International Chamber of
Commerce (ICC) has attempted to establish a set of Terms. These
are known as the INCO Terms, various parameters of which are
given below:
EXW (Ex Works) FCA (Free Carrier) FAS (Free Alongside Ship)
FOB (Free on Board) CNF (Cost & Freight paid to Destination Port)
CIF (Cost, Inse., Freight paid to Destination Port) CPT (Carriage pd. to dest.)
CIP (Carriage/Inse. Pd. To Dest.) DAF (Delivered to Frontier)
DES (Delivered ex. Ship) DEQ (Delivered ex Quay)
DDU (Delivered Duty Unpaid) DDP (Delivered Duty Paid)
EXPORT
Documents needed for Exports
The following Documents are generally

necessary for exporting goods from India
– Commercial Invoice
– Packing List
– Consular Certification of Commercial Invoice
– Bill of Lading
– Certificate of Origin
– Insurance Policy/Certificate
EXPORT

EXPORT

– Commercial Invoice
– Packing List
– Consular Certification of Commercial Invoice
– Bill of Lading
– Certificate of Origin
– Insurance Policy/Certificate
EXPORT
EXPORT
Excise Forms: Form AR4 issued when goods are

inspected and cleared for
export by Excise authorities at the Manufacturer’s works
Form AR4A issued when goods are
inspected and cleared for export by Excise
authorities at the Point of Exit
EXPORT
Excise Forms: Form AR4 issued when goods are inspected

and cleared for export by Excise
authorities at the Manufacturer’s works
Form AR4A issued when goods are inspected and cleared
for export by Excise authorities at the Point of Exit
Excise Gate Pass: GP1 issued when goods are exported

under rebate of Duty on the Goods Exported Scheme
GP2 issued when goods are exported under rebate of
Duty on the Bond Scheme
EXPORT
Excise Forms: Form AR4 issued when goods are inspected and
cleared for export by Excise authorities at
the Manufacturer’s works
Form AR4A issued when goods are inspected and cleared for
export by Excise authorities at the Point of Exit
Excise Gate Pass: GP1 issued when goods are exported under
rebate of Duty on the Goods Exported Scheme
GP2 issued when goods are exported under rebate of Duty
on the Bond Scheme
Three main categories under which Letters of Credit are divided:

Irrevocable/Revocable
Confirmed/Unconfirmed
With/without Recourse

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LECTURE 5

INTERNATIONAL MARKET RESEARCH

• Market Research is the gathering, recording and analyzing data to

• Market Research is the gathering, recording and analyzing data to

• Domestic Market Research and International Market Research are

SCOPE OF INTERNATIONAL MARKET

SCOPE OF INTERNATIONAL MARKET

• General information about the country, area and/or market

SCOPE OF INTERNATIONAL MARKET

• General information about the country, area and/or market

• Specific information needed to make price, promotion, distribution

SCOPE OF INTERNATIONAL MARKET

• General information about the country, area and/or market

• Specific information needed to make price, promotion, distribution

• Information needed to forecast future marketing requirements by

MARKET RESEARCH PLANNING STEPS

MARKET RESEARCH PLANNING STEPS

• Unysis Corporation has successfully incorporated a three

MARKET RESEARCH PLANNING STEPS

• Unysis Corporation has successfully incorporated a three

– Environmental: including economic/socio-political

MARKET RESEARCH PLANNING STEPS

• Unysis Corporation has successfully incorporated a three

– Environmental: including economic/socio-political

– Divisional assessment of the above conditions

MARKET RESEARCH PLANNING STEPS

• Unysis Corporation has successfully incorporated a three

– Environmental: including economic/socio-political

– Divisional assessment of the above conditions

– Review of strategies developed from the above assessment,

THE RESEARCH PROCESS

THE RESEARCH PROCESS

• The Market Research Process is always a compromise

THE RESEARCH PROCESS

• The Market Research Process is always a compromise

– Define the research problem and establish the research

THE RESEARCH PROCESS

• The Market Research Process is always a compromise dictated by

– Define the research problem and establish the research objectives

– Determine the sources of information to fulfill the research objectives

THE RESEARCH PROCESS

• The Market Research Process is always a compromise dictated by

– Define the research problem and establish the research objectives

– Determine the sources of information to fulfill the research objectives

– Analyze, interpret and present the results

The breadth of foreign marketing studies and the

The breadth of foreign marketing studies and the

The breadth of foreign marketing studies and the marketer’s

• Therefore, it is imperative that the data should be validated by

• A company shift from decisions involving market entry to those involved in

MULTINATIONAL MARKETING INFORMATION

MULTINATIONAL MARKETING INFORMATION

As global competition becomes more fierce, industrial marketers

US Government sources freely available to all:

• Foreign Trade Report (FT 410)

A number of International Organizations provide information and

Trade, Business and service Organizations

National Trade Data Bank (NTDB), which resulted from the

When selling to a variety of markets, the International

Price decisions can be an active instrumentation

Price decisions can be an active instrumentation of

Price decisions can be an active instrumentation of

The broader the product line and larger the market