Export Marketing: What You Need to Do To Go Global - Assignment Example

Export Marketing: What You Need to Do To Go Global TABLE OF CONTENTS What is Export? Necessity of Export Marketing and Export Marketing Research How to Enter into an Export Market? Role of Web Site in Export Marketing Advantages and Disadvantages of Export Marketing What is Export? In economics, export can be defined as a good, commodity or service, which is shipped or transported from one country, province or town to another part of the world in a legitimate fashion. Typically, export is used for trade or sale and it therefore, is an important part of the international trade. The export goods and services are generally targeted for the foreign consumers, and these goods or services are provided by the domestic producers. In simple terms, export is the marketing of goods and services produced in one country into another country. Necessity of Export Marketing and Export Marketing Research Export marketing is the marketing activities involved in an export that helps in taking the opportunities of doing business in foreign countries while at the same time it sustains the production in the home country. Export marketing is very much important in today’s competitive world, as it is only through exporting or marketing to the outside world, the small companies can turn into large companies and large ones into multinational operations. It allows a business to grow further beyond its geographical limits and helps in understanding economy of foreign countries. It also provides scope for improving the quality of goods or services as per the requirements in the foreign market. However, before pursuing export marketing, one should perform extensive export marketing research so that it can understand the demand of its goods and services among the foreign consumers. It also helps in understanding the capability of its products to sustain in the export market. Nowadays, in most of the countries worldwide, governments are encouraging their domestic companies to go global to expand their business extents and fulfil the requirements of overseas customers along with its domestic ones. This involves offering various export marketing research schemes to understand the foreign markets. One of such popular offer is the Export Marketing Research Scheme (EMRS) provided by UK Trade and Investment, which helps UK-based companies to undertake export marketing research. The primary purpose of EMRS is to provide the necessary export marketing research to the UK companies before the companies are ready with their strategies to enter into the overseas market. This export marketing research basically involves gaining knowledge and information about the following topics regarding the foreign markets: The size of the market and its segmentation Regulations and legislation in the foreign market Needs, attitudes and usage of the customers Available distribution network The market trends followed Activities of the competitors along with their strategies and performances How to Enter into an Export Market It is a very important decision for any domestic company to enter into the export market. However, the success of this step of the companies depends on many factors. For the success in export marketing, a company needs an effective way to market and distribute its goods and services in the export market. There are multiple options available, which include direct exporting by the domestic company, using third-parties as intermediaries for exporting the goods and services and collaborating with companies that are already marketing in the export market. It is generally seen that the new ventures targeting for export marketing prefers direct export process. The main concern behind this behaviour of the companies is mainly due to their intention to save money or avoid sharing of any profit with other company or third-party services. The companies going for direct exporting should understand that they can be successful in the foreign market only when they are ready to use their resources to perform the following basic tasks: Choosing the foreign market Choosing representatives for the target areas in the export market Performing research for the export market Developing strategies for pricing and promotion for the target market Handling monetary for billing and collection including managing the foreign exchange risk However, it is seen in the case of budding export companies that they mostly fail due to the lack of export intermediaries or their inappropriate use. Export intermediaries are must for new exporters as their resources and expertise are not sufficient for smooth handling of the export tasks. Also, it is seen in case of established companies that they prefer to focus their staff and financial resources mainly in the domestic market as the domestic market is the main source of the production. A popular intermediary in this regard is the Export Management Company (EMC), which can be the export department for the companies providing an alternative to direct exporting. A full-service EMC can perform several tasks including foreign market research, transportation arrangement, choosing and appointing distributors and agents in the foreign market, handling promotional activities along with billing and collection. A company can attain several benefits by using an EMC. It first enables the company to limit required staff time and resources for building a successful export business. It also provides instant access to all export market research results. In addition, an EMC can help in building an export business system with its available network of foreign agents and distributors. Role of Web Site in Export Marketing A company’s site can be of very much helpful in entering and expanding the export market. If a company wish to use Internet for marketing its business, then Web site is the best investment for such company. A good Web site with all the necessary information about the goods and services offered by a domestic company is a must for the company to start its venture in overseas market. The Web site should also clearly specify foreign exchange risk and other regulations necessary for export marketing. Some of the important reasons that make Web sites a compelling necessity for export marketing are: Establishing the identity — In today’s business, buyers and seller very often meet for transaction and in such situations, a Web site can be of utmost beneficial to establish the identity of the domestic company in the foreign market so that consumers from the export market can have a good understanding of its working and offerings. Attracting worldwide customers — The Internet, having no geographic limitations, can reach to any customer residing in any foreign country. This enables the domestic companies to extend the export market with less effort and attract more customers from worldwide. Providing superior but low-cost service — The Internet cost much less to promote goods and services of a company in the overseas market in comparison to other available promotional activities and yet it provides effective services including business e-mail, live chat, auto responders, etc for export marketing. Building professional image — A well-designed Web site of a company can help in providing its exporting statement as well as a professional image of the company to its overseas customers. It also helps in building a positive attitude towards the company along with providing confidence in the customers to do business with the company. Advantages and Disadvantages of Export Marketing The various advantages of exporting include: Market size — Expansion of market size of a company including venturing into the global markets Market suitability — Some products which are not popular in the domestic market may get considerable applause in the foreign market. Currency benefits — Changes in exchange rates helps a company that have weak currency value than the currency value used in the overseas or export market. Diversification — Exporting allows diversified product portfolios for a company to offer in the export market and also encourages various changes in the domestic economy. More competitiveness — Small companies can grow with their extension in the export market and thereby become more competitive in the market. Compensation for seasonal demands — Companies having products that are domestically used in certain seasons can sell in the export market across different seasons as per the suitability of the locations. Knowledge and experience — Extending into the global market provides a domestic company various important information about new technologies, marketing techniques along with the available foreign competitors in the export market. Sell excess products — If a company produces excess products then it can use its global market reach to clear the inventory. Apart from these benefits, there are certain disadvantages of export marketing. These include: Extra costs — It takes longer time period for developing foreign markets than domestic markets and therefore it is costlier and more time consuming. Financial risk — The payment collection methods used in export marketing are more complicated than the methods used for domestic markets and they are more time consuming. Therefore, a domestic company needs to carefully check the financial risk while going for an international transaction. Export licenses — In some instances the use of export licenses to do business in the foreign markets makes a domestic firm less competitive in the export market. Less competitiveness — Sometimes the higher cost of travelling to the foreign countries along with heavy management fees, shipping costs and agent’s charges can increase the cost of a service or good in the export market. This many a times lowers the competitiveness of the product in the export market among other similar goods or services. Bibliography Export Marketing Research Scheme (EMRS). TradeYorkshire Web site: http://www.tradeyorkshire.com/emrs.htm Export marketing. Australian Government, Austrade Web site: http://www.austrade.gov.au/Export-marketing/default.aspx ENTERING EXPORT MARKETS WITH INTERMEDIARIES. Web site: http://www.paagproducts.org/entering.html Benefits of Exporting. EXPORT.GOV Web site: http://www.export.gov/about/benefits_exporting.asp The advantages and challenges of exporting for the SME. Alibaba.com Web site: http://resources.alibaba.com/article/37653/The_advantages_and_challenges_of_exporting_for_the_SME.htm Read More