Developing Export Marketing Plan

Emerging Marketing Scenario The foreign markets are highly competitive; there are too many goods chasing too few customers. As a consequence, the buyers are becoming highly selective; the markets are fast turning into the buyer's markets. In such a market scenario, it is obvious that some of the exporters will be the losers and some of them will be the winners at the market place. The winners would be those who enter the market with something different, something special or something unique. But those who enter the market with something routine would find it very difficult to do business at the global market place. This underlines the need for developing an offer for the buyer which would give him/her the maximum value for money. Obviously, the exporter who makes the best 'value rich offer' would succeed at the market place. This scenario has also been projected by none other than the great marketing guru, Professor Philip Kotlar. According to him, marketing in the year 2005 would be done in an environment where "virtually all the products are available without going to the market. The customer can access products on the internet, shop among the online vendors on the best terms, and click order and payment. Most companies have built proprietary data bases containing information on individual customer preferences and use them to mass customize their offerings. Businesses are doing a better job of retaining customers by finding imaginative ways to exceed customer expectations. Companies are focussing on building customer share rather than Market share. An increasing amount of personal selling is occurring over electronic media, mass TV advertising has greatly diminished. Companies are unable to sustain competitive advantages and believe that their only sustainable advantage lies in an ability to learn faster and change faster." Thus, the emerging marketing scenario would be characterized by the following features: i) ii) Foreign markets would be essentially buyer's markets. The focus of marketing would shift from generating customer satisfaction to achieving customer's delight; this would be achieved by offering the buyer more than what he/ she expects. The main focus of marketing would be to achieve greater customer share rather than to market share. The marketing strategies would undergo complete transformation. The competitive edge of a business firm would depend upon its ability to learn faster an, change faster. The electronic media particularly the internet would play the dominant role in the marketing programmes of the business firms.

iii)

iv)

v)

Definition of Marketing In simple terms, marketing refers to the set of human activities aimed at consummating the desire exchange of things of value for satisfying the needs / wants of the people. It has also been defined as a social and managerial process by which individuals and groups obtain what the need and want through creating and exchanging products and value with others. Analysis of this definition of marketing brings out the following features of the marketing process: 1. Exchange process is the very essence of all marketing. 2. The party which seeks exchange is called the marketer and the party with whom exchange is sought is called the prospect. 3. The exchange is about a thing of value, be it goods or services. If a certain product or the service does not have the utility to satisfy the needs of the people, then it will not be exchanged and no market would exist for such a product or service. 4. The exchange process can be initiated by either the exporter or the importer. The exporter initiates the process by participating in the trade fair or giving advertisement on a websites or approaching a buying agent in his/her country or an overseas marketing agent. An importer may initiate the process by giving an advertisement in the trade magazines or on the web site or by circulating the trade enquiry through the trade promotion body in the overseas markets. The Marketing System The term market can be defined as a collection of buyers and sellers who transact over a particular product. It has nothing to do with a physical place where the buyers and the sellers used to meet traditionally to exchange goods. The developments in the fields of communications and information technology have made it possible for the buyers and the sellers to exchange the goods without even coming face to face with each other. The marketers view the sellers as constituting the industry and the buyers as constituting the markets. Thus, market for a product exists if there is a buyer for it. The relationship between the industry and the market defines the marketing system. This system has been explained in Figure 1.

Figure 1: The Marketing System

The above diagram shows that the sellers and the buyers are connected by four flows. The sellers send goods and communications such as direct mail, advertisements, etc. to the market; in return they receive money and information in terms of attitudes, sales data, etc. Selling and Marketing Marketing is a wider term and includes selling. Marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. Then what is needed is to make the product or service available. Selling is the act of exchange. It is only tip of the iceberg called marketing. Marketing Management Marketing Management refers to the conscious effort to achieve desired exchange outcomes with the target markets. It can be defined as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals. It requires considerable amount of work and skill to manage the exchange process implicit in marketing. Marketing management becomes relevant when the parties either the exporter or the importer thinks of bringing about the desired exchange with the other party. Marketing management is in fact the art and science of choosing target market and locating, retaining and growing customers through creating, delivering and communicating superior customer value. 3

Since exchange is the very essence of marketing management, it is important that the marketer understands what the market desires and accordingly supply the same. Marketing Environment The marketing environment is result of inter play of a variety of factors which should be recognised by the marketers before managing the exchange process. The marketing environment comprises of the following: 1. Competitive Environment 2. Task Environment 3. Broad Environment Competitive Environment Competitive environment is characterized by the competition to the firm's offering from the actual and potential rival products and substitutes that a buyer might consider. The competition in the market may assume any of the following four forms depending on the degree of substitutability of the firm's product. These are: 1. 2. 3. 4. Brand competition Industry competition Form competition Generic competition

Brand competition is provided by other business films offering the similar products and services to the same group of customers at similar prices. Industry competition is created when all the business firms making the same product or class of product compete for the given market share. Form competition takes place when the business firms provide the products that supply the same service. Generic competition is provided when all the companies try for maximising the market share of the same target customer group. Task Environment It comprises of all those business firms which are engaged in production, diminution and promotion of the given product or class of products. These firms are the exeunt firm itself, suppliers, distributors, dealers and the target customers.

Broad Marketing Environment It consists of six different components namely, demographic, economic, natural, technological, political-legal, and socio-cultural environments. These forces have a major impact on the functioning of the firms constituting the task environment. The firms must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies. Marketing Mix Given the marketing environment, the marketers use number of tools to achieve desired exchange in the target markets for their products or services. These tools constitute the marketing mix. Thus, marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives. McCarthy has classified these tools into four broad groups which he referred to as the four Ps of marketing namely; product, price, place and promotion. These four Ps of marketing in fact, represent the four distinct areas of decision making from sellers point of view to influence and achieve the desired exchange. The decision areas under each of these Ps are depicted in the Figure 2 given below:

Figure 2: The Marketing Decisions: Marketing Mix

1. Product Decisions These relate to the decisions regarding product variety, quality, design, specifications, brand name, packaging, size range, services, warranties and possible returns from the product to the prospective customer. 2. Price Decisions These relate to the decisions with regard to list price, discount/allowances, credit terms and payment period allowed to the buyers. 3. Promotion Decisions These relate to deciding about the market entry strategies namely, advertisements, creating web site, participation in trade fairs, working through buying agents or overseas marketing agents. 4. Place Decisions These decisions relate to the decision regarding channel of distribution to be used for distribution of the product to reach out to the target customers. The decision in this regard would relate to identifying me chain of various links involved in the process of distribution of the firm's product in the target export market. The links in the chainintermediaries- are the import agents, distributors, wholesalers, independent large retailers like super markets, mail order houses, departmental stores etc. and the retail stores. The decision regarding the link is vital as it would influence the price decision and the profitability of the firm. It is important to understand that the marketing mix decisions are taken to influence the trade channels and the final consumers. A business firm prepares an offering (mix of products, senses, and prices) and utilises a promotion mix of sales promotion, advertising, trade fair participation, sales force, public relations, direct mail, telemarketing, and interact to reach the trade channels and the target customers. The set of marketing decisions outlined above can also be looked at from the customer's point of view and each one is designed to provide a customer benefit. According to Robert Lauterborn, the seller's four P's correspond to the customer's four C's. These are as follows:

1. Customer solution signifies that the product offered by the firm must provide solution to the customer as regards satisfaction of his needs / requirements. A study of the needs / requirements of the target customers is the starting point of all marketing programmes and leads to the product development. 2. Customer cost refers to the price at which the customer would be willing to purchase the product. It is customer who sets the price for the product in the market; the seller has to simply follow it. The seller has to take a decision whether he can sell the product at the price considered suitable by the customer. 3. Convenience: This relates to the most convenient way for the customer so buy the product. It represents the decision regarding the channel of distribution as set forth by the buyer by expressing his/her preference for a particular link in the chain of distribution for procuring the product. 4. Communication: This highlights the fact that the communication with the customer should not be in the traditional sense of promotion of the product. The customer should be treated as partner in business and the communication with him/her should be planned accordingly. This brings into sharper focus the need for developing the long term relationships with the customers. This would mean a shift from transactions-oriented business to the relations-oriented business policies and practices. In view of the intense competition in the foreign markets, the exporters should take the marketing decisions as described by four P's with the customer orientation as characterised by the four C's. The successful business firms will be those which can meet customer needs economically and with effective communication. The Marketing Concept As explained earlier, exchange is the very essence of marketing. The business firm has to plan for achieving this exchange. The effectiveness or otherwise of this exchange process would depend upon the concept of marketing used by the firm, i.e., the focus of this exchange process. Traditionally, the focus of this process was on the needs of the seller and it was known as the Selling Concept. The primary concern of the seller was to sell whatever had been produced. This made advertising, personal selling, branding and packaging as important sales promotion tools. But over the years, the focus has shifted to the needs of the customer and the concept has come to be known as the Marketing Concept.

The marketing concept holds that a business firm can achieve its goals by determining the needs and wants of the people in the target markets and delivering the desired satisfactions more effectively and efficiently than the competitors. The following statements bring out clearly the focus of the marketing concept:

(i) (ii) (iii) (iv)

"Make what will sell instead of trying to sell what you can make." "Love the customer and not the product." "Find wants and fill them." "Puffing people first."

The marketing concept rests on four main pillars, namely, target market, customer needs, integrated marketing and profitability as illustrated in Figure 3.

Figure 3: Marketing Concept Target Market The business firm cannot operate in every market and as such must identify the target market and accordingly prepare its marketing programme. Customer Needs A business firm can define its market carefully and still fail at customer oriented thinking. The latter requires the firm to carefully define customer needs from the customer point of view, not from its own point of view. Every product involves tradeoffs, and management cannot know what these are without talking to and researching customers. It is important to satisfy the customer because the sales turnover of a business firm comes from two groups of customers: new customers and repeat customers. According to an estimate, attracting a new customer can cost five times as much as pleasing an existing one. It might cost sixteen times as much to bring the new customer to the same level of profitability as the lost customer. Customer retention is thus, more important than customer attraction. A key to customer retention is customer satisfaction. A satisfied customer 8

1. 2. 3. 4.

buys again talks favourably to others about the business firm pays less attention to competing brands and advertising buys other products that the business firm later adds to its line.

Japanese businessmen say: "Our aim goes beyond satisfying the customer. Our aim is to delight the customer". In fact, this is a higher standard and a deeper quest and may be the secret of the great marketers. They go beyond meeting the mere expectations of the customer. When they delight a customer, the customer talks to even more acquaintances about the products of the business firm. The delighted customers are most effective advertisers than advertisements placed in the media. Integrated Marketing Integrated marketing involves all the departments of the business firm working together to serve the interests of the customer. This involves two things, one, the various marketing functions sales force, advertisement, marketing research, etc. must be coordinated among themselves. Too often the sales force is mad at the marketing people for setting "too high a price" or "too high a quota", or the advertising director and a brand manager cannot agree on the best advertising campaign for the brand. These marketing functions must be coordinated from the customer point of view. The other point is that marketing must be well coordinated with the other departments of business firm; they must "think customer". This means that each and every business firm manager/executive should take decisions on the basis of their impact on the customer satisfaction. If their decision would promote customer satisfaction then they should take it and otherwise they should not go ahead with their decision. Marketing does not work when it is merely a department; it only works when all the employees appreciate how they can exert impact on customer satisfaction. Profitability The purpose of marketing concept is to enable the business firm to achieve their objective of earning profits by generating larger sales volumes through customer satisfaction. Need for Export Marketing Plan Export marketing plan is a part of the overall business plan of a firm. Every business plan should start with firm's vision. Vision refers to the personal values and the core purposes which are sought to be achieved through business. It is important that the owner of a firm recognises his personal values and core purposes in the way the firm is conducting its business. It is a proper way of transferring his personal ambition to his business. This makes for 90% of the success of the business firm.

The vision should be given concrete shape in the form of business plans. The transformation of a vision - a dream into concrete plans- is called a strategy. The vision could be "being the best" or "being the biggest". This vision should be reflected in functional plans drawn for various functional areas of production, finance, research, human resources and marketing. Export marketing plan is the most interesting part of export business plan. A good product can be completely spoiled by bad marketing (particularly, the promotion). It is thus, important that when a business firm has decided to start its export business then it must formulate an export strategy, i.e., a blue print for competing with the firm's competitors in the target export market. In the development of such an export strategy, import regulations and other trade barriers must be taken into consideration as they have a critical impact on the outcome of the export venture. Marketing Strategy Strategy formulation is the core of any business activity. Marketing strategy is often defined as the selection of a target market and the determination of the product, price, promotion and distribution policies that the enterprise must implement. The marketing strategy is in effect a blueprint for competing on target export markets. An explicit export marketing strategy would provide a unified sense of purpose to the export firm. An export marketing plan is required to implement the marketing strategy. Export Marketing Plan Defined An export marketing plan is step-by-step guide to strategy implementation. It addresses strategic issues and outlines the corresponding operational actions to be taken. It specifies targets for each step. The plan should answer all questions on how the export firm's marketing strategy is to be implemented and direct the enterprise in attaining the strategic objective. A business firm's marketing plan and its export marketing strategy are therefore, closely inter-related. As the various steps in the plan are put into action, interaction between the two should be continuous. The development of an export marketing plan requires decisions on the role that exporting is to play in the firm's growth, the scope and nature of the firm's product lines and markets abroad, precise export performance goals and the level of management commitment to the export venture. A plan is only as good as the quality of the basic data gathered and the analysis undertaken during the planning process. It is important to involve all levels of management in this process and to ensure their total commitment for the successful implementation of the export plan.

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Contents of Export Marketing Plan A typical export marketing plan focuses on the following aspects: 1. 2. 3. 4. 5. 6. 7. Marketing objectives Market segmentation and positioning, Market research, Characteristics of the product line, Export pricing, Distribution channels and Promotional strategies.

The plan should outline flee actions required in sufficient details: it should set out export targets, budgets and activity schedules as well as assign responsibilities for its implementation. 1. Marketing Objectives The first step in developing an export marketing plan is to establish export marketing objectives. These objectives should be attainable, realistic and clear and should be communicated throughout the business firm. Since they will determine the business firm's direction-and its activities, management will have to devote considerable time and effort to setting them. An analysis of the business firm is strengths, weaknesses, opportunities and threats, or a "SWOT' analysis for short, can provide a guide to management for developing effective and realistic objectives. A SWOT analysis reveals the competitive advantages of the business firm as well as its prospects for sales and profitability. It is usually based on an evaluation on facts and assumptions about the business firm and on market research. A business firm's strengths are its competitive advantages that will give it an edge in export markets. Its weakness are its constraints, which may inhibit marketing activities in certain direction. For example, a business firm having shortage of readily available funds cannot undertake a larva scale promotional campaign. The assessment of a business firm's strengths and weaknesses in relation to the competition is essential for competitive positioning. This assessment from the point of view of the competition should consider: (a) (b) (c) (d) (e) (f) (g) technology in use design styling and trademarks product quality, quality control and products life cycle completeness of the product line customer 's service raw material supplies distribution structure and cost. 11

The review of opportunities and threats in the market should complement the analysis of the business firm's strengths and weaknesses. The aim is to identify the best business opportunities and directions of growth. A business firm's opportunities on possible markets can be evaluated in terms of firm's customers, competing products, the market structure and competing suppliers. Such an evaluation may reveal complementarily between the business firm is strengths and market opportunities. Finally management should examine the so called marketing threats on the market being considered. These should include import rules and regulations relating to tariffs, quotas, non tariff measures and so on. Management should also determine whether the markets under assessments are mature markets, that is, these are already well supplied and do not therefore, provide a readily identifiable niche for the business firm's products. 2. Market Segmentation An export marketing plan is not complete until the business firm has identified its target segment in the export market. Any large market would have different market segments that differ substantially from each other. Different consumer groups exist according to income levels, age, lifestyle, occupation and education. A crucial element of the export marketing plan is to identify the segment of the customers that the business firm intends to reach. In making this choice, the business firm should answer the following questions; Who will buy its products in the export market? Why will they buy these products? Where are these customers located? What are their characteristics? In this exercise it will be helpful to concentrate on within-segment similarities and between segment differences. The business firm should choose the segment with the requirements that fit its product specifications best. For example, if it produces highquality premium priced porcelain ware, its target segment is likely to be high-income, well educated young consumers. A target market segment should be large enough to be profitable. An assessment of the size of the segment should, therefore, be made before a final decision is taken to include it in the marketing plan. 3. Market Research To succeed in export trade, a business firm must identify attractive export markets and estimate the export potential for its products in them as accurately as possible. Market research and forecasting are therefore, of great importance. Factors to be evaluated include the size of the market, the characteristics of demand, consumer requirements, trade channels and the cultural and social differences that may affect the firm's way of doing business with the market.

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A small producer contemplating entering export trade may not be willing or able to allocate resources to expensive data collection methods. Firms in that situation can use published data to assess the market. They should, however, first evaluate the data for reliability and accuracy. 4. Product Characteristics The business firm should next consider the products that it has to offer. An analysis should be made of any modifications required in the products, packaging changes needed, labeling requirements, brand name and after sales services expected. Many products must undergo significant modifications if they are to satisfy consumer and market requirements abroad. Other products require changes at the discretion of the producer only to enhance their appeal on export markets. 5. Export Pricing In setting an export price, the business firm should consider additional costs that do not enter into pricing for the domestic market. These include such items as international freight and insurance charges, product adaptation costs, import duties, commissions for import agents and foreign exchange risk coverage. Export pricing analysis should begin with these questions: What value does the target market segment place on the business firm's product? How do differences in this product add to, or detract from, its market value? In practice, these are difficult questions to research, but analysing the prices and product characteristics of existing competitive products may reveal critical information. The analysis may show that it is not the cost of materials that determines the product's value, but rather the customer's perception of that value. 6. Distribution Channels The potential exporter should consider the following distribution options: a. Exporting through a domestic exporting firm that will take over full responsibility for finding sales outlets abroad. b. Setting up its own export organization. c. Selling through representatives abroad. d. Using warehouses abroad. e. Establishing a wholly owned sales subsidiary.

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The choice of distribution channel will depend on the business firm's export strategy and the export market. An export strategy is a blueprint for selling on target markets. If the firm intends to export a product that has a specific feature mat should be a good selling point, to a market segment that is already well supplied, it may need to create greater awareness of the product through an appropriate promotional strategy. In this case, it may be better to appoint an agent who does not handle many products and can allocate the time needed to promote that product. Distribution channels should be chosen carefully and efforts should be made to maintain good relations between the parties concerned. 7. Promotion The export marketing plan should provide details on the following aspects of the promotional strategy: publicity methods; advertising (who will be responsible for it, and how much the firm can allocate to it): trade missions: buyers' visits; other promotional activities (which methods to use, how much to allocate); and local export assistance. It is important to emphasise that the success of export marketing plan would depend upon adequate customer support and detailed time table for its implementation. Customer Support An export effort will be successful to the extent that the firm provides effective customer support. An exporter should remember that even the best product may fail without the customer support to trade intermediaries and the end user. In addition, customer support creates goodwill and loyalty to the exporter. Timetables A budget must be established for the export marketing plan. This should cover such basic aspects as sources of financing, use of the financial resources and a forecast of the export venture's financial position after three to five years. A detailed timetable of activities must also be drawn up.

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Developing Export Marketing Plan: Some Practical Suggestions The following practical suggestions should be kept in view while developing the export marketing plan: 1. Exporters should be innovative That is to say, the exporters should innovate new product designs, strategies and promotional policies to improve the level of exports. This helps them to make 'value rich offers' that are better than the best. 2. Market niching may be the exporter's best option Developing country exporters of manufactured products rarely occupy a dominant position on international markets. The exporter should therefore, aim at a market niche rather than at the mass market. One advantage of market niching is that it does not require elaborate and expensive market investigations before market entry. A simple study of potential customer groups may be adequate. 3. Exporters should seek value-adding product strategies Another implication of market niching is that attempting to achieve price leadership may not be the exporter's best option. Product differentiation, branding, distinctive styling, durable packaging, outstanding customer service, etc. could provide comparative advantages on the export market and, therefore, eliminate the need to compete solely on the basis of price. 4. Exporters should know the key buyers in the target market Successful exporting often results from establishing strong relations with a key intermediary with access to distribution channels in the export market. This intermediary may be an importer, broker, trading business firm, or the business firm's distributor/agent. Forming a business alliance with a reputable partner that can channel export products to appropriate distribution points is one of the most important tasks in exporting. Such a task would fall under what is termed a "push" strategy. A contrast is provided by a "pull" strategy which requires the exporter to be in direct contact with end-users or consumers. The latter is frequently a costly strategy and is therefore not feasible for the small and medium-sized enterprise. 5. Exporters should choose their markets carefully The choice of market can make the difference between success and failure in exporting.

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6. Exporters should clarify their motives for exporting and set their objectives at the outset. They should know why they want to export and set their goals. Hopefully, the export venture will contribute to both their profit-seeking and market expansion objectives. 7. Exporters should consider export market development a long-term investment. Managers learn the tasks of exporting gradually, familiarity with export markets is gained over time and business relationships evolve and are strengthened over a period of time. Sustained efforts are therefore, essential in export marketing. 8. Planning and strategy development are essential for success in the long-run in export trade. 9. Exporting requires technical expertise The export Inn should have the requisite technical expertise, in addition to careful planning and suitable products. Managers sometimes underestimate the complexity of exporting tasks, the risks involved and the consequences of failure. A realistic understanding of the commitment required to succeed in an export venture is essential. 10. No enterprise should seek entry into an export market until it is ready Any attempt at exporting without experience in domestic marketing is bound to fail. Research suggests that enterprises gain important skills, knowledge and confidence at home which often prove beneficial in the export markets as well. 11. The responsibility for the export effort should be assigned to a key staff member, usually known-as Export Manager Experience suggests that an export venture is more likely to succeed when a key person in the enterprise is assigned the export task. This person can play a combination of roles as change agent, motivator, resource person, organizer and so on. Starting Export Business: Tips for Export Marketing Export markets are different from domestic markets. These markets have different sociocultural environment; different legal system; different styles of negotiation; different requirements for buying; different regulations governing imports; owning and disposing of property; a different currency that might fluctuate in value; conditions of corruption or political favouritism and so on. It is thus, very important that the business firm should keep in view these special characteristics of export markets while taking decision to establish export business. An entrepreneur should consider the following useful tips while deciding to establish export business:

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1. Select the product and the target market on the basis of desk research even before considering to export. 2. Once a market has been decided upon, the entrepreneur should catty out in-depth study of the target market. 3. The aim of the first visit to the foreign market should not be to do business or looking for orders. Rather, the first visit should be used to improve the preparation for entering the market. 4. Evaluate all the information collected and then formulate a marketing strategy and develop a marketing plan. 5. Gaining foothold in foreign markets can only be effective on a long term basis. Thus, the entrepreneur should have the strong financial base. 6. The foreign buyers cannot afford to lose face and credibility by deterioration in quality or alternatives to price and/ or late deliveries. It is important to understand the requirements of the foreign buyer before making commitments. 7. In exports, consumers are quality and price conscious in a market which enjoys large and varied supplies. Success or failure in business will depend upon understanding this sensitivity of the foreign buyer. The entrepreneur should adopt a consumer oriented approach to manufacturing and selling. 8. International markets are trend sensitive. Designs frequently change and the products may not remain in demand. It is therefore, necessary to be aware of this trend and efforts should be made to keep up-to-date with the market trends. 9. Foreign markets, particularly in the developed countries, are often highly segmented into different age and income groups. The exporter should select the right market segment and accordingly position the product in the market. Cultural Aspects of Export Business In export business, it is very essential to understand the behaviour pattern of the foreign consumers and buyers. The behaviour of people in any country is mainly influenced by their culture. A clear understanding the consumer behaviour helps in development of the items for the purpose of exports. On the other hand, understanding the business behaviour and practices of foreign buyers provides a vital input for formulation of a competitive marketing strategy. Promotion of exports depends to a great extent on the marketing strategy. There is thus, a need to study the culture of people in foreign markets and their impact on the business behaviour of the foreign buyers.

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Every country, every community has a culture of their own. Culture is defined as the sum total of the values, customs, practices and taboos observed by the people of a country/community. The culture of a nation or community affects the way we live, the way we die, the way we organise and the way we perceive. It is a normal behaviour to say that what is like our own culture is normal and 'good' and what is different from our own culture is abnormal and 'bad'. The culture is learnt: not inherited. Culture of a nation is generally very stable. The culture of a nation affects the way the people behave in business, i.e., business practices, values, etc. While planning for export business the managers and entrepreneurs should understand the business culture of the prospective market. That is to say, they should understand the following in particular: 1. The way the foreign customers think about and use certain products. 2. The business behaviour of import firms. 3. Business etiquette.

Use of Products The following examples illustrate the way foreign customers think about and use certain products: 1. The German and the French people eat more packaged food than the Italians. 2. The average French man uses almost twice as many cosmetics and beauty aids as does his wife. 3. Phillips succeeded in marketing coffee makers and shavers in Japan only after it had reduced the size of its coffee makers to fit into smaller Japanese kitchens and its shavers to fit smaller Japanese hands. 4. General Foods Tang initially failed in France because it was positioned as a substitute for orange juice at breakfast. The French drink little orange juice and almost none at breakfast. 5. P&G's Crest toothpaste initially failed in Mexico when it used the U.S. campaign. Mexicans did not care as much for the decay-prevention benefit, nor did scientifically oriented advertising appeal to them. 6. S.C. Johnson's wax floor polish initially failed in Japan. The wax made the floors too slippery, and Johnson had overlooked the fact that Japanese do not wear shoes in their homes.

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Business Behaviour The exporters should respect the culture and traditions of the country with which they want to do business. Since every society has its own norms for doing business, the exporters should be fully aware of the customs and practices of doing business in the foreign markets. This should cover the following aspects: 1. 2. 3. 4. 5. 6. 7. Punctuality How to address the individuals? How to dress up? Greeting practices Conversation with the buyers Fraternizing Negotiating styles

The following examples would illustrate the above points and their variations from one market to another: 1. Visiting exporters should value the time of their business partners and should always arrive on time to business discussions. They should do this even if the other party is not known for punctuality. 2. Different countries have different practices for addressing people in some countries, one can come down to first names right away: in others, one will have to be more formal and even use titles as a matter of course. There may also be special rules about addressing women. It is desirable that we address males as Mr... and a woman as Madam... in business meetings. 3. In some countries, the dress code is formal; in others, it is informal or casual. Are there any special conventions for women on matters of dress? Sometimes formal discussions are followed by informal dinners or get-togethers. Here again, customs differ on the dress code, going from formal to casual. 4. Different forms of greetings are used in different places. Shake hands may be accepted in one country, but frowned upon in another; bowing may be the formal greeting in some. Exporters should be sure that they know what the correct practice is for greeting women. In some countries one may not shake hands with them. 5. The negotiating styles and the practices for the conduct of business are different in different countries. The following examples will illustrate these varying practices.

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a.) In face-to-face communications, Japanese businessmen rarely say 'No' to the other party and as a result, the other party is confused and may not know where does it stand. The Japanese do not hold negotiations individually; they would always come in a group of two or more. They would not reveal their mind during negotiations because no individual takes the final decision in business matters. The Japanese always take business decisions in group on the basis of consensus. The negotiations are long drawn with Japanese as they start business negotiations only after there is a consensus in the business firm that they should proceeds to conduct the business with the foreign exporter. Once this decision is taken than the Japanese businessman would like to ensure whether it is possible to establish a long term relationship of trust with the foreign exporter. If this condition is satisfied after holding general discussion with the foreign exporter, then the Japanese businessman would hold business negotiations. Exporters should recognise this very important cultural dimension of the behaviour of Japanese businessman and act accordingly. b.) The Americans come to the point quickly whereas Japanese may find this behaviour offensive as they take time to reach the stage of business negotiations. When American executives exchange business cards, each usually gives the other's card a cursory glance and stuffs it in a pocket for later reference. In Japan, however, executives dutifully study each other's cards during a greeting, carefully noting business firm affiliation and rank. They give their card to the most important person first. c.) In France, wholesalers do not want to promote a product; they depend on retailers for this purpose. Thus, any strategy to promote a product around wholesalers will fail. It is interesting to note business people in France prefer top down and autocratic decision making and so it is essential for a visiting business executive to focus his attention on the top person in the organization. d.) In Germany, the chief executive officer does not hold direct negotiations. He would first ask his deputy to discuss matters at the preliminary level and then bring them to him for decisions. e.) Business confidentiality can be problem during negotiations in Italy as they seldom maintain privacy of the negotiations within the firm. Italians prefer formal clothing in business to exteriorise the feeling of confidence during business discussions. There is little delegation of authority or effective communications between different levels of managers in most Italian firms. Employees have little say in decision-making; managers at the top level take the 20

decisions. They are not used to delivery of goods on time. They are also very argumentative. Italians are more concerned with aesthetics of presentation - clear and exact during presentation. They prefer good faith in bargaining - polish and elegance count for a great deal in business negotiations. Italians prefer to look each other in the- face. They read opponent's expression to gauge his/her position and can thus, decide when to increase demands or when to retreat. They have cultivated the art of appearing rich, even when they are not. They would buy very costly things to create a spectacle of illusion.

Business Etiquette The visiting exporters from India should understand the etiquette for doing business in foreign markets. It is quite natural what is considered polite in India may be regarded as rude elsewhere. Such embarrassing situations in business can be avoided if the visiting exporter from India is aware of the etiquette for doing business in the foreign market. The prospective buyer will be highly impressed if the exporter reflects in his behaviour the understanding of culture of the foreign buyer's country. It needs to be understood that the personal image of the exporter created through his/her conduct has a direct bearing on the image of his/her business firm. The golden rule of business etiquette is to be openminded, nonjudgmental and flexible. While travailing abroad, exporters should keep the following points in mind: 1. They should be more formal than they are in India. 2. They should show full respect of their host when making introduction about themselves or their team members. 3. They should never call individuals by their first name unless invited to do so. 4. They should always use correct pronunciation 5. It is discourteous to say 'No' to the invitation of the foreign buyer for lunch or dinner. 6. It is desirable to carry a bouquet of flowers particularly if the host is a German buyer. 7. Exporters should carry with them a few gifts while going abroad for business meetings. It is a good practice to give gifts in return to the hosts.

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8. Business cards should be viewed as a statement about the status of a person. As such it should be given due respect. It is considered highly undesirable to bend, write on or put away the business cards while in the business firm of the person who presented the card. 9. The exporter should bear in mind that there are different types of hand-shakes and degrees of bowing. 10. If you don't speak French, apologize for your lack of knowledge. The French are quite proud of their language and believe that everyone should be able to speak it. 11. Germans are also sticklers for titles. Try to introduce people using their full, correct title, no matter how long it is. Also, Germans shake hands at both the beginning and the end of business meetings. 12. Most Japanese businesspeople know what will be discussed at a meeting, how everyone feels about it, and how it will affect their business before they even get there. The purpose of a meeting is to reach consensus. A flexible agenda is necessary so that discussions flow more freely. Foreigners should not try to adhere religiously to a set agenda. 13. While doing business with Koreans, Americans need to be sensitive to Korea's historical relationship with Japan, which made a virtual colony of the Korean peninsula. Koreans do not like foreigners to assume that their culture is the same as Japan's. However, Koreans do have great respect for Japanese business acumen, and like the Japanese they still observe Confucian ethics based on respect for authority and the primacy of the group over the individual. 14. Although individual Latin American countries may vary in terms of business protocol, there are some commonalities. In Latin America, it's de rigueur to make initial face-to-face contact through an outside liaison who knows the customer's business firm well. The liaison, or enchufe, introduces the salepeople or business representatives to key players. An exporter can contact embassies or High Commissions for any country-specific information required on business etiquette.

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Business Women and Conduct of Business Businesswomen all over the world may face problems and prejudices in a business scenario still dominated by men, particularly in access to finance. However, business is business and if a good business plan is developed for discussion with prospective partners in target countries, presentation by a woman should in principle raise no problems. One should nevertheless know that women often have to perform better in order to obtain the same results as businessman. Regardless of the country in which a woman may choose to conduct business, certain rules of thumb apply: (a) (b) (c) (d) Dress conservatively. Do not be coy or flirtatious. Be careful and cautious when dining alone. Do not give business gifts unless they can be used by the recipient's family. (e) Offer but do not insist on the other side joining during business lunch or dinners.

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