GUIDELINES
FOR
STARTING AN EXPORT
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ECONOMY
• Exports play a crucial role in the economy of the
country. In order to maintain a healthy balance to
trade and foreign exchange reserve it is necessary
to have a sustained and high rate of growth of
exports. Although trade policy is the jurisdiction
of the Government of India, the role of the State
Governments in its effective implantation is less
significant because export production is a local
activity, which is influenced by policies of the
State Government.
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DEFINITION OF EXPORTS
“Exports can be defined
as sale of goods and services
from one country
to another country.”
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WHY TO EXPORT ?
WHAT TO EXPORT ?
WHERE TO EXPORT ?
&
HOW TO EXPORT ?
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WHY,WHAT,WHERE &
HOW TO EXPORT ?
1 . Product in declining stage of Life Cycle in domestic Market (Pre- Liberalization)*.
2. International Market is vast and Internal market is limited hence, “EXPORT
VOLUMES”.
3. Building – Up of image & reputation in International Market as an expansion
strategy.
4. Foreign markets invite innovative and cost-oriented companies to buy quality
products at a cheap price.
5. High – Tech oriented companies enter into less developed countries to skim the
market.
6. Restrictions in domestic market force companies to view export as an alternative.
7. Government pressurizes companies to export to earn valuable foreign exchange to
pay for Import Bill.
8. Government is keen on reducing the adverse Balance of Payment position.
9. Government extends incentives and facilities to dynamic exporters to export their
surplus capacity.
10. Many firms go for overseas market for availing of import facilities to modernize
their plant.
* Now, you can start “EXPORTING” from day 1
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MARKET SELECTION
• Before the company pursues market expansion opportunities by
entering new geographic markets, executives and managers must
first analyze the global environment. The company exists in a world
of more than 200 countries and territories, each of which differs
from all the others in some respects. At the same time, there will
be ways in which various countries and the people who live in
them, resemble each other as well.
• The process of target – market selection involves narrowing down
potential country markets to a feasible number of countries and
market segments within them. Rather than try to appeal to
everyone, firms best utilize their resources by……
• 1 . Identifying potential markets for entry and
• 2. Expanding selectively over time to those deemed attractive.
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FIVE STEPS OF MARKET SELECTION
•
•
•
•
•
IDENTIFICATION
SCREENING
ESTIMATING MARKET POTENTIAL
ESTIMATING SALES POTENTIAL
IDENTIFYING SEGMENTS
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IDENTIFICATION
•
•
*
If markets are similar in their characteristics, the international marketer could enter any one
of the potential markets.
However, differences between markets exist
in three dimensions………..1. Physical.
2. Psychic.
3. Economic.
Physical distance is the geographic distance between home and target countries, its impact
has decreased as a result of recent technological developments.
•
Psychic or cultural distance refers to difference in language, tradition and customs between
two countries.
•
Economic distance is created by differences in the economic environments of the host
country and the target market.
•
Generally the greater overall distances or difference between the two countries, the less
knowledge the marketer has about the target market.
•
The amount of information that is available varies dramatically. For eg, although the marketer
can easily learn about the economic environment from secondary sources, invaluable
interpretive information may not be available until the firm actually operates in the market.
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SCREENING
The four stages of Screening Process are……
1 . Preliminary Screening.
- Export Ban.
- Import Ban.
- Market Accessibility.
- Preferential Treatment.
- Location.
- Product Specifications.
2. Estimation of Market Potential.
3. Estimation of Sales Potential and
4. Identification of Segments.
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PRELIMINARY SCREENING
* The preliminary screening process must rely
chiefly on secondary data for country specific
factors as well as product and industry specific
factors.
1). Country specific factors typically include those
that would indicate the markets overall buying
power.
2). Product specific factors narrow the analysis to
the firm’s specific areas of operation.
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1. EXPORT BAN
There are a few countries / areas to which exports are
not currently made by India. Eg : Iraq & few items to
Libya. Hence, such countries should straight away be
excluded from the list of potential market.
2. IMPORT BAN
There are various countries in the world, which do not
allow import of the items in which one should also be
avoided from the list of potential markets. For this
purpose, import policy of other countries has to be
referred, which is difficult to get.
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3. MARKET ACCESSIBILITY
There are countries, which are comparatively less accessible in terms of
export regulations in comparison to the countries where imports are
freely permissible. Similarly, imports from particular countries might be
preferred under bilateral trade or barter agreements in comparison to
imports from India. Hence, such countries should also be avoided from the
export marketing effort.
4. PREFERENTIAL TREATMENT
Whereas some countries do not prefer imports from India, there are few
countries which accord preferential treatment to our products. The
countries which have adopted the scheme of Generalized System of
Preferences (GSP) are giving a preferential treatment to products from
developing countries like India, Belgium, The Netherlands, Luxembourg,
UK, Ireland, Denmark, Japan, Australia, USA etc are therefore
comparatively easy markets for us.
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5. LOCATION
The countries that are located near to us are comparatively better
markets that the countries located at a long distance. Selling to
distantly located markets becomes difficult on account of nonavailability / irregular shipping services besides higher freight rate,
thereby making the goods uncompetitive.
6. PRODUCT SPECIFICATIONS
One should prefer the countries where products of the
specifications similar to ours are sold. Hence, countries requiring
goods with different specifications should be avoided as production
of items according to the changed specifications involves money
and time.
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ESTIMATING MARKET POTENTIAL
• Total market potential is the sales, in physical or
monetary units, that might be available to all
firms in an industry during a given period under a
given level in industry, marketing effort and given
environment conditions. The international
marketer needs to assess the size of existing
markets and forecast the size of future markets.
Because of the lack of resources, and frequently
the lack of data, market potentials are often
estimated using secondary database analytical
techniques.
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ESTIMATING SALES POTENTIAL
•
Even when international marketer has gained an understanding of markets with
the greatest overall promise, the firm’s own possibilities in those markets are still
not known. Sales potential is the share of the market potential that the firm can
reasonably expect to get over the longer term. To arrive at an estimate, the
marketer needs to collect the product and market specific data.
•
These will have to do with…….
COMPETITION
: Strength, likely reaction to entry.
MARKET
: Strength of barriers.
CONSUMERS
: Ability and willingness to buy.
PRODUCT
: Degree of relative advantage, compatibility,complexity
,trialability.
CHANNEL STRUCTURE
: Access to retail level.
•
The marketer’s questions can never be fully answered until the firm has made a
commitment to enter the market and is operational. The mode of entry has special
significance in determining the firm’s sales potential.
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IDENTIFYING SEGMENTS
• Within the markets selected, individuals and organizations
will vary in their wants, resources, geographical locations,
buying attitudes and buying practices. Initially, the firm may
cater to one or only a few segments and later expand to
other especially to the product in innovative segmentation
is indicated when segments are indeed different enough to
warrant individualized attention are large enough for profit
potential and can be reached through the methods that the
international marketer wants to use.
• Once the process is complete for a market of group of
markets, the international marketer may begin again for
another one. When growth potential is no longer in market
development the firm may opt for market penetration.
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Thanks & Regards……….
• Ms. MEDHA KULKARNI
Director
MCCIA – Women’s Entrepreneur’s Wing
E-Mail ID : medhak@mcciapune.com
• Mr. BHASKAR DASTIDAR
Consultant : Financial Services
Export Import Bank of India.
E-Mail ID : bhaskar.dastidar@indiatimes.com
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