Sources of Experimental Errors - Market Research

After having described the different types of experiments, we now turn to sources of potential errors in experiments.

There are several errors which may distort the accuracy of an experiment. These are briefly described below.

• History: 

History refers to the effect of extraneous variables as a result of an event that is external to an experiment occurring at the same time as the experiment.

For example, consider the design O1X O2 where O1 and O2 represent the sales affected by salesmen in an enterprise in the pre-training period and post-training period, respectively and X represents a sales training programme.

This experiment is expected to indicate the effectiveness of the sales training programme by showing higher sales in the post-training period as compared to sales in the pre-training period.

If the general business conditions have improved during the training period, when the sales could have risen even without the sales training programme.

• Maturation: 

Although maturation is similar to history, it differs from it, as the actual outcome is usually less evident.

Maturation refers to a gradual change in the experimental units arising due to the passage of time.

In our earlier example of training programme, salesmen have become more matured and more experienced due to the passage of time.

As a result, the improvement in sales performance cannot be attributed to the training programme alone.

Another example could be of consumer panels.

The members of such panels forming test units may change their purchase behaviour during the period when an experiment is on.

As the time between O1 and O2 becomes longer, the chance of maturation affects also increases.

• Pre-measurement effect: 

This error is caused on account of the changes in the dependent variable as a result of the effect of the initial measurement.

For example, consider the case of respondents who were given a pretreatment questionnaire. After their exposure to the treatment, they were given another questionnaire, an alternative form of the questionnaire completed earlier.

They may respond differently merely because they are now familiar with the questionnaire. In such a case, respondents’ familiarity with the earlier questionnaire is likely to influence their responses in the subsequent period.

• Interactive testing effect: 

This error arises on account of change in the independent variable as a result of sensitizing effect of the initial measurement. In other words, the first observation affects the reaction to the treatment.

For example, consider the case that respondents have been given a pretreatment questionnaire that asks questions about various brands of hair oil.

The pretreatment questionnaire may sensitise them to the hair oil market and distort the awareness level of new introduction, i.e. the treatment. In such a case, the measurement effect cannot be generalised to non-sensitised persons.

• Instrumentation: 

Instrumentation refers to the changes in the measuring instrument over time.

For example, consider the case when the interviewer uses a different format of a questionnaire in O2 as compared to that used in O1 .

This would case an instrumentation effect.

A similar example could be of an interviewer who in his enthusiasm and interest in the survey in O1 , explained to the respondents whenever there was any difficulty.

But the same interviewer gradually loses his interest in the survey and does not explain properly to the respondents in the post-measurement period-O2 .

Yet another example could be when sales aremeasured in terms of revenue and the company has increased the prices of its products in the intervening period.

• Selection bias: 

Selection bias refers to assigning of experimental units in such a way that the groups differ on the dependent variable even before the treatment.

Such a situation arises when test units may choose their own groups or when the researcher assigns them to groups on the basis of his judgment.

To overcome this bias, it is necessary that test units be assigned to treatment groups on a random basis.

• Statistical regression: 

Statistical regression effect occurs when test units have been selected for exposure to the treatment on the basis of an extreme pretreatment measure.

For example, a training programme may be devised only for salesmen whose performance have been very poor.

Sales increases in the post-treatment period may then be attributed to the regression effect.

This is because random occurrences such as weather, health or luck may contribute to the better performance of salesmen in the subsequent period.

Thus the effect of training programme may get distorted on account of this factor.

• Mortality: 

Mortality refers to the loss of one of more test units while the experiment is in progress.

It may be emphasised that mortality leads to the differential loss of respondents from the various groups.

This means that respondents, who left, say group A are different from those who left group B, thus making the groups incomparable.

In case the experiment pertains to only the group, mortality effect occurs when responsiveness of the respondents who have remained in the experiment differs from responsiveness of those who have ceased to be in the experiment.

Considerations for hiring Outside Marketing Research Agencies

There are several dimensions which need to be kept in view while selecting an outside agency for conducting Marketing Research.

These considerations may be enumerated as below:

1. Technical Expertise 

The marketing researcher should know who is to undertake the study and what is his proficiency in marketing research.

The client firm may find that a research agency is good at basic studies but is not competent enough to undertake complex studies.

Some research agencies are poorly staffed and as such they should be avoided.

2. Objectivity 

The question of objectivity is very important. Outside agencies should be reputable for their objective approach in research projects.

3. Confidentiality 

The client firm must ensure that the research agency maintains strict confidentiality regarding the project.

4. Economic Factors 

A client firm may invite research proposals from more than one agency.

In such a case, it would choose the most economical agency.

However, client firms should not overlook the fact that some agencies are very economical, but at the same time their quality is also poor. Quality should not be compromised.

5. Timely submission of reports 

The client firm should enquire about the reputation of the research agency especially in relation to its timely submission of reports.

Sometimes, outside agencies are quick in taking up assignments from clients but are not so prompt in carrying out the task.

6. Experience of The Supplier

The client firm should ascertain the standing of the agency. While general experience is very important, relevant and specific research experience is what should be looked for. 

7. Reputation of the agency 

It is necessary to ensure that the agency has a good reputation. 

This consideration is important for lending credibility to the research findings. 

This is of special importance particularly when the client firm intends to use the study for creating an impact. 

Since no single agency is likely to be strong on all these considerations, it is necessary that the client firm adopt a reasonable approach in this regard. 

It should ascertain which of the above criteria are crucial for its research project and then to select an agency

How Attracting Customers Made Me A Better Salesperson

Note the words that are emphasized in the paragraphs that follow.

I once had a friend from Colombia who wanted to sell coffee from his country in the Washington, D.C., area but didn’t know how to get into the market.

Finally, he succeeded on the basis of service and distribution.

He began importing coffee from Colombia and freestanding espresso machines from Italy, placed the machines in high-traffic locations, and stocked them with his Colombian coffee.

 More recently, I worked with an organization in Brazil that wanted to sell frozen açaí pulp in the United States.

Açaí is a “superfood” berry grown mainly in the Amazon region of Brazil and is very high in antioxidants.

About the time I started working with this product, early in 1996, some firms that marketed açaí products managed to have articles published in magazines, and one company arranged to have it featured on The Oprah Winfrey Show.

After that publicity, sales shot up and buyers were actually competing for the frozen pulp.

Goldman Jewelry, a company based in Israel, exports jewelry from the United States to numerous other countries.

The company’s secret is to make the product available everywhere by putting it on an online auction site.

Because Goldman’s overhead is low and its methods of promotion (eBay) and distribution (basically mail) are economical, it can offer lower prices than most of its competitors.

It nearly always helps to have the lowest prices, although this is hard for independent exporters to do

After the events of September 11, 2001, the demand for security equipment began expanding worldwide. A U.S. Department of Commerce study identified 44 ports, 47 airports, and other facilities that needed this kind of equipment just in the country of Spain.

Large and small exporters began vying for the business, and several were successful because they had products that were urgently in demand. Of course, pricing was important but not nearly so much as having products that would do the job well.

At this point I should say a word about bribery, which is an all-too-common way of influencing buyers of products and services.

It is so pervasive in many countries that the U.S. government has listed it as a barrier to trade.

I suggest avoiding this kind of activity, even if you lose the business.

First, you may be in violation of U.S. law, depending on whom you bribe and how you do it.

There is more information about antibribery legislation in the section on export regulations.

Second, if you are a beginner, you won’t know how to play the game and will probably make mistakes.

Anyone can ask you for money or favors and say that he or she can arrange for your offer to be accepted, but not everyone has the power or influence to make good on such a promise.

I suspect there are people who make their living by offering to arrange sales in return for money or other compensation and then simply say that such and such happened and they couldn’t get it done.

Third, if you pay a bribe and make a sale, you will find it very hard to avoid making similar payments on future sales to the same customer.

Once you start to give something, it’s hard to stoping it.

Of course, it is common in most businesses to pay commissions on sales.

Unlike a bribe, a commission is usually on top of (not under) the table.

Everyone knows it is being paid and accepts it as a legal and ethical cost of doing business.

Global Marketing Strategies for Indian Firms

With rare exceptions, products just don’t emerge in foreign markets overnight—a firm has to build up a market over time. Several strategies, which differ in aggressiveness, risk, and the amount of control that the firm is able to maintain, are available which most of the Indian firms adopt while entering in global marketing. These are:

Exporting is a relatively low risk strategy in which few investments are made in the new country. A drawback is that, because the firm makes few if any marketing investments in the new country, market share may be below potential. Further, the firm, by not operating in the country, learns less about the market (What do consumers really want? Which kinds of advertising campaigns are most successful? What are the most effective methods of distribution?) If an importer is willing to do a good job of marketing, this arrangement may represent a "win-win" situation, but it may be more difficult for the firm to enter on its own later if it decides that larger profits can be made within the country.

Licensing and franchising are also low exposure methods of entry—you allow someone else to use your trademarks and accumulated expertise. Your partner puts up the money and assumes the risk. Problems here involve the fact that you are training a potential competitor and that you have little control over how the business is operated. For example, American fast food restaurants have found that foreign franchisers often fail to maintain American standards of cleanliness. Similarly, a foreign manufacturer may use lower quality ingredients in manufacturing a brand based on premium contents in the home country.

Joint venture. Here, a firm partners up with a firm already in the country. Each partner contributes. Usually, the host country partner contributes expertise about the country and possibly some manufacturing facilities. The “guest” partner usually contributes technology and/or financial resources. This reduces risk and investment to some extent, but also reduces the control since agreements must now be made to satisfy the partner.

Direct entry strategies, where the firm either acquires a firm or builds operations "from scratch" involve the highest exposure, but also the greatest opportunities for profits. The firm gains more knowledge about the local market and maintains greater control, but now has a huge investment. In some countries, the government may expropriate assets without compensation, so direct investment entails an additional risk. A variation involves a joint venture, where a local firm puts up some of the money and knowledge about the local market. 

Hamel and Prahalad (1996) suggest the firms operating globally that succeed are those that perceive the changes in the international environment and are able to develop strategies which enable them to respond accordingly. The firms that will do well will base their success largely on the early identification of the changes in the boundaries of markets and industries in their analysis of their international marketing environment. Management foresight and  organisational learning are therefore the basis of a sustainable competitive advantage in global markets 

The increasing globalisation of business, particularly because it is being driven by information technology, has led many firms to reexamine what contributes to their global competitive advantage. They have recognised the fact that it is the pool of personal knowledge, skills and competencies of the firm’s staff that provides its development potential and they have redefined themselves as ‘knowledge-based’ organisations. Moreover, these firms have acknowledged that they must retain, nurture and apply the knowledge and skills across their business if they wish to be effective in global markets. The growth potential of international markets can only be exploited if the firm becomes a learning organisation in which the good practice learned by individual members of staff in one market can be leveraged and built upon throughout its global activity.

However, firms are increasingly vulnerable to losing these valuable personal assets, because of the greater mobility of staff, prevalence of industrial espionage and the security risks and abuse associated with the Internet. Moreover, with the increase in communications it is becoming more difficult to store, access and apply the valuable knowledge that exists amongst the huge volume of relatively worthless data that the company deals with. Consequently, effective knowledge management is now critical for success. This means having Web-enabled database systems that facilitate effective data collection, storage in data warehouses and data mining (the identification of opportunities from patterns that emerge from detailed analysis of the data held). 

Successful global operators use the knowledge gained to assess their strengths and weaknesses in light of their organisational learning and ensure they have the company capability and resources to respond to their learning in order to sustain their competitive advantage. This is particularly important in international markets as, for example, customer and brand loyalty may be much stronger in certain markets than others, and products that may be at the end of their life in the domestic market may be ideal for less sophisticated markets. In the dynamic international markets, therefore, if a firm is to succeed it must develop the ability to think, analyse and develop strategic and innovative responses on an international, if not global scale.

It is apparent, therefore, that firms and organisations planning to compete effectively in world markets need a clear and well-focused international marketing strategy that is based on a thorough understanding of the markets which the company is targeting or operating in. International markets are dynamic entities that require constant monitoring and evaluation. As we have discussed, as markets change so must marketing techniques. Innovation is an important competitive variable, not only in terms of the product or service but throughout the marketing process. Counter-trading, financial innovations, networking and value-based marketing are all becoming increasingly important concepts in the implementation of a successful international strategy. The challenge, then, of international marketing is to ensure that any international strategy has the discipline of thorough research and an understanding and accurate evaluation of what is required to achieve the competitive advantage. Doole (2000) identified three major components to the strategies of firms successfully competing in international markets: 

• A clear international competitive focus achieved through a thorough knowledge of the international markets, a strong competitive positioning and a strategic perspective which was truly international.
• An effective relationship strategy achieved through strong customer relations, a commitment to quality products and service and a dedication to customer service throughout international markets.
• Well-managed organisations with a culture of learning. Firms were innovative and willing to learn, showed high levels of energy and commitment to international markets and had effective monitoring and control procedures for all their international markets.

Some of the terms that are used in export marketing in the Indian context are explained below:

Goods moving at buyer’s risk and cost

• Ex-works (EXW): The seller makes the goods available at his premises. The buyer bears the full cost and risk of transportation of the goods.
• Free carrier (FCR): The seller delivers the goods to the custody of the carrier (or the first carrier in multi-modal transport). The risk of the goods passes to the buyer at that moment and the buyer pays the transport costs.
• Free on rail, free on truck (FOR/FOT): This term is used for rail transport only. The seller delivers the goods to the railway and the buyer bears the risk of loss of damage from that moment and pays the transportation costs.
• Free on airport (FOA): The seller delivers the goods to the air carrier at the airport of departure. The buyer bears the risk of goods from that moment and pays the transport costs. The seller normally arranges the contract of carriage on the buyer’s behalf.
• Free alongside ship (FAS): The seller delivers the goods alongside the ship in the port of shipment. The risk of the goods in transferred to the buyer from that moment
• Free on board (FOB): The seller clears the goods for transport and delivers them on board the ship. The risk passes form Chapter-2: International Marketing Strategies of Indian Firms 86 seller to buyer when the goods cross the ship’s rail at the port of departure. 
• Goods moving at buyer’s risk and seller’s cost and freight (C&F): The seller clears the goods for export, pays the freight charges, and delivers the goods on board the ship. The risk passes form seller to buyer when the goods cross the ship’s rail at the port of departure. The seller undertakes to provide the buyer with a negotiable bill of lading that can be endorsed to transfer ownership of the goods or pledge them in a bank.
• Cost, insurance and freight (CIF): This is identical to C&F except that, in addition, the seller insures the goods against loss and damage at his own cost. The insurance covers the buyers not the seller, since the goods are travelling at buyer’s risk.
• Freight, carriage paid to (FCP): The seller pays the transport costs. Risk passes to buyer when the seller delivers the goods into the custody of the first carrier.
• Freight, carriage, insurance paid to (CIP): This is identical to FCP, except that in addition, the seller insures the goods at his own cost, for the benefit of the buyer

Goods moving at seller’s risk and cost:

• Ex-ship (EXS): The seller makes the goods available to the buyer, on board the ship at the port of destination. He pays the transport costs and bears the risk of the goods until they are made available this way.
• Ex-quay (EXQ): The seller makes the goods available to the buyer on the quay or wharf at the port of destination. The seller bears the risk of the goods upto that point and pays the transport cost. The seller pays the import duties (“ex-quay duty paid”) unless the contract provides for the contrary (“ex-quay, duties on buyer’s account”). 
• Delivered at the frontier (DAF): The seller delivers the goods at the agreed frontier and bears all the costs and risks upto the point, including transportation costs. The buyer is responsible for the import duties and formalities.
• Delivered Duty Paid (DDP): The seller delivers the goods at an agreed point in the buyer’s country. The seller bears all the costs and the risks of the goods upto the point of delivery including the transport costs. The seller is responsible for import duties and formalities.  

Learn The Truth About GATT AND WTO In The Next 60 Seconds.

The General Agreement on Tariffs and Trade (GATT) was established in 1945 as a provisional agreement pending the creation of an International Trade Organization (ITO).

The ITO draft charter, which was the result of trade negotiations at the Havana Conference of 1948, never came into being due to the failure of the U.S. Congress to approve it.

Other countries also declined to proceed with the ITO without the participation of the United States.

Thus, the GATT continued to fill the vacuum as a de facto trade organization, with codes of conduct for international trade but with almost no basic constitution designed to regulate its international activities and procedures.

The GATT, in theory, was not an “organization,” and participating nations were called “contracting parties” and not members (Jackson, 1992; Hoekman and Kostecki, 1995).

Since its inception, the GATT has used certain policies to reduce trade barriers between contracting parties (CPs):

Nondiscrimination :

All CPs must be treated in the same way with respect to import-export duties and charges. According to the most favored nation treatment, each CP must grant to every other CP the most-favorable tariff treatment that it grants to any country with respect to imports and exports of products. Certain exceptions, however, are allowed, such as free trade areas, customs unions, or other preferential arrangements in favor of developing nations. Once imports have cleared customs, a CP is required to treat foreign imports the same way as it treats similar domestic products (the national treatment standard).

Trade liberalization:

The GATT has been an important forum for trade negotiations. It has sponsored periodic conferences among CPs to reduce trade barriers (see International Perspective 2.1). The Uruguay Round (1986-1993) gave rise to the establishment of a permanent trade organization (World Trade Organization or WTO). The most recent round (the Doha Round) hopes to reach agreement on other trade distortions, such as agricultural subsidies and trade barriers imposed by developing countries on imports of manufactured goods.

Settlement of trade disputes:

The GATT/WTO has played an important role in resolving trade disputes between CPs. In certain cases where a party did not follow GATT’s recommendations, it ruled for trade retaliation that is proportional to the loss or damage sustained. It is fair to state that the existence of the GATT/WTO has been a deterrent to damaging trade wars between nations.

Trade in goods:

The GATT rules apply to all products both imported and exported, although most of the rules are relevant to imports. It was designed primarily to regulate tariffs and related barriers to imports such as quotas, internal taxes, discriminatory regulations, subsidies, dumping, discriminatory customs procedures, and other nontariff barriers. The Uruguay Round (1994) resulted in a new general agreement on trade in services, trade-related aspects of intellectual property (TRIPs) and traderelated investment measures (TRIMs). Thus, CPs have moved beyond the original purpose of the GATT to achieve unrestricted trade in goods, to reduce barriers to trade in services, investment, and to protect intellectual property (Collins and Bosworth, 1995).

Now Is The Time For You To Know The Truth About History Of International Trade

ANCIENT PERIOD

International trade based on the free exchange of goods started as early as 2500 BC. 

Archaeological discoveries indicate that the Sumerians of Northern Mesopotamia enjoyed great prosperity based on trade by sea in textiles and metals. 

The Greeks profited by the exchange of olive oil and wine for grain and metal somewhere before 2000 BC.

By around 340 BC, many devices of modern commerce had made their appearance in Greece and its distant settlements: banking and credit, insurance, trade treaties, and special diplomatic and other privileges.

With the decline of Greece, Rome became powerful and began to expand to the East. 

In the first century AD, the Romans traded with the Chinese along the Silk Road and developed many trade routes and complex trading patterns by sea.

However, the absence of peace made traveling unsafe and discouraged the movement of goods, resulting in the loss of distant markets.

By the time of the breakup of the Roman Empire in the fifth century, the papacy (papal supremacy) had emerged as a strong institution in a new and unstable world. 

The church’s support (sponsorship) for the crusades in the eleventh century revived international trade in the West through the latter’s discovery and introduction of new ideas, customs, and products from the East. 

New products such as carpets, furniture, sugar, and spices brought from Egypt, Syria, India, and China stimulated the markets and the growing commercial life of the West. 

This helped Italian cities such as Venice and Genoa to prosper and to replace Constantinople as the leading center of international commerce. 

Letters of credit, bills of exchange, and insurance of goods in transit were extensively used to accommodate the growing commercial and financial needs of merchants and travelers

By the end of the fifteenth century, the center of international commerce had moved from the Mediterranean to Western Europe. 

Spain, Portugal, and later Holland became the focal points of international commercial activity. 

The more developed areas of Europe were changing from a subsistence economy to one relying heavily on imports paid by money or letters of credit

COLONIAL PERIOD (1500-1900)

With the discovery of America in 1492, and sea routes to India in 1498, trade flourished and luxury goods and food products such as sugar, tobacco, and coffee became readily available in the markets of Europe.

The principal motivations behind global expansion (colonization) in the fifteenth century had been to enhance national economic power (mercantilist policy) by exploiting the colonies for the exclusive benefit of the mother country. 

Colonies were regarded as outposts of the home economy that would reduce trade dependence on rival nations and augment national treasure through exports as well as discoveries of precious metals. 

This first phase of colonization, which lasted until the advent of the Industrial Revolution in England in 1750, was characterized by the following general elements with respect to commerce:

1. All commerce between the colonies and the mother country was a national monopoly, meaning all merchandise exports/imports had to be carried by ships of the mother country and pass through specified ports.
2. Little encouragement was provided toward the development or diversification of indigenous exports. For example, in 1600, precious metals constituted 90 percent of colonial exports to Spain. In the mid-1650s, British imports from its colonies were mainly concentrated in three primary products: sugar, tobacco, and furs. To protect domestic producers, competing colonial exports were restricted or subject to special duties. The patterns of economic relations were fashioned on the basis of dissimilarity, that is, noncompetitiveness of colonial and metropolitan production.
3. Certain enumerated products could be exported only to the mother country or another colony. The policy ensured a supply of strategic foodstuffs and raw materials.
4. Private companies in the metropolis received a charter from the government that granted them (i.e., the companies) a monopoly of trade in the colonies. In most cases, the charter also granted complete local administrative authority, ranging from the making of laws and administration of justice to imposition of taxes. Examples of this include the British East India Company (1600), the Dutch West India Company (1621), and Hudson’s Bay Company (1670).

The second historical phase of overseas expansion (1765-1900) was dictated more by commercial considerations than by mere territorial gains.

Britain emerged as the dominant colonial power, and by 1815 it had transformed its empire into a worldwide business concern. 

By the 1860s, the Industrial Revolution had transformed the social and economic structure of England, and mass production dictated an expansion of the market for goods on an international scale. 

The political economy of mercantilism that had proliferated over the preceding century was gradually replaced by that of free trade. By 1860, Britain had unilaterally repealed the Corn Laws, abolished the Navigation Act restrictions (foreign ships were permitted to take colonial goods anywhere) and the commercial monopolies given to particular companies. 

Preferential duties on empire goods were gradually abolished. 

In trade, as in foreign policy, Britain led the free trade ideology based on nondiscrimination. 

At the time, Britain was most likely to benefit from free trade because of its industrial and commercial lead over other nations.

1900 TO THE PRESENT

The major characteristics of economic relations from 1900 until the outbreak of World War I were the further development of trade and the emergence of a world economy. 

These were also the result of the international migration of people and capital from Europe, particularly Britain, since the 1850s, to other countries such as the United States, Australia, Argentina, Brazil, and Canada. 

This pattern of world economy provided the industrial economies with new sources of food and raw materials and new markets for exports of manufactures. 

For example, by 1913, Brazil was the source of twothirds of German coffee imports, whereas North Africa supplied over half of French imports of wine. 

However, much of the import trade in Europe was subject to trade restrictions, such as tariffs, to secure home markets for local producers. 

Even within Britain there were mounting pressures for the abolition of free trade.

The post–World War I recovery was further delayed by the disruption of trading links, as new nations were created and borders were redrawn. 

State intervention and restrictive economic policies had been consolidated in Europe and other countries by the end of the war. 

The U.S. government introduced the Fordney-McCumber Tariff in 1922, which imposed high tariffs on agricultural imports, and later the Smoot-Hawley Tariff in 1930, which provoked widespread retaliation. 

Britain imposed high duties on various industrial products, such as precision instruments and synthetic organic Introduction 3 chemicals, to encourage domestic production under the Safeguarding of Industries Act, 1921. The volume of world trade in manufactures fell by 35 percent between 1929 and 1932, and prices also fell by a similar amount. 

The volume of trade in primary products fell by 15 percent, but prices fell by about 50 percent. 

To alleviate the worst effects of the Depression, countries resorted to more protectionism. This wave of protectionism produced a massive contraction of international trade and further aggravated the Depression. 

Many of the barriers placed on trade included tariffs and quotas, a variety of price maintenance schemes, as well as arbitrary currency manipulation and foreign exchange controls and management. 

To avoid a repetition of the economic situation of the previous two decades, Allied countries met even before the war to discuss the international financial arrangements that should govern trade and capital movements in the postwar world. 

In 1944, they established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). 

The IMF was to be concerned with facilitating the growth and expansion of global trade through the system of fixed exchange rates, while IBRD was established to promote long-term investment. 

This was followed by an agreement (the General Agreement on Tariffs and Trade, or the GATT) in 1948 to permit the free flow of goods among nations.

What You Know About Exporting And International Marketing And What You Don't Know About Exporting And International Marketing.

Exporting is often considered as the first step in the process of internationalization of a business. 

In general, the firms engaged in export operations have to concentrate on managing the 4 p’s of marketing mix i.e. 

• Product

• Price

• Place 

• Promotion. 

Exporting is primarily a transactional approach to marketing wherein goods are exchanged for value on deal to deal basis. 

International Marketing on the other hand extends from identifying the customer needs to achieving customer satisfaction.

Internationals marketing requires greater commitment of the executives’ time and resources than exporting

Exporting is usually a short-term solution to an immediate problem of under-capacity of production or over-capacity of the stocks. 

However, International Marketing is a long-term approach to sustained business from a market. 

It helps to bridge the information gap between a company and the final consumer of its product. 

While, exporting may involve agents or intermediaries, the market and marketers are more close in marketing. 

The differences in exporting and International Marketing  can be shown in the form of the following table


Table 1: Differences in Export Sale and International Marketing

---

Export Sales	International Marketing
To realise Short run To realize long-run goals(e.g. (e.g. immediate sales)	long- term goals (e.g.development of long term market)
No systematic selection of markets	Systematic selection of markets
Minimum resources commitment to gain immediate sales	Sufficient resource commitment get permanent market position
No systematic choice for mode of entry	Systematic choice of most appropriate mode of entry of entry
Development of products home market	Development of products for both home and foreign markets
Minor product adaptation necessary mandatory legal obligations	Major product adaptation to suit to satisfy foreign buyers
No effort to control channels objectives/goals	Effort to control channels to support of market
Prices based on domestic full cost with some ad hoc adjustments to specific sales situations	Prices fixed in terms of demand conditions, competition and cost.
Promotion mix mainly confined to foreign tours or left to middlemen	Promotion mix includes advertising,  sales promotion and foreign tours