International Marketing Channels

1. 8 International Marketing Channels 8.02 Exporting and Logistics

2. Warmup--Logistics Connect to each of these videos (in order) to use as a warm-up (approx. 20 min.): http://www.youtube.com/watch?v=qDbnx6nLrQo&feature=related http://www.youtube.com/watch?v=Wlrf32iU9pc&feature=relmfu Chapter 8

3. Lesson 8.2Exporting and Logistics Goals • Explain what is involved in the exporting process. • Discuss the importance of having an efficient logistical system. Chapter 8

4. Terms • exporting • importing • indirect exporting • direct exporting • customs • customs broker • intermodal transport Chapter 8

5. EXPORTING • Exporting • The process of shipping a product to another part of the world for trade or sale • Includes: • Identification of customers • Preparing products for shipment • Arranging documentation • Clearing customs • Planning shipping/delivery of products Chapter 8

6. EXPORTING (continued) • Indirect exporting • For a company not fully committed to international marketing • Uses a broker or agent to help find customers and export products • Extra middle-men can increase total cost Chapter 8

7. EXPORTING (continued) • Direct exporting • For a company fully committed to foreign markets • a company actively controls finding markets and exporting products • Importing • receiving products exported from another country Chapter 8

8. Intermediaries that assist in exporting: • Export trading company • Buy and sell products • Conduct market research • Overseas distribution • Provide funding and financing • Coordinate shippers, suppliers, and manufacturers • International freight forwarder • Travel agent for cargo • Ships products directly to foreign customers Chapter 8

9. Documentation for clearing customs • Customs • immigration control for products entering the country • Inspect shipments to insure proper documentation • Collect customs fees • Insure restricted products do not enter • E.g., dangerous items, embargoed products, fake products, endangered species products Chapter 8

10. Documentation for clearing customs (cont.) • Customs broker • An intermediary that specializes in moving products through customs • Licensed by U.S. Department of Treasury • May also work with Dept. of Agriculture, Environmental Protection Agency, or Food & Drug Administration Chapter 8

11. Documentation requirements • Bill of lading • Issued by carrier (transporter) to shipper (exporter) acknowledging receipt of goods • Describes type and quantity of goods • Describes how goods will be shipped • Identifies destination • http://www.youtube.com/watch?v=nmosREOfkXw • Bill of lading video Chapter 8

12. Documentation requirements • Certificate of origin • Document that identifies the country in which exported goods are obtained, produced, or processed • Helps determine import duties or whether the products may be legally imported, depending on country of origin Chapter 8

13. Foreign Trade Zone • Foreign Trade Zone (FTZ) • an area designated by a country as a specialized zone where products may be exempt from duties • Products in FTZ’s may be stored, modified, displayed without paying duties • Products exported out of FTZ’s no import duties are paid where the FTZ is located • http://www.youtube.com/watch?v=uFxTKV7_LLM • http://www.youtube.com/watch?v=w2rmuKHlU3A • Foreign trade zone videos and china Chapter 8

14. INTERNATIONAL LOGISTICS • Logistics involve the transportation and storage of products between producer and consumer • Modern technology makes logistics easier than in the past: • GPS allows ships to avoid bad weather • Easy to track individual shipments Chapter 8

15. Logistics and the Total Cost Concept • Transportation costs are a major portion of total exporting costs • Other cost factors to consider: • Products shipped by water or land arrive with less certainty than by air • Greater chances for spoilage, loss, or obsolescence • Warehousing and insurance costs may be higher • Air freight enhances security, limits shipping time, assures faster delivery Chapter 8

16. Logistics and the Total Cost Concept • Other costs factors to consider (cont.): • Free on board (FOB)—determines where the shipper pays the transportation costs • FOB destination—seller pays shipping costs to the buyer’s delivery point • FOB Origin—buyer pays shipping costs from the seller’s departure point • May include cost, insurance, and freight (CIF) Chapter 8

17. Transportation Modes • Water transportation • Within a continent—utilize rivers and lakes • Cargo containers used for overseas shipping • Good for bulk items such as grain or minerals • Half of all U.S. imports arrive via cargo container—over 9 million containers yearly Chapter 8

18. Transportation Modes • Air cargo • Containerized jumbo jets can carry over 90 tons • Costs are higher than other transportation • Fast delivery avoids need for warehousing • Less opportunity for theft Chapter 8

19. Transportation Modes • Land transportation • Two main modes: rail and truck • Rail typically used for bulk products • Usually require land connections to air or ferry • Long-distance land shipments increase chance of loss, damage, delivery uncertainty Chapter 8

20. Transportation Modes • Pipelines • Primarily for energy-related products (oil and natural gas) • Coal can also be put into a liquid mixture (slurry) and shipped through pilelines Chapter 8

21. Intermodal Transport • Intermodal transport involves a combination of transportation modes. • Fishyback • Containerized shipping between trucks & ships • Piggyback • Shipping between truck and rail • Birdyback • Shipping between truck and air cargo Chapter 8