Meaning of Exports
Export market is a systematic process of developing and distributing goods and services in overseas markets. The export marketing manager needs to undertake various marketing activities, such as marketing research, product design, branding, packaging, pricing, promotion etc. To undertake the various marketing activities, the export marketing manager should collect the right information from the right source.
Export marketing means exporting goods to other countries of the world. It involves lengthy procedure and formalities. In export marketing, goods are sent abroad as per the procedures framed by the exporting country as well as by the importing country.
Exporting is a process of earning profits by selling products or services in foreign markets. On the other hand, an exporter is therefore someone who engages in selling of goods and services in foreign markets. There abound great export opportunities largely unknown either due to ignorance or lack of an export culture caused by years of undue focus on the oil sector in a country like Nigeria while neglecting other critical sectors such as manufacturing, handicraft, solid minerals and agriculture. Since the oil boom era of the 70s and until recently, oil product has dominated the export scene to the detriment of the agriculture and allied products which were hitherto the mainstream of the economy. However, government is currently making a shift to the agriculture and non-oil sector to enhance the revenue base of the economy. The reason for the new focus is the need to diversify foreign exchange earnings through increased export activities in the non-oil sector. This will in no doubt stimulate greater capacity utilization to meet both the domestic and foreign demands. Oil era is fast aging. Government cannot alone give a 100% enablement hence the people themselves must be interested in exporting business, the broker, the producers, small and medium scale entrepreneurs need to further create wealth through export business, both exporter and producer must synergize to enhance quality Knowledge of the market
The exporter must understand both the domestic and international market and regulations as it affects the product. The exporter and producer must interact with various regulatory bodies in order to keep abreast of current issues e.g. NEPC.
Benefits of Export Business Wealth creation for self and economy Reduces unemployment It enhances profitability It enhances quality It increases clientele level outside the local environment Best practices enhanced because of international standards requirement, agricultural products abound in Nigeria and can be exported; all that is expected of the exporter is to collaborate with the farmers in order to enhance large-scale production. Cassava Nigeria is highest producer in the world Walnuts Onion Cashew nuts and kernel Tomatoes Kola nuts dried and fresh Bitter kola Mushrooms Potatoes Mangoes Flowers Roses Beans Bananas Pepper Guava Ginger Shea nuts Cocoa Cashew nut, etc.
Duty Draw Back Scheme – refund of duties and surcharges on import which form inputs for the manufacture of exportable Challenges of Nigerian Export Marketers Generally it could be recall that the history of Nigeria involvement in the league of exporting activities in the world could be traced even before the discovery of crude oil in the early Earlier before then, Nigeria’s export trade was more on crude system of agriculture, mining and other related products The unhealthy experience of Nigeria Government as a result of Oil glut the world market in the 1980s was discouraging and heightened the Nigerian ever-growing import bills, and balance of payments issue. According to the result of this economic imbalance, which is structurally deficient with its attendant consequences, is that Nigeria began to encourage other alternatives to oil as sustainers of its economic growth and development. Government therefore began to place emphasis on export promotion, especially that of manufactured goods from the country. However, the earnings realized from manufactured and semi-manufactured products were insignificant relative to the Country’s foreign exchange earnings as at. These trends of course, still existed up till the late 2000s. Petroleum crude dominated Nigerian export trade and accounted for 95% of foreign exchange as at This false wealth enhanced the structure of Nigerian economy up and encouraged Nigerians to be more consumption-oriented import dependent and above all less export oriented. The first step in enhancing Nigeria product advantage in export marketing is to overcome the age-old colonial mentality of assigning superiority of their own product.
IMPORTANCE OF EXPORT MARKETING
Export marketing are important for all countries whether developed or underdeveloped. The importance and advantages of export marketing can be explained from the viewpoint of a country and that of business organization. the Importance and Advantages of Export Marketing at the National Level, is to Earning foreign exchange. Exports bring valuable foreign exchange to the exporting country, which is mainly required to pay for import of capital goods, the raw materials, spares and components as well as importing advance technical knowledge. International Relations – Almost all countries of the world want to prosper in a peaceful environment. One way to maintain political and cultural ties with other countries is through international trade. exports solve balance of payments problem and enable countries to have favorable balance of payment position.
A country which is foremost in the field of exports, commands a lot of respect, goodwill and reputation from other countries. For example, Japan commands international reputation due to its high-quality products in the export markets. Employment Opportunities Export trade calls for more production. More production opens the doors for more employment. Opportunities, not only in export sector but also in allied sector like banking, insurance etc. Promoting economic development Exports are needed for promoting economic and industrial development. The business grows rapidly if it has access to international markets. Large-sole exports bring rapid economic development of a nation. Optimum Utilization of Resources – There can be optimum use of resources. For example, the supply of oil and petroleum products in Gulf countries is in excess of home demand. So, the excess production is exported, thereby making optimum use of available resources. Spread Effect – Because of the export industry, other sectors also expand such as banking, transport, insurance etc. and at the same time number of ancillary industries comes into existence to support the export sector. Higher standard of Living – Export trade calls for more productions, which in turn increase employment opportunities. More employment means more purchasing power, as a result of which people can enjoy new and better goods, which in turn improves standard of living of the people in need. Importance or advantages of export market at Business firm enterprise an organization which undertakes exports can bring fame to its name not only in the export markets, but also in the home market. For example, firms like Sony, coca cola, Pepsi, enjoy international reputation. Optimum production a company can export its excess production after meeting domestic demand.
Domestic market. is easy and simple due to several reasons such as uniform currency system, limited trade restrictions, uniform trade practices and short distances for transport of goods.
DIFFICULTIES IN INTERNATIONAL MARKET
International marketing is difficult and complicated due to reasons such as use of different currencies, trade restrictions long distances and absence of uniform trade practices.
Trading Blocs – Absence of trading blocs and tariff and non-tariff barriers provide ample scope for expansion in domestic marketing activities. Trading blocs and tariff and nontariff barriers exist in international market and they restrict free trade among the countries of the world, Licensing and procedures, it is free from licensing and lengthy procedures and formalities. This brings simple in trading operation It involves licensing, permissions and lengthy procedures. This makes market operations complicated, time-consuming and difficult. environmental changes
in the economic, political or social environment create limited effects on domestic market Changes in the economic, political or social environment create far-reaching effects on international market scenario
MOTIVATIONS FOR EXPORT MARKET
Companies have to take several decisions to participate in export marketing. There are same basic economic reasons which influence a company decision regarding participation in export business. Such reasons can be treated as motivators for export market. These motivational factors for export market are as follows.
Rate of profit – The rate of profit in export business is normally higher as compare to rate of profit in domestic market. The unit value realization of export products normally increases.
Such progressive improvement in the unit value of realization is one reason which acts as a motivator for exporting. Sales and production stability Export marketing may enable a firm to maintain sales and production stability. For example, in the case of seasonal products, exporting may help to achieve sales stability, because the seasons may be opposite in certain export markets. For example, woolen clothing. Inadequate domestic demand
The level of domestic demand may be insufficient for utilizing the available production capacity fall, i.e. at the optimum level. Here, the company enters into export market so that the available production capacity will be utilized fully for meeting domestic demand and demand from abroad.
This is one motivational factor for export market, Economic growth is another major reason for internationalization. The growth potential of many foreign markets is a very strong attraction for foreign companies. Several developing countries, like China, and India, have been growing at a much faster rate than the developed countries.
Many multinational companies are eager to establish their foothold in such countries, considering future potential. Reducing business risks – Geographical diversification facilitates distribution of business risks among different export markets. Even the risks in internal market can be reduced by undertaking export market. A diversified business spreads business risks among different markets. Information and media Revolution,
there has been tremendous growth in the field of information and media. For example, internet facility has given a big boost to a global trade. Now, business firms can conduct global operations with much investment in setting up elaborate offices. Business activities in other countries can be conducted through information network. Strategic vision – Some firms have a strategic vision to enter in export markets.
The business strategy of such firms includes systematic international growth. Therefore, the stimulus for export marketing comes from desire to grow and expand, need to become more competitive. Accepting social responsibility Export promotion is a collective responsibility of all social groups including business enterprises. Some large enterprises accept this social obligation and participate in export marketing. Here, social responsibility acts as a motivation for export marketing. Government policies – Government policies and Regulations may also encourage the companies for international marketing. Some companies export and invest in foreign countries to avail economic incentives, and benefits provided by the government. Also, some companies internationalize due to government’s emphasis on import development and foreign investment. certain companies export in order to fulfill their export obligation. W. T. O. Due to WTO, member nations have reduced a number of restrictions on foreign investment, and trade in goods and services. For example, the custom duties have been reduced worldwide. This has motivated business firms to enter in the global markets to a greater extent. Benefit of bulk selling – Export business is normally in bulk quantity. Export orders are much larger as compared to orders in domestic marketing. Export business is undertaken in order to take the benefits of selling in bulk, in large quantities. It helps to earn foreign exchange in large. In brief, export market offers many benefits to exporting organization. Such benefits encourage companies to participate in export marketing. The benefits also act as motivators for export mark
THE PROBLEM FACING EXPORT
These problem or difficulties are as follows. Recession, in world market the world market, faced recession in 2008 and in the first half of 2009. The recession was triggered due to sub-prime crisis of USA in September 2007. Due to recession, the demand for exporters get low orders from overseas markets, and they have to quote lower prices. Therefore, exporter gets law profits or suffers from losses.
global market, Export market is highly competitive. This competition relates to price, quality, production cost and sales promotion techniques used, exporters face three-faced competition while exporting. This includes competition from domestic exporters, local producers where the goods are being exported and finally from producers of competing countries at global level. Such competition is one special problem to the exporters. Problem of product standards – Developed countries insist on high product standards from developing countries like Nigeria. The products from developing countries like Nigeria are subject to product tests in the importing countries. At times, the importing countries do not allow imports of certain items into import country due to their law or policy.
Another significant problem is delayers at seaport if the product is of large quantity and other documentation
INTRODUCTION TO EXPORT MARKET