Onkvisit S., Shaw J. International Marketing: Analysis and Strategy

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the merchandise originated in a certain country.

It assures the buyer or importer of the country

of manufacture. This document is necessary for

tariff and control purposes. Some countries may

require statements of origin to establish possible

preferential rates of import duties under the

Most Favored Nation arrangements. This certiﬁ-

cate also prevents the inadvertent importation of

goods from prohibited or unfriendly countries.

The forms can vary, ranging from a shipper’s own

letterhead certiﬁcate to a countersigning by the

Chamber of Commerce (see Figure 13.7). In some

cases, such forms must be visaed by an import-

ing country’s resident consul. For international

use, this document is generally notarized and cham-

berized.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

Figure 13.6 Foreign

customs invoice

Source:

Reprinted with permission

of Radix Group International, Inc.

Inspection certiﬁcate

An inspection certiﬁcate is a document certifying

that the merchandise was in good condition imme-

diately prior to shipment. Many foreign buyers

protect themselves by requiring a shipper’s afﬁdavit

or an independent inspection ﬁrm to certify quality

and quantity and conformity of goods in relation to

the order, as well as to ensure that the goods con-

tracted for have actually been shipped.This certiﬁ-

cate is normally prepared by an independent ﬁrm

other than the exporter, attesting to the quality or

quantity of goods being shipped.

Special purpose documents

As in the case of an inspection certiﬁcate, an

importer may request other special documents,

such as a certiﬁcate of weight/measurement and

a certiﬁcate of analysis in order to protect the

importer’s interests. A certiﬁcate of weight/mea-

surement is issued by an independent party attesting

to the weight or measurement of the merchandise to

be shipped. A certiﬁcate of analysis contains an

expert’s report on the ﬁndings or grading of the sub-

stance or composition of the product shipped.The

document assures the buyer that the goods are those

that an exporter contracted for shipment.

Insurance certiﬁcate

A certiﬁcate of insurance is a negotiable document

issued to provide coverage for a speciﬁc shipment.

It brieﬂy describes the transaction and its coverage.

Usually, an insurance certiﬁcate is issued as an open-

coverage policy to protect any and all shipments and

transportation as long as a certiﬁcate is ﬁled for each

shipment. Generally, the policy will cover most

losses sustained during transit. Not restricted only

to ocean shipments is a marine insurance policy,

which covers all modes of transportation.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

Near and Middle East Central America

Saudi Arabia Panama

Kuwait Nicaragua

Lebanon Honduras

Oman Guatemala

Jordan

Bahrain Far East

Syria Philippines (by request)

Yeman Europe and Asia

Iraq Greece (by request)

Iran Spain (by request)

United Arab Emirates Turkey

South America Africa

Colombia (by request) Libya

Argentina

Uruguay Caribbean

Paraguay Dominican Republic

Source:

Reprinted with permission of Radix Group International, Inc.

EXHIBIT 13.2 COUNTRIES THAT REQUIRE A CONSULAR INVOICE

Air waybill

An air waybill is basically a bill of lading issued by

air carriers for air shipments.This transport instru-

ment is not a negotiable document. As a result, a

carrier will release goods to a designated consignee

without the waybill.

Bill of lading

A bill of lading is a document issued to record ship-

ment transportation (see Figure 13.8). Usually pre-

pared by a shipper on the shipper’s carrier’s forms,

this document serves three useful functions. First,

as a document of title, it is a certiﬁcate of owner-

ship that allows a holder or consignee to claim the

merchandise described. Second, as a receipt of

goods, it is issued by the carrier to the shipper

for goods entrusted to the carrier’s care for trans-

portation. A bill of lading is thus proof of the

carrier’s possession of the freight. Third, as a con-

tract of carriage, the bill of lading deﬁnes the

contract terms between the shipper and his carrier.

The conditions under which the goods are to be

carried and the carrier’s responsibility for the deliv-

ery are speciﬁed.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

Figure 13.7 A certiﬁcate

of origin

Source:

Reprinted with permission

of Radix Group International, Inc.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

Figure 13.8 A bill of lading

Source:

Reprinted with permission of Radix Group International, Inc.

Bills of lading can be issued for inland (overland),

ocean, or air transport. An inland bill of lading is

issued by railroad or truck lines. It authorizes

movement of goods from the shipper’s warehouse

to the port or point of export. An ocean bill of

lading, in contrast, applies to goods shipped by

water and is issued by steamship lines. When the

document is issued by an air carrier, it becomes an

air waybill. In the case of a so-called through bill

of lading, shipment is provided for two or more

transportation modes for delivery to a ﬁnal destina-

tion. Another kind of bill of lading is the NVOCC,

which is issued by a “nonvessel operator common

carrier” that consolidates freight into a container for

shipping by regular liner vessels.

According to the International Chamber of

Commerce, the bill of lading is acceptable only

when it is marked clean and on board.The bill of

lading is clean when the carrier sees no evidence of

damage to the packing or condition of the cargo.The

cargo thus must be received in good order and con-

dition without exception or irregularity. A bill of

lading is foul when there is indication of damage to

the goods received. For an on-board bill of lading to

be issued, the cargo must be loaded aboard the

named vessel on the speciﬁed date of loading. In

comparison, even though a received-for-shipment

bill of lading also mentions a particular vessel, this

document only implies that the goods have been

received by the steamship company. In such a case,

because the goods are not yet loaded on board a par-

ticular vessel, it is possible that the goods may end

up on another vessel instead.

In addition to being classiﬁed as clean or foul and

by types of transportation carriers, a bill of lading

can be straight or negotiable. A straight bill of

lading, under international law, is non-negotiable. It

is consigned directly to a consignee rather than to

order. As such, it allows delivery only to the con-

signee or party named on the bill.The carrier must

be certain that the party receiving the goods is actu-

ally the named party. To obtain possession of the

shipment, the foreign buyer simply shows one’s

proof of identity.

A shipper’s order or negotiable bill of lading

is a negotiable instrument that is consigned to order.

When endorsed, it allows transfer of title to the

holder of documents, and delivery can be made to

a named party or anyone designated.

Both the straight and order bills of lading serve

as collection documents.The buyer must pay for the

goods, post bond, or meet other speciﬁed condi-

tions before obtaining the bill of lading to claim the

goods.The shipper endorses the bill and presents it

to the bank for collection as evidence of satisfying

the conditions stated in the letter of credit.

CONCLUSION

Moving cargo to an overseas destination is a much

more complex task than transportation of freight

locally. Other than the usual package designed to

protect and/or promote a product while on display,

packing (shipping package) is necessary if the mer-

chandise is to be properly protected during ship-

ment. Because of a greater number of hazards, the

length of time during which the cargo is in transit,

and a carrier’s limited liability, the shipper should

obtain marine insurance. In addition, the shipper

should take necessary packing precautions to mini-

mize any chance of damage. Containerization is

one of several transportation modes that can achieve

this goal.

Cargo cannot move without proper documenta-

tion. There are a huge number of documents that

must be ﬁled to satisfy an exporter’s government

requirements and an importer’s legal requirements.

To compound this problem, the document require-

ments of the various countries are far from being

uniform. The shipper, however, does not have any

option – the shipper simply must submit all required

documents if a cargo is to be moved and if the ship-

per is going to collect payment from the buyer.There

are specialists in cargo movement who can facilitate

the process for a fee. Freight forwarders and cus-

tomhouse brokers work for the shipper and the

importer, respectively. They are capable of taking

over all aspects of physical distribution and docu-

mentation.When the shipper wants to be relieved of

these responsibilities, these intermediaries can help.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

QUESTIONS

1 What are some of the hazards associated with the air, water, and land modes of transportation?

2 Explain how the freight rates–density effect can affect the choice of transportation.

3 Distinguish among conference lines, independent lines, and tramp vessels.

4 Distinguish between special coverage and blanket coverage.

5 When is an export license needed?

6 Explain the following documents: SED, dock receipt, invoice (commercial, foreign customs, and consular),

certiﬁcate of origin, inspection certiﬁcate, air waybill, and bill of lading.

7 Distinguish among these types of bill of lading: clean, foul, straight, and negotiable.

DISCUSSION ASSIGNMENTS AND MINICASES

1 Is there an ideal mode of transportation based on market location, speed, cost, and hazard criteria?

2 What products are suitable for air shipping?

3 Explain how containerization can solve the four packing problems of weight, breakage, moisture, and tem-

perature, and pilferage and theft.

4 What are the functions of a freight forwarder and a customhouse broker? Is it worthwhile to use these

agents?

NOTES

1 Gene R. Tyndall, “We Must Manage Change Before It Manages Us,”

Marketing News

, February 5, 1990,

14.

2 Martin Christopher,

The Strategy of Distribution Management

(Westport, CT: Quorum Books, 1985), 3.

3 John F. Magee, William C. Copacino, and Donald B. Rosenﬁeld,

Modern Logistics Management

(New York,

NY: Wiley, 1985), 193.

4 Mike Moore, “Tariff Reductions Aren’t Enough,”

Asian Wall Street Journal

, June 19, 2001.

5 Rupert Pennant-Rea and Ian G. Heggie, “Commercializing Africa’s Roads,”

Finance & Development

(December 1995): 30ff.

Ports of the World: A Guide to Cargo Loss Control

(13th edn) (CIGNA), 46–7.

7 David Ross,“Air Freighting,” in

Handbook of Physical Distribution Management

(3rd edn), ed. John Gattorna

(Aldershot: Gower, 1983), 223–37.

8 “Security as a Trade Barrier,”

Business Week

, December 31, 2001, 36.

9 Overseas Shipholding Group, Inc.,

1993 Annual Report

, 13–14.

10 Charles A.Taff,

Management of Physical Distribution and Transportation

(7th edn) (Homewood, IL: Irwin,

1984), 261.

Ports of the World

, 51.

Ports of the World

, 52.

13 John Wilson, “Security in Distribution,” in

Handbook of Physical Distribution Management

(3rd edn), ed.

by John Gattorna (Aldershot: Gower, 1983).

14 “Sounding the Alarm in Mexico,”

Business Week

, June 26, 2000, 74.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

15 Magee, Copacino, and Rosenﬁeld,

Modern Logistics Management

, 196.

16 Patterson Brown, “Freight Forwarders, Customs Brokers and Incoterms: Making Exporting Easier,”

Export

America

(November 2001).

17 Paul R. Murphy, James M. Daley, and Douglas R. Dalenberg,“Doing Business in Global Markets: Perspectives

of International Freight Forwarders,”

Journal of Global Marketing

6 (No. 4, 1993): 53–68.

18 “WearGuard Does It Right in Canadian Launch,”

DM News

, April 18, 1994, 22, 43.

19 Jim Robb, “Ask the TIC,”

Export America

(January 2001): 14–15.

20 “US Customs Lays Stress on Secure Cargo,”

Bangkok Post

, November 30, 2001.

21 “Anti-Terrorism Cargo Rules Please Nobody,”

San José Mercury News

, February 19, 2003.

22 “Export Controls,”

San José Mercury News

, February 2, 2000.

23 “Hughes, Boeing to Pay Fines,”

San José Mercury News

, March 6, 2003.

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PHYSICAL DISTRIBUTION AND DOCUMENTATION

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413

Everyone lives by selling something.

Robert Louis Stevenson

CHAPTER OUTLINE

■ Promotion and communication

■ Promotion mix

■ Personal selling

 Personal selling vs. advertising

 Varying quality and style of personal selling

 Intercultural negotiation

 Motivation

 Telemarketing

 Expatriate personnel

■ Publicity

 The nature of publicity

 The management of publicity

 Negative publicity

■ Sales promotion

 The nature of sales promotion

 Restrictions

■ Overseas product exhibitions

■ Conclusion

■ Case 14.1 Selling in the EU

■ Case 14.2 AllWorld Corporation

Promotion strategies

Personal selling, publicity,

and sales promotion

Chapter 14

PROMOTION AND COMMUNICATION

The purpose of promotion is both to communicate

with buyers and to inﬂuence them. Effective pro-

motion requires an understanding of the process of

persuasion and how this process is affected by

environmental factors. The potential buyer must

not only receive the desired information but should

also be able to comprehend that information.

Furthermore, the information must be sufﬁciently

potent to motivate this buyer to react positively.

To communicate effectively with someone means

that certain facts and information are shared in

common with that person. Communication is

basically a ﬁve-stage process consisting of source,

encoding, information, decoding, and destination

(see Figure 14.1). Encoding is a step that trans-

forms the idea or information into a form that can

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PROMOTION STRATEGIES

PURPOSE OF CHAPTER

The Fiat example in the marketing illustration below provides clear evidence that a product must be pro-

moted and that advertising is not the only means. A well-rounded marketing plan must include a proper

promotion mix. This mix should not rely solely on advertising – personal selling, publicity, and sales pro-

motion should also be included. This chapter examines the communication process in general as well as

those promotional components other than advertising that are part of the process. Attention is given to the

role of personal selling, both internationally and locally.The pros and cons of employing local nationals for

selling are also discussed.

A section is devoted to the treatment of publicity, examining the principles related to a sound publicity

campaign, with an emphasis on how to deal with negative publicity. A further section investigates the use

of sales promotion and the inﬂuence of local regulations on the various sales promotion techniques.

Fiat Automotive S.A. needed a promotion campaign

in Brazil for its redesigned Marea sedan and station

wagon.The company told its agencies that a CD player

was one Marea’s top new features. As a result, the

Impeccable campaign was born.The program focused

on a giveaway of a premium CD containing music

by well-known Brazilian singers (Milton Nascimento

and Gilberto Gil). Direct mailings and consumer

magazines’ inserts were used to distribute the CDs.

Recipients were urged to visit a Fiat dealership for a

chance to win a Marea or concert tickets. They were

required to bring a CD to be played during a test drive.

When the drive was almost over, a salesperson would

skip to the ﬁnal track which gave an audio code that

could be matched to a printed code located under the

car’s visor. Each person taking a test drive won

concert tickets and could enter a secondary sweep-

stake for a second Marea. More than 22,100 CD

recipients came in for a test drive, exceeding the cam-

paign’s goal by nearly 15 percent. More importantly,

nearly 14 percent of them (about 3000 people) ended

up buying a car. During the promotion period, the

brand achieved an increase of 20 percent in sales.

The campaign also offered sales force incentives.

Fiat aimed its motivation plans at individual sales-

people as well as managers and dealerships as a

whole, thus providing rewards to both an individual

and a team.

Source:

“A Real Gassser,”

PROMO

, January 2002, 58.

MARKETING ILLUSTRATION IMPECCABLE

be transmitted (e.g., written or spoken words). For

a receiver to understand the coded information, that

person must be able to decode these words.

The source can encode and the receiver can

decode only through the experience each has

had.The two large circles in Figure 14.1 represent

the ﬁelds of experience of each party. If the

two circles have a large common area, communica-

tion is relatively easy because both individuals

have similar psychological and social attributes.

Communication is more difﬁcult if the overlapping

area is smaller. This is often the case with inter-

national communication. If the circles do not

meet, communication is likely to be impossible; that

is, the sender and the receiver have nothing in

common, and they therefore have an extremely

difﬁcult time understanding each other. Moreover,

“noise” (interference) can easily affect any one of

the ﬁve stages, making the effect on the communi-

cation difﬁcult to predict.Thus the sender must be

receiver oriented. The message must consist of

information that the receiver can relate to, and the

information must be encoded with relevant images

and words common to the receiver’s experience and

language.

It is not sufﬁcient for the receiver to be informed

only by the message; the receiver must also be

persuaded to accept the information and to act as

suggested. A promotional message thus must be

designed in such a way that the purchaser reacts

favorably. Effective motivation requires that the

principles of mass persuasion be followed.

The ﬁrst principle is that the message must reach

a person’s sense organs.This may sound simplistic,

yet frequently the message sent is not received by

the intended audience. To ensure reception, the

message must gain the attention of the receiver. If

the right media are not available or if the wrong

message channel is used, the message may never get

to the intended receiver. Furthermore, if the cue is

not appealing, the receiver may never open his or

her senses to the message due to a lack of interest.

Note that what is interesting in one culture may not

be so in another. A message that refers to historical

events in a home country (e.g., July 4) may have

little meaning in a host country.

The second principle requires that the message

should not contradict a person’s cultural norms.

It is possible, though not probable, that a message

that is not consistent with the receiver’s beliefs may

sometimes be potent enough to make the buyer re-

evaluate traditional beliefs. In most cases, such a

message is likely to be rejected, discarded, or dis-

torted. The effective promotional message is thus

one that is accepted as part of the receiver’s attitude

and belief structure.

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Feedback

Noise

EncodingSource Decoding

Source’s

environmental factors

Receiver’s

environmental factors

Source’s

field of experience

Receiver’s

field of experience

ReceiverInformation

Figure 14.1 The process of communication