Licensing Procedures in India

Import and Export Licensing Procedures in India

India’s import and export system is governed by the Foreign Trade (Development & Regulation) Act of 1992 and India’s Export Import (EXIM) Policy. Imports and exports of all goods are free, except for the items regulated by the EXIM policy or any other law currently in force. Registration with regional licensing authority is a prerequisite for the import and export of goods. The customs will not allow for clearance of goods unless the importer has obtained an Import Export Code (IEC) from the regional authority.

Import Policy

The Indian Trade Classification (ITC)-Harmonized System (HS) classifies goods into three categories:

·         Restricted

·         Canalized

·         Prohibited

Goods not specified in the above mentioned categories can be freely imported without any restriction, if the importer has obtained a valid IEC. There is no need to obtain any import license or permission to import such goods. Most of the goods can be freely imported in India. 

1.     Restricted Goods

Restricted goods can be imported only after obtaining an import license from the relevant regional licensing authority. The goods covered by the license shall be disposed of in the manner specified by the license authority.

1.     Canalized Goods
Canalized goods are items which may only be imported using specific procedures or methods of transport. The list of canalized goods can be found in the ITC (HS). Goods in this category can be imported only through canalizing agencies. The main canalized items are currently petroleum products, bulk agricultural products, such as grains and vegetable oils, and some pharmaceutical products.

Prohibited Goods
These are the goods listed in ITC (HS) which are strictly prohibited on all import channels in India. These include wild animals, tallow fat and oils of animal origin, animal rennet, and unprocessed ivory

Export Policy
Just like imports, goods can be exported freely if they are not mentioned in the classification of ITC (HS). Below follows the classification of goods for export:

·         Restricted

·         Prohibited

·         State Trading Enterprise

1.     Restricted Goods: Before exporting any restricted goods, the exporter must first obtain a license explicitly permitting the exporter to do so. The restricted goods must be exported through a set of procedures/conditions, which are detailed in the license.

2.     Prohibited Goods: These are the items which cannot be exported at all. The vast majority of these include wild animals, and animal articles that may carry a risk of infection.

State Trading Enterprise (STE): Certain items can be exported only through designated STEs. The export of such items is subject to the conditions specified in the EXIM policy.

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Decision making process

Intoduction

Consumer behavior includes the processes and motives that drive consumer buying activities. Consumers typically make purchases in a systematic way, with the time frame and nature of the process dependent on the type of purchase. The standard consumer buying process with a service has some specific differences from a product-based purchase situation.

1. Need Discovery

The first step in the consumer decision-making process is need discovery. This stage is where a consumer realizes he has a functional or emotional need or want. In engaging in a service scenario, consumers recognize several common needs. One is expertise. A consumer might hire a plumber or electrician for their service expertise, for instance. Time savings, more valuable ways to spend time and simply not liking to perform a certain activity are among needs or motives for a service purchase.

2. Information Search

The second phase of the buying process is information search. During this stage, the buyer looks for information and evaluates providers on certain criteria. Services are intangible, so buyers often need to consult company websites and talk with sales reps to evaluate options. Additionally, services are often highly involved purchases for buyers because of the costs and importance. To get someone to hire your roofing company, you must provide significant information about the value of your materials and service relative to competitors.

3.     Evaluation of alternatives

Buyers typically want to see proof of benefits before making a product or service purchase. With products, you can show buyers how the product works and demonstrate the benefits. With intangible services, you can't. You can, however, provide customer testimonials emphasizing the quality, reliability and value of your service. It is also important to connect with customers' emotions by communicating the value of your expertise or the time that you save them.

At this stage, consumers evaluate different products/brands on the basis of varying product attributes, and whether these can deliver the benefits that the customers are seeking.  This stage is heavily influenced by one's attitude, as "attitude puts one in a frame of mind: liking or disliking an object, moving towards or away from it".  Another factor that influences the evaluation process is the degree of involvement. For example, if the customer involvement is high, then he/she will evaluate a number of brands; whereas if it is low, only one brand will be evaluated.

Customer involvement	High	Medium	Low
Characteristics	High	Medium	Low
Number of brands examined	Many	Several	One
Number of sellers considered	Many	Several	Few
Number of product attributes evaluated	Many	Moderate	One
Number of external information sources used	Many	Few	None
Time spent searching	Considerable	Little	Minimal

 4.     Purchase decision

This is the fourth stage, where the purchase takes place. According to Kotler, Keller, Koshy and Jha (2009), the final purchase decision can be disrupted by two factors: negative feedback from other customers and the level of motivation to comply or accept the feedback. For example, after going through the above three stages, a customer chooses to buy a Nikon D80 DSLR camera. However, because his good friend, who is also a photographer, gives him negative feedback, he will then be bound to change his preference. Secondly, the decision may be disrupted due to unanticipated situations such as a sudden job loss or the closing of a retail store.

 5.     Post-purchase behavior

These stages are critical to retain customers. In short, customers compare products with their expectations and are either satisfied or dissatisfied. This can then greatly affect the decision process for a similar purchase from the same company in the future, mainly at the information search stage and evaluation of alternatives stage. If customers are satisfied, these results in brand loyalty, and the information search and evaluation of alternative stages are often fast-tracked or skipped completely. As a result, brand loyalty is the ultimate aim of many companies.

On the basis of either being satisfied or dissatisfied, a customer will spread either positive or negative feedback about the product. At this stage, companies should carefully create positive post-purchase communication to engage the customers.

Also, cognitive dissonance (consumer confusion in marketing terms) is common at this stage; customers often go through the feelings of post-purchase psychological tension or anxiety. Questions include: "Have I made the right decision?", "Is it a good choice?” etc.

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Targeting & Positioning in Marketing

Target Marketing

In the next step, we decide to target one or more segments.  Our choice should generally depend on several factors.  First, how well are existing segments served by other manufacturers?  It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well.  Secondly, how large is the segment, and how can we expect it to grow?  (Note that a downside to a large, rapidly growing segment is that it tends to attract competition).  Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers?  Firms may already have an established reputation.  While McDonald’s has a great reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers that McDonald’s now offers gourmet food.  Thus, McD’s would probably be better off targeting families in search of consistent quality food in nice, clean restaurants.

It is possible using to target very specific customer groups based on magazine subscriptions, past purchases, and demographic variables.  A number of list brokers will sell lists of names and addresses of homeowners in a particular area (information they get from county registrars) or the subscribers to various magazines. Firms will often sell lists of their customers to competitors since it is widely believed in the industry that more catalogs tend to result more in incremental sales than in losing share in fixed-size pie.  One can also buy e-mail lists, but it is generally not legal to send soliciting e-mails to individuals with which one does not already have an established business relationship, and these are also likely to be discarded by "spam" filters.  In the "merge-purge" process, lists from several sources are combined (since none contains every relevant individual by itself), after which duplicates are removed.  Here is an illustration of what could be used by an online merchant of surf gear seeking to find additional potential customers:

Strategies for Reaching Target Markets

Marketers have outlined four basic strategies to satisfy target markets: undifferentiated marketing or mass marketing, differentiated marketing, concentrated marketing, and micromarketing or niche marketing.

1. Mass marketing - Mass marketing is a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It is the type of marketing (or attempting to sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that will reach the largest number of people possible.

2. Differentiated marketing - A differentiated marketing strategy is one where the company decides to provide separate offerings to each different market segment that it targets. It is also called multi segment marketing. Each segment is targeted uniquely as the company provides unique benefits to different segments.

3. Concentrated marketing - Concentrated marketing is a strategy which targets very defined and specific segments of the consumer population.

4. Niche marketing - In marketing, a niche refers to a service or a product that occupies a special area of demand. It is that small corner in the market that accounts for a certain kind of specialty concerning an unmet customer need. Niche marketing is the process of finding market segments that are small but potentially profitable nonetheless.

Positioning

Positioning involves implementing our targeting.  For example, Apple Computer has chosen to position itself as a maker of user-friendly computers.  Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for “non-geeks.”  The Visual C software programming language, in contrast, is aimed a “techies.”

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of three categories:

• Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organized and well run competitors.  The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for the specific customer.  Wal-Mart is an example of this discipline.  Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed.
• Customer intimate firms, which excel in serving the specific needs of the individual customer well.  There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer.  Reliability is also stressed.  Nordstrom’s and IBM are examples of this discipline.
• Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation.  These firms, because they work with costly technology that need constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer.  Intel is an example of this discipline.

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Segmentation

Introduction

Market segmentation is best known for its use in marketing: customer acquisition, retention, and migration to higher value; and choosing the right location for a given facility, be it a retail store, library, or other type of outlet. Over the last decade, however, the success of market segmentation has expanded its application across other business functions. Market segmentation can be applied to a range of business or organizational functions including:

• Strategic and tactical functions ranging from strategy development to customer acquisition and retention

• Core business practices and initiative-based activities including planning and forecasting and development of new products and services

• Customer management at the portfolio level and in one-to-one sales and services, including media and distribution choices.

Segmentation strategies

There are many ways in which a market can be segmented. A marketer will need to decide which strategy is best for a given product or service. Sometimes the best option arises from using different strategies in conjunction. Approaches to segmentation result from answers to the following questions: where, who, why and how? Jon Weaver, Marketing Manager at Bournemouth Borough Council applies a multi-strategy approach to identify segments.

1.       Geographic segmentation: Where? A market can be divided according to where consumers are located. On a trip abroad you might have noticed that people enjoy more outdoor activities than back home. You could also be surprised by the amount of people that like drinking hot coffee at the beach in Rio de Janeiro. If you visit this website you will see differences in food preferences around the world.

Understanding cultural differences between countries could be pivotal for business success, consequently marketers will need to tailor their strategies according to where consumers are.

Geographic segmentation is the division of the market according to different geographical units like continents, countries, regions, counties or neighborhoods. This form of segmentation provides the marketer with a quick snapshot of consumers within a delimited area.

Geographic segmentation can be a useful strategy to segment markets because it:

·         Provides a quick overview of differences and similarities between consumers according to geographical unit;

·         Can identify cultural differences between geographical units;

·         Takes into consideration climatic differences between geographical units;

·         Recognizes language differences between geographical units.

But this strategy fails to take into consideration other important variables such as personality, age and consumer lifestyles. Failing to recognise this could hinder a company's potential for success.

For example some youth groups across the world appear to be somewhat similar. Youth groups will tend to listen to similar music and follow similar fashion trends. If you were to do a quick check of people's nationalities in a 18s-30s club in Mexico, you would find a very international clientele. You might have found that you can befriend foreign people of your same age easily because you share common interests.

2.       Demographic segmentation: Who?

A very popular form of dividing the market is through demographic variables. Understanding who consumers are will enable you to more closely identify and understand their needs, product and services usage rates and wants.

Understanding who consumers are requires companies to divide consumers into groups based on variables such as gender, age, income, social class, religion, race or family lifecycle.

A clear advantage of this strategy over others is that there are vast amounts of secondary data available that will enable you to divide a market according to demographic variables

3.       Psycho-demographic segmentation: Why?

Unlike demographic segmentation strategies that describe who are purchasing a product or service, psycho-demographic segmentation attempts to answer the 'why's' regarding consumer's purchasing behaviour. Through this segmentation strategy markets are divided into groups based on personality, lifestyle and values variables.

1.       Behavioral segmentation: Why?

Behavioral segmentation divides consumers into groups according to their observed behaviors. Many marketers believe that behavioral variables are superior to demographics and geographics for building market segments and some analysts have suggested that behavioural segmentation is killing off demographics. Typical behavioral variables and their descriptors include:

·         Purchase/Usage Occasion: e.g. regular occasion, special occasion, festive occasion, gift-giving

·         Benefit-Sought: e.g. economy, quality, service level, convenience, access

·         User Status: e.g. First-time user, Regular user, Non-user

·         Usage Rate/ Purchase Frequency: e.g. Light user, heavy user, moderate user

·         Loyalty Status: e.g. Loyal, switcher, non-loyal, lapsed

·         Buyer Readiness: e.g. Unaware, aware, intention to buy

·         Attitude to Product or Service: e.g. Enthusiast, Indifferent, Hostile; Price Conscious, Quality Conscious

·         Adopter Status: e.g. Early adopter, late adopter, laggard

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Types of Marketing Risks

Investing time, money and resources in marketing is critical to the success of most companies. However, like other business investments, marketing has risks. These risks exist within each critical element of marketing, including customer and product research, design and development, promotion, sales and customer service.

Pricing

Pricing strategies fall under the marketing umbrella. Companies must generally pick a pricing strategy that correlates with their brand and position. Some companies use low price strategies, while others have higher prices that tie to value-based or high-end solutions. A low price provider risks developing a reputation for poor quality and instilling a strong price orientation in the market. High-end providers can flop if product or service quality doesn't measure up to the price point. Midrange or value-priced businesses must work especially hard to project a desirable mix of benefits and fair prices.

Target Market

A target market is the group of specific customers a company targets with products, services and promotional messaging. One marketing risk is targeting the wrong type of customer and missing out on a more profitable market segment. A company can alienate customers if it inaccurately defines the market and its needs. Another risk is going after customers that don't align best with the company's product or service strengths.

Research and Development

Research is used to identify what customers want and to develop products that align with desired features and benefits. Research costs money. Thus, investments that don't lead to useful data and results are wasteful. Additionally, companies need to use multiple types of research and multiple studies to ensure reliability in results. Investing in product developing or promotion based on singular sets of data may lead to additional waste and missed opportunities.

Promotion

Some of the most expensive marketing risks lie in the area of promotion. This is the use of paid advertising, unpaid public relations and selling to convey company and product benefits to targeted customers. Companies can err by developing messages that aren't making an impact. They may also err by selecting the wrong media to reach the audience with the desired impact. Messages that make no impact are wasteful. Additionally, companies sometimes inadvertently use messages that offend targeted customers or the general public. Such mistakes can severely damage the company brand.

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Risk Analysis

Introduction

Risk Analysis is a process that helps you identify and manage potential problems that could undermine key business initiatives or projects.

To carry out a Risk Analysis, you must first identify the possible threats that you face, and then estimate the likelihood that these threats will materialize.

Risk Analysis can be complex, as you'll need to draw on detailed information such as project plans, financial data, security protocols, marketing forecasts, and other relevant information. However, it's an essential planning tool, and one that could save time, money, and reputations.

When to Use Risk Analysis

Risk analysis is useful in many situations:

·         When you're planning projects, to help you anticipate and neutralize possible problems.

·         When you're deciding whether or not to move forward with a project.

·         When you're improving safety and managing potential risks in the workplace.

·         When you're preparing for events such as equipment or technology failure, theft, staff sickness, or natural disasters.

·         When you're planning for changes in your environment, such as new competitors coming into the market, or changes to government policy.

How to Use Risk Analysis

To carry out a risk analysis, follow these steps:

1.     Identify threats

2.     Estimate risks

1. Identify Threats

The first step in Risk Analysis is to identify the existing and possible threats that you might face. These can come from many different sources. For instance, they could be:

·         Human – Illness, death, injury, or other loss of a key individual.

·         Operational – Disruption to supplies and operations, loss of access to essential assets, or failures in distribution.

·         Reputational – Loss of customer or employee confidence, or damage to market reputation.

·         Procedural – Failures of accountability, internal systems, or controls, or from fraud.

·         Project – Going over budget, taking too long on key tasks, or experiencing issues with product or service quality.

·         Financial – Business failure, stock market fluctuations, interest rate changes, or non-availability of funding.

·         Technical – Advances in technology, or from technical failure.

·         Natural – Weather, natural disasters, or disease.

·         Political – Changes in tax, public opinion, government policy, or foreign influence.

·         Structural – Dangerous chemicals, poor lighting, falling boxes, or any situation where staff, products, or technology can be harmed.

You can use a number of different approaches to carry out a thorough analysis:

·         Run through a list such as the one above to see if any of these threats are relevant.

·         Think about the systems, processes, or structures that you use, and analyze risks to any part of these. What vulnerabilities can you spot within them?

·         Ask others who might have different perspectives. If you're leading a team, ask for input from your people, and consult others in your organization, or those who have run similar projects.

2. Estimate Risk

Once you've identified the threats you're facing, you need to calculate out both the likelihood of these threats being realized, and their possible impact.

One way of doing this is to make your best estimate of the probability of the event occurring, and then to multiply this by the amount it will cost you to set things right if it happens. This gives you a value for the risk:

Risk Value = Probability of Event x Cost of Event

As a simple example, imagine that you've identified a risk that your rent may increase substantially.

You think that there's an 80 percent chance of this happening within the next year, because your landlord has recently increased rents for other businesses. If this happens, it will cost your business an extra $500,000 over the next year.

So the risk value of the rent increase is:

0.80 (Probability of Event) x $500,000 (Cost of Event) = $400,000 (Risk Value)

How to Manage Risk

Once you've identified the value of the risks you face, you can start to look at ways of managing them.

Avoid the Risk

In some cases, you may want to avoid the risk altogether. This could mean not getting involved in a business venture, passing on a project, or skipping a high-risk activity. This is a good option when taking the risk involves no advantage to your organization, or when the cost of addressing the effects is not worthwhile.

Share the Risk

You could also opt to share the risk – and the potential gain – with other people, teams, organizations, or third parties.

For instance, you share risk when you insure your office building and your inventory with a third-party insurance company, or when you partner with another organization in a joint product development initiative.

Accept the Risk

Your last option is to accept the risk. This option is usually best when there's nothing you can do to prevent or mitigate a risk, when the potential loss is less than the cost of insuring against the risk, or when the potential gain is worth accepting the risk.

For example, you might accept the risk of a project launching late if the potential sales will still cover your costs.

Before you decide to accept a risk, conduct an Impact Analysis to see the full consequences of the risk. You may not be able to do anything about the risk itself, but you can likely come up with a contingency plan to cope with its consequences.

Controlling Risk

If you choose to accept the risk, there are a number of ways in which you can reduce its impact.

You can use experiments to observe where problems occur, and to find ways to introduce preventative and detectiveactions before you introduce the activity on a larger scale.

·         Preventative action involves aiming to prevent a high-risk situation from happening. It includes health and safety training, firewall protection on corporate servers, and cross-training your team.

·         Detective action involves identifying the points in a process where something could go wrong, and then putting steps in place to fix the problems promptly if they occur. Detective actions include double-checking finance reports, conducting safety testing before a product is released, or installing sensors to detect product defects.

Summary

Risk Analysis is a proven way of identifying and assessing factors that could negatively affect the success of a business or project. It allows you to examine the risks that you or your organization face, and helps you decide whether or not to move forward with a decision.

You do a Risk Analysis by identify threats, and estimating the likelihood of those threats being realized.

Once you've worked out the value of the risks you face, you can start looking at ways to manage them effectively. This may include choosing to avoid the risk, sharing it, or accepting it while reducing its impact.

It's essential that you're thorough when you're working through your Risk Analysis, and that you're aware of all of the possible impacts of the risks revealed. This includes being mindful of costs, ethics, and people's safety.

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