10 Patterns of foreign trade

Currently, foreign firms can participate in the Soviet market in a number of ways.

These include direct sales, trade through agents, production cooperation, the signing of licensing agreements, the creation of joint ventures.

Direct Sales.

The most common means of doing business with the USSR is through straight sales of foreign goods in exchange for foreign currency or Soviet-produced commodities (countertrade).

In a countertrade transaction the Seller agrees to take full or partial payment in goods.

Countertrade covers barter, counterpurchase, buyback. A barter deal involves an exchange of goods to an equal va¬lue. As a rule, little or no currency is involved.

Counterpurchase refers to short and medium-term transactions. The Western Seller commits himself to purchase an agreed value of the Buyer's products to help finance the original sale. The counterpurchase element of a contract may be about 10 percent of the total contract value.

Buyback refers to long-term contracts and is connected with the development projects supported with huge credits. Buyback involves two phases, one for the delivery of equipment to the Buyer and a second for the delivery of the end product to the Seller.

Foreign Economic Restructuring has affected the conduct of foreign trade, the banking system and the role of the Soviet enterprise in the economy.

The main points of the foreign trade reform are:

- enterprises now have the right to conduct foreign trade;

- industrial enterprises are allowed to maintain hard curency bank accounts;

- greater emphasis is made on exports and world marketing technique.

- inward investment by means of joint ventures is encouraged;

Some plants and factories team up with research centres to form a consortium. Their final objective is to sell the equipment produced in a package deal.

One of the most acute problems facing Soviet economy externally and internally is non-convertibility of the rouble which is a serious handicap in relations with its trade counterparts.

The Economic reform sets a task to make the rouble convertible.

11 «Positive» market segmentation

Market segmenting is dividing the market into groups of individual markets with similar wants or needs that a company divides the market into distinct groups who have distinct needs, wants, behavior or who might want different products & services. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private although industrial market segmentation is quite different from consumer market segmentation, both have similar objectives. All of these methods of segmentation are merely proxies for true segments, which don't always fit into convenient demographic boundaries.

Consumer-based market segmentation can be performed on a product specific basis, to provide a close match between specific products and individuals. However, a number of generic market segment systems also exist, e.g. the Nielsen Claritas PRIZM system provides a broad segmentation of the population of the United States based on the statistical analysis of household and geo-demographic data.

The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments can have different industry structures and thus have higher or lower attractiveness (Michael Porter). With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased leading to better reputation.

Market segmentation is the act of identifying and profiling distinct groups of buyers who might require separate products and/or marketing mixes. It is the process of splitting customers into different groups or segments, within which customers with similar characteristics have similar needs. Benefits:

1) marketers are in a better position to locate and compare marketing opportunities

2) marketers can easily and effectively formulate and implement marketing programs

3) marketers can make finer adjustments in their products and marketing communications.

4) Competitive strengths and weaknesses can be assessed effectively

5) Segmentation leads to more effective utilisation of marketing resources