Having a clear idea of exactly what you are hoping to achieve by exporting will give you the best chance of success.
Future export success requires the following:
|1.||HAVE A LONG-TERM VIEW|
|2.||CONDUCT THOROUGH PLANING|
DEVOTE TIME FOR THE PREPARATION OF:
UNDERSTAND THE PRICING OF YOUR PRODUCTS AND SERVICES:
|5.||BE PREPARED TO VISIT THE TARGET MARKET|
MANAGE YOUR INTERNATIONAL BUSINESS RELATIONSHIPS
UNDERSTAND THE IMPORTANCE OF DETAIL AND QUALITY
Let’s take a closer look at the things to consider.
A company's size has little influence on their success in an overseas market. The foundation for success comes from the long-term commitment and investment by senior management. This provides the financial and human resources support required for long term success.
It is inevitable that a company will experience problems and difficulties on an export journey. These issues will require additional effort and the unwavering support of senior management - which is essential. The organisation must be seen to support their strategy and staff for the long run.
Areas that require thorough planning are covered in detail throughout the International Business Section of the BIG Hub.
Establishing in a new market requires considerable funding. One of the major barriers companies experience in realising their export potential is the cost associated with developing their distribution networks and general marketing activities. Developing an export market is equal to creating a whole new business requiring an export market plan with budget forecasts, performance measures and targets.
Once you’re confident that your business can handle the financial challenges of exporting, the next step is to put together an export strategy.
Preparing Company and Marketing Collateral
The preparation of marketing collateral and developing a company profile are covered in the fact sheet on The Company Profile - first steps to your export journey.
Preparing for market ready Products/Services
Market research may have identified the need to adapt products or services to suit the target market. For example:
Market Research – understanding the market
It is essential to thoroughly research potential export markets. Good market research will help identify promising opportunities; indicate potential barriers; and help to minimise or eliminate mistakes that could prove costly.
Market research is covered in Selecting and Researching your Export Markets.
Cultural Differences - understanding what they are and how they can influence the outcome
Business cultures and ethics differ from country to country. An exporter will need to understand the local culture and customs when doing business in an export market. You will find that business is nearly always conducted by the business rules, culture and customs of the export market.
There may be language barriers in non-English speaking countries that may require your product/service and promotional collateral to be translated. Where English is not the primary language, negotiations may be frustrated or stall because of misinterpretations and misunderstandings. Ensure you understand the local culture you are about to introduce your product or service to. It may be the difference between success and failure.
After you have conducted market research you can decide which pricing model will work best for your products and services – cost plus or top down pricing. Price will be influenced by many of the factors that are particular to the sector; impacted by the distribution channel; freight method; the currency; and nuances within the target market.
Exporters should consider all models when establishing their product/service overseas before deciding on the one they believe is right for them in the market. Exporters may seek to set the lowest possible price with the narrowest of margins generating a loss – which may be acceptable in the establishment phase and not long term.
Market research should identify the elements that will affect the final costing some of which may include tariffs; quotas; sales tax; plus it could also identify previously unknown add-on costs.
Most importantly a company needs to consider how much the customers in the target market are prepared to pay for the product or service. You might find that: you need to modify your product or service to adjust the price to suit the market; that the price point puts you in the high end - making your product/service more expensive; or you may discover that the target market is not suitable and research another market.
A distribution agreement is the legal document that defines the terms and conditions between the parties and includes: the products/services for sale; the territory; pricing; payment terms; transport; the distribution channel; warranties; conflict resolution; jurisdiction; etc. The agreement should also convey intent; so there is a clear understanding, by both parties, of the relationship; product education; marketing support; and sales expectations.
For more information on distribution agreements refer to the International Distribution Agreement Checklist.
Visiting a prospective market is essential for understanding the needs of potential customers; the business culture; local customs; and competitors in market. Market visits are covered in detail in Visiting the Market.
Successful exporters are engaged with their contacts in market. They develop strong trusting relationships and are seen as partners to the business.
It is important that exporters view their future agents/distributors as members of the business. It is very easy to overlook them and not provide the attention they need to engage and develop a loyal partnership. This is evident in Asia where regular contact is expected; demonstrating your commitment and long-term interest. A lack of communication can be perceived as a lack of commitment and interest in the relationship; leaving the Asian company disconnected.
You spend a great deal of time supporting your domestic sales network; now include a cultural difference; potential language barrier; distance; time change; and many more differences. This gives you some indication of the support and effort that is required to make your export relationships a success.
Being a successful exporter also requires a significant time commitment right across your business, so confirming support within your business for an export project allows you to proceed with confidence.
It is important that exporters pay attention to detail - particularly with documentation and their promises. This can seem simple but the consequences of not focusing on detail can be serious. Successful exporters stand out for their attention to detail; commitment to timelines; commitment to contractual or other obligations; and their commitment in providing high quality goods and services.
Ai Group can assist companies wanting to research new markets, please email email@example.com and request a free consultation.