Join Doug Ladd for an in-depth discussion in this video Exporting, part of Marketing Foundations: International Marketing.
- The ancient Greeks were amazing marketers. About 3,000 years ago, they had the dominant market share when it came to wine and olive oil. They produced more than they could possibly consume in a given year so they figured out how to export their bountiful yields. I'm sure there's a historian that might see it differently, but I like to give the Greeks some marketing credit. Over time, they realized they could make the wine appear more valuable by exporting it in elaborate vases. They invented the souvenir cup. As you are thinking about options to expand your business outside of your home market, one of the strategies to consider is exporting.
At its core, the exporting model is one that places the lowest burden on your organization, usually requires the least amount of cash and can be the fastest method to get you into a new market. However, there are some trade-offs. When you go with exporting as your strategy, essentially what you do is take product out of your facility, sell it to a second partner and then give up control on what happens next. As a result, your margins are going to be limited to what you can get your export partner to pay for the product.
In all likelihood, that partner is going to push for a lower transfer price because she is going to take a significant amount of risk to get the product through the distribution channels to the end consumer, deal with the regulatory and tax issues, address customer complaints and returns and battle with the competitors in the marketplace. If you don't have the money to build your own team and do all of these tasks and invest in creating the systems and business infrastructure necessary to make your business successful in a different country, finding an export partner may be the best option for you.
Choosing the right export partner is a critical first step. You can get good ideas on who's trustworthy and comes with a record of success by talking with the trade group or industry council in your sector of the economy, networking with other companies that export to gather references and success stories, connecting with the nearby foreign and commercial services division of the international trade administration. You can find them at buyusa.gov. Click on the option that says export products from the U.S. and then you can find the export assistance center near you.
The foreign and commercial services division offers a service where they would gather market knowledge for you, meet and interview potential partners for your export business, help you navigate the local laws and even assist with collecting payments from slow-paying business partners in the new geography. Best practice is to meet and interview at least two or three potential distributors for your product. You'll want to get comfortable with the level of commitment they will make. Some key questions include how many people will they be engaging on your business, what's their area of expertise, how much inventory will they carry and others.
Finding the right partner to export your product is an important first step but it's just the beginning. Think of this like a dating relationship. The relationship will require continuous nurturing, sharing, involvement and communication if it is going to grow. When you find the right partner, you may find you can make beautiful music together.
The course also investigates options for global expansion, such as exporting, licensing, joint ventures, and direct investment, and details how to put together a successful marketing mix using distribution, promotional methods, and translation. Plus, learn where to turn for more information about your specific target markets.
- The rise of the global consumer
- Learning about customers in global markets
- Accessing foreign markets
- Adapting products
- Balancing risks and rewards