Six steps to consider when planning to sell a product or service abroad
Step 1: The Company’s desire
The company’s international development needs an important knowledge and specific tools. It is imperative for the company to evaluate its ability to export and its preparation for the world market. The company has to know and do not underestimate its strengths and its weaknesses.The export diagnosis consists in evaluate several aspects of the company:
The production: capacity and adaptability
The investment: financial capacity to protect your brand, distribute abroad…
The product: To propose competitive products, responding to the market.
The management’s quality
Examples of questions that a company should be able to answer:
Are you willing to devote 30 hours a week from your schedule for export?
What would happen if your first order forcing you to double your production?
If your customers were asking for after-sales services (Return Merchandise, repair, information on the use of products, and so on.), would you be able to meet them?
Step 2: Market Research
Different possibilities are offered to target a foreign market and a market study would be more than useful in order to analysethe structure of:â— The offer: competitors, the environment, the main players.â— The demand: customers, purchase habits, prices implemented.â— The potential of the market: evaluate the success for the company compare to the size of the market. By doing this, the company can decide whether a market is attractive and decide whether or not to select it.E.g. When the French company Carrefour opened its first hypermarket in China, the market survey revealed that a Chinese consumer use to spend only 10 euros per week in order to buy foodstuff but they are very sensitive to the freshness of the products and to the markets’ conviviality. Thanks to its knowledge of this purchase’s criteria, Carrefour developed a unique positioning which use fresh and convivial axes. The shops had for example recreated a particular atmosphere introducing the rice in bulk with sales points of islands shaped pagoda.
Some service providers for International Market research
B2B International, Facts International Ltd, Metra-Martech, NMS International Marketing, Executives Onlines, Alliance-International, Ause-International, Mintel, Invest Northern Ireland
Step 3: Assure the product presence
In order to organize the products on a foreign market, the company has to choose between several options responding to the degree of presence needed for the sale network.
Controlled export, which gives it complete control over the development and implementation of its commercial policy. It could be franchising, company’s representatives, agents, or via the Internet.
By contrast, inexperienced newcomers look for partners or intermediaries, as it could represent benefit and knowledge from their market experience. It could facilitate the entry to the foreign market if the company has limited resources. It could be export traders, sales agent, importer, and licensee.
E.g. The international development of a company has to be done step by step. At the beginning often geographically close, then further far. It requires products which do not pose too many logistical problem, and sufficient added value to bear transport costs without ruining their price competitiveness. The organization of the company, its export orientation, its experience in this field will determine its ability to understand the market, to monitor and understand developments. Plus this capacity, the greater the company may consider a high degree of involvement, either in its trade policy (in the case of controlled export) or in monitoring it (case of sales by partners or intermediaries). But inside of each option, the requirements are variables in this domain, and certain cases are therefore more than others, the scope of the export beginner.Some companies and useful internet web site which help finding partners or intermediaries: Iride Global Limited, Export Partners, China Export Partners, The Global Business Exchange Service, UK Trade and Investment, The GLE Group, EnterpriseEurope Network
Step 4: Respond to the market needs
A product or a service may involve different changes to respond to the foreign demand, in terms of:
1. Price
The company has to set a price appropriate to the market. In particular, it is important to know the price of the competition and have a good idea of the psychological price that consumers are prepared to pay. The company has to take into consideration the cost of logistics, the distribution and the customs taxes.Fixing the selling price of a product or service is critical because it determines the profitability of the business and its survival. It often represents the main challenge faced by marketers. How to spend for example the price on the domestic market at prices in other markets? To succeed in a long term point of view, there could be no question of applying a coefficient or add to the selling price on the local market costs of logistics. This ignores a different competitive situation and does not take necessarily in consideration all cost elements. It is necessary to have a rigorous approach to define prices that allow the company to optimize its performance and that are also attractive to foreign buyers.
2. Product
The quality, the standards needed to tackle the market, the company’s image. As a matter of fact, respond to the customers needs would involve adaptation to the different markets in both a technical and commercial level. The brand and the packaging are as well as important. The company is facing some technical and quality standards. The non-compliance with these standards can have consequences such as
- a ban on entering the market,
- an immediate withdrawal of products and possible fines.
A company should study the technical requirements for its products, but also its security and environmental protection. The existence of an international standard developed by the International Standard Organization or another international organization simplifies this task.
A company holding an international standard represents a major advantage for customers is a mark of quality.
These elements participate to the product/service position and they facilitate the client’s choice.
3. Distribution
The company will have to select the best penetration method, and the distribution channels that best suit the market. It will include, in particular, gaining an understanding of the local distribution. On a new market, a company should emphasis sales agents, or importer-distributors without exclusivity, to give itself enough time to see how the market runs. It should establish later, if sales increase, higher costs partnerships, in order to control the sale process in a better way.
4. Communication:
The best means to attract costumers in a foreign country are important and it differs from one another. In the case of the search for new customers, the profile of prospects is based on results thanks to the market research and characteristics of existing customers of the company. Various means are possible, such as mail, Internet, telephone, attend trade shows ... .Some aid may be granted for the financing of prospecting, such as support regional Chambers of commerce, or regional bank.
Step 5: The communication
Two major possibilities for a company to communicate a product or service abroad:
Adaptation: The firm would have to take into consideration the main media which interest and attract the costumers taking into consideration foreign legislation, cultural context. This method would gives to the client a proximity effect. E.g. The famous beer 1664 from Kronenbourg became 1668 inAsia as the number 4 means the death while the number 8 refers to happiness.
Standardization: It will give a global image to the company. In this case the company would translate some elements such as slogans. E.g. The Nike company would communicate a sport image with famous stars, known in each country.
Logistics represents the entire flow from inside the company to outside, which has arisen from its relations with its suppliers, sub-contractors, partners and clients. There are 3 major points:
Efficiency: Good logistics depend on the control of merchandise, and notably the reduction of supplies and the ability to keep deadlines.
Quality: A good product delivered on time.
Productivity Experts estimate that the logistical cost of exporting can be up to 30% of the total cost of international sales.
For all transactions with foreign countries which are scheduled flows, the exporter must implement an organized approach to develop a comprehensive solution on transport. Indeed, if this is not the exporter himself who manage the conditions for the delivery of its products, it must rely on its foreign partner. But this is not desirable in most cases. It is important to remember that, whatever the sharing of risks and costs, the seller is always more or less held responsible for commercial deliveries to delay or damage of goods. His interest is in general optimizing, or at least monitor the delivery of its products.In terms of finance, companies have to take into consideration 4 points:
The company's business partners, in terms of credibility or honesty. The geographical distance separating them often prevents them maintaining close contact, which does not favour mutual trust. Furthermore, it is generally more difficult to obtain precise information concerning partners abroad.
International contracts: The currency variation which fluctuates in the exchange market could be a problem for your sale.
Delays in payment.
Your relationship with your client
The choice of payment instrument and technique of payment is dictated by the need to secure payment. This concern is needed in different ways depending on the context of the transaction. We can identify four factors that determine this choice:
Security for the seller and the buyer
The commercial accessibility
The cost for the buyer and seller
The reliability
Legal issues:
Measure the importance of the political and legal environments in each country.
Understand how the political actions of governments can expose your company to political risk.
Understand how political relations and treaties can affect international business
Have an overall view of the different laws, legal practises and principals which govern international business in order to manage as well as possible your company.
The question of law arose immediately in case of dispute, and sometimes even in the absence of litigation, for example as regards the form of rules applicable to a contract.
The natural response to this question is to refer to a national right. But there are necessarily two that are intended to apply, and they may be different. What place must be given the law to organize a society? This place is essential in the developed Western countries, where the contract is the basis of the economic and social organization and where it expects the law that sets standards of conduct. But some countries in the Far East consider the law as a suspected structure because it is estimated that human relations must be built on harmony rather than on the balance of interests.
Some international consultants for logistics, financial and legal issues:
