1. KNOW YOUR TARGET MARKET
Select your market (country) based on the need you perceive for your product in that market. To find out IF there is a need for your product there are several sources you can tap: That country's embassy or consulate. Embassies are generally in Washington D.C., and depending on the size of the country, consulates are located in major or strategic cities around the USA. The local library. Find o t if they are on-line. If so, they might have access to a National Trade Data Base (NTDB) which is updated monthly. You can also subscribe to their service and receive monthly CD Rom.
2. KNOW YOUR COMPETITION
Find out who your competitors here in the USA are and where they export to. Who are their distributors or sales outlets in your target country. Find out who potential local competitors are in that country and where their products originate from. Find out pricing information if you can. Again, embassies and consulates as well as that country's trade mission (if any) and their chamber of commerce (here and local) may be helpful.
3. SHOULD YOU GO INTO THAT MARKET?
Now that you have this basic information you need to decide if it will be worth your effort to proceed with this country. Usually the decision to market in a new country has far reaching effects on product development, pricing, financial and staffing. Do you need to conform to special laws and standards? (i.e. ISO 9000, metric etc.). Does your product come under export restrictions? (strategic high tech products). Does your product require specially trained technical support? Do you need to translate documentation? (Warning! Translations need to be done into the translator's native language; he/she must be familiar with your industry).
4. DISTRIBUTOR vs [OWN] SALES REPS
Should you market your product yourself, or through a distribution network. Using your own sales reps means they are your employees and therefore you have "control" over their sales efforts. It also gives you "presence" in that country. The downside is, that it is expensive, you pay them whether you sell anything or not. Unless you are there physically you don't really have "control" over their activities and there is a ramp up time since most likely they don't hit the ground running. Distributors, in contrast, are established companies with their own presence, infra structure and [hopefully] success. They are already staffed and have a market established and they may have already a pipeline (prospects) for your product. The downside is, that they usually represent many other products as well.
5. HOW TO CHOOSE A DISTRIBUTOR
The U.S. embassy in that country can help locate distributor candidates for you. There is a fee associated with that; check with the Department of Commerce (DOC). You can also check trade directories for the Region (where available) and local trade publications for ads from distributors. You may want to ask another company which has similar products to yours (not competitive) and find out who they are using in that country. That country's embassy/consulate often has such directories as well. After you contact potential distributors find out who they are representing, how many products, how many sales reps they have, what their annual volume is, what they feel the market for your product might be, if they have technical support people (if that's what's needed for your product). When you have interviewed several potential distributors (on the phone, fax or e-mail), spend the money and visit the country and meet them personally. You will also get a first hand feel for the market. That is very important. You may want the same distributor represent you in several countries. (i.e. all that use the same language such as Austria, Germany and parts of Switzerland). Be cognizant of cultural and language differences! It, might however, be better to have one distributor for each country (not all eggs in one basket). In South East Asia it is different. Often one distributor has several countries because the markets may be small (Hong Kong, Singapore, Thailand, Malaysia etc.).
It is of utmost importance that you execute a distributorship agreement (or sales rep agreement) which has been reviewed by an attorney with international contract experience. It should contain, aside from the boiler plate clauses, length of term, information to what degree the distributor has the right to disclose information, pricing policies, discount policies, technical support policy, training, customer training, who pays for documentation, translations (if applicable), commissions and/or royalties, and sales quotas. If a distributor wants and gets exclusive geographic rights, then quota requirements are a must. If distributor does not make quota for a specified number of times, h can lose the distributorship or the exclusive status. Establish policy on multi-national accounts, "house" accounts, third party sell, etc. Will you provide sample product and/or demonstration products?
You have to consider what kind of support your distributor or sales rep will get. If it is an "easy" product may be very little technical support is required. High tech products like hardware and software require skilled technical support not only from you to the distributor but also from the distributor to the customer. You need to maintain a state-of- the-art level of support at the distributor level. For that he either needs to attend training at your location here in the USA or you need to provide that training at his location. Who pays for it? (needs to be in the agreement). US Manufacturers often provide frequent visits to their distributors. Some technical support visits, some marketing/sales political visits.
8. POTENTIAL FOR YOUR PRODUCT(S)
Establish what the potential market for your product is. Although a variety of market research may be available from the country's embassy/consulate or DOC, trade publications etc. you may have to do some search yourself through local channels. What is the "life" for your product? Is it something consumers will purchase on a long term continual basis or is it a seasonal product or fad. Is it a capital purchase which requires regular maintenance long term. Is there residual income from maintenance, support, value added services?
9. COST OF MARKETING OVERSEAS
When putting together the marketing plan, cost of marketing overseas is a major consideration. If you decide to market in one country, how much more expensive would it be to market to a number of countries in the same region. Cost factors are travel and related expenses, regional and local trade shows, local training, documentation, translations, added technical and other support, communication cost (tel/fax), licensing (export and local), adaptation to local standards and laws (i.e. 220V/50Hz), conversion of CCIR and not the U.S. format).
10. LONG TERM COMMITMENT
When a decision is made to sell a product in foreign markets, it is a long term commitment. The first 12-18 months are difficult at best and most likely will not show our company and product must build a customer confidence. Only a long term commitment will provide this. When making a marketing plan, it should contain sales and cost figures for at least 5 years, which are updated annually and reviewed quarterly. If approached properly, a comprehensive business plan is essential.
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