Introduction to Exporting - Part 5

Chapter 5 - Developing Your Export Marketing Strategy

Understanding Export Marketing Plans

Long before you fill your first order, you’ll need an export marketing plan. While you’re developing it, remember not to confuse marketing with advertising, sales or promotion. Marketing is strategy. The other three are the tools your strategy will use to reach your target audience.

A good marketing plan should answer the following questions. According to your research, what are the characteristics of your target market? How do your competitors approach the market? What is the best promotional strategy to use? How should you modify your existing marketing materials, or even your product or service?

The Many P’s of International Marketing

The 4 P’s of marketing are commonly referred to as the marketing formula and include:

Product                                —what is your product or service and how must it be adapted to the market?

Price                                      —what pricing strategy will you use?

Promotion                           —how will you make your customers aware of your product or service?

Place                                      —how and where will you deliver or distribute your product or service?

International trade is more complicated, and adds 9 P’s to the list to produce the 13 P’s of international marketing. They are:

Payment                              —how complex are international transactions?

Personnel                             —does your staff have the necessary skills?

Planning                               —have you planned your business, market, account and sales calls?

Paperwork                          —have you completed all the required documentation?

Practices                              —have you considered differences in cultural and business practices?

Partnerships                       —have you selected a partner to create a stronger market presence?

Policies                                  —what are your current and planned policies?

Positioning                          —how will you be perceived in the market?

Protection                           —have you assessed the risks and taken steps to protect your company and its

intellectual property?

Building Your Export Marketing Plan

Because marketing is an ongoing activity, your marketing plan is a work in progress that you’ll modify continuously. As you develop it, consider the following questions:

• What is the nature of your industry?
• Who are your target customers?
• Where are they?
• What is your company’s marketing strategy?
• What products or services do you plan to market?
• How will you price your products and services?
• Which segment of the market will you focus on?
• Does your marketing material accurately convey the quality of your products or services and the professionalism of your company?

As for content, a good marketing plan is closely related to your export plan and should contain the following:

Executive Summary—state the purpose of your marketing plan. This provides an overview of your objectives and how the plan will be used in your exporting strategy.

Product or Service Analysis—give a clear description of your export product or service, its unique selling points and how marketable it might be internationally.

Market Analysis—describe your target market in terms of size and trends. Include key economic, social, political and cultural characteristics, a profile of your target customer, buying patterns and factors influencing purchasing decisions.

Competitive Analysis—analyze the competitiveness of your product or service. This will help you to position it effectively in your target market, and to decide pricing and marketing strategies.

Goals—state your objectives in terms of market share, revenue and profit expectations. Indicate the position you would like to occupy in the target market and explain how you will go about achieving it.

Marketing Strategy—describe your marketing strategy, including information on specific product or service pricing recommendations, mode of delivery and proposed promotional methods.

Implementation—list the activities you’ll undertake to carry out your marketing plan, indicating target dates and who will perform the activities. Prepare a detailed marketing budget.

Evaluation—design a method of evaluating your marketing plan at various stages to determine if your goals are being achieved and what, if any, modifications may be needed.

Summary—include a half-page summary of your marketing plan goals, describing how they fit into your overall export plan.

Setting Prices

Strategic pricing is one of the most important factors in achieving financial success in your export business. Part of setting a realistic export price, and therefore an appropriate profit margin, is to examine production, delivery costs, competition and market demand. You should also understand the variables of your target market and other export-related expenses such as:

• Currency exchange rates;
• Market research and credit checks;
• Receivables/risk insurance;
• Business travel;
• International postage, cable and telephone rates;
• Translation;
• Commissions, training charges and other costs involving foreign representatives;
• Consultants and freight forwarders; and
• Product or service modification and special packaging
   
  Market Demand

As in domestic markets, demand in foreign markets can affect your price. In other words, what will the market bear? For most consumer goods, per-capita income is a fairly good way to gauge a market’s ability to pay.

It’s true that some products or services may create such a strong demand that even low per-capita income will not affect their selling price. Generally, though, simplifying products or services to reduce the selling price may be the best option in less affluent markets.

Remember that currency valuations affect affordability. Your pricing should try to accommodate currency fluctuations and the comparative value of the US dollar.

 

Competition

In domestic markets, few companies can set prices without considering their competitors’ pricing. This is also true in exporting.

If you have many competitors in a foreign market, you may have to match or undercut the going price to win a share of the market. If your product or service is unique or new to a market, though, you may be able to set a higher price.

 

Pricing Strategies

How will each market affect your pricing? To begin with, you have to include things like product modifications, shipping and insurance in your calculations. And as mentioned above, you can’t ignore your competitors’ pricing.

Refer to your market objectives when setting your price. For example, are you trying to penetrate a new market? Looking for long-term market growth? Or pursuing an outlet for surplus production?

You may have to tailor your marketing and pricing objectives to certain markets. For example, pricing strategies for developing nations, where per-capita income may be low, will differ from your objectives for high per capita markets. This all means that you have several pricing strategies available:

Static Pricing                                     —charging the same price to all customers.

Flexible Pricing                                   —adjusting prices for different types of customers.

Full Cost-Based Pricing                 —covering both fixed and variable costs of the export sale.

Marginal Cost                                    —covering only the variable costs of production and exporting, while you pay overhead and other fixed costs out of domestic sales.

Penetration Pricing                         —keeping your price low to attract more customers, discourage competitors and gain quick market share.

Market Skimming                            —pricing the product high to make optimum profit among high-end consumers while there is little competition.

After you’ve determined your costs and chosen your pricing strategy, establish a competitive price for your product or service that gives you an acceptable profit margin.

 

Promotion

The outcome of your promotional strategies can make or break your export venture. In this context, promotion refers to all the communications tools you use to convince people to buy your product or service. They are:

Advertising—carefully select the media that have a wide circulation within your target audience. If few people have televisions, is radio a better bet? Or print?

 

Promotional Materials—you may need to redesign your marketing materials and packaging to remove elements that are inappropriate, offensive or meaningless in the target market. You’ll also need to translate these materials into the native language, so be prepared to hire a professional translator with experience in commercial and business writing. And before you use the translation, have it double-checked by a native of the country.

 

Direct Mail—a targeted direct mail campaign can be very effective. Research and experience in your target market will help you build a base of potential buyers and clients to whom you can direct your company’s message.

 

Media—publicity via the media is a good way to establish awareness, profile and credibility. Prepare a media kit that introduces a profile of your company, new products/ services or newsworthy activities. Include copies of any articles published about your company.

 

Personal Visits—personal contact with potential clients is perhaps the best means of promotion. Many cultures value such contact in their business relationships. Your attention to it can impress your foreign contacts.

 

Trade Shows—attending or participating in international trade shows is an excellent promotional method. It also allows you to check out the competition and do market research.

 

Internet—it’s generally assumed that a business will have a website. A well-designed site can help your export venture in many ways, from promotion to customer service. Be prepared to commit time and money to keeping the site up-to-date, though—an outdated site can do your enterprise more harm than good.

Marketing Tools

Getting your marketing tools right is crucially important. Here’s a list of things to remember about them:

• Business Cards should be:

• Professionally designed and of high quality;
• Easy to read;
• In the appropriate language;
• Consistent throughout your firm;
• Distinctive and informative; and
• Up-to-date and complete, including area codes, country, telephone and fax numbers, postal code, e-mail and website addresses

• Brochures should be:

• Creative and appealing;
• Informative and easy to read, highlighting your uniqueness;
• Professionally designed and printed; and
• Visually pleasing

• Customer Testimonials should:

• Show that your company is highly recommended;
• Represent your best customers;
• Be from top executives; and
• Be included in your brochure

• News Articles should be:

• Clear in stating that your company is a recognized leader;
• Quoted in your brochure;
• Reproduced on your letterhead;
• Displayed in your office; and
• Sent to potential clients

• Videos should be:

• Sophisticated and interesting;
• Professionally produced;
• Oriented to the quality and benefits of your product or service;
• Clear and concise; and
• Easily available

• Websites must be:

• Comprehensive and informative;
• Professionally designed;
• Visually pleasing;
• Up-to-date;
• E-mail enabled; and
• Capable of allowing online purchasing (if appropriate)

Pricing Checklist

Use this handy checklist to track your costs and develop your pricing strategy.

• Marketing and Promotion

• Agent/distributor fees
• Advertising, media relations
• Travel
• Communications
• Materials (brochures, business cards)
• Trade fairs and exhibitions

• Production

• Unit cost of manufacture
• Product or service modification
• Preparation
• Labelling
• Packaging
• Packing
• Marking

• Documentation

• Inspection
• Certification
• Document preparation
• Cargo insurance
• Freight forwarder’s fees

• Transportation

• Lading and related charges
• Carriage
• Warehousing and storage
• Insurance
• Customs
• Customs and others duties at port of entry
• Customs brokerage fees

• Financing

• Costs of financing
• Interest charges
• Exchange rate fluctuations
• Export credit insurance