Happy CEO

You have achieved a market study, prospected targets and identified potential clients interested in your offer ?

It’s time to take action. Hereafter a last check-up before the GO.

Export diagnosis. Simple approach to optimize your market research.

To define your company’s development strategy and adopt a coherent dual sectoral and geographical approach, international information on foreign markets must necessarily be collected. These datas will allow you to measure the accessibility of the market, its potential and the risks that you may have to manage.

“Creation comes before distribution, or there will be nothing to distribute.”

Ayn Rand

The key principles to know your product fit

As a first step, already select countries before deciding to export. You shall consider the following criteria into account :

• Economic-political data : market size, administrative constraints, financial situation of the country and stability of the political regime.
• Economic growth : demography, development plans and development aid.
• Other variables : Cultural identity, language, distance, state of infrastructure, image of your own country, culture, brand, purchasing behavior…

These sources of information will come from public or private entities that offer macro and micro economic databases of markets accessible on paper or on the net.

Start asking yourself the following questions:

• Product and administrative constraints : will it have to undergo modifications ?
• Additionnal technical, customization requirement ?
• The local offer and the competition ? Market prices ?
• Specific taxes of import into the chosen country?
• Transport cost ?

Go on site! You shall complement this data with a field study in order to verify the accuracy of the information. Visit distribution channels, potential customers or partners, observe consumer behavior…
Immerse yourself in the local market and culture.

If you have more budget, you can complete these studies with external services carried out by specialized organisations abroad.

Product check-up

Do your products require constraints? (storage, image, after-sales service, etc.)

• What will be the real added value that you will argue during your appointments? (novelty, rarity, luxury, price…)
• What are my real capacities for production, extension, adaptation?

Price check-up

Remember to include the following elements in your price:

• Distributor price / Final customer price
• Transport fee
• Cost of Packing (Air or maritime transport? What type of Container? Which Incoterm ?…)
• Agent commission
• Miscellaneous expenses (planes, hotels, etc.)
• Installation on site
• Customer training
• Translation and printing of user manuals and training manuals.
• Extra margin for negotiation.
• Drafting of the matrices of your commercial contracts.
• Import charges that will be applied for info not to appear.

The terms of payment and the resulting methods are generally defined in the terms of the contract. Cash settlements or credit settlements (the most commonly used bill of exchange).

Means of payment :
It is necessary to distinguish between instruments and techniques:

Instruments :
Check,
Bill of exchange: bill of exchange: draft
Promissory note
Transfer: swift

The techniques :
Simple collection,
Against reimbursement,
Documentary collection
Documentary credit,

Cash payments are risky (misunderstanding of the partner and also in terms of the time that will elapse between the delivery of the check or transfer and its collection.)

Documentary payments offer more security but will be subject to the submission of certain documents:

• Documentary delivery: the customer verifies the conformity of the documents then after having seen the goods, if he wishes, pays the supplier or his intermediary banker. For the documentary remittance, it is first necessary to gather certain documents, then to write the letter of instruction and finally to monitor the collection (especially if it is a cash payment).
  
• Documentary credit: its management is divided into 3 phases: its drafting, its processing and finally its reception. The management of the documentary credit imposes several constraints and precautions of use and requires the collaboration of the buyer who will communicate the documents which will be necessary for him. Once complete, the file will be verified by the bank, which will grant acceptance of payment. Always be sure to open a documentary credit available in a French bank.

To cover the risks : the documentary credit, if it is irrevocable and confirmed, provides all the necessary security, except if your goods cannot be delivered. Be sure your business is covered by an insurance.

You can also demand full payment for the goods before delivery (stocks must then be non-perishable).

If, despite all your vigilance, you are faced with payment incidents, you can call on collection agencies. As a last resort you will have the choice between arbitration or the courts

Promotion check-up

It is important to take into account the intercultural aspect of export exchanges with people from different cultures or countries. This notion must always be kept in mind, especially when it comes to developing a communication strategy.

Centralize communication needs. Manage certain communications operations internally and outsource all or part of operations requiring specific expertise or taking too much time (translations, fairs, website, etc.)

Budget the costs generated by all these actions by isolating them by major items:

• Website, translations, Content management, Sales documents
• Community management, Direct marketing
• SEO, SEA (Search Engine Optimization or Acquisition), Press Relations, Advertising
• Communication & Events : Fairs, Public Relations

Place Check-up

Now you need to define your sales strategy.

Define your objectives based on your analysis of the following two points:
Speed of penetration of your product on the market (long / short cycle)
Mastery and control that you wish to have over your distribution policy

DIRECT OR AGENT ?
Direct trade or via intermediary? It all depends on the commercial margin granted to the subcontractor.

You want to fully control your distribution policy, opt for:
A direct establishment with recruitment of employees or commissioned commercial agents, Franchise, Merge & Acquisition, Joint venture.

You want to sell through distributors, (control will be almost zero) but also synonymous with saving time.

• Exclusive agents,
• Authorized distributors (who also provide after-sales service and marketing)
• Non-exclusive agents, non-authorized distributors
• Export management companies
• Purchasing centers
• Licensing

Above all, from experience, be clear and precise on the amount of the commission but even more on the ancillary costs (support, planes, hotels, etc.)
Do not try to “bypass” your intermediaries, except in cases of unfair behavior.

“If you control your distribution, you control your image”.

Bernard Arnault