Guide To Exporting
Having determined that you are ready to export (through the Export Readiness Quiz), the next step is to begin your export planning.
When your company decides to look towards foreign markets for selling your product(s) you need to make an Export.
Market research is an ongoing process. It assists you by guiding your business decisions and, in turn, your communication with current and potential customers. It helps you evaluate your success, identifying problems that are limiting your success and pointing out the strengths that are driving your success.
You should develop a cash budget which forecasts two to three years of cash you will need for your ongoing activities including exports. Have a longer term capital budget showing cost/benefit analysis of your export program and make sure you have clear objectives in mind. Establish your short-term (current operating activities, purchase of raw materials, goods and services, wages, etc.) and medium-term to long-term (facility modernization, new machinery, buildings etc.), financial needs.
Place refers not only to the target market for your goods but to all the variables involved in selecting the best way (or distribution channel) of getting your product to the buyer. At some point the responsibility for placement, marketing and promotion of your products will shift more to your partner’s area of responsibility. Therefore, selecting the best distribution channel is a very important part of any marketing process. This is even more so in a foreign market where you will need to rely on all of your market intelligence when coming to the vital decisions regarding the appropriate market channel.
Strategic export pricing is one of the most important factors in achieving financial success in your export business. It can also be quite complex and should therefore be given priority consideration when approaching a new market. 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? And be sure to investigate the competition.
Arguably, the most important of the Ps is “product”. “Product differentiation”, referring to how your product differs from those of your competition, is an essential practical issue with regard to understanding and developing your position in a new market. Differentiation focuses on the distinctiveness of the product and its attributes, its colour, size, style and packaging etc. Knowing your competition helps you to differentiate your product, to determine its strengths and how it may be improved and adapted to the new market. Your product must be different and distinctive in some way from similar products that are competing for the buyer’s attention.
In a highly competitive, developed market, a new product will not just sell itself (you may think your product is new, innovative and the best value for the price, but it is what the buyer thinks that is important). Additional effort is needed to promote the product and to do so in a methodical and sustained way. Promotion refers to all the elements that will create awareness of your product and its distinctive features in the market and specifically amongst buyers.
Import terms vary with individual importers. In general, quotations should be made f.o.b. foreign port (in USD currency if not otherwise indicated), including packaging, but may be requested c.i.f. to a named port. Payment for imports from traditional suppliers is generally cash against documents (CAD – the buyer assumes the title for the goods being purchased upon paying the sale price in cash).
There are four parts of trade terms including: general terms, inco terms (also known as Transportation), Partnerships terms, and Financing terms.
Regardless of which entry option that you select, it is essential to proceed with any partner or contact in the new market with care, knowledge, tact and accuracy. Remember you have only one opportunity to make a good first impression, but many chances to destroy a good business relationship. The key to a good first impression is good communication, and we will focus our discussion on this issue now.
As your preparations for exports proceed to the point where you are ready for market entry, consideration of the best entry strategy becomes a primary concern. Through the completion of various steps of your Foreign Market Strategy, especially the Marketing Plan stage, you will have considered various ways of actually getting your product to the market. Drawing from these elements, you must now evaluate which option for market entry is most suited to your needs and most likely to bring you long-term success.
The goal of market research is to identify the market best suited to your export endeavours (the target market) and to increase your understanding of this market in order to enable you to enter it most effectively for long-term success. Market research allows you to determine that an opportunity exists and minimizes the risk of going after it by uncovering and identifying potential problems. It helps you to gauge the market characteristics in relation to your products and plans, and to learn how a new market can be developed. Through market research, you can see who is presently supplying that market in your product area, your level of competitiveness (including if your product is up to standards, compliance etc.), potential partners, buyers and distributors and barriers to trade (tariff and non-tariff) among other things.
The method by which you will move your product to market depends largely on the target market (distance, climate, regulations, etc.), type of product (for example, fresh flowers need to be shipped to market under the fastest, yet highly controlled, conditions possible), who your buyer is (Importer, Agent or other) and how much of the logistics and distribution responsibilities of getting your product to the end-user they will control and manage (LCBO, the world’s largest single purchaser of alcoholic beverages.
There are ten components in a proper export plan together with the executive summary. These elements including introduction, organizational issues, products and services, export objectives and goals, target market overview, market entry strategies, regulatory and logistical issues, risk factors, implementation plan, and financial plan.
The international market is extremely competitive. Importers and retailers evaluate a new foreign product mainly based on price, quality, and reliability of supply. In order to succeed, you must offer a new product or be able to push aside competitors with a more attractive offer in terms of design, quality, price or service. Buyers evaluate potential exporter partners, based on key attributes such as a company’s reliability, experience, competence, ability to source their raw materials and a determined commitment to a long-term business relationship. You must therefore demonstrate your capacity to deliver the product in an efficient manner, with professional attention to servicing your exports and a commitment to careful development of the business relationship with the buyer over the long term. Any failure to give buyers excellent service will result in the buyer quickly turning to other suppliers. Good communication is key to your long term success.
TFO Canada improves lives through the creation of sustainable trade partnerships for exporters from developing countries with Canadian and foreign buyers.