Here are some of the advantages and disadvantages of using sales agents to distribute services and products:

Advantages:

• Established distribution and delivery system in the market
• Offer services such as receiving goods, clearing through customs, warehousing and delivery
• Established network of customers for organization’s products and services
• Familiarity with local business practices and regulations
• Less expensive than hiring, training and paying benefits and wages to sales representatives

Disadvantages:

• May also represent competitor’s products and services
• Lack of loyalty
• Lack of motivation to sell organization’s products and services due to low agent risk
• Added costs if subsequent sales are required from agents to distributors
• Decreased direct contact with end-user

It is important to thoroughly research and screen potential sales agents prior to entering into an agreement. Organizations should seek information on the specifics of the relationship, the sales and marketing strategies that the agent will employ, the agent’s reach within the target market, and their technical capacity. It is also critical to request and verify business references.

The questions to ask of potential sales agents will change depending on the specific needs of the organization and the type of product or service being sold. This list is not exhaustive but provides an example of the information that exporters should gather and use to screen potential sales agents.

The Relationship

1. Why do they want to act as an agent or representative for your company and product?
2. Who will be your main point of contact at their company?
3. Is it possible to have direct, face-to-face meetings?
4. Will any of the processes required for selling your product be outsourced to third parties? If yes, who are the third parties?
5. What support do they expect from your company?
6. Expected sales volume (broken down by time frame, e.g. year one, months one to three)

Sales and Marketing

7. What is their marketing strategy, e.g. how will they build your brand, what medium will be used (social media, print, web)?
8. What is their sales strategy?
9. Do they plan on using any images, logos or information other than those provided by your company?
10. How large is their sales force?

Reach

11. Where are they located and what is the extent of the territory they cover?
12. Are they currently selling any similar or competing products?
13. How many companies are they currently representing?
14. What competitors do they face and are those competitors selling any products that are similar to, or compete with, your product?

Technical Capacity

15. What methods of stock control do they use?
16. Can they describe and provide market intelligence on the territory that they will cover?
17. Do they have previous experience with the type of product you sell?
18. Does their sales force understand, or have the capacity to understand, any technical requirements of your product?
19. Are they qualified to provide after-sales services?

Business References

20. Asking for references is an absolute must. Inability to provide references should be considered a red flag.
21. Other data to access, if possible, such as a business plan or financial statement

Contracts with sales agents should specify the territory the agent is responsible for and whether or not exclusive rights to sell within that territory are granted. If an agent requests exclusivity in a country or region, exporters should first consider whether the agent can provide effective and efficient coverage. Inadequate coverage, or inability to apply sufficient marketing, sales and follow-up efforts in the region, could translate into loss of prospective sales.

Contracts must also stipulate how sales agents will be paid. The most common method of payment is commission. Other financial details that should be addressed in agent contracts include what, if any, expenses will be covered by the exporter, as well as any compensation payments that the exporter may need to pay if it decides to terminate the relationship. The specific conditions that would initiate the termination of the contractual relationship should also be defined.

This relationship can be complicated by the fact that the exporter may be held responsible for the agent’s actions or for shortfalls in the agent’s earnings if the exporter fails to supply adequate stock. Organizations should seek legal advice before signing a contract with an agency.

The post 21 interview questions you should ask potential sales agents before hiring them appeared first on Trade Ready.

• Customer
• Consistency
• Creativity
• Culture
• Communication
• Change
• Channel

1. Customer

A company’s marketing strategy must be focused on its customers. The marketer must understand the customer as a person, not just a target market.

Once companies understand the target customer, they can adapt their product or service and even their brand to appeal to the target customer. Adapting to suit the target customer must be a continuous process if companies hope to succeed.

2. Consistency

At one time or another we have all seen mixed advertising messages coming from the same company.

Mixed messages often result in confusion. A confused customer is not a confident customer. A customer who is not confident in a product or service will look elsewhere. Marketing communication messages must be consistent, so the target customer gets the value proposition that the company is offering.

3. Creativity

Advertising is everywhere. Marketers have to find creative ways to get their target customer’s attention. Marketers have to dream up new and innovative ways to inform, educate and persuade target customers.

Want to learn more about how to Increase your reach, decrease costs and enhance the customer experience by developing an easy-to-use e-commerce operation? Check out the FITTskills International Sales & Marketing online course.

4. Culture

In order to reach a global audience, marketing messages must have a broad cultural appeal. Alternatively, specific marketing messages can be delivered to specific cultures. Companies cannot assume that everyone behaves and responds as their culture does. Such an assumption can harm companies.

5. Communication

No one likes “in your face” marketing messages. Nor do people appreciate being “marketed to.” Most people prefer to be “communicated with.”

The right communication message informs, educates and persuades the target customer in a way that they understand—it gains the target customer’s trust.

6. Change

Marketers need to continually adjust their marketing strategy to accommodate the changing target customer, societal changes and especially technological changes. Trying something different is likely what it will take to get the attention of the target customers. Even the company itself may change. Marketing communication messages must reflect all of these potential areas of change if they are to be effective.

7. Channel

The transformational impact of the Internet on many modes of human interaction cannot be denied. The ability of companies to access global markets through a well-crafted online presence is particularly well recognized. Relatedly, the ability of competitors to target a company’s domestic market from remote corners of the globe presents a unique challenge for managers, including marketing specialists.

Web presence has evolved far beyond the option of maintaining a static website to engaging much more directly with customers, business partners, prospects and others via social media.

Facebook has taken on a decidedly more commercial flavour over the last few years, and Twitter has proven very effective as a mode of engagement as well.

The number, variety and positioning of various social networks is huge and increasing by the day so that a comprehensive listing of such platforms is difficult to gather and would be obsolete within very short order. International marketers must consider appropriate leverage of various social networks, and they must plan for the effective use of other new emerging mechanisms.

The post The seven C’s you need to organize your marketing strategy appeared first on Trade Ready.

Cash flow planning is one of the most important aspects of running any business, and it is particularly important for companies in international trade. It can mean the difference between success and failure. Without cash, businesses cannot pay their suppliers and employees, or meet their financial obligations to their lenders and shareholders.

Ensuring that the firm has enough cash or operating credit is a principal duty of the people responsible for the financial operations of the business.

This planning is usually done by means of budgets that set out a forecast of expected cash receipts, expected cash disbursements, and the calculated cash surplus (to be invested) or shortfall (to be borrowed) over regular intervals.

The budgets are prepared on a period-by-period basis (i.e., weekly, monthly, yearly, etc.); the period chosen depends on the detail available to the firm, the nature of the firm’s operations, and the reason for which the information is being prepared.

Cash flow planning for international trade transactions can be much more challenging than in domestic operations. This is because of the multitude of factors that can restrict the receipt of funds or lessen the value of the funds received. In particular, firms trading abroad must anticipate exchange rate fluctuations, transmission delays, exchange controls, political risks, and slower collection of accounts receivable.

Here are the top 5 factors and how they affect cash flow:

1. Exchange rate fluctuations

Exchange rate fluctuations can reduce the value in Canadian funds of the proceeds from a sale, or can increase the value of the funds needed to pay for a transaction. Unless planned for and controlled through risk management techniques, such fluctuations can seriously undermine expected cash flows.

2. Transmission delays

Transmission delays are an often-overlooked cost of doing business abroad, but they do affect cash flow. International shipments and the resulting payments are complex enough already; delays can slow the transmission of funds from the paying country to the receiving country by a few days to several weeks.

The cash budget must take into account the possibility of technical or bureaucratic delays along the payment chain.

The delays may be the result of improperly completed documentation, or they may arise from foreign administrative procedures. New exporters may be able to plan for the types of delays experienced in their domestic business, but they can be unpleasantly surprised when international business delays are far longer than they expect.

3. Exchange controls

Exchange controls can prevent or restrict the payment of funds by the trading parties in a particular country. Such controls result from the host government’s attempt to conserve its hard currency reserves.

Often enforced by a cumbersome and lengthy system of foreign currency authorization, these regulations impose more problems for capital repatriation transactions than for payment of arm’s length invoices. At times they can result in all payments being stopped.

This can have a devastating effect on a firm’s cash flow, and it should be insured against if the amounts involved are relatively large.

4. Political risks

Political risks can also severely affect a firm’s cash flow. For instance, the revocation of an export or import permit frustrates performance under an international trade transaction.

In the meantime, the exporter may already have covered the costs of arranging for the export sales or preparing the products for shipment. Such a situation will have an obvious negative impact on cash flow.

5. Slower collection of receivables

The slower collection of international accounts receivable can strain a firm’s cash position. To avoid this, care must be taken to select appropriate payment terms for each foreign buyer, and to factor likely delays into the cash budget.

If the receivables involved are substantial, the Canadian exporter should use export credit insurance or export receivables discounting facilities in order to avoid excess risk.

The factors listed above show how conditions of international trade can undermine a company’s cash position. Companies can take measures to reduce or avoid such risks, but only if they know of the risks in advance. Cash flow planning is the way for a company to identify possible problems and defend itself against them.

The post These 5 factors will change the way you manage your cash flow appeared first on Trade Ready.

Many companies adopt an incremental approach to marketing—they start local and then go international. For those companies that go international, several distinct evolutionary stages have been identified:

1. Domestic marketing

Companies in this category are primarily preoccupied with their domestic markets and management is typically not interested in exporting. Management is willing to fill unsolicited orders from abroad but makes no effort to explore the feasibility of active exporting or to assign specialized staff to this function.

2. Pre-export stage

This will involve some in-depth international trade research. One of the most important things to determine during this stage is the market segment and therefore audience you will be targeting with your new strategy.

The inherent nature of a specific market segment or geographic market can vary greatly from one target market to another. A key element of the strategic planning process is to identify which target markets are appropriate for the company’s products or services.

Based upon the market intelligence for the particular target market and the customer profile for this market, the company can decide if this market has the potential to meet its objectives. Considerations in the evaluation of a target market are varied, but will typically include the size of the market (number of customers, economic potential, buying power); the proximity and/or ease of access to the market; and the sophistication and/or cultural customs of the market.

Some markets or market segments will not be appropriate for a company’s products or services due to the very nature of the market. For example, attempting to sell energy-efficient heating systems to markets within tropical climates would be a failure. This is an obvious example, but it illustrates the importance of proper target market selection. These factors become even more important when considering international market selections and options.

3. Experimental involvement

Companies start limited international trading. In Canada, the company experimentally exports to some culturally close country like the United States or the United Kingdom.

4. Active involvement

The company becomes an experienced exporter to that country and adjusts exports to optimize changing exchange rates and tariffs.

5. Committed involvement

Management explores the feasibility of exporting to additional countries and allocates its resources to international opportunities.

Decisions to enter foreign markets and resulting successes are related to the level of management commitment; time, human and financial resources available; and the expectations of satisfactory profits.

Once companies have become familiar with the intricacies of international business—even if they have no obvious cultural links to any market—they may venture into more challenging markets.

They may address markets such as Japan where language, culture and business practices are completely unfamiliar. Alternatively, they may look to complex markets such as India in which many different languages and cultures co-exist. The point is that companies generally tend to tackle challenges that are more complex only when they have gained the insights and experience needed for success in a larger arena.

 The importance of a strong marketing plan

The basic principle of marketing revolves around the two-way communication between a company and its customers.

Customer focus is one of the core tenets of marketing. One of the goals of successful marketing is to create value for customers.

There are many methods for creating and recognizing value.

The roadmap for all marketing efforts for any company is set down in the corporate marketing plan. There are several marketing concepts that are applied in the development and implementation of a marketing plan; some are more relevant than others depending upon the nature of the company and the product or service that it is marketing. In addition, there exist many marketing functions within the company and the marketing plan itself.

In order to make this transition successfully, companies must understand the reasons for attempting to enter foreign markets. They must also understand that foreign markets are different and will require a thorough knowledge of the market to develop the appropriate strategies and activities that will form the international marketing plan.

The post The 5 stages of evolution in your international marketing plan appeared first on Trade Ready.

• Is the company entering a new market and hoping to attract customers’ attention and gain acceptance? If so, it should probably charge a low introductory price.
• Is the company looking to position itself in a particular way? If the company wants customers to view its products as luxury or quality goods, it should price accordingly.
• Is the company seeking to maximize the market opportunity by addressing all portions of the available market? If so, it may want to price flexibly to capture every part of the market.
• Is the market so far away that the company wants to minimize the administrative and operational costs of selling? If so, perhaps it should charge a single price.
• Is it seeking to recoup its investments within a narrow window? If so, it should charge whatever the market will bear before competitors drive down prices.

Companies’ marketing plans should also address day-to-day tactical marketing concerns. For example, should companies offer discounts for volume purchases? What kinds of special sales and promotions are appropriate?

Flexible pricing

Flexible, or variable, pricing involves offering identical products to different customers in the market at different prices. In essence, the seller positions the product differently, pointing out different sources of value to different groups of customers.

For example, one target group might be well-to-do and care about prestige. It may be possible to charge this group a high price by positioning the product as an imported luxury item.

Another group, such as middle-income earners, may be more concerned about getting value for money. The company would use mid-range pricing and position the product as offering quality or durability.

How high a price is depends on a customer’s bargaining ability, which in turn depends on the level of competition.

By addressing all possible market sectors, companies can maximize returns on their export investment and market position within a specified period. This strategy risks alienating customers who have paid the higher price.

Flexible pricing to a distribution network requires particular caution. The company’s distributors may hear of this practice and resources may be tied up in extended bargaining for the lowest prices.

There is also a natural inclination to divert supplies of the product from the lower to the higher priced territories.

Want to learn more about how to meet the needs of your customers by adapting products and services for specific international markets? Check out the FITTskills International Sales & Marketing online course.

Static pricing

Companies using static or uniform pricing offer the same price to all customers. Benefits of this strategy include the ease of administration and the customer goodwill created by such a policy.

The main disadvantage is that a rigid uniform pricing policy can easily be matched or undercut by competitors.

Another disadvantage is that a single price will not satisfy all parts of the market. Some high-end customers will think of the price as low, and may consider the product as less attractive and look for a superior (i.e., more prestigious) alternative.

There will be others at the low end that will find the price too high and will not buy it. With static pricing, there is no possibility of capturing every part of the market continuum.

Penetration pricing

The penetration strategy aims to capture market share by initially offering customers a low price. The company foresees that larger market share will enable it to achieve greater economies of scale. This means that its costs of production will come down, thereby opening up the margin for profit.

The target market becomes familiar with the product, accepts it, and ultimately comes to rely on it. In addition, as marginal competitors are forced out because they cannot match the low price, the original producer faces less competition. Then the company can slowly increase price and generate higher profits over time.

For example, the very first Japanese goods to enter North America several decades ago were offered at extremely low prices. In the 1950s and 1960s, “Made in Japan” was a byword for cheap and often shoddy merchandise.

Once the Japanese were established in the North American marketplace, however, they began to emphasize superior quality.

The success of this strategy can be seen in consumer electronics, where Japanese and Asian manufacturers now dominate the North American marketplace. It is also evident in the number of Japanese cars driven on North American highways.

Other Asian countries quickly imitated the Japanese strategy and, in some cases, overtook the Japanese.

Not all companies are in a position to adopt this strategy. It takes deep pockets and an ability to wait out a situation. Those that are in a position to do this must watch that they do not price so low that they violate a country’s antidumping laws.

International trade agreements prohibit the sale of goods at prices that are lower than the costs of production and delivery. Since costing is often inexact, considerable controversy can arise over what should be charged.

If they wish to avoid costly litigation, companies pursuing a strategy of penetration pricing should exercise caution.

Price skimming

With a price-skimming strategy, the company charges a high price in an attempt to maximize returns on a new product before competition materializes.

For example, the developers of a new technology (a more powerful computer, a new way of recording sound or video) will have incurred significant R&D costs that they will want to recover as quickly as possible.

They will also want to get whatever returns they can from their innovation before competitors figure out how to imitate it.

Because they have not incurred those R&D costs, imitators can easily offer the product at a lower price and still make a profit. Thus, the initial innovator has a narrow window in which to recoup the investment.

Weighing the benefits and drawbacks

Where demand is uncertain, high prices can establish an initial fix on the level of demand and then be reduced later as appropriate. The disadvantage is that the higher the pricing, the more attractive the opportunity will appear to competitors.

Companies need to think carefully about how long they have to pursue their strategy and what market position, if any, they hope to be able to maintain once competition appears.

Being the innovator that first brought the product to market may ultimately be less appealing than being the quality or the low-cost provider to mass markets.

Which of these plans fits best with your company’s marketing needs?

The post Which pricing strategy is the best fit for your international marketing plan? appeared first on Trade Ready.

• Product: Selling the right product to the right market at the right time.
• Price: The act of selecting the pricing strategy that both fits the market conditions and the costs of doing business in the market.
• Place: A determination of the best way of getting the product to the customer.
• Promotion: Selection of the most effective means of making the customer aware of the value of the product.

In global business, there are other P factors that should be considered. The following examples round out the list to ten P factors, although the number of strategic elements to be defined by the marketing plan could be much higher depending on the business the company is in and the unique aspects of the target market.

• Planning (business, market, account, sales and calls, etc.)
• Personnel (identifying the skills required to design, develop and deliver)
• Practices (business practices within the culture of the target market)
• Partnerships (potential partners that may strengthen the opportunity)
• Positioning (how the company wants to be perceived by clients and customers)
• Protection (an assessment of the potential risks in all aspects of the transaction)

The concept of the marketing mix is a generally accepted rudimentary principle. However, there is debate on its current real-world applicability. In some cases, the marketing mix is interpreted as being too biased toward consumer markets, and could be an unsuitable approach toward industrial markets. In recent years, the marketing mix has been subject to new interpretations in order to address the unique attributes of service export modalities.

The post Finding the Right Mix: Elements of the Marketing Strategy appeared first on Trade Ready.