International Marketing

Transcription

1 International Marketing Tom Hammett Center of Forest Products Marketing and Management, Virginia Tech Presented at BOLFOR2 La Paz and Santa Cruz August 2004

2 Topics for Discussion Introduction Trends Practices Tools & Resources Q & A

3 Value of solid wood exports worldwide is increasing 1985 $ 3 Billion 1989 $ 6 Billion 1990 $ 6.7 Billion 2000 $ 9 Billion Source: USDA, Foreign Agriculture Service

4 Why Have Exports Increased? Buy less tropical hardwoods Switch to North American species Decline in US Dollar US Industry groups aggressive Excess supply in US market Prices decline, so mills go overseas Competitors prices high

5 Some Trends China emerging as a large market Green Certification More trade through agreements

6 China- The PRC Economy - double-digit annual growth Increasing demand for high quality value added wood products Booming furniture industry Limited domestic hardwood supply Domestic logging ban

7 Global Environmental Groups

8 Markets Response Forest Stewardship Council (FSC), AF&PA s SFI program Pan-European Forest Certification International Organization for Standardization (ISO) Canadian Standards Association (CSA)

9 Why Not Enter International Markets? More risky Takes more time More expensive New marketing focus

10 Why Enter International Markets? 90% of global marketplace is outside U.S. Diversification of markets Can balance downturns in domestic sales Sales growth greater in overseas markets Technology - worldwide access to information Exports counter international competitors

11 How to Get Started in Exporting? 1. Establish management commitment 2. Analyze firm's objectives, strengths, and weaknesses 3. Develop overseas contacts 4. Collect and analyze current overseas market information 5. Analyze and select appropriate country markets 6. Focus marketing effort on one or two countries. 7. Service your markets

12 1. Establish Management Commitment Develop a written plan including: goals objectives capabilities constraints Answer questions: Who? What? Where? Why? Be ready for the long haul.

13 2. Analyze Firm's Objectives, Strategies, and Weaknesses Establish short- and long-term goals Realize type and number of personnel required Plan for: Resources needed Production capability Adequate financing Develop knowledge of export marketing

14 3. Develop Overseas Contacts Establish contact with potential customers Identify and contact resource persons in each target market Join appropriate industry associations Contact overseas trade associations Locate concerned government agencies

15 4. Collect Overseas Market Information Collect and organize overseas market information Sign up for trade lead dissemination programs Contact agencies that collect or disseminate market information banks with international departments freight forwarders marine insurance agents port authorities

16 4. Collect Overseas Market Information (cont.) Review U.S. export and foreign import statistics Learn from other exporters Identify and monitor current market trends

17 5. Select Appropriate Country Market(s) Identify current demand and potential trends Know own production capacity and that of competitors Identify standards and specifications required For potential target market(s) learn: language requirements appropriate marketing channels business practices

18 5. Selecting Markets (cont.) Identify tariff and non-tariff barriers: licensing phytosanitary requirements legal considerations Calculate shipping costs Select one or two target markets

19 6. Focus on One or Two Countries Organize firm giving emphasis to overseas markets Determine firm s production requirements Direct contact of potential customers Schedule overseas marketing trip(s)

20 7. Service and Maintain Markets Respond to customers' needs Ongoing product development & modification Monitor markets, look for demand trends Schedule periodic visits Maintain relations with existing customers Develop new contacts Refine marketing approach as needed

21 Ten Questions to Answer Before Exporting 1. What products are selected for export development? 2. What countries are targeted for sales development? 3. What is the customer profile in each country? 4. What special challenges pertain to each market? (competition, culture, import controls, etc.) 5. How will export price be determined?

22 Ten Questions (cont.) 6. What operational steps must be taken and when? 7. What is time frame for implementing export plan? 8. What personnel and company resources will be dedicated to exporting? 9. What will be the cost in time and dollars? 10.How will the results be evaluated and used to modify the plan?

23 Keys to Export Success Versatility Adaptability Aggressiveness Patience Attention to detail Willingness to travel Willingness to meet customers face-to-face Good supply of logs Be able to cut lumber accurately Do what you say you will do

24 Where to Get Export Information? Publications Government agencies Industry associations Universities Internet

25 Publications Build your own international desk reference Subscribe to newsletters Print off (or store) electronic information

26 Federal Government Agencies US Department of Commerce USDA Foreign Agricultural Service (FAS) APHIS Forest Service (Princeton, New Orleans) US Agency for International Development

27 US Dept. of Commerce Publications and market studies Loans/financing Hands-on assistance Support for trade shows/missions

28 Monitors diseases and pests Approves imports and certifies exports Information on export programs

29 State Governments For instance in Virginia: Virginia Department of Agriculture and Consumer Services (VDACS) Virginia Economic Development Partnership Virginia Ports Authority

30 USDA Forest Service Specialized publications Support for association sponsored events (trade missions, trade shows) Technical advice Forest Products Lab, Madison

31 Foreign Agriculture Service Specialized market reports Export credit assistance Trade Leads Export Promotion Program Attaches in overseas embassies Trade policy monitoring Trade show organization and support

32 Industry Associations Export marketing services: - Overseas offices - Trade missions - Trade Shows

33 Industry Associations - Publications - Market studies - Technical information (in French, etc.)

34 University-based Small Business Development Centers (Business Schools work with the SBA) Cooperative Extension Service Economic development programs Hands-on help; market studies; trade shows or missions

35 Online Internet sources of information Trade lead services ( ) Company web sites

36 Who to access overseas markets? Logistics of selling to overseas markets Some comments on distribution

37 Export channels and distribution systems Direct Channels: Manufacturer deals directly with foreign buyer Indirect Channels: Domestic manufacturer deals with a series of intermediaries prior to a product reaching overseas market Typically, sell their product to an exporter, who deals with the foreign customer

38 Export intermediaries - agents Export management companies (EMC) - represent many small companies Export buyers - Represent foreign manufacturers; purchasing goods Export Brokers - Act as intermediaries to bring buyer and seller together Freight Forwarders - Act as export shipping department; handle all aspects move product to foreign buyer s site

39 Export Merchants Export Trading Companies (ETC) - Take title to goods and handles all aspects of marketing products. Individual Export House - Wholesaler to foreign buyers. Takes title, then may split loads or remanufacture. In-house - Company sets up their own export division to handle all aspects of exporting

40 Sample Proforma Invoice

41 Sample export Quotation sheet

42 Pricing for exporting Elements for pricing goods for export: Cost of producing products and profit Packaging Processing/handling Inland transportation Unloading fees at port

43 Pricing for exporting (cont.) Forwarders charges Consular fees Ocean freight Marine insurance Import tariffs Determine a total price in U. S. Dollars

44 Methods of Getting Paid Cash in advance - best method Open account - like selling domestically, paid in 30 days Consignment sales - deferred payment Sight draft - bank acts as intermediary for goods

45 Methods of Getting Paid Acceptance draft - time set on sight draft, i.e., 30 days Letters of credit - buyer places funds in escrow account; released when goods are received Barter or countertrade Russia s currency was not accepted, traded vodka or lumber for imported goods

46 Summary Exporting is profitable Exporting affects the whole forest products sector - whether or not you export directly Problems are not insurmountable! Lots of support available Exporting can be fun!

47 Thank you for your attention! Any questions? If so, Please Contact Tom Hammett Virginia Tech,