- How can companies export?
- What are the most common international market-entry strategies?
- How to select an export market
- What is market research?
- How to develop a marketing plan
- Does Jordan have organizations that can subsidize marketing costs or provide support in meeting the target market’s technical requirements?
- How to price a product
- Marketing using fair-trade
- How to learn about export tradeshows and exhibitions
- How to display products during exhibitions
- What to research prior to selecting a tradeshow or exhibition?
- How can companies minimize costs and challenges related to export marketing and export shipping?
01How can companies export?
Companies can export goods directly or indirectly.
Indirect exports: When the product is shipped to an international buyer through a local seller such as an export agent or a trading or marketing company.
The company, in this case, is not involved in negotiating with the international buyer, and will not carry any risk in concluding the export sales because the deal/payment ends with the domestic buyer; this is treated as local sales. Usually, indirect exports are adopted by small companies with small production capacity and administrative infrastructure.
Direct export: When the company negotiates with an international buyer the terms and conditions of the sales agreements and ships the goods directly to the buyer (see Q7- international market-entry strategies). Direct export is a costly process that requires hiring staff experienced in international trade and international marketing with English language or other language skills as per the target market. Usually direct exports are adopted by companies that have an advanced administrative structure with substantial export volume.
02What are the most common international market-entry strategies?
Companies can adopt various strategies to enter international markets depending on the type of product they are selling and the company’s experience in exports:
Beginner Level 1 – Direct exporting:
Is when the company sells its products directly in the target market without using an intermediary in the form of B2B (Business-to-business) or B2C (Business-to-Consumer). Examples of direct selling are: selling through exhibitions, online selling using e-commerce, and selling to a distributor/retailer. Types of sales agreements that can be concluded in direct exports may include a purchase order (PO), a production agreement and/or a licensing agreement to manufacture on behalf of the buyer.
Moderate Level 2- Exporting through agents:
Is when a company signs an agreement with an agent to sell their products in the target country on their behalf. Examples can vary from a basic commission-based agent, distribution agent, or a more advanced structure such as franchise agent.
Advanced Level 3 – Exporting by establishing commercial presence:
In this case the company invests in the target market by establishing a retail/sales office that is owned by the company, or as a joint venture. (see Q-3 Mode 3: Commercial presence).
03How to select an export market?
- Having contacts/relatives/friends in the target market will help reduce the learning curve since the contact can provide support in reaching prospective buyers in the target market.
- Knowing the language of the target market can reduce communications obstacles.
- Having preferential access through trade agreements reduces the cost of export and may make your product more competitive.
- If selling ethnic products, having expatriates from your community in that market will increase sales prospects of the product.
- The economic situation of the target country such as: currency, inflation, GPD, income per capita, total population, corruption index…etc will help identify the financial risks and costs associated with exporting to a market.
04What is market research?
Market research aims to establish a better understanding of the country, consumers, regulatory environment, and the competition operating in that market. When exporting to a country, an exporter should consider investigating the following:
- Understand the overall economic situation of that country, currency, inflation…etc. This data can be obtained from online sources such as World Bank and UNCTAD…etc.
- Understand the market segments:
- Business to Customer (B2C): define target segment by: age, generation, ethnicity, education, gender, geography,…etc).
- Business to Business (B2B): define target industry, agents, distributors, retailers, wholesalers who can be approached to sell the product.
05How to develop a marketing plan?
Once the research is completed, the company can start developing the marketing plan. It is not recommended to make the marketing plan complex or perfect, but sufficient to lay-down the foundations and allow the plan to evolve with market experience.
- Define the target market: Develop a clear description of your target customer.
- Develop the positioning statement vis-à-vis competitors:
What is your value added/competitive advantage vis-à-vis other retailers/suppliers.
- What are the strengths and weakness, opportunity and threats/challenges (SWOT) in the market: The SWOT might relate to political situation, economic conditions, product quality and competition, price…etc.
- Technical requirements and associated costs: These will add to the product, and the cost thereof should be investigated and
New staff/consultants to support the marketing plan: Define whether you will need experts to further refine your plan, or conduct additional research to close gaps identified in the SWOT.
- Pricing Strategy and distribution strategy: Critical in entering a market is to establish a price and ensure that this price incorporates delivery terms (see incoterms) maintenance or service costs if needed, duties and fees. Distribution strategy should focus on tactics that should be adopted to avoid direct confrontation with established competitors while gradually increasing market presence and market share.
- What are the financial projections: How many units can be sold per month/quarter/season/year in that market and what is the breakeven price per unit considering all costs associated with entering that market?
- Monitoring and Control: How to control and measure the performance indicators of the plan, and how to update it.
- Understand competitors in the market? Use industry associations in the market to learn more about competitors (e-commerce sites) to learn about competing brands/prices/packaging…etc.
- Understand the Marketing mix to use?
How and what product will be sold in the market, what quality certificates are needed, will the product need warranty or service support…etc, what is the anticipated volume of sales, and who are the competitors.
How to pack the product for the consumer, are there any market standards, what is the weight/volume per pack if sold to consumers/ wholesalers/ distributors…etc?
At what price should the product be sold, what is the customs tariff on the product, what are the payment arrangements and delivery terms (see incoterms), credit terms or discounts, minimum order, guarantee warrantee offered in the market? (See Q13- How to price a product)
How is the product sold? Is it sold on seasonal basis? Which distribution channels in which cities, is e-commerce a valid option? What exhibitions to attend…etc. (See Q18-Distribuiton Channels)
Are employees with special skills needed to sell the product and support the marketing plan?
How to promote the product? Are there any special exhibitions to attend in the market? Do you need to advertise: how and where?
06Does Jordan have organizations that can subsidize marketing costs or provide support in meeting the target market’s technical requirements?
Yes, companies may be able to obtain grants to finance the market research and marketing plan or obtain financing towards certifying the product/factory.
Jordan has many organizations that provide grants, partial subsidy, or provide zero-cost consulting support services. These organizations include:
- Jordan Exports (JE)
- Jordan Enterprise Development Corporation (JEDCO)
- Chambers of Industry and Commerce
- Donor projects dedicated to enhancing the SME’s competitiveness
- Associations such as Jordan Exporters Association (JEA) or industry specific associations, among others.
Additionally, organizations such as the National Fund for Enterprise Support (NAFES) together with the Amman Chamber of Industry (ACI) can provide partial subsidies towards the cost of obtaining quality certification.
Organizations such as the Jordan European Business Association (JEBA) can provide retired experts from the Netherlands (PUM senior expert program) to conduct market studies or provide any other technical assistance to the company at a reduced cost.
07Marketing using fair-trade
Fair-trade is when producers in developing countries are paid a fair price for their work by companies in developed countries. Fair-trade can help market farmers and small producers’ products to international buyers who apply fair trade principles. Initially the company should be assessed to qualify for the fair-trade brand label and be part of the fair-trade value chain. Several organizations provide fair-trade certification to businesses such as; Fair-Trade America and Fair-Trade International(11). There are also several e-commerce sites for fair-trade that can be used to help promote fair-trade companies.
08How to price a product
Companies can adopt several pricing strategies per market and region. The main elements to consider when pricing a product is: (1) actual cost of manufacturing the product and breakeven point(12); (2) Price offered by competition; (3) Price that will be paid by customer (price elasticity(13)), (3) Profit margin sought-after by the company (4) Anticipated sales volume.
In addition, when pricing for an export market and presenting a price quotation to the buyer, the following costs should be investigated prior to offering the buyer with a price quotation:
- Delivery Terms: How much will it cost to deliver goods (FOB, EX-factory, CIF, DDP…etc) (See Annex I- 2020 Incoterms).
- Product adaptation costs: Packaging requirements, quality certificates…etc.
- Price discounts: That could apply on early payment, volume purchases, and off-seasonbuying.
09How to learn about export tradeshows and exhibitions
Exhibitions and tradeshows are important channels for reaching customers. The most effective exhibitions to attend are those that are related to the industry in which the exporter operates. These exhibitions can be easily researched using the internet.
10How to display products during exhibitions
Product display in exhibitions is necessary to attract and increase visitor’s frequency using colour and visual effects. The space used for the display in exhibition booths is usually very limited, thus the space must be maximized to ensure that both the product and the brand have good visibility with sufficient space for private negotiations. Usually visual merchandising graduates, interior designers and advertising and communications agencies offer a good reference on how to design and present your product in an exhibition
11What to research prior to selecting a tradeshow or exhibition?
Each exhibition/tradeshow issues statistical data and information on the exhibition to promote it to prospective buyers and sellers (exhibitors). This information is useful to analyze and understand because it can provide the company with information on:
- Type and number of attendance: How many visitors divided by country and sometime leading chain buyers…etc.
- Whether they pre-organize matchmaking with potential buyers: Exhibitions are increasingly getting involved in matching a buyer with a seller; however special fees are paid for this extra service.
- Special seminars: Companies may attend industry-specific seminars organized during the exhibition these seminars are useful for networking and for learning more about the industry and the latest trends in the industry.
- Study the list of exhibitors: Exhibitors are competitors; thus the companies should also plan on visiting other competitors to understand more about the marketing mix they adopt for their products.
12How can companies minimize costs and challenges related to export marketing and export shipping?
Companies, who sell small volumes, do find it very difficult to conduct market research, or develop a marketing plan, or even manage the export process (see Q6- How can companies export). As such these companies are strongly recommended to consider some of these recommendations:
- Identify a local agent who can sell their product in international markets, and/or
- Conduct collective marketing and sales by establishing a marketing company with a group of companies that sell complementary products. Each company will own shares in the marketing/trading company. This marketing company can be staffed with marketing and commercial employees that will conduct international trade on behalf of the shareholders/owners, and ship the product on behalf of manufacturer as well as promote the product online using e-commerce.
- Use fair-trade as a marketing channel (see Q-12 Marketing using fair trade)
- Use virtual markets to promote your products collectively such as Amazon, Alibaba..etc.
13What are distribution channels?
Distribution channels are part of the marketing channels that the company utilizes to sell and promote its products. Distribution channels are used to display, sell, or deliver the product or service to the buyer. It includes distributors, wholesalers, retailers and agents.
The other two marketing channels are communications channels and service channels: Communications channels include newspapers, magazines, radio, television, mail, telephone and e-advertising using websites, Google advertising and social media such as linked-in, Facebook…etc. Service channels are used to help in concluding transactions with buyers and include warehouses, transportation companies, banks, insurance companies…etc.
14How to use online retail as a distribution channel?
Online retail or electronic commerce (e-commerce) is a virtual marketplace. The advantage of online retail is that it is borderless and can reach any customer (B2B/B2C) who has internet connectivity. Since the reach is easy, companies that adopt e-commerce must complement their virtual retail with a strong e-advertising strategy to ensure that they receive sufficient visibility in the virtual market space, and since mobile devices have achieved far more traffic than desktops, companies should also consider investing in a fully responsive, mobile-optimized site that can give visitors the full experience they would get on desktop. Online retail can be developed within the company website, and can be promoted using social media such as: Facebook and Instagram. Other option for online retail is to leverage third party virtual marketplace sellers such as Amazon, Alibaba and e-bay. These third party sellers receive a monthly subscription fee and referral fees in lieu for they achieve on behalf of their customers.