Once market research is conducted and the target countries are selected, the next step is to visit the countries in order to locate and cultivate new customers or to develop and maintain relationships with foreign distributors. As we enter the twenty-first century, the world has become one market, and this has naturally given rise to more intercultural encounters. The exporter has to be aware of certain important factors before embarking on a trip, not only to avoid embarrassment but also to be able to conclude a successful business arrangement (International Perspective 4.3).
1. Planning and Preparing for the Trip
1.1. Making Prior Arrangements
The most important meetings should be confirmed before leaving the United States. One should avoid traveling during national holidays or political elections in the host
countries. Contacts can be made with the Department of Commerce country desk officers in Washington, DC, and/or U.S. embassies abroad to obtain current and reliable information about the target countries.
1.2. Acquiring Basic Knowledge of the Host Country
Exporters should know some basic facts about the history, culture, and customs of the host countries. Several books and magazines cover business manners, customs, dietary practices, humor, and acceptable dress in various countries. It is essential to exercise flexibility and cultural sensitivity when doing business abroad. The exporter should also obtain prior information on such important areas such as weather conditions, health care, currency exchanges, and visa requirements. Various travel publications provide such information (for export procedures, see International Perspective 4.4).
1.3. Obtaining the ATA Carnet
For exporters who take product samples, duties and burdensome customs formalities can be avoided by obtaining the ATA (Admission Temporaire) carnet. The United States is a member of the ATA carnet system, which permits U.S. commercial and professional travelers to take material to member countries of the ATA carnet system for a temporary period of time without paying duty. An exporter should check whether a host country is member of the ATA convention. The U.S Council for International Business handles applications for carnets. A bond, a letter of credit, or a cash equivalent (as guarantee for 40 percent of the value) will, however, be required to cover outstanding duties in case the samples are not returned to the United States.
1.4. Business Negotiations
Negotiations should be entered into with sufficient planning and preparation. The exporter should establish the line or boundary below which he or she is not willing to concede. It is also advisable to draft the agreements, since it will enable the exporter to include terms and conditions with important implications into the contract.
1.5. Documentation
The exporter should document the various meetings at the end of the day to avoid confusing one market with another. Such a summary also provides a record for company files. Once the trip is over and the exporter returns home, there should be an immediate followup, with a letter confirming the commitments and a timetable for implementation of these commitments.
2. Overseas Promotion
Overseas promotion of exports is often designed to open new markets, maintain and increase existing market share, and obtain market intelligence. Such efforts must meet strategic marketing goals and achieve the greatest impact at the lowest possible cost. Effective promotion should go beyond enabling the potential buyer to receive the desired information. It must be strong enough to motivate the buyer to react positively. This requires the conveying of a message that does not offend cultural sensibilities and one that is uniquely designed for each market. The exporter can choose one or a combination of promotional tools: direct mail, advertising, trade fairs/missions, and publicity. The choice will depend on the target audience, company objectives, the product or service exported, and the availability of internal resources, as well as the availability of the tool in a particular market (Czinkota, Ronkainen and Moffett, 2010). Exporters may use the same promotional strategy in different foreign markets if the target markets vary little with respect to product use and consumer attitudes. In some cases, the product and/or promotional strategy must be adapted to foreign market conditions. For example, Tang sold in Latin America is especially sweetened and promoted as a drink for mealtime. In the United States, people drink it in the morning, and the product is promoted as a drink for breakfast (Ball et al., 2013).
In certain developing countries where the rate of illiteracy is high, advertising in periodicals does not reach a broad audience. However, if the product or service marketed is intended for a small part of the population, such as middle- or high-income consumers, using periodicals could be an effective way of reaching the target market. For products that are intended for a broader audience, such as soap or cooking oil, radios or billboards could be an effective way of reaching many consumers in these countries.
It is often stated that adapting a product to local conditions and accentuating the local nature of a certain aspect of the product in the promotional material tend to create a favorable image among the public and stimulate product sales. This means that exporters should consider ways and means of localizing a certain part of their activity, such as product adaptation to local conditions or assembly of parts in the host countries. Such activities not only increase product sales but also create employment opportunities in the local economy. For less sophisticated products, a firm could export the necessary ingredients or components into a host country, preferably into a free-trade zone, and use local labor to produce or assemble the final product. In addition to being a good promotional tool for the product, such localization will enhance the competitiveness of the product by reducing cost.
2.1. Advertising
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Typically, no one vehicle reaches an entire target audience, and, thus, exporters must evaluate the many alternatives so as to meet their desired objectives. One or a combination of vehicles can be used (magazines, newspapers, TV, radio, direct mail, or billboards) to carry the advertisements to target audiences.
Exporters should be aware of regulations in various countries that govern advertising. In some European countries, for example, television stations allow only a certain percentage (12 to 18 percent) of advertising per hour. In many developed countries, the advertising of tobacco and alcoholic beverages is heavily regulated. In some Latin American countries, such as Peru, commercial advertising on national television should be domestically produced.
The advertising process involves (1) budgeting (how much it will cost and how much the exporter can afford); (2) determining the most effective and least expensive media to reach the potential customer; and (3) preparing an appropriate advertising package that emphasizes the important but minimal number of points.
Small exporters often use direct mail (correspondence and brochures) to reach their overseas customers. In Southeast Asian markets, direct mail is the most effective way of promoting the sale of industrial goods. Brochures have to be translated into the local language, and accurate mailing lists have to be obtained. Mailing lists can be purchased from private firms. Most libraries have various resources, such as trade publications, and journals of various trade associations, from which a list of potential overseas customers can be obtained. In addition, such lists are available from the directories and catalogs of trade shows and from other government publications, such as Foreign Trades Index, the Export Contact List Service, and the World Traders Data Reports (WTDR).
The exporter can use one or a combination of the following media to advertise the product or service:
Foreign media: A product can be advertised in an overseas retailer’s or distributor’s catalog or trade publication. Cooperative advertising, that is, a group advertising program, can be arranged by business associations and local chambers of commerce. Cooperative advertising is more effective for noncompeting and/or complementary products. The advantage of such advertising is that it reduces expenses, especially for small exporters, and also enables exporters to combine advertising budgets to reach a larger audience than is normally possible individually.
Government-supported advertising: There are many government supported (federal and state) promotional programs for U.S. exporting firms that facilitate the marketing of U.S. products overseas.
Commercial publications: Many U.S. trade publications are widely read in many parts of the world. Advertising in such journals or magazines will enable the exporter to reach a broader market. Some of these publications include Showcase U.S.A., Export, and Automobile and Truck International.
The Internet: The Internet provides the exporter with an additional global medium. Potential consumers can be reached through websites in key languages and e-mails. A number of products are being made available online. Data collected from customers can also be used for future marketing efforts.
2.2. Personal Selling
Personal selling is often used during the first stages of internationalization. It is also used for the marketing of industrial, especially high-priced goods. Personal selling entails oral presentations by sales personnel of the organization or agents to prospective overseas purchasers. Salespeople also collect information on competitive products, prices, services, and delivery problems that assist exporters in improving quality and service. In short, such media are used in cases in which advertising does not provide an effective line with target markets, the price is subject to negotiation, and the product/service needs customer application assistance. Avon and Unilever, for example, use personal sellers in rural villages in many developing countries to market their products.
2.3. Sales Promotion
Sales promotion refers to marketing activity other than advertising, personal selling, or publicity. It includes trade shows, trade fairs, demonstrations, and other nonrecurrent selling efforts not in the ordinary routine (Asheghian and Ibrahimi, 1990). Trade shows are events at which firms display their products in exhibits at a central location and invite dealers or customers to visit the exhibits. Such shows are a cost-effective way of reaching a large number of customers who might otherwise be difficult to reach. Adding to their benefit, from a cost and efficiency standpoint, is that trade shows help exporters to contact and evaluate potential agents and distributors. Trade fairs also provide an important opportunity for exporters to introduce, promote, and demonstrate new products, cultivate new contacts, and collect market intelligence, as well as to close deals with a number of attendees who often have direct responsibility for purchasing products and services.
Trade fairs can be organized by certain industries, trade associations, or chamber of commerce. For example, the Hanover trade fair in Germany organizes regional and national fairs and exhibitions in various product sectors targeted at specialized audiences as well as the general public. Every year it organizes around fifty trade fairs and exhibitions that attract more than 28,000 exhibitors and 2.5 million visitors from more than 100 countries around the world. The Seoul International Gift and Accessories show is one of the largest trade fairs for gift and fashion accessories in Asia. It attracts about 32,000 local and overseas visitors, resulting in about $15 million in sales.
Trade shows are also supported or organized by governments in order to promote exports. In the United States, the Department of Commerce (DOC) organizes various export- promotion events such as exhibitions, seminars, trade missions, and other customized promotions for individual U.S. companies. Under the International Buyer program, the DOC selects leading U.S. trade exhibitions each year in industries with high export potential. DOC offices abroad recruit foreign buyers and distributors to attend these shows, while program staff help exhibiting firms make contact with international visitors at the show to achieve direct export sales and/or international representation. The DOC, through the certified trade fair program, supports private-sector organized shows. Exhibitors use U.S. pavilions to create enhanced visibility and also receive the support of commercial services from U.S. embassies and consulates. The DOC and state agencies also jointly organize U.S. company catalogs and product literature to present to potential customers abroad and send the trade leads directly to participating U.S. firms. Many developed countries have similar programs to promote the sale of their products abroad.
Trade missions are another export sales promotion tool. Under a trade mission, a group of business people and/or government officials visits foreign markets in search of business opportunities. Missions typically target specific industries in selected countries. Events are also organized by private organizations or government agencies so that foreign buyer groups can come to the United States to meet individually with U.S. companies, exporters, or relevant trade associations. At these events, foreign businesses buy U.S. products, negotiate distributor agreements, find joint venture partners, or learn about current industry trends.
2.4. Publicity
Publicity is communicating with an audience by personal or nonpersonal media that are not explicitly paid for delivering the messages. This is done by planting commercially significant news about the exporter and/or products in a published medium or by obtaining favorable presentation on the local media without sponsoring it. A carefully managed advertising and public relations program is essential to the long-term success of an export firm. The public relations (publicity) program could include charitable donations to schools, hospitals, and other social causes; sponsorship of youth athletic teams; participation in local parades; and invitations to the media to cover special events sponsored or supported by the export company.
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.
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