Direct exporting involves personally handling every aspect of the exporting process from market research and planning to foreign distribution and collections. Therefore, a significant commitment of management time and attention is required to achieve superior results, making this the most ambitious form of exporting. Nevertheless, this approach is probably the best way to maximize profits, obtain the most control over the process, develop closer relationships to the overseas market, and achieve long-term growth.
A company usually begins exporting by treating its export sales no differently than its domestic sales, using existing personnel and organizational structures. A small firm is likely to have just a single export manager who has the responsibility for the full gamut of international activities. As international sales increase, it is likely to separate the administration of exports from that of domestic sales. Larger firms or those at advanced stages of exporting may decide to retain an international division or organize along product or geographic lines. A firm with distinct product lines is more likely to create an international department in each product division, while those that have products that have common end users are more likely to organize geographically.
Irrespective of how the firm organizes its exporting efforts, its success in foreign markets depends less on the unique attributes of its products and more on sound marketing methods. Proper channels to handle direct exporting include sales representatives, distributors, foreign retailers, and direct sales to end users.
Sales representatives are also called manufacturer’s representatives or a sales agents. They use the firm’s product literature and samples and present them to potential buyers. A sales representative typically handles many complementary lines that do not conflict and works on a commission basis, essentially as a broker assuming neither risk nor responsibility for servicing the product after the sale. They are usually under a contract that clearly defines the period of the agreement, their territorial jurisdiction, whether or not they will operate on either an exclusive or a nonexclusive basis, the method of compensation, and limits on legal authority of the representative to obligate the company.
Foreign distributors are merchants who purchase goods from an exporter at a substantial discount and subsequently resell it for a profit. They also generally provide support and service for the product and carry an inventory of sufficient supply of spare parts. Distributors maintain adequate facilities and personnel for normal servicing operations, and normally sell a nonconflicting but complementary range of products. They may resell the product to local dealers and retailers.
Selling through foreign retailers usually involves consumer products, and is effective in countries that have large retail chains such as the United States, Canada, the United Kingdom, and Japan. The technique relies on traveling sales representatives contacting foreign retailers or mailing them catalogs, brochures, and other literature. This approach has benefits of eliminating commissions, reducing travel expenses, and reaching a broader audience. To maximize results, companies using direct mail to reach retailers should integrate it with other marketing activities.
Companies may sell their products directly to end users in foreign countries—entities such as foreign governments, banks, hospitals, schools, or businesses. The buyers can be contacted either through trade shows, international publications, or through the Commerce Department’s Export Contact List Services. Selling to end users overseas may incur additional costs such as shipping, payment collection, and product support and service.
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