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Chapter 17

Chapter 17. Selecting Import Products and Suppliers. Types of Products for Importation. Products that are unique Products that are less expensive Products that have proven demand Products that are of better quality. Finding, Assessing, and Selecting the Product. Domestic market research

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Chapter 17

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  1. Chapter 17 Selecting Import Productsand Suppliers

  2. Types of Products for Importation • Products that are unique • Products that are less expensive • Products that have proven demand • Products that are of better quality

  3. Finding, Assessing, and Selecting the Product • Domestic market research • Trade publications • Foreign travel • Trade fairs and shows • Trade offices

  4. Landed Cost Landed-Cost Survey, DM Import Company, Davie, Florida Supplier: V. Maundo, Nairobi Kenya Quantity: 150 Makonde carvings • Gross sales price3500.00 • Less cash discount (15%) 525.00 • Net sales price 2975.00 • Landed cost • Purchase price 2975.00 • Packing ----- • Inland freight ----- • Duty (2975 - insurance ($50) + • Freight (800)) = 7% (2125.70) 148.75 • Brokerage and banking charges 160.00 • Custom bond fee 50.00 • Merchandise processing fee 8.00 • Harbor maintenance fee 2.00 • Total landed cost (CIF, Miami)3343.75 • Expenses • Advertising ----- • Re packing 15.00 • Interest 10.00 • ABI (Automatic broker interface fee) 10.00 • Total landed costs and expense 3378.75 • Unit cost $22.52 per item • Suggested selling price $45.00 • Net Profit 6750 ($45 x 150) - 3378.75 (22.52 x 150) = $3371.25

  5. Selecting the Supplier • Purchase sample • Request inspection by customs • Check with freight forwarder • Estimate price

  6. Selecting the Supplier: Important Considerations • Product quality, brand name • Market appeal, minimum defects • Other supplier benefits: timely delivery, warranties, after-sales service, reliability • Protection of intellectual property rights

  7. Determinants of Import Volume 1. High per capita income 2. Population size 3. Price of imports denominated in foreign currency 4. Exchange rates 5. Price of domestic goods relative to imports 6. Price elasticity 7. Government restrictions, availability of foreign exchange

  8. Import Marketing Channels Direct channels of distribution: - Foreign producer exports through its subsidiary Indirect channels of distribution: - Entails exporting the product to an intermediary

  9. Financing Imports 1. Open account 2. Consignment 3. Documentary collection 4. Letter of credit

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