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Introduction to Exporting to the US

Introduction to Exporting to the US. By Fred Levitan Emerging Markets Group. Agenda. Introduction Objective US Market Overview Market Research Methodologies, Components, Tools/Resources Market Entry Strategies/Options Other Factors Marketing Communications

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Introduction to Exporting to the US

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  1. Introduction to Exporting to the US By Fred Levitan Emerging Markets Group

  2. Agenda • Introduction • Objective • US Market Overview • Market Research • Methodologies, Components, Tools/Resources • Market Entry Strategies/Options • Other Factors • Marketing Communications • Export Feasibility and Implementation Plan • Questions/Answers

  3. Objective To provide Jordanian firms with an introductory understanding of how to develop and implement a proactive export plan for the US market

  4. US Market Overview General Economic Indicators: • Population: 300 million • GDP: $14 trillion • Per Capita Income: $46,000 • Inflation: 4% • Unemployment: 5% • Imports $2 trillion; Exports $1.2 trillion

  5. Market Overview (2) Leading Trade Partners

  6. US Market Overview (3) State of the Economy: • Recessionary signs - .6% growth • Housing/credit crises – home prices plummeting • Layoffs – 80,000 over last 1-2 months • High energy and food costs • Weak dollar • Dropping interest rates • Export boom fueled by weak dollar • World’s largest economy

  7. US Market Overview (4) General Demographics And Trends • Gender: 49% Women; 51% Men • Median Age: 35 years old • Life Expectancy: 78 years old; Rank #42 • Graying population • Retiring baby boomers

  8. US Market: National, Regional, and Local Series of individual markets/regions:

  9. US Market: National, Regional, and Local (2) • New England: CT, ME, MA, NH, RI, VT • Mid-Atlantic: DE, MD, NJ, NY, PA, VA, WV • Southeast: AL, AR, FL, GA, LA, MS, NC, SC, TN • Midwest/Great Plains: IL, WI, MI, OH, KY, IN, MO, KS, MN, NE, ND, SD, MT, IA • Mountain: CO,ID, UT, WY • Southwest: AZ, NV, NM, OK, TX • Northwest: AK, OR, WA • West: CA, HI

  10. US Market: National, Regional, and Local (3) • Each region represents separate economy • Each has varied economic strengths • Shaped by larger population centers • Identifying core business activities and clusters important for developing plan

  11. Market Research Objective: To determine whether there is a market for the exporter’s product/service in the US Key Questions: • What is the size of the market? • Where in the US is my market? • If yes to #1, do I have to modify my market and how shall I accomplish that? • What is driving demand for my product/service? • How do I best access and satisfy that demand/market?

  12. Market Research (2) Components: • Market size ($ value/units) • Market projections (annual %) • Segments • Trends/Drivers • Distribution channels • Pricing • Competitors • Regulations (national, state, local laws) • Certifications (QC/QA, safety) • Voluntary versus mandatory

  13. Market Research (3) Methodologies: • Primary research is defined as information gathered through interaction with other people such as meetings/interviews, focus groups, and surveys via email, phone, etc • Secondary research is defined as information (hard copy or electronic-internet) gathered through literature, publications, broadcast media, and other non-human sources • Analysis and conclusions

  14. Market Research (4) Secondary Research: • Information gathered from magazine articles, market research reports, directories, trade associations, government statistics, financial reports, etc • Provides general information to answer essential questions

  15. Market Research (5) Examples of General Secondary Research Tools/Resources: • Lexis-Nexis • Factiva • Dialog • ReferenceUSA

  16. Market Research (6) Example of General Secondary Research Tools/Resources: • SRDS List of all publications by industry • Chain Store Guide: covers many industries • Database List of USA Importers/Buying Agents • Manufacturers directories by state (all 50 states) • Gourmet Food Brokers Directory

  17. Market Research (7) Examples of Specialized Secondary Tools/Resources: • Food: Baking and Snack, Beverage World, Candy Industry, Food Processing, Food Quality, Milling and Baking News, QSR, and Tea and Coffee Trade journal, Private Label • Packaging: Beauty Packaging, Brand Packaging, Food and Drug Packaging, Package Design, Packaging Digest, and Packaging World • Giftware: Giftware News, Gifts and Decorative Accessories, JCK, Modern Jeweler, and National Jeweler

  18. Market Research (8) Examples of Specialized Secondary Tools/Resources: • Furniture: Furniture Today, Casual Living, Home Accents Today • Stone: Architect, Stone World, Stone Business • Services: SourcingMag, Tourism Management, Medical Tourism • Cosmetics: Global Cosmetics Industry, Cosmetics and Toiletries, Soap and Cosmetics

  19. Market Research (9) Trade Associations • Provides advocacy, technical services, and research for members • Offers useful conferences and tradeshows • Serves as excellent source • Publishes membership directories • Start with Encyclopedia of Associations: National Organizations of the US

  20. Market Research (10) Examples of Trade Associations • Association for Dressings and Sauces, Institute of Food Technologists, Food Marketing Institute • Contract Packaging Association, Flexible Packaging Association, Institute of Packaging Professionals • Gift and Home Trade Association • Tile Council of North America, World Floor Covering Association • Personal Care Products Council

  21. Market Research (11) Advantages of Secondary Research: • Relatively easy • Many tools and sources • Information readily available • Provides good intellectual grounding and direction • Generates initial answers to key questions

  22. Market Research (12) Disadvantages of Secondary Research: • Produces information overload • Lacks precision • Presents credibility issues • Focuses more on big business • Becomes dated very quickly

  23. Market Research (13) Primary Research • Information gathered from human sources through interviews, focus groups, surveys, etc • Identify sources at publications, associations, manufacturers, distributors, government agencies, and even competitors • Use information from secondary sources as basis for getting missing details • More viable now with current technology (i.e., Skype, email, etc)

  24. Market Research (14) Primary Research • Interact with and build relationships • Establish credibility by sharing information • Confirm findings with several parties (3-5) • Develop through interpersonal skills

  25. Market Research (15) Advantages of Primary Research • Fills in missing pieces of information • Adds clarity • Validates findings • Provides realistic and current assessment

  26. Market Research (16) Disadvantages of Primary Research: • Time consuming and expensive • Challenging at times • Requires different type of research skills

  27. Market Research (17) Analysis and Conclusions • Evaluate findings to identify missing data • Compare information with current capabilities: • Many methods (SWOT, STEEPLE, Profiles, etc) • SWOT (Strengths, Weaknesses, Opportunities, Threat) analysis and competitor profiles extremely popular

  28. Market Research (18)-SWOT Analysis-

  29. Market Research (19) Competitor Profiles: • Concise summaries of key competitors • Obtain information from primary and secondary sources • Represents benchmark of what to expect • Shapes export plan and implementation

  30. Market Research (20) - Competitor Profiles -

  31. Market Research Case Study Overview: Medium sized German manufacturer of disinfection equipment wanted to enter US market Objective: Determine if there is a market Processes: • Secondary Research – Associations, publications, annual reports, government statistics, regulatory agencies, web sites • Primary Research – Customers, distributors, and competitors • Drafting and finalizing information • Conclusions/recommendations Outcome: Very limited market. Extensive education needed prior to launch of product

  32. Market Entry Strategies/Options Generally: • Devising the best approach to enter the market • Market research should shape decision • Due diligence is vital regardless of option

  33. Market Entry Strategies/Options (2) Direct Sales: Sales that are transacted directly with the end-user or consumer • Hire person in the US to act as the master importer/distributor • Deal directly with customers • Advantages: • Control over entire process • Retain higher profits • Disadvantages • Expensive • Not applicable or practical in many industries

  34. Market Entry Strategies/Options (3) Distributor/Representative: • Distributor is an entity that stocks, resells, and delivers goods to customers • Representative (manufacturers’ rep/agent) acts on behalf of manufacturer and sells products to customers • Does not take possession of goods • Commission sales

  35. Market Entry Strategies/Options (4) Distributor/Representative: • Advantages • Leverage existing marketing/sales relationships • Access key accounts • Assume responsibility of sales process • Disadvantages • Struggle to stay relevant • Manage complex relationships • Commit considerable time and money

  36. Market Entry Strategies/Options (5) OEM/Private Label Supply: • Produce for others under the latter’s brand name • Advantages: • Generates fast revenues • Remains consistent with outsourcing trends • Disadvantages: • Ends abruptly • Retains no equity

  37. Market Entry Strategies/Options (6) License: • Manufacture Under License (“MUL”) • Intellectual property basis • Upfront fees • Royalties • Consulting • Use of product/service • Fees • Advantages • Spreads risk • Builds presence and knowledge • Generates income • Disadvantages • Temporary measure • Requires plenty of trust

  38. Market Entry Strategies/Options (7) Joint Venture: • Two partners take equity investment in a new enterprise and share expenses and revenues • Advantages: • Spreads risks and responsibilities • Leverage other party’s expertise/contacts • Disadvantages: • Performs inconsistently • Dissolves in chaotic fashion

  39. Market Entry Case Study Overview: Small, family-owned Scottish maker of malt extract wanted to enter US baked goods market Objective: Determine if there is a market and how to enter Processes: • Secondary Research – Associations, publications, annual reports, government statistics, regulatory agencies, web sites • Primary Research – Customers, distributors, reps, competitors • Drafting and finalizing information • Conclusions/recommendations Outcome: Large and competitive market for malt extract that can best be served through reps and, later, distributors. Found rep/distributor

  40. Other Factors Incoterms: • Established by International Chamber of Commerce • Sets legal obligations regarding costs and risks pertaining to the delivery of goods between buyers and sellers • 13 in total: Most common are ex works, CIF, and FOB • Has impact on customs • CIF: Enables importer to deduct international freight and insurance

  41. Other Factors (2) Customs: • US-Jordan FTA provides for a 10-year phase-in • Confirm classification codes • Verify that goods eligible for duty-free entry • Merchandise Processing/Harbor Maintenance Fees • Food/beverage and related items governed by BTA rules (Register facilities with FDA and prior notice needed for each shipment)

  42. Other Factors (3) Customs (continued): • Entry • Handled by importer or broker • Exporter must provide commercial invoices that contain: • Classification codes for each item • Value • Country of origin – “Made in Jordan” • Itemized international freight and insurance costs • Marking

  43. Other Factors (4) Shipping/Logistics • Select freight forwarders with right expertise • Consider bonded warehouses duty deferral • Expect possible container availability and consolidation issues

  44. Other Factors (5) Insurance: • Cover possible shipping loss (Depends on terms) – Marine – Specific v. blanket policies • Cover receivables – Advisable for large retail accounts (i.e., Wal-Mart) • Product liability – Strict liability states

  45. Marketing Communications Brochures/Sales Materials: • Keep consistent with other materials • Same colors, logos, etc • Use American English • State in imperial units (not metric…) • Emphasize benefits/uniqueness of product • Present clear and brief message • Provide full contact details – email, fax, phone #, website, name of US partner/office

  46. Marketing Communications (2) Communications Styles: • Cultural differences abound • Not have to mimic but be prepared • Empathize with prospect • Be concise; • Be brief; and • Be knowledgeable • Be consistent • Follow-up aggressively

  47. Marketing Communications (3) Website – E-Marketing • Ensure consistency with other media • Provide right mix of information • Partner with other sites/share links • Consider internet marketing tools • Update regularly

  48. Marketing Communications (4) Advertising • Prepare to assist/support US partners • Consider after research and promotional materials completed • Select media that best addresses desired audience • Keep consistent message • Transmit clearly benefits/advantages • Measure by number of responses

  49. Marketing Communications (5) Tradeshows • Study prospectus to determine relevance • Ensure geographic scope – national v. regional • Look for attendee description • Check if competitors are exhibiting • Attend before exhibiting • Make appointments at ~2-3 months prior • Schedule meetings offsite in conjunction with event • Examples: Institute of Food Technologists’, Nat’l Restaurant Association, High Point, Pack Expo, Int’l Baking Industry Expo,

  50. Export Feasibility and Implementation Plan • Define tasks • Set realistic deadlines • Determine measurable results • Develop budget based on tasks/deadlines • Monitor periodically • Change as needed

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