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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

Introduction to Exporting to the US

By Fred Levitan

Emerging Markets Group

agenda
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
objective
Objective

To provide Jordanian firms with an introductory

understanding of how to develop and implement a

proactive export plan for the US market

us market overview
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
slide5

Market Overview (2)

Leading Trade Partners

us market overview 3
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
us market overview 4
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
us market national regional and local
US Market: National, Regional, and Local

Series of individual markets/regions:

us market national regional and local 2
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
us market national regional and local 3
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
market research
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?
market research 2
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
market research 3
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
market research 4
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
market research 5
Market Research (5)

Examples of General Secondary Research

Tools/Resources:

  • Lexis-Nexis
  • Factiva
  • Dialog
  • ReferenceUSA
market research 6
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
market research 7
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
market research 8
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
market research 9
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
market research 10
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
market research 11
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
market research 12
Market Research (12)

Disadvantages of Secondary Research:

  • Produces information overload
  • Lacks precision
  • Presents credibility issues
  • Focuses more on big business
  • Becomes dated very quickly
market research 13
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)

market research 14
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
market research 15
Market Research (15)

Advantages of Primary Research

  • Fills in missing pieces of information
  • Adds clarity
  • Validates findings
  • Provides realistic and current assessment
market research 16
Market Research (16)

Disadvantages of Primary Research:

  • Time consuming and expensive
  • Challenging at times
  • Requires different type of research skills
market research 17
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
market research 19
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
market research 20
Market Research (20)

- Competitor Profiles -

market research case study
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

market entry strategies options
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
market entry strategies options 2
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
market entry strategies options 3
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
market entry strategies options 4
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
market entry strategies options 5
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
market entry strategies options 6
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
market entry strategies options 7
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
market entry case study
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

other factors
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
other factors 2
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)
other factors 3
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
other factors 4
Other Factors (4)

Shipping/Logistics

  • Select freight forwarders with right expertise
  • Consider bonded warehouses duty deferral
  • Expect possible container availability and consolidation issues
other factors 5
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
marketing communications
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
marketing communications 2
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
marketing communications 3
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
marketing communications 4
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
marketing communications 5
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,
export feasibility and implementation plan
Export Feasibility and Implementation Plan
  • Define tasks
  • Set realistic deadlines
  • Determine measurable results
  • Develop budget based on tasks/deadlines
  • Monitor periodically
  • Change as needed