DEVELOPMENT THROUGH EXPORTS

DEVELOPMENT THROUGH EXPORTS:

Ireland is a tiny market and if you want your company to continue on a growth path you need to look at the most attractive export markets in the EU and beyond.

This paper highlights 9 fundamental export considerations, taken from a presentation; Development through Exports, by Frank Fitzpatrick.  An experienced entrepreneur, business advisor, and former university lecturer, who has opened new markets throughout the EU and North America and has also traded in China and South Korea.

Brexit has certainly thrown a spanner in the works for trade with our most accessible export market but not all exporters to the UK will be impacted to the same extent and the UK market will remain attractive for some exporters.

Nevertheless, now is a good time to seek export markets beyond the UK and Enterprise Ireland is offering great encouragement to companies to do so.

Basically, all companies have four options to develop sales:

1. Sell more existing products to existing customers.
2. Sell new products to existing customers.
3. Sell existing products to new customers.
4. Sell new products to new customers.

These options may or may not include exports but if you are an exporter or a potential exporter the following nine points might be of interest to you.

For a full and more detailed explanation of our presentation; Development through Exports, contact Frank Fitzpatrick.

I           BEFORE DIVING IN:

Five basic questions you need to consider before getting down to the finer details of successful exporting.

1. Is there an accessible export market for your product/service?
2. Do you have the resources and capability to supply this market, profitability?
3. Is it large enough to risk the resources needed to supply it?
4. Do you have a valuable competitive advantage over existing suppliers?
5. Can you position your product to meet the market’s value expectations?

 II         BREXIT & EXPORTS:

Generally, companies who are exporting or planning to export need to take account of the relative attractiveness of export markets and the predictability of that attractiveness.

1.  Brexit means that the UK market will inevitably becomeless attractive to Irish exporters – but how much less attractive is still unpredictable.
2. UK market attractiveness will vary depending on your specific industry, and on the extent of the yet unknown changes to; tariffs, currency and logistical barriers to trade.
3. You need to forecast the risks & rewards in any market, and Brexit has made this extremely difficult to do in the UK market.
4. If you are exporting, or thinking of exporting, to the UK you consider spreading your risk by looking at other export markets with more predictable conditions and attractiveness.

III        IDENTIFY AN ATTRACTIVE EXPORT MARKET:

The British government doesn’t agree, but there is a strong case for looking first at markets within the EU, as it offers:

1. A huge customs free single market where most members use a common currency.
2. Sophisticated, regulated and reliable; banking, legal, and taxation systems.
3. Democratic and open society with high-income populations.
4. An easily navigable single landmass.
5. A strong transport infrastructure.
6. Language and business culture barriers that are relatively easy to overcome.

Note: The EU is not a homogenous market and currently consists of 500m people in 28 member states with numerous sub markets and segments.

Entering any new market becomes easier the more knowledge you have in advance on your targeted segment and the more due diligence you have carried out on your prospective customers.

A company must be clear about it’s; strategic plan, target market selection, competitive strategy, positioning in the market, and its marketing mix strategy, if it is to be a successful exporter.

IV        CHANNELS TO MARKET:

When assessing a market, always consider how easy and cost-effective it is to physically put products or people in the market.

You need to decide on the best channel to serve your customers. The most common channels include:

1. Own sales and support people based in Ireland.
2. Own sales and support people based in the market.
3. Hire a sales consultant working on behalf of your company.
4. Hire an independent agent who represents your company.
5. Partner with a locally-based distributor.

V         PRICE:

It’s best to focus on ‘value to the customer’ rather than just price.

NB: It’s the professional BUYER’S JOB to pressure the seller into improving the value of his/her offer by:  a) reducing price, and or, b) increasing quality, and or, c) enhancing support. It’s the SELLER’S JOB to resist this pressure, amicably.  This is a constant in Buyer / Seller negotiation.

In setting your prices, you will need to consider:

• Competitors’ prices.
• Level of existing competition in the market,
• Customers’ perception of the price/quality relationship,
• Production, distribution, marketing, and overhead costs.
• Impact of local VAT or other taxes on final price.
• Customers margin if they are not final consumer.
• Extent to which your customers can afford your price.

VI        PARTNER:

Choosing a partner in a new market is extremely important, with long-term consequences.

The types of details you should consider include:

1. Sales objectives.
2. Shared marketing plans.
3. Exclusivity.
4. Pricing.
5. Margins.
6. Discounts and payment terms.
7. Relationships with existing competitors.

Be ready to manage agents and distributors to ensure their ongoing commitment.

It’s also wise to include a ‘get out’ and ‘fixed period’ clause if sales targets are not being met or the arrangement is not working

VII       PAYMENT:

It’s no good selling something if you can’t collect payment, always carry out due diligence on your customers and get credit references and letters of credit whenever possible.

You also need to consider the lead-time and be aware of potential payment delays, which can be longer when exporting – test how this could affect your cash flow.

VIII      INTELLECTUAL PROPERTY:

It’s essential that find out what you will need to protect your IP. First step is to get advice from EI.

IX        LOCAL REGULATIONS:

You must have a clear understanding of the specific regulations or technical standards before entering a market. Germany, for example, often has higher accreditation standard than the EU or international norms.

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For a full and more detailed explanation of our presentation; Development through Exports, contact Frank Fitzpatrick B.A., M.B.S., H.D.Mrkt.Mngt., H.Dip.Ed., M.M.I.I.

Frank is an entrepreneur, business advisor, and former university lecturer. And he has personally opened new markets throughout the EU and North America and has traded in China and South Korea.