Introduction to Export Marketing'

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Introduction to Export Marketing.

• Simon Devlin,
• Envision Management and Marketing
  Consultants.
• March 2004.

2
Objectives of the lecture.

• To highlight the importance of exporting to the
  local economy.
• To provide an introduction to the practical
  issues involved in export market research.

3
Agenda for tonights lecture.

• How good is N.Ireland at exporting?
• Why should any company consider exporting?
• What do you need to know about a new export
  market?

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Question 1.

• How good is
• N.Ireland at
• exporting?

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Traditional View.

• Exporting? ..... Thats for the big companies.
• Exporting? ...... Sure, theres enough here to
  keep up busy!.
• Exporting? ..... I dont need to - Sure, Ive
  already got a BMW and can afford to have 2
  holidays every year.

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But things are changing .

• Maghera Company brings touch of Irish crack to
  Berlin.
• Specialist Joinery Fittings.
• How Fastank brings water to the desert.
• Fast Engineering.
• Tyrone negotiates Japans crystal maze
• Tyrone Crystal.

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But things are changing .Contd.

• Trump Card for Printer with American deal.
• Post Card Co. in Omagh.
• Total Design wins slice of Russian deal.
• Total Engineering.
• Chic shirts stitch up Asia
• Wendy Smith.

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Northern Ireland trading performance

• 1999 2000 2001
• Exports 3,127M 3,751M 3,810M
• Excludes GB sales figures.

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Northern Ireland trading performance

• 1999 2000 2001
• Exports per capita 1,839
  2,206 2,235
• Excludes GB sales figures.

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Trading PerformanceNI v ROI

• 1999 2000 2001
• NI Excl. GB
• Exports 3,127M 3,751M 3,810M
• ROI.
• Exports. 66,956M 83,889M 92,690M

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Trading PerformanceNI v ROI

• 1999 2000 2001
• NI Excl. GB
• Exports per capita 1,839 2,206 2,235
• ROI.
• Exports per capita 19,130 23,968 26,560

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Destination of NI Products Manufacturing and
tradable services 2001 02.

• N.Ireland 3,085
• GB 3,168
• ROI 1,068
• Rest of EU 1,234
• Rest of World. 1,749
• 10,304 million
• 78.5 of all NI sales are generated by companies
  employing gt 50 people.

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Destination of NI Products 2001 02

• Export Sales Excluding GB.
• ROI 1,068
• North America. 703
• Asia. 499
• Netherlands. 269
• Rest of EU. 237
• Germany. 217
• France. 214
• All others. 844
• Totals. 4,051

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Macro-environmental factors likely to impact on
NI companies over the next few years

• Britain and the Euro.
• EU enlargement
• Opportunities.
• Threats.
• Unprecedented levels of competition from China
  following entry to WTO.
• General rise in wage levels in Western Europe.
• General decline in manufacturing in Western
  Europe.
• Shift of manufacturing to lower cost regions.

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Question 2.

• Why should any
• company consider exporting?

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Exporting The NI Economy

• Why consider exporting in the first place?
• To increase turnover - in order to contribute to
  overheads and in turn increase profitability.
• No option - the home market is saturated/increased
  local competition in the local market.
• Development of a suitable market spread.
• Get better prices/margins.
• Less competition.
• Better payment terms.

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Less legitimate reasons for exporting.

• Government Incentives.
• Corporate profile.
• Everybody else is trying it!
• Travel the world See the sights!
• Been there on holiday.

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Exporting The NI Economy

• Some Barriers To Exporting
• Cost - financial, time and effort.
• Unfavourable economic conditions.
• Fear of not getting paid.
• Lack of knowledge about markets outside Northern
  Ireland.
• Language/cultural barriers.
• Too much red tape/hassle.
• Psychological/Fear of the unknown.

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Question 2.

• Where should you export to?

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Common reasons for international business failure

• Wrong export market chosen.
• Lack of good good market information.
• Difficulty in finding the right partners.
• Lack of commitment / perseverance.
• Lack of resources.
• Lack of senior management commitment.
• Costing / pricing issues.
• Lack of planning.
• Lack of skills / professionalism.

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Hardly surprising when .

• Approximately 190 countries in the world.
• 45 countries in the Continent of Europe.
• 16 Lander in Germany.
• 50 States in USA.
• Initial market screening essential so that
  resources
• can be properly focused.

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Export market selection should be based on

• Initial export market screening.
• Careful export market research.

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Question 3.

• What information do you need on
• a new export market?

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Case Study.

• Mulholland and Bailie makes cuddly teddy bears
  and rocking horses.
• The company wants to break into the German
  market.
• What information does it need to make a decision
  about whether it can do so successfully?

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Case Study.Background statistics .

• How many children are there in Germany between
  the ages of 4 15?
• Approximately how much is spent on toys per annum
  in Germany?
• What is the breakdown of this between technical
  games etc and traditional toys?
• What is the perception of British toys in
  Germany?

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Case Study Contd.Suppliers of similar
products in Germany .

• Other manufacturers of rocking horses / push
  along dogs in Germany? How many? Who are the
  leaders?
• What materials are used? What about quality? What
  designs are used?
• How much are these sold for?
• How are these promoted? Where are they sold?

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Case Study Contd.Potential buyers for M B.

• Which shops are these products sold in? How many?
• What is the usual route to market for these
  products?

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Case Study Contd.Other information.

• Are there major toy exhibitions in Germany?
• What magazines / trade journals are read in the
  toy trade?
• Who are the toy experts in Germany?

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Impact of the market research findings for M B.

• Had to develop a new product range for the German
  market.
• Increased their prices.
• Amended their promotional strategy.
• Altered their plan to sell through distributors.

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The export market research process.

• Analysis of macro environmental considerations.
  The Big Picture in the export market in
  question.
• Analysis of micro environmental considerations.
  Factors relevant to your specific product and
  its chances of success in the export market in
  question. 2 means of gathering this information
• gt Initial desk research.
• gt Primary research.

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Analysis of macro-environmental factors.

• Economic considerations.
• Political considerations.
• Cultural considerations.
• Technological considerations.
• Legal considerations.

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Examples of .economic considerations.

• Stability of the currency in question. Do you
  invoice in Sterling or the currency of the
  overseas market in question?
• Wage rates. What is the likely wage bill of
  indigenous suppliers of similar products how is
  this likely to impact on their pricing?
• Trade balance. Is the target market in question
  importing more than it is exporting or vice
  versa?

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Examples of .political considerations.

• Is the target market in question part of the
  E.E.C.?
• V.A.T and exporting to Belgium v. Switzerland.
• Does the target market in question have a stable
  government?

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Examples of ..legal considerations.

• Are there legal requirements / standards laid
  down in the target market in question for your
  products?
• Are there any taxes / import duties which will be
  applied to your product in the target market in
  question?
• What is the law concerning, for example,
  employment of nationals by a foreign company?

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Sources of macro-environmental information.

• Quality newspapers and mags. Sunday Times /
  Economist.
• Dept. of Industry Country Desks.
• Customs and Excise Import / Export statistics.
• British Embassies.
• Publications in business libraries / Internet.

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Core micro-environmental issues..Competition.

• Who are they?
• How many of them are they?
• Where are they based?
• Who are the market leaders?
• What is the approximate market share?
• How good is their product?
• How much do they charge for their products?
• How do they promote their products?
• Do they sell direct to the customer or through
  agents / distributors?

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Core micro-environmental issues .. Potential
buyers.

• Who are they?
• How many of them are there?
• What types of similar products do they currently
  purchase?
• How often do they buy?
• How much do they spend?
• What influences their purchasing decision?

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Sources of micro-environmental information.

• Desk Research Basic identification of key
  players in a target export
• market.
• gt Suppliers of similar products in the
  export market.
• gt Prospective buyers.
• Primary research More specific / useful
  information on that target market.

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Sources of export market information desk
research.

• Overseas telephone directories.
• Trade directories, such as Kompass.
• Trade magazines relevant to your product type in
  the export market in question.
• The Internet / Electronic databases.
• Exhibition catalogues relevant to your product.

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Sources of export market information primary
research.

• Straight from the horses mouth!
• gt Price lists.
• gt Brochures.
• gt Samples of product.
• Speaking to people in the business.
• Attending trade exhibitions.

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Conclusions.

• Market research is not difficult - It is simply
  about gathering the right information.
• Determine what information is required.
• Assess where you can most easily find this
  exhibition.