Trade Guide Step by Step

How to adapt your product for export

In many cases, the choice to export a product is accompanied by necessary modifications to the product itself. The methods and techniques for checking whether a product is suitable for export cover a very wide range of procedures, from the very basic, fast and inexpensive ones to those that require complex, very expensive and time-consuming processes.

It is up to the exporters themselves, in cooperation with their respective representative or head of product distribution, to select the size, technique and duration of the research that must be carried out in each case.

A program including research can be applied, which can involve:

1. Studying and recording competitive products

1. Technical aspects: raw materials, product form, variety, type, sizes, marks, colours, modifications, ameliorations, durability.
2. Quality assessment: endurance, ability, performance, appearance, suitability and ease to handle.
3. Legal patentability: design (product form, patent rights, approvals).

2. Packaging / Presentation

1. Technical aspects: design, shape, construction materials, endurance to weather conditions, easy and stable handling during loading/unloading, distribution, storage and presentation, adaptation to official rules and legal regulations.
2. Attractiveness: size, shape, suitable colour, quality stamp and label design (sign).
3. Identity info: shape, colour, label, trademark.
4. Information: product description, content composition, instructions of use.
5. Service provision: type of services supplied by competitive products - delivery, installation, preparation, main parts and accessories, training in use, repairs, contributory goods.

3. Competitive Prices

1. Consumer Prices: main pricelist – common sales prices – taxes (added value, community or municipal) – price discounts (due to quantity or cash payment) – payment method (cash, credit, installments) – discounts due to damaged goods – product variety, market sectors and sale type (branches and shops).
2. Commercial prices: different prices – discounts – payment terms – special discounts for wholesale and retail importers, due to products, sectors, order size, type of traders.

4. Product Acceptance

The exporters must present their product to potential importers and discuss with them the conditions during selling and distributing similar products. In this way, they will be able to proceed to additions or changes in their product, wherever necessary. The next step must be the product presentation to a group of wholesale and retail traders, so as to collect their opinion and proceed to decision-making.

They can also ask the consumers for information directly. At the same time, they will have to take into account:

1. The size and dimensions that the product must have.
2. The type of outer case that should be used for its packaging.
3. The method that should be used for its packaging, so that it is easy to handle in the storeroom.
4. How much the packaging enables easy freezing, if necessary.
5. The issue of selling price and how easy it is to provide similar offers.

How to price your product for export

The pricing process for the products to be exported is particularly important, since it takes into account, in addition to production cost factors, other factors related to the transportation and delivery of goods to foreign markets.

These factors may be:

• Differences in currency rates
• Goods transportation
• Special packaging of exported products
• Goods insurance
• Commissions and other charges regarding intermediaries, etc.

The demand for a product, the same as in local markets, has a decisive impact on prices. For most consumer goods, the per capita income is an index of market dynamics, while few products are considered to have such a high demand, so as not to be affected by the low consumers’ per capita income.

Competition, the same as in local markets, definitely affects the sale prices for products. A new product in a new market may have a high price, while the introduction of a product in a particularly competitive market, can require a reduced price in order to win a market share immediately.

However, pricing also takes into account the export targets in each market. Such targets can be the quick spreading into the market, the replacement of existing products, the slow but steady penetration, etc. These targets and the overall pricing strategy are also affected by the development phase of the target market and the potential consumers’ per capita income.

Some alternative pricing methods are as follows:

• Static pricing – the same price for all customers.
• Flexible pricing – adjusting prices for various customer types.
• Pricing based on cost – pricing aiming at fully covering the constant and variable costs of product manufacturing and export.
• Pricing based on variable cost – pricing aiming at fully covering the variable costs of product manufacturing and export, while the stable costs are covered by sales in the domestic market.
• Pricing for penetration – low price, for a quick introduction in the market and in order to discourage competitors.
• Pricing for markets with low competition – high product price, with a high profit margin in markets with low competition.

After defining the pricing strategy and calculating the various costs, the products are also priced based on the desirable profit margin for the company.

While attempting to price its products in the most effective way, the company must take into account all potential costs.

Most of these are listed below:

• Marketing and promotion costs: distribution, advertising, trips, printed promotional material, participation in trade fairs, etc.
• Production costs: production cost per product, packaging or assembly cost per product
• Packaging cost: materials, mock-up, label, etc.
• Organization and administration costs: safety of transportation, certifications, etc.
• Goods transport costs: storage, insurance, transport costs
• Financial costs: costs of funding exports, costs from fluctuations in currency rates, costs from fluctuations in interest rates, etc.

How to export through third parties

Exports through third parties involve selling the company products to intermediaries, who can be wholesale traders or distributors. The company can also have a representative who does not buy its product, but represents them in the specific market.

Partnership with another company to carry out exports, which will offer significant advantages, such as knowhow transfer, risk distribution, equal contribution to the necessary funds, simultaneous penetration in various target markets, etc.

Strategic partnerships with a company in the target market can also be extremely beneficial, since these usually involve companies with supplementary products and they utilize the existing distribution networks and promotion means.

Despite the fact that direct exports may seem more profitable, the existence of intermediaries can result in a significant time and cost saving for the company.

A method for introducing products in the target market is through representatives, who usually represent a specific market and also sell supplementary products.

They are authorized to form selling agreements for the companies they represent and are paid in commission only after the actual sale. An agreement with a representative in a foreign market helps the company or the product to have a direct presence in this market. This usually costs less than direct exports, while the company maintains control of the product and its selling price. Local representatives can help the company and contribute to market research, the provision of advice on issues of goods transport, the penetration in specific customer categories and to the provision of information on legal, financial and procedural issues.

Another alternative for the businessman involves selling to foreign markets through wholesale traders who, in some cases, buy and resell products and, in some others, sell with commission. They usually specialize in specific products or product categories. In many cases, they undertake actions for promoting the products to the actual market, through advertising, participation in trade fairs, personal sales, etc.

Finally, the existence of distributors must also be mentioned, who buy the products and resell them to customers in the foreign market. They usually set themselves the selling prices and undertake to monitor the progress of the product in the market. The disadvantage of selling through distributors consists in decreasing the profit margin for the exporter and lowering the control of the products’ position and price. In order to select the intermediaries with whom the company will cooperate in order to export its products, various factors must be taken into account, since this is a particularly important decision and there may be many potential alternatives.

Some of these factors can be:

• The intermediaries’ sales network, degree of development and expansion over time, etc.
• The part of the target market that they cover and their connection with the company’s targets, the existence of branches or local offices in the target market.
• The product mix and variety that they represent or sell, their relation to the company’s products, representing other products from the Greek market, the minimum sales that they can ensure, their effectiveness in terms of selling supplementary or relative products.
• The product storage or stocking method, the ease to communicate with them, the company’ organization, the services that they can offer to the final customer, etc.
• The selling method they follow, the way they monitor sales, the method for training sales personnel.
• Their customers’ characteristics, who and how many clients they have.
• The provision of technical assistance in market research, the promotion means they use, the amounts they invest on advertising and other promotion actions, the intention to share the advertising cost, the existence of a website and the promotion of the products for the companies they represent through that website.

Development in foreign markets is a long-term commitment for the company and it requires special effort, resources and time. This must be accepted by the company management first and foremost.

How to penetrate foreign markets

As long as the company has chosen the “best” markets for its products, the next decision involves the method for penetrating the target markets.

The factors that must be taken into account in order to make this decision are as follows:

• The competitive advantages of the products in the foreign markets and the potential risks.
• The company’s financial dynamics.
• The restrictions and obstacles that the company may come across during this effort.
• The kind of product or service to be exported.
• The special aspects of each market.

In general, the methods for introducing a product to a foreign market can be considered to be the following:

1. Direct exports.
2. Exports through third parties.
3. Forming a partnership with domestic or foreign companies.

Direct exports consist in selling the products directly from the company to the final customer. The main advantages of this method involve securing a higher profit margin due to the lack of intermediaries, the possibility to set low prices, and the direct contact and knowledge of the company’s final customers/consumers.

There are also disadvantages, such as that the company must possess an excellent knowledge of the market, and that the visibility of the product and the company rises slowly.

How to promote your product to foreign markets

The promotion means that the company possesses in foreign markets are general the same as for domestic markets. These are:

• Advertising: Special attention must be paid to the selection of suitable means that will have an impact on the potential consumer.
• Promotional material: the material developed and distributed in the local market may need to be modified in terms of both its design and the texts included in it.
• E-mails: sending direct messages to potential target clients can only take place in case of experience in the particular market and effective market research.
• Personal visits: personal contact with potential customers may be the best promotion method. In many cases, this also depends on the business culture of the target market.
• Participation in trade fairs: participation in trade fairs, in addition to promoting the products and the company, helps the company become better acquainted with the market and competitors. In case it is difficult to take part in a trade fair, it is enough for the businessman to visit the trade fair.
• Company website: each export company must have a website for advertising reasons and which contributes to serving foreign customers. However, in order to contain updated information, its monitoring and continuous feedback are necessary. The target is not simply to have a website but also to update it often, since a website that is not updated can do more harm than good to a company.