SAMED · International organisations’ research reports (e.g. International Trade Centre) Newspapers and journals Commercial directories and reviews South Africa’s trade representatives

SAMED

Export Development / Orientation / Information

Workshop

18 January 2017

Program Contents

International Trade:

Is exporting for you?

Getting ready to export

Finding the right market

Other basic export issues

Who can assist you?

Export Challenges

Not nurturing enough exporters

Fly-by-night exporters!

Lack export commitment

Little or no preparation

Start before being export ready

Going about it in wrong way

Not allocating the required resources

Aim of the programme

Expected and desired outcomes

Gain an understanding of the export process

Obtain an overview of export marketing basics and what is involved

Gain understanding of the export marketing planning and process

Main categories of export barriers

1. Motivational - a belief that it is:

Easier to do business at home

More cumbersome, time consuming and costly to

export

Impossible to compete internationally

2. Informational

Companies lack detailed information regarding • market opportunities

• market size

• prices of similar products

• quality requirements

• packaging requirements

• distribution channels

• payment terms

Main categories of export barriers (continued)

3. Resources

The average company simply does not have the

resources to always actively pursue the export

market in terms of: • manpower

• time

• money

Is exporting for you?

To answer if exporting for you consider following

What is exporting?

Why should you export?

Advantages of exporting

What are the risks of exporting

When is a company export ready?

Export assessment (exercise)

What is involved in an export process?

What is Exporting?

Entails the provision of goods/services across our borders and there are two types of exporting:

Direct Exporting

- Deal direct with importers overseas

- Appoint agents and/or distributors to sell

Indirect Exporting

- Happens in SA through a third party

- Trading houses, local agents or merchandisers

As a country

Use of national resources more effectively

Increase level of technological development

Expand and develop economy beyond local market limits

Increase job opportunities and reduce unemployment

Earn foreign currency

Foster economic growth

Slogan: “EXPORTS UP OR SOUTH AFRICA DOWN”

Why export?

Why export? You as a business:

Sell more and increase profit

Expand market opportunities

Obtain economies of scale

Spread risk

No seasonal fluctuations sales all year

Improve efficiencies and product quality

Learn to run bus more competitively

Improve your competitiveness

Gain know how & new technology

Benefits of exporting?

Country’s prosperity depends on it!

Develop additional sales

Optimising prices

Maximise resources – capacity utilisation

Levelling seasonal demand

Distribute risk i.e. when local downturn

Capitalise on unique product or technology

Improved competitiveness - exposure

Gain know how &combat foreign comp’s

Risks of exporting? Long term investment with many potholes!

How long – don’t expect quick results

Financial

Payment

Cash flow

Currency by quoting in Rand & fluctuations

Working capital to buy more raw materials

Intellectual property

Insurance claims – product liability

Inadequate resources i.e. time, money and people

More Risks

Slow payers

Additional plant facilities

Driver and administration of activities

Product not accepted in export market

Adapt catalogues, brochures & materials

Packaging & labelling requirements

Quality standards

Accreditations i.e. HACCP

Typical company growth

Stage 1: Establish a local market presence

Stage 2: Develop national market or export?

Stage 3: Grow in local market or export?

Stage 4: Expand by product diversification or export?

Stage 5: Move into exports

Stage 6: Become international player

Stage 7: Become global player

Basic export options In the beginning

Produce to export goods direct

Produce and sells goods to an export trader in South Africa

Produce exports as part of a group or co-operative or Joint Action Group (JAG)

Later

Franchise or license the product/service in foreign markets

Establish operations in one or more foreign markets

Why exporting is different

People-related differences

Different culture, language and customs

Consumer and user preferences

Distance from your country:

– different transport arrangements

– longer lead times

– communications

Competition is tougher

Buyers are demanding and have one chance to prove yourself

Why exporting is different

Legal framework

Different laws

Different product standards

Health and sanitary regulations

Foreign currency issues

Tariffs and taxes involved

Paperwork is more cumbersome

Are you export ready?

Export Ready Factors

Company

Production – capacity, range,

Marketing plan, info & skills

HR – skills, experience, etc.

Financial Resources

Many aspects to consider

Does it fit in with your company goals?

International experience

Management and staff

Production capacity

Quality & standards

Packaging & labelling

Financial capacity

Export readiness: Is the company export ready?

Management commitment

Production capacity

Marketing planning

Financial resources

Export admin skills

Export readiness: Is the product exportable?

Does it meet a customer need?

Is it a ‘quality’ product?

Does it offer value for money?

Does it have any special features?

Could the enterprise modify it to meet individual requirements?

Will it travel well?

Can the enterprise produce it in sufficient quantities to make exporting possible?

Export readiness: Production facilities?

Do you have spare capacity?

If so what volume? If not?

Sufficient production space?

Technology used

Good manufacturing practices

Packaging, labelling & storage

Export readiness: Financial resources?

Can you fund an export order

What payment terms

Machinery for expansion

Market development expenses

Certification/accreditation cost

Export readiness: Marketing?

Export market information

Competitor information

Target market info

Marketing plan

Identification agent/distributor

Marketing skills and experience

Export readiness: summary

Do you have and acceptable product

Ado you have spare production capacity

Production efficiencies

Price competitiveness

Business and communication systems

Access to finance

Export market experience & knowledge

Management commitment

Time and staff resources

Determining a company’s export readiness – YOUR TURN

Test your export readiness

Export audit/readiness

Score Indications

90% plus – ready should be exporting

80 -89% - Export ready

70 – 79% - Specific aspect to work on

60 -69% Several areas require attention

50 -59% - Not export ready and lot of work to be done

Below 50% - Far from export ready

The Export Process Many aspects to the process:

Feasibility analysis – SWOT, capacity, capabilities, profile markets, consult trade specialists, register and apply

Preparation

Plan foreign market entry i.e. seek funds

Market research, evaluate markets, comply with requirements, methods of distribution, pricing & costing and develop marketing plan

Implementation

BASIC EXPORT PROCESS SOUTH AFRICA

FOREIGN MARKET

EXPORTER

Order

IMPORTER

Enquiry

3

Appoint agent? Promote product

2

Research markets, identify

standards, find buyers

1

Decide if export ready

Goods

Produced

Pro-Forma

Invoice or quotation

CUSTOMS IN

IMPORTING COUNTRY

Goods in transit

Check price,

delivery

Documents SHIPPING /

FWD AGENT

Documents

CUSTOMS IN

SOUTH AFRICA Documents

CARRIER

Payment

Documents

Getting ready to export

Register as an exporter

Start preparation – main reason of export failure!

Obtain market information

Develop export marketing plan

Identification agent/distributor

Allocation of resources

Components for an export marketing plan

SWOT analysis

Product portfolio

Features and benefits

Target market segments

Export objectives readiness & SMART

Marketing strategies to achieve obj’s

Marketing planning basics

Market analysis

SWOT analysis

Situation analysis

Capacity analysis

Competitor analysis

Key marketing issues

Market Information

Market segmentation

Competitive advantage

Marketing orientation

Customer service

Marketing Planning

Sales Force Productivity

Exports

Marketing basics: What is marketing?

“The management process by which

customer requirements are identified, anticipated and

satisfied profitably.”

What is Marketing?

Marketing starts with:

Real knowledge of the market place

Real knowledge of your customer

Real knowledge of your competitors

Effective marketing information is a key weapon in combating the impact of competition and changes in market conditions

Marketing basics: The four Ps of marketing

Product

Price

Promotion

Place (distribution)

Foreign environment (uncontrollables)

Economic

forces

Competition

Technology level Distribution

Geography, infrastructure

Culture

Political,

legal forces

Controllable and uncontrollable elements

Domestic environment

(uncontrollables)

Economic

climate

Competition

Political,

legal forces

Place

Product

Promotion

Price

Controllables

Four P’s of strategic marketing

Probing: Researching the market you’re interested in

What is the market like?

Who’s in it?

What do they need and want?

Partitioning: Customers are not all the same

Cluster into different groups

According to customers different needs

Four P’s of strategic marketing (continued)

Prioritizing: Make choices about which segments to target.

We don’t have the resources or capabilities to service every need!

Positioning: The image we want to create

Who we are & what do we stand for?

What level of service quality, price and other key deliverables are we offering

Export planning basics: What is a marketing plan?

A set of objectives, decisions and actions

that takes the business from where it is

to where the owner wants it to be

IN

?

YEARS NOW

Export planning basics: Why planning is important

It helps to

– decide if the objectives are realistic

– decide what resources (machinery, people, money, skills) are needed to reach the objectives

– know what time period is necessary

– keep focused

Banks, DTI and other bodies need to see your business and marketing plan

Export planning basics: What makes up a marketing plan?

Mission statement: Why the company is in business

Company /market audit and SWOT analysis:

Knowing where the company is

Objectives: Knowing where the company wants to be

Strategies and action plans: Deciding the right actions to achieve objectives

Budget: Working out how much it is going to cost

Controls and reports: Measuring performance

Framework for an Export Marketing Plan

Business/marketing plan structure

Presentation

Introduction

Situation analysis

– Mission statement

– SWOT analysis: opportunities and benefits

– Market audit

Objectives

Strategies and action plans

Budgets

Export marketing planning process

SITUATION

ANALYSIS -

WHERE YOU

ARE

MARKETING

OBJECTIVE -

WHERE YOU

WANT TO BE

MARKETING

STRATEGIES -

HOW TO GET

THERE

COST OF

ACTIONS -

MARKETING

BUDGET

Market

feedback Sales

reports

MONITOR

PROGRESS - MAKE

SURE YOU GET

THERE

4 P’s of marketing

Product/market grid

Market research

Adapt product

Set price Distribution

Promote product

Sales

Personnel

ACTION PLANS -

WHO DOES WHAT,

WHEN

Mission statement

Market audit

SWOT

Identify problems

Decide action

Learn from

mistakes

FEEDBACK

AND

CORRECTIVE

ACTION

Sales targets

Target markets SWOT

Who can help you?

Help with specific products:

Export councils

DTI industry sector task teams

Industry associations

SABS & CSIR

Who can help you?

With research & market planning:

Parastatals – ARC, CSIR, Seda, TISA

DTI

Business & industry association

International trading companies

International Trade Centre (ITC)

CBI - promote imports of dev countries

Consultants, banks, freight forwarders

Information resources

Seda, DTI, SABS, CSIR

Export councils

Business & industry association

International trading companies


CBI - promote imports of dev countries

Consultants, banks, freight forwarders

Information sources Trade statistics, government regulations

International organisations’ research reports (e.g. International Trade Centre)

Newspapers and journals

Commercial directories and reviews

South Africa’s trade representatives abroad

Foreign embassies and trade offices in South Africa

Chambers of commerce and industry and trade associations

More information sources

Market research organisations

Export promotion organisations

Banks and other export service companies (e.g. freight forwarders)

Consumer organisations

Local companies

Some useful web sites Cargo Info: www.cargoinfo.co.za

CBI (Centre for the Promotion of Imports from Developing Countries), The Netherlands: www.cbi.nl

CIA World Factbook: www.odci.gov/cia/publications/factbook/index.html

FXTOP s.a.r.l.: http://fxtop.com

International Trade Centre: www.intracen.org

International Trade Centre product maps:www.p-maps.org (register at http://mas.admintools.intracen.org/accounts/ registration

More useful web sites

SA Department of Trade and Industry: www.thedti.gov.za

SA Revenue Services: www.sars.gov.za

UK Statistical Office: www.statistics.gov.uk

World Bank: www.worldbank.org

World Trade Organisation: www.wto.org

World Travel Guide (Columbus Publications) www.worldtravelguide.net

Also see sites listed in EOC Annexure 1

CBI market surveys Fresh fruit and vegetables

Fishery products

Preserved fruit and vegetables

Health foods

Cut flowers and foliage

Gifts and decorative articles

Toys and games

Stationery items, office and school supplies

Domestic furniture

CBI market surveys cont

Electronic components

Hides and skins

Chemicals

Essential oils and oleoresins

Packaging materials

Sanitary ware and ceramic tiles

Natural ingredients for cosmetics

Computer software and IT services

Finding the Right Market

What does SA export?

To which countries do we export

How to choose right product

Where to find info and reports

Ways to enter export markets

How can you be represented

Overview of international trade

What is international trade? How does it take place? Who are the main players?

The WTO, GATT and ITC

What is the role of governments?

What is the role of the private sector?

What restricts international trade?

Agreements

SADC

EU

AGOA

COMESA

China Textiles

World Trade Organisation (WTO)

Is international body to:

– implement the General Agreement on Tariffs and Trade (GATT)

– resolve international trade disputes

– facilitate multilateral trade negotiations

Was formed 1 January 1995 after Uruguay

Round

Has 158 member countries, with 30

observers/ applicants

Principles of GATT

Trade between WTO members should be non-

discriminatory (Most-Favoured-Nation concept)

Progressive reduction of tariffs and other trade

restrictions.

Domestic industries should be protected only by

tariffs and not by non-tariff barriers.

Generalised System of Preferences (GSP) for

developing countries.


Formed by UNCTAD (UN Council on Trade and Development) and WTO

Role is to help develop international trade of developing countries

Provides assistance, training, information through government departments of developing countries.

Role of government

Negotiating trade agreements

Government-to-government and multi-

lateral interventions

Creating a favourable trade environment

Encouraging investment

Assisting business / export development

Supporting export education

Creating & providing export incentives

Promoting exports

Role of the private sector

Organised private sector provides export

promotion and support services

Export service companies provide banking,

insurance, freight forwarding, transport and

other services

Individual companies gear themselves to meet

the challenges of international trade

Individual co’s strive to become export ready

Restrictions on international trade

Import duties of various types

Quotas and restraints

Government procurement policies

Technical regulations

Special interest groups

Sanctions and boycotts

Restrictions on international trade

Especially in developing countries:

Poor physical trade infrastructure

Poor services infrastructure

Lack of business acumen

Lack of foreign exchange

Lack of funds

Customs classification: tariff structures

Customs Co-operation Council

Evolution of classification systems

Harmonised System of classification for tariff purposes

Principles of HS classification system

22 basic classification sections - do not form part of number system

Each section consists of chapters - 98 in total

Each chapter consists of headings - 1241 in total

Each heading consists of sub-headings - 5019 in total

Sub-headings may be further sub-divided by individual countries

Tariff structures

General rates of duty

Most-favoured-nation (MFN) rates of duty

Preferential rates of duty

Excise duties may be levied in addition

Import surcharges may be levied

Anti-dumping and countervailing duties

Dumping: selling in export market below domestic market price or at unfair price

Anti-dumping duty against specific exporter

Countervailing duty against all exporters of specific products from particular country providing export subsidies

South Africa’s regional trade: 2012

REGION IMPORTS RM

EXPORTS RM

Africa 61 161 103 925

Europe 238 102 216 512

Americas 97 543 81 591

Asia 313 474 194 044

Oceania 15 526 13 481

Unclassified 1 846 52 860

Ships’ stores 0 687

TOTAL 727 632 663 100

Regional market opportunities

Western Europe

traditional trading partner

wide range of goods established

emphasis on quality, price and service

niche markets

EU programme includes partnership concept for SMMEs

Eastern Europe

traditional buyers of SA raw materials

food products developing

many selected other goods

Payment issues? Language issues?

generally difficult market area for SMMEs



North America

major consumer and industrial market

diverse demand

regional approach

niche markets essential

may be too large for SMMEs unless specific outlets identified

South America

selected SA products are well established

opportunities for JVs in other areas

more liberal trade regimes aid imports

similar regional integration aims and small business development as SADC, language and culture differences


Far East

rapidly growing trade with SA

established buyers of SA raw materials

aggressive marketing needed for manufactures

highly competitive area; unique product features needed


Australasia

trade is growing from a small base

economic synergy creates some opportunities

gateway for SA to Pacific Rim

SA is gateway into Africa

competitive market with supplies from Far East


Africa

25% growth p.a. in trade for more than a decade

SA has major competitive advantages

Africa takes wide range of SA goods, especially manufactures


SA companies have production and marketing JVs

Aid-funded projects now open to SA companies

Natural first export region for SA firms; good prospects for entrepreneurs; some resentment of SA


South Africa’s main trading partners: 2012

Total two-way trade

South Africa's imports from…

South Africa's exports to…

R millions R millions Rank R millions Rank

Germany 129 846 82 417 1 47 429 3

United States 123 710 58 147 3 65 563 2

People's Rep of China 117 655 82 411 2 35 244 5

Japan 107 069 40 603 5 66 466 1

United Kingdom 69 630 29 529 6 40 101 4

Saudi Arabia 48 657 45 946 4 2 711 19

Netherlands 38 416 10 074 18 28 342 6

India 37 465 18 813 10 18 652 7

France 31 367 20 778 9 10 589 17

Italy 30 770 17 726 11 13 044 13

Angola 29 687 22 349 8 7 338 21

Iran 28 649 27 374 7 1 275 20

Belgium 26 109 9 374 19 16 735 8

Australia 25 749 13 550 15 12 199 16

Rep of Korea 24 274 11 952 17 12 322 15

South Africa’s advantages & challenges

ADVANTAGES

Trade agreements

Diverse economy

Political stability

Flexible producers

Good trade relations

Fair physical

infrastructure

Good service

infrastructure

CHALLENGES

Distance from major

wealthy markets

High cost of transport

Lack of skilled

supervisors and labour

Labour costs

High production costs

Power supplies & cost

Crime

How can you be represented?

Commission agent

Distributor

International trading house

Branch marketing office

Buying houses and import agent

What is difference between agent & distributor?

Commission only

Distributor adds margin

Can control agent but not distributor

Distributor more access to market?

Agent may be well connected and “hungry”

Amount of commission earned

Distribution channels

Options

Manufacturer

Foreign

Agent

+ 10%

Retailers

+ 120%

Distribution channels

Option Manufacturer

Foreign

Agent

+ 10%

Distributor

Retailers

+ 100%

Distribution decisions in international

marketing

Short

channels

Manufacturers of

consumer goods

Consumer

Long

channels

Agents

Retailers

Wholesalers

Retailers

Retailers

Retailers

Wholesalers

Agents

Channel options in each market

Agency agreement

Commission

Area applicable

Expenses

Marketing and promotion

Service

Other Issues

Intellectual property (IP) and types

Business etiquette in different countries

What are quality standards?

Financial needs for exporting

Adjusting packaging and labelling

Amount of commission earned

What is quality?

Quality is product’s ability to satisfy stated and implied needs

Quality management is setting quality policy, objectives and responsibilities and implementing them effectively

Quality control refers to techniques and activities to fulfil quality requirements

Dimensions of Product Quality

o Quality Killers

Reliability

Conformance

o Quality Drivers

Performance

Durability

o Quality Enhancers

Features

Serviceability

o Quality Aesthetics

Appearance

Reputation

Export Marketing and Investment Assistance Schemes (EMIA)

Funded by DTI, through EMIA who is part of TISA

Partially subsidise marketing and investment promotion activities

Marketing activities:

– primary export market research, including promotional items

– outward selling trade missions

– inward buying trade missions

– exhibition assistance – individual or national pavillions

– industry sectors

EMIA Program Objectives

Provide marketing assistance to develop new export markets and grow existing export markets

Assist with the identification of new export markets through market research

Assist companies to increase their competitiveness by supporting patent registrations, quality and product marks

Increase the contribution of black-owned business and SMMEs to South Africa’s economy

EMIA: who qualifies?

SA manufacturers of products

SA export trading houses

SA agents representing 3 or more SMMEs and/or HDI-owned firms

SA export councils


Joint Action Groups (JAGs)

EMIA: Eligibility Criteria?

All entities should have traded for more than 1 financial year

Must be a legal registered entity except sole proprietor and partnerships

Must be a tax payer in good standing

Must submit applications in time – 2 months

For events must submit 6 months prior to event

Entities applying may be subject to a site visit

EMIA: classification of companies

HDIs, at least 51% owned, must be SA and SMMEs

SMMEs, private and independent, and:

– less than R40 mil turnover a year

– total assets, excluding fixed property, less than R15m

– fewer than 200 full-time workers

Other companies

Note a new category: Emerging Exporters (similar to HDIs, less than R5 m t/o year)

Financial support Assistance is provided on the following basis:

Air Travel (economy class)

Daily subsistence

Transport of samples for specific events

Development of marketing materials for specific events

Exhibition costs relating to stand rental, stand design, services and set up costs

Costs of brochures & marketing

EMIA: general requirements

Applicant must be viable, some experience/training, product/supply capacity, export ready, etc.

Must be registered with Customs & Excise

Applications must show marketing plan

Application must be on current form

Must be export ready

Must apply months in advance

EMIA: Generic Application Docs

Export registration certificate

Certified copy of Certificate of Incorp or certified copies of ID

Comprehensive colour brochure or DVD

Latest financial statements or 3 months bank statements

Export marketing plan

Three air ticket quotes from 3 SP’s

Three freight quotes from 3 SP’s

EMIA: applying and claiming

Apply before the activity; note the required notice i.e. 2 months for PMR & 3 months for individual exhibitions & 6 months pavilions

Specific application form for each scheme

Keep all documentation showing costs

Claim after completion on combined claim form

Attach all required documentation

EMIA: Generic Claim Documents

Original / copy of air ticket

Copy of passport with depart & entry stamps

Original / certified copies of invoices for transport of samples

Original / certified copies of invoices for exhibition cost

Valid tax clearance certificate

Credit order instruction form (verified by bank)

EMIA: preferred service providers

Certain travel agents and freight forwarders appointed

Eligible travel/freight costs reimbursed only if preferred providers used

Cancellation fees levied if tickets cancelled

EMIA: PMR compensation

Primary market research:

– airfares: for HDIs & SMEs - 100% to maximum of R13 000;

– Other companies - 50% to a maximum of R6,500

– subsistence: all companies R2,000 per day

– transport of samples: R1, 000

– Marketing materials designing & printing of export brochures, promotional videos or CDs R10,000 per annum

– Product registration – 50% of the actual costs to a max of R100,000 per annum; 50% of the cost relating to registration of a product in a foreign market such as patents, trade marks and quality marks

Individual exhibition compensation

Individual exhibitions:

– airfares: HDIs & SMMEs - 100% to maximum of R17 000;

– subsistence: HDIs & SMMEs - R2,300 per day

– transport of samples: HDIs & SMMEs - R20, 000

– Exhibition costs – HDIs, SMMEs and other size – 100% of the exhibition costs to a maximum of R50,000 including foreign VAT (including the costs of marketing material within the R50,000 limit up to a maximum of R50,000)

Individual mission compensation

Individual mission assistance:

Business or economy class airfares:

– 100% for HDIs to maximum R13 000;

– 100% for SMMEs to maximum R13 000

– 50% for other size & maximum R6,500

– subsistence: R2,000 per day (Up to 5 days)

– Rental of vehicle – R200 per day (Up to 5 days)

SSAS (Sector Specific

Assistance Scheme)

All benefits will be paid up-front for qualifying individuals or entities – definition of emerging exporter is a business or individual that: Is an SMME owned by persons of SA nationality Has EMIA qualifying product or service Has traded locally for at least 12 months Must have been involved in limited or NO exports and At least 51% must be owned by black person(s), woman or

disabled (HDIs) The company or person should have annual turnover of

less than R25 million

SSAS Eligible Project

Coordinator

: The following entities qualify for assistance: Export councils


Provincial Investment & Economic Development Agencies

Business Chambers

Small Enterprise Development Agency (Seda)

Local Municipalities

Metropolitan Councils

SSAS Limitation of

Assistance Offered

Assistance limited to entrepreneurs only – staff and consultants are excluded

Entities will participate 4 times annually in programme Focuses on exhibition participation & missions only Minimum 7 to max 20 entities will be assisted in project Product must have minimum local content of 35% All applications must be submitted at least 4 months

prior to the commencement date of the vent Participants will be allowed to arrive 1 day prior to the

exhibition official starting date Only projects evaluated and supported by TISA will be

considered

SSAS Financial

Contribution 100% to a maximum of R1,9 million per project on:

Local and international airfares

Accommodation breakfast and dinner

Ground transport

Marketing materials

Transport of samples

Exhibition costs

Specialized training i.e. product development, design, colour trends, project management, ect

EMIA information

Keep up-to-date; use latest application and claim forms

Visit DTI web site:

http://www.thedti.gov.za and follow links

to exports incentives EMIA

Ask seda for assistance

Other incentives

Import duty drawbacks, refunds and rebates

Export credit insurance

Financing schemes through (IDC) Industrial Development Corporation

Regional industrial development programmes

Various small business assistance schemes

Range of DTI incentives

Specific export barriers

1. Lack of commitment

Approach is half hearted

2. Lack of perseverance

Giving up too easily

3. Lack of sufficient capital

You need money

4. Fairweather exporters

Only when local conditions are bad

5. Lack of international exposure

Past isolation

6. High protection (import tariffs) of the past

Specific export barriers (continued)

7. Lack of information and knowledge

8. Lack of experience

How to go about it

9. Not segmenting export markets

Shotgun approach

10. Following wrong strategies

Choice of • distribution channels

• appointment of agents

• payment terms

Market orientation

What is it?

What is its impact?

How do we achieve it?

Relationship between marketing orientation and commercial success?

Marketing has moved center stage in successful companies world wide – we should too!

Export Orientation Quiz! Name the 4 P’s of marketing?

Name the 4 P’s of strategic marketing

Name main reason for export failure

List 3 main export barriers

Why do you need an export marketing plan

What and who is EMIA, WTO, GATT, TISA

What export incentives are you entitled to

List factors contributing to export success

What is most important to be export ready?

Export Value Chain Map

How does a VC affect you competitiveness

Draw a export value chain map for consumer goods

What is a market niche or segment?

A market niche or segment

is a group of end-users

that is large enough to be profitable

but small enough to be served efficiently

and where the exporter can be the sole

or preferred supplier

What makes a market niche?

Income level

Age level

Gender

Cultural and/or religious issues

Shared life style e.g. sport, hobbies, leisure activities, health focus

Physical location or size

Other common needs or preferences

Importance of niche marketing

Adds focus to export marketing activities

Allows scarce resources (people, time, money) to be used more effectively

Provides opportunity for even a small exporter to be an important player in selected markets

Relieves pressure on price

Enables market research to be targeted

Product factors

Product: design, quality, materials, compliance with international standards, accreditation, etc.

Packaging, labelling and brand name

Service: instructions on use and care, servicing and repair (if relevant), spares, efficiency of manufacture and delivery

Price factors

Price setter or taker?

– Product differentiation

– Market demand

Local, regional, global pricing?

Quantity pricing?

Other aspects i.e. technology

Only four ways to higher profitability

Sell more of your product at right price

Sell at higher prices

Speed up your stock turn or

Cut costs

What is Competitive Intelligence?

CI is actionable recommendations arising from a systematic process involving planning, gathering, analyzing and disseminating information on the environment for opportunities & developments that have the potential to affect a company’s competitive situation

Competitive advantage

Grows out of improvement, innovation and change

Learning faster than your competitor

Distribution resources & coverage

Product differentiation

Customer service orientation

Quality or uniqueness of products & services

Competitive intelligence resources and application

Manufacturing and management expertise

Customer loyalty

More the jockey than the horse

Understand the sources of competitive

advantage

Specialized knowledge

Customer orientation

Trade relationships

Technical expertise

Flexible management

Market Coverage

Economies of scale

Financial structure

Shared experiences

Market information

SUPERIOR POSITION

Costs

Differentiation

Protected niche

SUPERIOR SKILLS

SUPERIOR RESOURCES

Examples of SFP Personal selling in South Africa

Average time selling 27% (11-50%)

Average time traveling 20%

Time spent on admin/office 53%

On top of this 60% of time spent with LP customers

Selling cost as % of sales is increasing

Product Positioning and Market Share

Product-Price Position, Marketing Efforts,

and Market Share

Potential positioning

Market share

leader

Quality leader

Service leader

Technology

leader

Innovation leader

Customizing

leader

Prestige leader

Expertise leader

Bargain leader

Value leader

Marketing Plan Framework

Marketing Mission –what business? Product /Service Portfolio Target Market Segments per product Market Potential per TMS Export Marketing Objectives Marketing Strategies - Product - Price - Promotion - Place Implementation & Control of the Plan

Action plans

Each strategy requires certain actions

Each action must have a date and a person responsible

Important to identify all actions for budget - actions cost money!

Place/distribution policy Sell direct to retail outlets.

Identify possible specialised chain stores/outlets: Marcia by Internet, telephone calls, within 6 weeks.

Contact selected outlets and set up meetings for Ricardo: Marcia within 2 months.

Market research on wood and design preferences: Ricardo; within 4 months.

Research on technical regulations regarding fittings: Marcia via SABS, within 2 months.

Research to determine mark-ups at retail level: Ricardo on market visit within 4 months.

Calculate export costs to CIP suitable named place in the UK: Marcia within 2 months.

Objective Develop

market for small lamp

bases in the United

Kingdom: Sell 2 500

units within 18 months

Product policy: Research to determine type of wood, fittings, other preferences, regulations, etc. Then firm up policy.

Pricing policy: Aim at low-volume/medium price market. Determine volumes with selected retailer. Delivery term CIP suitable named place. Quantity discount on early payment?

Promotion policy:

Direct marketing to identified specialised outlets in southern England.

Print new brochure.

:

Research to determine retail pricing levels: Marcia through Internet within 2 months.

Apply to EMIA for primary market research assistance for brochure: Marcia within 2½ months

Plan UK market visit and obtain quotations from travel agent; decide on samples to take: Marcia within 2 months.

Contact graphic designer for new brochure: Ricardo within 1 month.

Marketing planning process diagram

Test your customer service quality commitment

Does your company/do you Yes No

Have a mission – or vision statement that includes customer service?

x

Have image/position in the market-place that includes customer service i.e. expect excellence?

x

Conduct regular, ongoing customer service surveys x

Set standards for each customer service contact point

x

Audit service levels x



Know the total cost of acquiring a new customer and cost of losing a customer?

x

Provide ongoing customer service training? x

Include customer service bonuses or incentives as part of your compensation program?

x

Have a quality improvement process to provide error-free service to clients?

x



Track why customers start/stop using your products and provide easy access for customers to voice complaints?

x

Regularly thank customers for their business? x

Regularly evaluate customer complaints? x

Communicate to all employees through meetings, speeches or newsletters the importance of customer satisfaction?

x

Score on Service Commitment Test

Yes

Answers

10 - 13 Customer satisfaction STAR. Your company has probably received recognition for its service levels – a rare achievement for a South African company. Your company should be honored by a National Quality Award.

7 - 9 Customer satisfaction in sight. Not there yet, but something is starting to happen. Moved from vision to making it reality

3 - 6 Inconsistent at best. Sometimes it’s good, some times it’s bad. Neither employees or customers are getting a clear message.

0 - 2 Customer service is mostly lip service