2. OPTIONS FOR EXPORT MARKET ENTRY
• Agents
• Distributors
• Selling Direct and Using Your Own Resources
• Trade Fairs
• Franchising
• Licence Agreements
• Joint Ventures
• Export Houses
• Government contracts
• Buying Houses
3. LET’S LOOK AT AGENTS & DISTRIBUTORS
• Differences between agents and distributors
• What will they do for our business ?
• Where and how can we find them ?
• The interview process• The interview process
• Appointment – the legal contract
• Communication and cultural issues
• Motivation
• Monitoring and evaluating performance
4. WHAT IS A DISTRIBUTOR ?
• Independent contractor who purchases goods for resale
• Usually takes legal title to the goods
• Buying from a business and selling for own account at
prices that are calculated for the distributor’s own benefitprices that are calculated for the distributor’s own benefit
• A distributor is a business Partner
5. WHAT IS AN AGENT ?
• Marketing or sales agent - seeks orders on behalf of a
client (‘the Principal’) in return for an agreed commission
on each order
• The agent is briefed on appropriate prices and terms and
then approaches businesses within a designated areathen approaches businesses within a designated area
• The agent legally binds the business they represent to any
contract they sign for product orders
• An agent never owns the goods he is selling and to all
intents and purposes is just an extension of the Principal
• An agent is a business Partner
6. ADVANTAGES OF A DISTRIBUTOR
• Has an established presence in the market
• You can rely on their expertise
• You delegate the distribution and selling functions to them
• The financial risk is largely theirs• The financial risk is largely theirs
• Your investment is negligible
• May simply be the most appropriate method of getting goods
to market
7. ADVANTAGES OF A DISTRIBUTOR
• Has an established presence in the market
• You can rely on their expertise
• You delegate the distribution and selling functions to them
• The financial risk is largely theirs• The financial risk is largely theirs
• Your investment is negligible
• May simply be the most appropriate method of getting goods
to market
8. DISADVANTAGES OF A DISTRIBUTOR
• Little control can be imposed once goods have become
the property of the distributor - you cannot dictate the
customers they sell to or the prices they charge
• A distributor’s time may be split across many product
lineslines
• Any lack of commitment on your part will inevitably
result in a similar lack of commitment on their part
• If the sales potential is high your distributor may not have
the presence to exploit it
• Some countries have legislation that can provide for
rights to compensation on termination of agreement
9. ADVANTAGES OF AGENTS
• You retain absolute control of marketing and advertising,
including pricing and the terms and conditions of sale
• You maintain direct contact with your customers
• An agent’s commission is based on a percentage of net
sales so that remuneration is directly linked tosales so that remuneration is directly linked to
performance
• You obtain the services of an experienced local national
and benefit from his market knowledge
• Your investment is negligible
10. DISADVANTAGES OF AGENTS
• You usually retain the financial risk arising from sale of goods
• Within the EEA, agents have a right to compensation or
indemnity upon termination of the relationship
• Agents take less responsibility than distributors so your
responsibilities are correspondingly greaterresponsibilities are correspondingly greater
• Agent’s time usually split between you and other exporters
• If sales are not forthcoming, agent may not make an effort to
promote your product
• If there is great potential, agent may not have resources to
exploit this
11. HOW CAN YOU FIND THEM ?
• Advertise in the trade press and use the Internet
• Ask your suppliers and potential customers
• Ask professional associations in your target market
• Ask other exporting companies selling complementary products
• Advertise at Trade Fairs
• Do your own market research, contacting, long/short listing and
qualification of prospects
• Commission a ‘Partner’ search from a Government support agency or
a private export consultancy
• ALWAYS try to shortlist and interview several prospects (be wary of
sole candidates and unsolicited offers)
12. QUESTIONS TO ASK A POTENTIAL PARTNER
• How long have you been established ?
• Do you specialise in any particular sector or customer
segment ?
• What is your turnover ?
• What is your share of the market ?
• How many active accounts do you have ?
• How many staff do you have ?
13. QUESTIONS TO ASK A POTENTIAL PARTNER
• Will I have direct contact with your sales staff ?
• How big is the territory that you cover ?
• What office/storage facilities do you have ?
• What product ranges do you already carry ?• What product ranges do you already carry ?
• How many principals do you already work for ?
14. WORKING WITH OTHER CULTURES
Look out for differences in:
• Communication style
• How things are managed
• Leadership and management• Leadership and management
• Approach to risk
• Reaching decisions
• Negotiating style
15. MOTIVATING, TARGETS, MONITORING & EVALUATING
• Rigorous interview and selection process
• Frank and open negotiation of objectives
• Terms and conditions of the legal agreement
• Introducing a trial period• Introducing a trial period
• Setting realistic targets and incentives
• Monthly/quarterly activity reports
• Annual review of performance
16. MOTIVATING, TARGETS, MONITORING & EVALUATING
• Clear definition of responsibilities
• Speedy implementation of corrective action
• ‘End user’ comfort analysis
• Sharing of supply-chain monitoring report
• Effective communication and use of IT
• Keeping control
• Annual senior review meeting
17. MOTIVATING, TARGETS, MONITORING & EVALUATING
• Annual price review
• Product orientation training
• Regular face to face meetings
• Periodic strategy review
• Measurement of partner benefit from Agreement• Measurement of partner benefit from Agreement
• Level of integration
• Must be a ‘Two Way Street’
18. THE PRICE OF FAILURE - AGENTS
• Under-performance
• Compensation on termination
• Restrictions on post-termination activity
• Damage to Principal’s profile• Damage to Principal’s profile
• Lost opportunity
19. THE PRICE OF FAILURE - DISTRIBUTORS
• Loss of market share
• Exposure of Intellectual Property
• Potential damage to your Brand
• Possibility of compensation• Possibility of compensation
• Potential loss of market good-will
• Post-Agreement competition
20. SOME TIPS
• Market entry is best undertaken as a project
• Every good project needs a Plan
• Roles & resources are inevitably going to be factors
• Research is critical to your success• Research is critical to your success
• Be clear about the reason for a market visit
• Stick to your partner selection process
• Make sure your team is in agreement
• You may need to review some issues several times
• Some issues could make your project ‘no go’
21. CONCLUSION
• Negotiate your terms with clarity and purpose
• Put the agreement in writing
• Avoid uncertainty- deal with all points
• Take legal advice• Take legal advice
