Instructor IntroductionInstructor: Jim and Jennifer Krigbaum Founders 2020 Development Company LLC
Export 101Building blocks for successful exports
How to enter the International market
Select a Product for Export•Do you have sufficient supply to service export markets?•Do you have sufficient capital, personnel, and resources tohandle volume?•Are you better off selling a big volume item or a small volumeitem with more profit?
Niche Niche definitionA position particularly well suited to theperson/product who occupies it; “sheabutter has a good niche in the naturalcosmetic industry in California."
Applied to productsMost products have several possible niches in the market– the key to maximum success is finding the niche thatprovides the greatest return for the supply chain – a“good” product in the wrong niche will be unsuccessful.Identifying the right niche requires a full understanding ofthe product including strengths and weaknesses of theproduct and supply chain.Consumer demand is what drives a product to succeed ina niche.
Discussion Discussion 4 what factorsWhat factors determine if a buyerpurchases a product at the importer level? determine if a buyer buys?What about the distributor level?What determines if an end consumerpurchases your product?
Prepare Company Profile Sheets Objective of the profile is to create buyer confidence in the producer by communicating their background, ability and resources. Provide information about the company’s owners and management team
Company Fact SheetsVital Information About Your Company:Contact InformationList of ProductsCompany History and PhilosophyAnswer the question “why in the world wouldanyone buy my product over everything else thatis available?”
Company Fact SheetValue of athat the customerfact sheetIt is important company have confidence in the company producing the product the fact sheet helps them gain this confidence.It is important to provide an outline of the companies technical abilities and resources.It is important to provide background information on the company owners.
Create your own Fact Sheet
Develop a Product Profile Sheets What is a product profile sheet? Why prepare it? “Unseen is Unsold” What elements would it need to include?
Product Fact SheetContact InformationCommon and ScientificNamesIngredientsPackaging SpecificationsSpecial CertificationsShipping conditions
How will these documents be used and why do them? Documenting information – ensuring that it is complete and the process has been thought through. Marketing tool for promoting the company You need something to leave with the customer – either in person or e-mail.
Packaging and Labeling
Quality Sells But Packaging sells it first!The customer wants a high perceived value – this is oftena factor of image of packaging and price.
Packaging Wisdom #1“Make sure your product can make the trip in the correct condition.”
Find out how your product usually ships Know When to Ship Your Product So That It Arrives in Good Condition!
Packaging Wisdom #2“It doesn’t matter what you like, it matters what yourcustomer likes.” •Color •Size/Units per package •Transportation •Living conditions •Shopping habits •Cultural beliefs
Packaging Wisdom #3 “Follow The Market Leader”Guerrilla Marketing:Emulate those who have market experience.
Solicit Feedback from your Customers! They Can Help By: •Proofreading your labels •Reviewing your grammar •Giving feedback on your colors •Critiquing your image Your Customer Is The Expert!
Use Photos On Your Labels The importance of Photos• Photos can show how the product is used• They can be understood in any culture• They can remind customers why they want tobuy the product• Photos create an image of value
Exercise – Evaluate your packaging
What is a Tradeshow?A tradeshow is an industry gatheringwhere manufacturers and producersexhibit their products to expandtheir markets.
Reasons for attending a show* Identify new products and services * Strengthen relations with existing suppliers and customers * Identify industry players – customers, suppliers and support industry * Gather information for future purchasing decisions * Review business plans with customers and suppliers
Reasons for participating in a show * Find new customers and suppliers * Launch a new product * Strengthen brand identity * Visit existing customers
How to catch a customer at a tradeshow!This image cannot currently be displayed. You have a choice.... • Will you cast a wide net and see how much you catch? • Will you choose your bait carefully and attract one big fish?
Choose a targeted tradeshow The tradeshow doesn’t have to be big to attract the “Right” customer
Tradeshow attendants are at the show to sell – not to buy Therefore, it is critical that you do your homework to arrange meetings prior to the show!
Visit tradeshow websites and research Researchwho is exhibiting and who is attending.Look for other companies in your nicheor complimentary to your niche.Talk with people who have been to theshow in the past
Questions to consider beforecommitting to attend the show…. Questions to consider before Who is the target audience and how do I committing to attend a show reach them? Do I need to change the product, image or position of the product to reach the target audience? Can I afford the time away from my regular work to attend the show?
Budget for all costs of attending a tradeshow Cost of Brochures Samples This image cannot currently be displayed.Follow-up Travel Business Cards Booth Rental
Don’t underestimate the cost of your time This image cannot currently be displayed. If you were not at the trade show, what would you be doing ? Is that more rewarding than attending the show?
Maximize your tradeshow booth attendance
Take care of details!Make sure you and your product arriveto the trade show on time!Make sure the samples have all thenecessary paperwork for customsclearance.
Actively promote your attendance at the tradeshow Announce your attendance to prospective clients Invite clients in the area to your booth or to dinner Follow-up with a call to personally invite them to visit your booth
Be prepared to answer questions:• Why should the customer buy your product over any other in the world?• What is the price?• What are your payment terms?• How quickly can you ship?• Do you have an agent?• What is your experience in the market?
At the show!
To draw customers into your booth:This image cannot currently be displayed. Make Brochures, Business Cards, and Corporate Literature Available Give-Away Samples or Gifts Create a U-Shaped Booth
Keep your display simple and feature your hottest selling products This image cannot currently be displayed. This image cannot currently be displayed.
Dress to Sell• Don’t over or under This image cannot currently be displayed. dress your customer• Consider dressing in “theme” clothing• Wear company tee- shirts or matching colors
At the Show• Walking the Show • Contact• Schmooze• Take promotional photos• Debrief with care
This image cannot currently be displayed. No Exhibit? No Problem. • The Power of coffee • Walk the floor • Pick up others materials • Check out the Media Room • E-mail • Send a thank-you note • Google your competition
Follow-up after the show!
Things to consider when contacting the potential customer• You have a two week window to keep the relationship alive• The first week the customer is swamped getting back to their normal flow of business.• When contacting the customer always send something in writing first• Avoid sending attachments in e-mails• Give them time to read the document and then follow-up with a phone call• Always follow-through on what you say you are going to do.• Be persistent but not a pest – walk the thin line.• Look for other opportunities and ask if they can recommend someone else to talk with or another company to work with.
Relationship management Key points• Listen – it is your most valuable communications tool. Learn what the buyer wants.• Look – when meeting with them look for signs as to who they are. Get to know them.
The meeting• Work with your target customer to arrange a meeting. If they are not going to be at the show ask who else you can meet with.• Always have something to leave them. Have a sample to show if possible and paper to leave. Send the sample later as most people don’t want to carry it home from the show and it will get lost.• Know your product, its potential and your target customers needs.
Monitoring the relationship• Stay in touch. Don’t just call the people when you need something, but don’t waist their time.• Develop a friendship with both supplier and customer that goes beyond the product• Follow-up with details requested at the show. Contact 100% of the people who gave you a business card.• Send out samples promptly
Back Home• Make press book• Send thank-you notes• Debrief your colleagues• Update database• Follow-up with stragglers• Update website• Send samples!
This image cannot currently be displayed. Sending samples This image This image cannot currently be displayed. cannot currently be displayed. This image cannot currently be displayed.
Incoterms 2010 g
Exercise – “Benefits of Speaking the Same Language”
Documentation flow export shipment offer • Formal offer submitted to interested customer Proforma Invoice • Proforma Invoice sent to customer Purcer • Customer opens Purchase Order – places order hase Or LC • Customer opens LC Advsesd • LC is advised by bank to Exporter
offer • LC reviewed by exporterProforma Invoice • Containers or shipment space booked Purcer • Pre-shipment documents filed 10+2 USA hase Or LC • Shipment loads on vessel – bill of lading issued • Documents prepared and submitted to the bank Advsesd for negotiations
offer • Bank reviews documents • Bank submits documents to issuing bank forProforma Invoice payment Purcer • If no discrepancies payment made hase Or • If discrepancies either an amendment is LC requested or an acceptance is requested • Funds deposited into exporters account Advsesd
Costing and PricingCOSTING PRICING• Calculating what a product • What youre willing to partcosts to produce. with a product for and what your market is willing to pay• As you calculate, you need for it.to consider everything it coststo produce THIS product. • Cost-based pricing sets the floor; demand-based pricing sets the ceiling
Export Quotation Worksheet►Document and record how you arrivedat your offer price.► Use the form in your notebook or developsomething computerized with a similarfunction.
Cost of Goods for Export $3.50Quantity 1904Total Cost of Goods $6,664.00Add Profit Margin 3.50 $0.53 $1009.12 x .15 = .525Inland Freight to Port or Airport $0.21 $400.00Consular Legalization Fees $0.01 $25.00Inspection Fees/Charges $0.02 $35.00Freight Forwarding Fee $0.03 $50.00Bank Charges $0.02 $35.00Document courier charges $0.01 $25.00Total Exporting Costs $0.30 $565.00FOB Loading Port / FAS Airport $4.33 $8238.12 Total PriceOcean Freight /Air Freight $0.63 $1200.00CFR Unloading Port / CPT Airport $4.96 $9438.12 Total PriceInsurance Premium $0.11 $ 200.00CIF Unload Port / CIP Airport $5.07 $9638.12 Total PriceOffer Valid Until: 11/31/02Prepared by: Authorized by:
The Role of the Bank Under Letter of Credit terms # 1: The bank replaces the exporters credit with theirs thus eliminating risk to theBank exporter that the importer will be insolvent at time of shipment. #2: The Bank guarantees the importer that the exporter has met the terms of the LC before issuing payment.
Avoid Discrepancies in an LC Your Documents Must Exactly Reflect the LC, Even if the Information is Incorrect.
Questions to ask about an LC Is the LC Irrevocable? Can I produce the documents?Is the amount accurate? Can I meet the schedule?Is the address correct? Is insurance required?Is the description correct? Is the correct transportation Are the ports correct? document required? Is transshipment allowed? Is it what I expected?
Documentation TerminologyProforma Invoice - An invoice sent in advance ofshipment, to enable the buyer to obtain an import permitor exchange permit or both. The proforma invoice gives aclose approximation of the weights, values and timing ofthe intended shipment.Commercial Invoice - A written and signed list ofmerchandise and/or services with associated quantities,prices and expenses. It contains the terms of the sale andis prepared by the seller to show the total amount owedby the buyer.
Notify - This phrase requires the carrier to notify adesigned party upon arrival of the merchandise, butdoes not transfer title of the merchandise to that party.Consignee - a person who receives goods from someonefor their own use or to sell for the sender. Theconsignee is the person to whom the shipment is to bedelivered whether by land, sea or air.
Types of paymentsDocumentary Credit - A letter of credit issued to supportthe movement of merchandise supported by shippingdocuments presented by the beneficiary to the IssuingBank for payment or acceptance.Documents Against Acceptance (D/A) - Instructions givenby a shipper to his or her acceptance bank that thedocuments attached to a time draft for collection aredeliverable to the drawee/payer against his or heracceptance of the draft.
Direct Collection - Method of payment for goods in whichthe seller sends a draft drawn on the buyer, the shippingdocuments, invoices, insurance certificates, otherappropriate documents directly to the buyer’s bank forcollection. Only an information copy of the advice is sentto the exporter’s bank to establish and monitor thecollection transaction for the seller.
Negotiating Bank - The bank that reviews thedocuments required in the letter of credit for compliancewith its terms and remits payment to the beneficiary.Discrepancy - Any deviation from the terms andconditions of a letter of credit or from the documentspresented under the letter of credit.
Bill of Lading (Air, Ocean, Railroad, Truck) - A documentof title issued by the carrier (transport company) or itsagent. Bill of lading is a receipt for the merchandise intransit, as well as a contract for delivery to a specifiedparty at a specified destination.Clean Bill of Lading - One in which the goods aredescribed as having been received by the carrier inapparent good order and condition” and withoutqualification.
Beneficiary - The party who receives payment asstipulated in a letter of credit. This party is usually theseller/exporter.Freight Forwarder - An independent business thatarranges for the shipment of export cargo and completesthe necessary export documentation on behalf of theexporter.Issuing Bank - Bank that draws up and issues the letter ofcredit and that makes payment according to theconditionsNegotiate - Take action to verify that the documentspresented under an L/C conform to the requirements inorder to release funds to the seller.
Expiry or Expiration Date - The date on which the draftand documents drawn under a letter of credit must bepresented to the negotiating, accepting, paying, orissuing bank in order to effect payment. If the letter ofcredit is a “negotiable credit,” the issuing bank musthonor the credit, provided the complying documentswere submitted prior to the expiry (or expiration) date.Draft - A draft is a formal demand for payment. It is anunconditional order in writing, addressed by one party(drawer) to another party (drawee), requiring thedrawee to pay, at a designated or determinable futuredate, a specified sum in lawful currency. In internationaltrade, drafts are also known as “Bills of Exchange.”
Types of Letters of Credit
Letter of Credit - An instrument issued by a bank, at therequest of the applicant, promising to pay the beneficiaryupon his presentation of stipulated documents inaccordance with the terms and conditions of the credit.Irrevocable Letter of Credit (L/C) - Letter of credit thatcannot be changed or cancelled without the consent of allparties involved. Almost all L/Cs are irrevocable unlessotherwise stated on L/C. See also “letter of credit”.Confirmed - A letter of credit issued by one bank to whichanother bank added its irrevocable confirmation to pay,thereby obligating itself in the same manner as the openingbank.
Revocable Letter of Credit (L/C) - A letter of credit thatcan be modified or canceled by the issuing bank withoutthe beneficiary’s consent unless the negotiation ofcomplying documents has already taken place. The issuingbank must honor the draft(s) negotiated before the noticeof revocation has been made.Red Clause - Clause in a letter of credit that authorizesthe advising/negotiating bank to make an advancepayment to the beneficiary before presentation ofshipping documents, usually against a simple receipt.
Transferable Letter of Credit (L/C) - Letter of credit thatpermits the beneficiary to transfer all or some of therights and obligations under the credit to a secondbeneficiary.Standby - A letter of credit that generally guaranteespayment due for an unfulfilled obligation on the part ofthe applicant or another party. It is payable uponpresentation of a draft, as well as a signed statement orcertification by the beneficiary that the applicant hasfailed in his obligation.