Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 1

Finding Your Partners for DIRECT Exporting

World Trade PracticesChapter 9

WTP-Chris Schrage

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Sales Agent or Distributor Issues– Representation– Size of company– End-user contact– Accepts title of goods– Profit earned– Marketing activities– Customer support– Receivables risk– Inventory– Speed of delivery– Knowledge of import regulations– Termination aspects– Effective representation– Preferences of local market

WTP-Chris Schrage

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Travel or not???

Rule of thumb– Some travel better than no travel

Travel allows opportunities– To meet various potential representatives

– Better understanding of market potential

– Better view of research issues– More objective view of market feedback

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 2

WTP-Chris Schrage

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Finding customers w/researchHelpful indicators� Company size/scale� Product lines represented� Number of companies representing

� Industry focus� Technical knowledge� Level of experience� Sales volume� Sales structure� Key accounts� Professionalism� Customer support� Office locations� Product launch experience� references

WTP-Chris Schrage

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TOP TENways to find a distributor or agent

Existing distributor or agent listsNetworking – Industry contacts– Trade associations

U.S. Department of CommerceLocal and state contacts– State foreign offices (JETRO)

– U.S. Chambers of Commerce

Catalog showsRecommendations from potential customersAdvertisingKompassPrivate databasesThe internet– GlobalEdge– Everything International– Export Zone– GTN

WTP-Chris Schrage

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Tapping other resources

John P. Griffin from Ireland

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 3

WTP-Chris Schrage

7

Griffin’s Quick ReferenceFundamentals

Profits for both parties

Real fight is for dealer selling time

All the dealer’s other lines are you competitors

A distributor knows he may outgrow his usefulness

The facts of life are tough but understood by all

Jon P. Griffin

WTP-Chris Schrage

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Griffin’s Quick ReferenceAnalysis

A day in the field is worth a hundred at the deskLearning really starts with sellingTerritories can be quickly shuffled in priorityIntermediaries are shaped by their environmentDon’t depend on distributors for logic or reasonIntelligence is often no substitute for actionData is certainly no substitute for an order, read sparinglyIf you want to know about the trenches- talk to the troopsOnly talk to troops that have been in trenches

Jon P. Griffin

WTP-Chris Schrage

9

Griffin’s Quick ReferenceMechanisms

Channel choices– Sole national exclusive

– Multiple national product-exclusive

– Multiple regional-exclusive

– National distributor w/ regional sub-distributors

– Commission agent

– Trading subsidiaries, partners, JVs

Jon P. Griffin

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 4

WTP-Chris Schrage

10

What are the customers needs and how do the products compare?

Why triggers the customer to purchase?

How is an order generated?

When are the selling cycles and stocking needs?

Where do the customers shop right now?

Who? Poll customers to shortlist good dealers

Griffin’s Quick ReferenceKey Questions

Short cuts are tempting, but expensive in the long run.

Jon P. Griffin

WTP-Chris Schrage

11

Griffin’s Quick ReferenceSelection

Vultures are professional line-collectors– All talk, no actions

Talkers are hard to resist when orders are neededTreat distributors like murder suspects and crosscheck dataVerification- internal and external auditThe first thing a dealer will buy is timeDistributors may want a franchise for the wrong reasonsMistakes in selection are very expensiveIn early market entry, small and hungry dealers are desirableAdvantages of larger dealer cooperatives are often illusory

Jon P. Griffin

WTP-Chris Schrage

12

Griffin’s Quick ReferenceContracting

Initial distributor enthusiasm is purely a reflexNational emporia is dead– Dealers today focus

Attracting dealers takes best selling skillsNever appear to deal from a position of weaknessDress the partPrepare your pitch / pre-empt distributor fearsContracts are one of the most overrated instruments of businesContracts are really only useful on terminationAt least appear to be fair

The contract:PerformanceActivitiesLaunchingInventoriesPersonnelTrainingInformationExclusivityTerritoryProductSub-distributionPricingPaymentReturnsPeriodChangesMarket development

Jon P. Griffin

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 5

WTP-Chris Schrage

13

Griffin’s Quick ReferenceInitiation

After contract- high-voltage kickoff is vital

Deal isn’t closed until the action starts

Serve the best wine first and wean a dealer with success

Don’t give dealers bad habits with early concessions

Go for quality, not quantity, in supportive material

Invest some bucks efficiently announcing your existence

Creep up on competitors

Good training is a gift that steals a salesman’s heart

Harness the “key mole” in the dealership

Jon P. Griffin

WTP-Chris Schrage

14

Griffin’s Quick ReferenceTraining

Good professional presentation skillsKey to a good presentation is to teachTeaching is the vehicle for relationships with dealer sales staffAssess your audience, tune your presentation and prepare defensesTraining should build full supplier proficiencyBetter training involves rehearsals and field work

Jon P. Griffin

WTP-Chris Schrage

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Training Pyramid(Sacred sequence for product presentation)

Jon P. Griffin

Introduction(a pleasant warm-up)

General Industry Background

General Product Background

Specific Product

The Market

The Summary

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 6

WTP-Chris Schrage

16

Griffin’s Quick ReferenceMotivating the Distributor

Never publish net distributor pricesForget simplistic notions of price controlMake line a top profit earner Incentives needed for extra effortUpward pressure may galvanize selling activityCredit and payment are really opportunities, not problemsInternal incentives give products the edge

Jon P. Griffin

WTP-Chris Schrage

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Griffin’s Quick ReferenceMotivating the Customer

Don’t take distributors skills for granted

Quality in promotions

Inform dealers of promotions in advance

Do trial runs before all out program

Jon P. Griffin

WTP-Chris Schrage

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Griffin’s Quick ReferenceGrowing

Distribution networks will change– Expand territories of proven distributors– Concentrating more dealers in the same territory– Allocating different products to specialized distributors– Upgrading to stronger distributors w/ more resources

As sales grow- so does access and controlCritical mass- enough sales to go it aloneChanges are dictated by ROIProducts change to match the marketProducts evolve to meet opportunities

Jon P. Griffin

Global Trade Practices 28/11/2001

College of Business, University of Northern Iowa 7

WTP-Chris Schrage

19

Griffin’s Quick ReferenceAnd more besides

Other issues– Currency rates– Treasury function in managing cash– Taxation and exposures– Subsidiary and branch operations– Regional inventory– Equity investment in distribution for data and control

Distributors see suppliers’ sales people as asset and threatGood international staff are flexible, autonomous hybridsFight home-office mistrust with communication

Jon P. Griffin

WTP-Chris Schrage

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Matchmakers

Industry Specific“leg-work” completed by organizersMeetings arranged– Appropriate ministries or agencies

– U.S. offices in host country• Ambassador• Consulates

Minimal cost

WTP-Chris Schrage

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Meeting potential distributors