Page 210 - Marketing the Basics 2nd

202 Marketing: the Basics
agents seek and negotiate foreign purchases on your behalf and are paid on commission. Cooperative organizations carry on exporting activities on behalf of a number of producers and are typically partly under their control. Producers of primary products such as fruits, nuts or maple syrup, often use them. One example is the BC Tree Fruit Marketing Board which helps sell around the world various fruits that come from trees in British Columbia. In Australia there are many marketing cooperatives including the Australian Fresh Mango Co-operative Ltd, Shepherds Producers Co-operative Ltd and the Goat Meat Producers Co-operative Ltd to name just a few. OPEC is another example: though members are nation states, they all sell oil to the same global market.
Indirect export has two principal advantages. First, less invest- ment is required because the firm does not have to set up an export department, overseas sales force or international contact network, all of which needs care and attention. Second, it means less risk, because of the knowhow and experience of these intermediate firms the firm will generally make fewer costly mistakes.
Over time, with success, firms often decide to directly handle their own exports. Risk is higher but so is the potential for greater profitability and as your experience with indirect export grows so does your confidence that you don’t need anybody else’s help. There are several different ways to go about direct exporting:
• Domestic-based export department or division.
• Travelling export sales reps. Get them out on the road.
• Overseas sales branch or subsidiary. This is closer to the
customer and gives the opportunity to better tailor products
to the differing needs of foreign customers.
• Foreign-based distributors or agents. They may be given the
exclusive rights to report the company in a given country or countries or only limited rights – something to negotiate.
Many firms will eventually move to direct on-the-ground investment but they will use the above methods to ‘test the water’.