Page 25 - Export and Trade

Export Management

distribution method. Representation will be your ears • Agreed performance measures for both seller and buyer.
and eyes in the market, so you will be dependent on it. • Any provision for after-sales service.
Will you use your own staff based in the market? Can • Promotional allowances, if any, included in the price level.
you operate by visiting frequently or would it be best to For example, there may be provision to supply product
appoint a local sales agent? samples up to a certain level included in the price.
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agent’s performance will be measured and remunerated. • Who is making what from the supply chain transaction
For both distribution and sales representation/ (who is clipping the ticket and are they adding value to
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customers and your company. This may involve company
and country training. The teaching of product/service It is important to determine from as many sources as
knowledge and capability of production and supply possible the above information about the value customers
chain processes is most important. To succeed in export see in your offer and any competitor’s offers before you
markets all staff in the supply chain must be authorised make a product supply offer including a price. Often by
to make decisions within certain boundaries so customers seeking such information from a wide range of sources it
know they are dealing with a responsive organisation with is possible to get such information to gel, thus giving you
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Of course, when making a product or service supply
Price setting offer it is important you fully explain to the potential
The role of price-setting and its validity period are critical customer what is being offered. Often customers do not
factors in being competitive. Knowing the level of margin fully understand a supply offer unless it is clearly spelt
your company can secure from a given market for a out to them. Sometimes they are surprised to discover
particular product or service must be clear before making they have been incurring costs on purchasing competitors’
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Too often pricing is determined on a cost-plus basis supply offer includes some of these costs it is critical you
without determining the value a customer places on your make this clear.
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to maximise margins and/or force cost reductions in FDQ¶W SXW LW RQ ,Q RWKHU ZRUGV LW LV GLI¿FXOW WR UDLVH D
WKH WRWDO FRVW VWUXFWXUH WR HQDEOH SUR¿WDEOH EXVLQHVV price once you have given an indication of price – even if
to be secured. Ideally both maximisation of price and it was given informally.
minimisation of costs are considered right from the start Loose price talk will often come back to haunt you. So
of a market study. do not talk price until you are very sure of your supply
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structure. To determine this, key information needs to be
derived from several sources including: Strategic planning
‡ 'HWDLOHG SURGXFW DQG RU VHUYLFH VSHFL¿FDWLRQ Sound planning reduces doubts and allows greater
‡ 3DFNLQJ VSHFL¿FDWLRQV control over future events. Strategic planning for the
• Exact delivery requirements to the point where the shorter term must inevitably be more precise than long-
customer becomes responsible for picking up the costs WHUP SODQQLQJ ZKLFK PXVW DGDSW DQG EH PRUH ÀH[LEOH
in the supply chain. Fluctuations in exchange rates, changing technology,
• Terms of trade, FOB, CFR, CIF, DDP, DAP, etc. increasing competition, changing regulations, new ways
• Payment terms including: currency of sale, time of of transacting business and new paperwork are some of
payment, method of payment (letter of credit, sight the many challenges you will have to face.
GUDIW RSHQ DFFRXQW WHOHJUDSKLF WUDQVIHU RWKHU PHWKRGV Successful management strategies include:
• Validity of price offer. • Risk evaluation based on professional research.
• Is price based on any indicative or contractually agreed • Developing people skills that are sensitive to different
value, volume, time line? cultures.

NZ Export & Trade Handbook 2018 23