The twelve most common mistakes and pitfalls awaiting new exporters - excerpts from the U.S. Dept. of Commerce's A Basic Guide to Exporting

Business America, Dec 7, 1987

The Twelve Most Common Mistakes And Pitfalls Awaiting New Exporters

The following may be considered the 12 most common mistakes and pitfalls made by new exporters.

1. Failure to obtain qualified export counseling and to develop a master international marketing plan before starting an export business--To be successful, a firm must first clearly define goals, objectives, and the problems encountered. Secondly, it must develop a definitive plan to accomplish an objective despite the problems involved. Unless the firm is fortunate enough to possess a staff with considerable export expertise, it may not be able to take this crucial first step without qualified outside guidance.

2. Insufficient commitment by top management to overcome the initial difficulties and financial requirements of exporting--It may take more time and effort to establish a firm in a foreign market than in domestic ones. Although the early delays and costs involved in exporting may seem difficult to justify when compared to established domestic trade, the exporter should take a long-range view of this process and carefully monitor international marketing efforts through these early difficulties. If a good foundation is laid for export business, the benefits derived should eventually outweigh the investment.

3. Insufficient care in selecting overseas distributors --The selection of each foreign distributor is crucial. The complications involved in overseas communications and transportation require international distributors to act with greater independence than their domestic counterparts. Also, since a new exporter's history, trademarks, and reputation are usually unknown in the foreign market, foreign customers may buy on the strength of a distributor's reputation. A firm should therefore conduct a personal evaluation of the personnel handling its account, the distributor's facilities, and the management methods employed.

4. Chasing orders from around the world instead of establishing a basis for profitable operations and orderly growth--If exporters expect distributors to actively promote their accounts, the distributors must be trained, assisted, and their performance must be continually monitored. This requires a company marketing executive permanently located in the distributor's geographical region. New exporters should concentrate their efforts in one or two geographical areas until there is sufficient business to support a company representative. Then, while this initial core area is expanded, the exporter can move into the next selected geographical area.

5. Neglecting export business when the U.S. market booms--Too many companies turn to exporting when business falls off in the United States. When domestic business starts to boom again, they neglect their export trade or relegate it to a secondary place. Such neglect can seriously harm the business and motivation of their overseas representatives, strangle the U.S. company's own export trade, and leave the firm without recourse when domestic business falls off once more. Even if domestic business remains strong, the company may eventually realize that they have only succeeded in shutting off a valuable source of additional profits.

6. Failure to treat international distributors on an equal basis with domestic counterparts--Often, companies carry out institutional advertising campaigns, special discount offers, sales incentive programs, special credit term programs, warranty offers, etc., in the U.S. market but fail to make similar assistance available to their international distrbutors. This is a mistake that can destroy the vitality of overseas marketing efforts.

7. Assuming that a given market technique and product will automatically be successful in all countries --What works in one market may not work in others. Each market has to be treated separately to insure maximum success.

8. Unwillingness to modify products to meet regulations or cultural preferences of other countries-- Local safety and security codes, as well as import restrictions, cannot be ignored by foreign distributors. If necessary modifications are not made at the factory, the distributor must do them--usually at greater cost and, perhaps, not as well. It should also be noted that the resulting smaller profit margin makes the account less attractive.

9. Failure to print service, sale, and warranty messages in locally understood language--Although a distributor's top management may speak English, it is unlikely that all sales personnel (let alone service personnel) have this capability. Without a clear understanding of sales messages or service instructions, these persons may be less effective in performing their functions.

10. Failure to consider use of an export management company--If a firm decides it cannot afford its own export department (or has tried one unsuccessfully), it should consider the possibility of appointing an appropriate export management company (EMC).

11. Failure to consider licensing or joint-venture agreements--Import restrictions in some countries, insufficient personnel/financial resources, or a too limited product line cause many companies to dismiss international marketing as unfeasible. Yet, many products that can compete on a national basis in the United States can be successfully marketed in most markets of the world. A licensing or joint venture arrangement may be the simple, profitable answer to any revervations. In general, all that is needed for success is flexibility in using the proper combination of marketing techniques.