Entering the Target Market
You have assessed your readiness, completed your export plan, conducted your research and devised your marketing plans. You feel ready to enter the market but seek the best strategy to reach potential customers. There are many market entry strategies however they can be generally grouped in to three main categories, direct, indirect and strategic alliance.
Direct Exports involves the direct marketing and selling to the end user or client. This may be a viable option for some familiar accessible markets however those less familiar may have different legal and regulatory environments, business practices, customs and preferences that rule out direct exporting as an option. A local partner for example may be better able to manage such complexities and serve your potential customer better.
Indirect Exporting is one of the most frequent methods used to enter a new market. Businesses selling products enter into an agreement with an agent, distributor or a trading house for the purpose of selling (or marketing and selling) the products in the target market. Due diligence is critical when selecting an agent or distributor for indirect exporting.
A Strategic alliance or partnership with other companies or individuals that have complementary skills and capabilities is another means to market entry. A partner can often provide the insight, contacts and expertise that fill any gaps in your export readiness. A strategic alliance with a company selling a complementary product or service can provide more effective market access, resulting in more foreign sales in less time. As with indirect exporting relationships, contractual agreements with partners must be stated in clear terms. Some useful resources to visit for channel distribution are;
- Distribution channels (Exports.gov)
- Export directory of U.S. Agricultural Suppliers (Foreign Agricultural Service, USDA)
- Export directory of Washington Commodity Suppliers (WSDA)
- Export directory of U.S. Food Distribution Companies (Foreign Agricultural Service, USDA)
- Agent distributor qualifications checklist (SBDC)
- Sample introductory letter to potential overseas representatives (SBDC)
- Sample foreign representation agreement (SBDC)
- Sample foreign representation agreement (CITD)
- Sample export sales representation agreement (CITD)
Take a look at our short guides on: